Three North Carolina brokers recently received scholarships from the Commission for academic excellence in real estate courses.
The recipients, each of whom received $400 for tuition, are Michael J. Shelton, Winston-Salem, the Joe Schweidler Memorial Scholarship Award; Melinda G. Pope, Liberty, the Blanton Little Memorial Scholarship Award; and Mike G. Montpetit, Cary, the Phillip T. Fisher Scholarship Award.
Shelton and Pope were selected by the North Carolina Association of REALTORS® for achievement in the Graduate REALTORS® Institute (GRI) program. Montpetit was selected by the North Carolina Chapter of the Council of Residential Specialists for achievement in the Certified Residential Specialists (CRS) program. Little and Schweidler were former Secretary-Treasurers of the North Carolina Real Estate Licensing Board. Fisher was Executive Director of the Real Estate Commission from 1981 to 2010.
This article came from the October 2018-Vol49-2 edition of the bulletin.
By Charlie Moody, Legal Counsel
North Carolina law has long required individuals, partnerships, LLCs, and corporations that engage in business under an assumed name to file a certificate with the register of deeds in the county in which that person or entity does business.
Similarly, Commission Rule 58A .0103(c) requires a broker or firm to file such a certificate in compliance with GS 66-71.4 AND notify the Commission in writing of the use of such assumed name.
What is an “Assumed Business Name”? For example, when an individual broker/sole proprietor named Alex advertises as Robinson Realty, Alex is not using an assumed name because Robinson Realty includes the broker’s surname.
If Alex Robinson instead advertises brokerage services (with business cards, ads, etc.) under the name “Luxury Homes 4U Realty,” Alex is now using an assumed business name and must comply with the statute and Commission rule.
Similarly, a licensed firm has a corporate name under which it is registered to do business with the Secretary of State but may choose to advertise under one or several assumed names. “Team One Property Management” and “Team One Realty” might be two assumed names (or “trade names”) used by ABC Corporation for branding purposes. Both assumed business names must be filed with the State and the Commission must be notified of their use to assist consumers in finding the actual entity/broker with whom they are dealing.
On December 1, 2017, the legislature repealed Chapter 66, Article 14 and enacted Article 14A, the “Assumed Business Names Act.” This change modernized the assumed business name process to make it easier to register, find, and maintain assumed name information. The new Act altered the requirements for the assumed business name certificate and created the means by which a single registration in the office of one Register of Deeds can be made effective for multiple counties.
Filers will need to identify which counties they will be doing business in or check the box for “All 100 counties.” The certificates are then recorded and indexed in identified counties and scanned certificate images are transmitted by the Register of Deeds to the NC Secretary of State for entry into a single, statewide searchable database maintained by the Secretary at http://www.sosnc.gov/abn/search. The Secretary assigns an identification number to each assumed business name that is recorded, and to which any future amendments or withdrawals must refer.
Certificates filed before December 1, 2017 are still valid, at least for now. The Act allows for a five-year transitional period during which individuals and entities with pre-existing assumed business names can re-file a certificate to preserve the effectiveness of the name designation. Filers have until December 1, 2022 to re-file a certificate for a pre-existing assumed name. Remember also that filers of assumed business names must update the filings within 60 days of the information changing.
Compliant blank certificate forms are available from registers of deeds or may be downloaded from https://edpnc.com/start-or-grow-a-business/start-a-business/business-forms/.
Go to the Secretary of State website to find additional information about when, how and why to file an Assumed Business Name: https://www.sosnc.gov/divisions/business_registration/assumed_business_names.
This article came from the October 2018-Vol49-2 edition of the bulletin.
Stephen L. Fussell, Chief Consumer Protection Officer
The term, “As Is,” means that a seller has decided in advance of soliciting offers that he or she will not make any repairs to the listed property. Disclosing this decision to prospective buyers puts them on notice that the seller will not make any repairs regardless of the results of inspections. However, it should not discourage prospective buyers from ordering inspections as doing so is a prudent means for determining the true condition of a property. One misconception is that when a seller notes “As Is” on a property, the buyer has no right to inspect. The NC Realtors Standard Form Offer to Purchase and Contract (No. 2-T) specifically gives the buyer the right to conduct their due diligence and order relevant inspections.
There is no State law or Commission rule compelling sellers to make repairs. Moreover, Section 4(c) of the NC Realtors Contract 2-T reads in part, “Buyer acknowledges and understands that unless the parties agree otherwise, THE PROPERTY IS BEING SOLD IN ITS CURRENT CONDITION.” With that said, many sellers are willing to make at least some repairs as a means of facilitating a sale. If every seller refused to make repairs, then many transactions would fail to close for that reason. NC Realtors created the Due Diligence Request and Agreement (“DDRA”) form (No. 310-T) for buyers and sellers to identify the repairs they agree upon. Once all parties sign this form, the seller then has an obligation to make the repairs listed on the form.
Another common misconception is that selling a property “As Is” gives a seller and/or a listing agent the opportunity to conceal material facts about the property. While a seller can always answer “No Representation” to any question on the Residential Property and Owners’ Association Disclosure Statement (“RPOADS”), a seller who answers “No” to a question when the truthful answer is “Yes,” may face civil liability for his/her misrepresentation.
Real estate brokers, including those brokers who are selling their own properties, must always disclose material facts. A listing agent has the duty to discover and disclose material facts. The Commission holds brokers responsible for the information they know or reasonably should know about or relating to a property. Therefore, even if a seller fails to disclose a material defect on an RPOADS, the listing agent must disclose it to prospective buyers or their agents prior to the formation of sales contracts. If a seller indicates he/she does not want a listing agent to disclose a material fact, then the listing agent should decline to list the seller’s property.
This article came from the October 2018-Vol49-2 edition of the bulletin.
By Charlie Moody, Legal Counsel
On August 15, 2018, the US Department of Justice indicted a Minnesota real estate broker, his wife, and their real estate firm on multiple counts of mail and wire fraud.
Broker Jeffrey Detloff managed and sold foreclosed properties on behalf of institutional clients and worked with his wife, Lori, an accountant.
The couple are alleged to have carried out a multi-year scheme to defraud corporate and institutional clients including Fannie Mae and Freddie Mac by collecting kickbacks from independent contractors for repairs.
The couple allegedly created and submitted sham bids to create a false appearance of competitive bidding for projects, and awarded contracts only to contractors who were willing to pay a kickback.
The couple faces up to 30 years in jail and a fine of up to $1 million. The fine may be increased up to twice the gain derived from the crime or the loss suffered by the victims. One housing repair contractor has already pled guilty in connection with the investigation.
This article came from the October 2018-Vol49-2 edition of the bulletin.
ALICIA DAWN ALTMAN (Sunset Beach) – The Commission accepted the permanent voluntary surrender of the broker license of Ms. Altman effective July 18, 2018. The Commission dismissed without prejudice allegations that Ms. Altman violated provisions of the Real Estate License Law and Commission rules. Ms. Altman neither admitted nor denied misconduct.
ROBERT LORENZO ARRIAGA (Cary) – By Consent, the Commission suspended the broker license of Mr. Arriaga for a period of 36 months effective December 1, 2017. Six months of the suspension were active with the remainder stayed for a probationary period from June 1, 2018 to December 1, 2020. The Commission also prohibited Mr. Arriaga from acting as a broker-in-charge, engaging in property management, and accepting or holding trust monies belonging to others for a period of five years. The Commission found that Mr. Arriaga, the qualifying broker and broker-in-charge of a property management firm, received compensation for a maintenance referral without disclosuring to his principal, improperly applied the tenant security deposit to various expenses, failed to provide the tenant with an accounting, and failed to provide documents requested by the Commission. A Commission review of his tenant security deposit account found that cancelled checks and deposit tickets lacked the required identifying information and were not properly retained funds, were used for Mr. Arriaga’s personal benefit, a journal and separate ledger sheets were not maintained, an audit trail was lacking, and a shortage was present. A review of his rental deposits account found that it contained an overage and that some owners were being overpaid, causing deficit spending.
WAYNE T. BARBOUR (Dunn) – By Consent, the Commission suspended the broker license of Mr. Barbour for a period of three months effective November 1, 2018. The Commission then stayed the suspension on certain conditions. The Commission found that Mr. Barbour as Qualifying Broker and Broker-in-Charge of a licensed real estate firm in and around October 2016, acted as buyer agent in a transaction with a provisional broker serving as the exclusive listing agent. Mr. Barbour submitted an offer to purchase on behalf of the buyer without first entering into a written agency agreement or presenting a Working With Real Estate Agents brochure. Neither Mr. Barbour nor his firm had permission from the buyer to act as dual agent. The subject property’s heated square footage was also negligently misrepresentated in the MLS.
WILLIAM F. BELLAMY (North Myrtle Beach, South Carolina) – By Consent, the Commission suspended the broker license of Mr. Bellamy for a period of six months effective November 1, 2018. The Commission then stayed the suspension for a probationary period through May 1, 2019. The Commission found that Mr. Bellamy entered into a listing agreement for a property and failed to obtain a buyer agency agreement, but purported to act as dual agent for the transaction without authorization from the seller or buyer to perform dual agency.
VALERIA MARIA CARRIZO WYDA (Asheville) – By Consent, the Commission reprimanded Ms. Carrizo Wyda effective September 25, 2018. The Commission found that Ms. Carrizo Wyda was the listing agent for a property and received reports noting limited accessibility of the crawl space and issues with the property’s foundation. Although Ms. Carrizo Wyda disclosed this information to some subsequent interested buyers, this information was not disclosed to the buyer who went under contract. This buyer later terminated the contract after discovering these issues.
SABRINA HORTENSE CHARLESTON-MILES (Raleigh) – Following a hearing, the Commission permanently revoked the license of Ms. Charleston-Miles, effective July 31, 2018. The Commission found that Ms. Charleston-Miles acted as a dual agent in transactions when she was not authorized to do so, advertised real property for sale without having an executed listing agreement, failed to provide and review a copy of the publication “Working with Real Estate Agents” with prospective buyers or sellers at first substantial contact, failed to ensure that her buyer clients submitted all due diligence fees and earnest money deposits in accordance with the purchase contract, failed to notify Commission staff of her updated contact information, failed to timely communicate with other agents involved in transactions, required “cash only” offers on a property she listed for sale without her seller client’s consent, failed to properly and timely deliver a copy of an executed listing agreement pursuant to a court order, failed to communicate with Commission staff during the investigation, and misrepresented to the Commission that she was represented by an attorney whom she, in fact, had not retained.
COMPASS REAL ESTATE GROUP LLC (Huntersville) – By Consent, the Commission permanently revoked the firm license of Compass Real Estate Group effective September 5, 2018. The Commission found the firm’s trust accounts were not labeled “trust” or “escrow”, entrusted funds were commingled and converted to the personal use of the broker, deficit spending, failure to perform monthly reconciliations, lack of a trial balance, lack of required documentation, and a shortage. The investigation also discovered that Compass Real Estate Group was administratively dissolved by the NC Secretary of State from January 14, 2016 through June 16, 2016, and that it failed to notify the Commission.
CROWN REALTY INC. (Fayetteville) – By Consent, the Commission permanently revoked the firm license of Crown Realty Inc., effective August 29, 2018. The Commission found that Crown Realty, a property management firm, failed to maintain trust account records in compliance with Commission rules. Crown Realty deposited rent proceeds into its operating account and issued 32 non-sufficient funds checks to owner-clients from its operating account, causing the owner-clients to incur bank service fees. An audit showed a trust account shortage of at least $14,663.
DEBORAH L. DOSS (Thomasville) – The Commission accepted the permanent voluntary surrender of the broker license of Ms. Doss effective August 15, 2018. The Commission dismissed without prejudice allegations that Ms. Doss violated provisions of the Real Estate License Law and Commission rules. Ms. Doss neither admitted nor denied misconduct.
ELLIS BARBOUR & SONS, INC. (Dunn) – By Consent, the Commission suspended the firm license of Ellis Barbour & Sons for a period of three months effective November 1, 2018. The Commission then stayed the suspension on certain conditions. The Commission found that Ellis Barbour & Sons, in and around October 2016, acted as dual agent for a transaction with a provisional broker serving as the exclusive listing agent and the BIC as the buyer agent. An offer to purchase was submitted without the firm first entering into a written agency agreement or presenting a Working With Real Estate Agents brochure. Ellis Barbour & Sons did not have permission from the buyer to act as dual agent. The heated square footage was also negligently misrepresented in the MLS.
PATRICIA GONZALEZ (Fayetteville)- Following a hearing, the Commission permanently revoked the broker license of Patricia Gonzalez effective August 7, 2018. The Commission found that Ms. Gonzalez practiced real estate after her broker license was suspended by the Commission in a prior case, that she failed to remit rental proceeds and a tenant security deposit to her client, and that she converted trust money to personal use.
ROBERT SANFORD GOSNELL JR. (Hendersonville) – By Consent, the Commission suspended the broker license of Mr. Gosnell for a period of 16 months effective May 9, 2018. The Commission then stayed the suspension for a probationary period from May 10, 2018 through September 10, 2019. The Commission found that Mr. Gosnell timely reported his August 31, 2017 conviction of Aggravated Level I DWI, served 120 days in jail, received 24 months of supervised probation and is currently in full compliance with all court ordered restrictions.
DAMIAN DAVID HALL (Tryon) – By Consent, the Commission suspended the broker license of Mr. Hall for a period of 18 months effective July 19, 2018. The Commission then stayed the suspension for a probationary period from July 19, 2018 through January 18, 2020. The Commission found that Mr. Hall failed to provide property management records to the Commission’s investigator. An audit of the firm’s records found that deposit slips were not designated as “trust” or “escrow”, agency agreements did not identify the broker’s license number, and security deposits were not deposited within three days of receipt. The firm continued to operate from July 2016 through June 2017 despite being issued a revenue suspension by the North Carolina Secretary of State. Mr. Hall is restricted from further property management.
HD REALTY LLC (Mount Holly) – The Commission accepted the permanent voluntary surrender of the firm license of HD Realty effective July 18, 2018. The Commission dismissed without prejudice allegations that HD Realty violated provisions of the Real Estate License Law and Commission rules. HD Realty neither admitted nor denied misconduct.
INTRACOASTAL REALTY CORPORATION (Wrightsville Beach) – By Consent, the Commission reprimanded Intracoastal Realty effective July 18, 2018. The Commission found that Intracoastal was notified that a waterproofing project was approved at an oceanfront condominium complex where the firm managed rental properties. A tenant reserved one of the condominiums for a month but the firm failed to notify the tenant that the project could affect her ability to use the condo’s balcony. The firm refunded a significant portion of the tenant’s rental amount.
HOLLY MARIE LAM (Mount Holly) – The Commission accepted the permanent voluntary surrender of the broker license of Ms. Lam effective July 18, 2018. The Commission dismissed without prejudice allegations that Ms. Lam violated provisions of the Real Estate License Law and Commission rules. Ms. Lam neither admitted nor denied misconduct.
LANEY REAL ESTATE (Wilmington) – By Consent, the Commission suspended the firm license of Laney Real Estate until September 1, 2018 on certain conditions including requiring the deposit of $77,432.19 into its tenant security deposit trust account and providing sufficient evidence to the Commission to demonstrate that the trust account was fully funded and balanced. The Commission found that in June 2018, a total of $77,432.19 was transferred from Laney Real Estate’s tenant security deposit trust account to pay a non-client legal order.
DAVID MAYO (Fayetteville) – By Consent, the Commission permanently revoked the broker license of Mr. Mayo effective August 29, 2018. The Commission found that Mr. Mayo, as broker-in-charge, failed to maintain trust account records in compliance with Commission rules. Instead of depositing rent proceeds into the trust account, Mr. Mayo deposited the rent proceeds into his operating account. Mr. Mayo issued 32 non-sufficient funds checks to owner-clients from his operating account, causing the owner-clients to incur bank service fees. An audit showed a trust account shortage of at least $14,663.
CAREY MARIE MCMULLEN (Wrightsville Beach) – By Consent, the Commission reprimanded Ms. McMullen effective July 18, 2018. The Commission found that Ms. McMullen, as broker-in-charge, of Intracoastal Realty Corporation, was notified that a waterproofing project was approved at an oceanfront condominium complex where the firm managed rental properties. A tenant reserved one of the condominiums for the month but the firm failed to notify the tenant that the project could affect her ability to use the condo’s balcony. The firm refunded a significant portion of the tenant’s rental amount.
HOWARD JOSE MORGAN (Greensboro) – By Consent, the Commission suspended the broker license of Mr. Morgan for a period of 18 months effective December 1, 2017. Four months of the suspension were active with the remainder stayed for a probationary period from April 1, 2018 to June 1, 2019. The Commission found that Mr. Morgan failed to maintain a journal and ledger, failed to perform monthly reconciliations, and used of unapproved financial software programs, which caused a lack of an audit trail and overages in the tenant security deposit account.
ROBERT EDWARD ROBBINS (Laurinburg) – The Commission accepted the permanent voluntary surrender of the broker license of Mr. Robbins effective May 9, 2018. The Commission dismissed, without prejudice, allegations that Mr. Robbins violated provisions of the Real Estate License Law and Commission rules. Mr. Robbins neither admitted nor denied misconduct.
WILLIAM FREDERICK SCHNEIDER (Charlotte) – By Consent, the Commission reprimanded Mr. Schneider effective June 15, 2018. The Commission found that Mr. Schneider, a broker-in-charge, entered into a residential lease with a tenant. Due to the lease terms and Mr. Schneider’s acceptance of a full month’s rent payment on the 15th, the tenant believed payments were due by the 15th of each month. Mr. Schneider mistakenly notified the tenant that she was in arrears with rent payments. Mr. Schneider caused further confusion at lease termination by referencing different lease termination dates, and charged rent against the tenant’s tenant security deposit for a period where the tenant should not have been responsible for rent.
JEAN I. SKELCY (Tryon) – By Consent, the Commission suspended the broker license of Ms. Skelcy for a period of 12 months effective June 1, 2018 and restricted her from further engagement in property management. The Commission then stayed the suspension for a probationary period from June 1, 2018 to May 31, 2019. The Commission found that Ms. Skelcy, a broker-in-charge, failed to provide all requested property management documents to the Commission and failed to designate “trust” or “escrow” on deposit slips, failed to identify the broker’s license number on agency agreements, and failed to deposit security deposits within three days of receipt. The firm also continued to operate from July 2016 through June 2017, despite being issued a revenue suspension by the NC Secretary of State.
TRINA C. STRICKLAND (Tabor City) – By Consent, the Commission suspended the broker license of Ms. Strickland for a period of six months effective November 1, 2018. The Commission then stayed the suspension effective November 1, 2018. The Commission found that Ms. Strickland acted as a dual agent in a sales transaction and attempted to use a standard form “Offer to Purchase and Contract”, “Buyer Possession Before Closing Agreement”, and “Additional Provisions Addendum” to broker a contract for deed transaction. Ms. Strickland managed the subject property without first executing a property management agreement and without having a signed lease agreement. Ms. Strickland, after collecting rent, did not deposit rental proceeds in a trust account before remitting the rental proceeds to the owner.
WFS PROPERTIES LLC (Charlotte) – By Consent, the Commission reprimanded WFS Properties effective June 15, 2018. The Commission found that in July 2015, WFS Properties entered into a residential lease with a tenant, and due to the lease terms and WFS Properties’ acceptance of a full month’s rent payment on the 15th, the tenant believed payments were due by the 15th of each month. WFS Properties notified the tenant that she had to pay on the 1st of each month and mistakenly notified her that she was in arrears. WFS Properties caused further confusion at lease termination by referencing different lease termination dates and charged rent against the tenant’s tenant security deposit for a period where the tenant should not have been responsible for rent.
BRYAN GREGORY YURKO (Raleigh) – By Consent, the Commission reprimanded Mr. Yurko effective November 1, 2018. The Commission found that in 2013, Mr. Yurko, acting as listing agent for a property serviced by a septic tank, advertised the home as having four bedrooms based on the seller’s representation, and failed to verify the septic permit. When listing the property in 2017, the buyer discovered that the home was permitted for only three bedrooms.
This article came from the October 2018-Vol49-2 edition of the bulletin.
By Corean E. Hamlin, Director, Education and Licensing Division
The annual period for renewal of your real estate license begins at midnight on May 15 and continues until midnight June 30. If you do not renew by June 30, your license will expire.
Due to new laws and rules, you will have to answer more questions during the license renewal process. All licensees must provide the “Employee Misclassification” disclosure and certification. Additionally, if you are a Broker-in-Charge, you will be required to disclose information regarding your trust account(s) and any criminal convictions or disciplinary actions that have occurred within the previous year, if applicable.
To help you prepare for the new questions, the Commission has created a renewal simulation, which is posted on the Commission’s homepage (www.ncrec.gov). Also, an overview of the renewal process is provided at the end of this article.
The renewal fee is $45.00. Per Commission Rule 58A .0503, you must renew online at www.ncrec.gov. To renew online, login to your record on the Commission’s website, www.ncrec.gov, on or after May 15. Your PIN (password) will be the last four digits of your Social Security number unless you have changed it.
You may pay by Visa, MasterCard, Discover, American Express, or PayPal. A printable confirmation of renewal will appear on your screen when the process is complete.
If your renewal fee has not been received by the Commission by June 30, your license will expire. To reinstate an expired license, you must pay a $90 fee between July 1 and December 31. Failure to reinstate the former license by December 31 will result in your having to submit a new application, including application fee and criminal background report.
You will also be required to take additional education and/or pass the state license examination. Refer to the “Reinstate your License” page on the Commission’s website (www.ncrec.gov) for detailed information regarding the reinstatement process.
Be sure to renew your license even if you do not complete your continuing education by June 10. By doing so, your license will be changed to inactive status on July 1, rather than expired. Refer to Rule 58A. 1703 for license activation instructions.
NOTE: Brokers-in-charge and BIC-eligible brokers whose license statuses change to expired or inactive automatically lose BIC status and/or eligibility. If that happens, a broker who wishes to regain BIC status must (1) return the license to active status; (2) meet the experience requirements for BIC designation; (3) take the 12-hour Broker-in-Charge Course before re-designation; and (4) send the Commission the BIC Declaration Form. Do NOT take the 12-hour BIC Course before your license is on active status! Refer to Rule 58A. 0110(m) for detailed instructions regarding re-designation as BIC.
RENEWAL PROCESS STEPS
For a detailed explanation and preview of these steps, go to the Commission’s homepage (www.ncrec.gov) and click on Renewal Simulation.
Step 1: UPDATE INFORMATION
This step is required for all brokers.
Your license record will be displayed, and you will verify that all information is correct and make changes as needed.
Commission Rule 58A .0103 requires every licensee to maintain current and accurate residence and email addresses and telephone numbers with the Commission.
Step 2: EMPLOYEE MISCLASSIFICATION
This step is required for all brokers.
As required by the NC state legislature in NCGS § 143-765, effective January 1, 2018, in order to renew an occupational license, you must certify that you have read and understand the public notice statement from the Employee Classification Section of the State Industrial Commission and must disclose any investigations for employee misclassification.
Step 3: CRIMINAL CONVICTIONS
This step is required only for BICs. If your license record does not reflect BIC status, this step will not appear.
You will select Yes or No to indicate whether you have been convicted of a misdemeanor or felony or have been disciplined by an occupational licensing agency since your last renewal. If you select Yes for either question, you will be required to indicate whether you have previously reported the violation(s) to the Commission. If you indicate that you have not previously reported the issue, you will be prompted to report the requirement using the Criminal Conviction Disciplinary Action Reporting Form (REC 2.09) upon completion of renewal.
Step 4: TRUST ACCOUNT INFORMATION
This step is required only for BICs. If your license record does not reflect BIC status, this step will not appear.
You will select Yes or No to indicate whether you or any firms where you are designated as BIC maintain trust accounts. If you select Yes you will be required to enter the name(s) of the bank(s) at which the trust account(s) are maintained.
FINAL STEP: PAYMENT
This step is required for all brokers. It will appear as Step #5 for BICs and Step #3 for all other Brokers.
You may pay the $45 renewal fee by Visa, MasterCard, Discover, American Express or PayPal account.
Once you submit your payment, a confirmation page will appear. On the confirmation page, you may click on the Pocket Card button to view/download/print your digital pocket card or you may click on the Receipt button to view/print a receipt* of your renewal transaction.
This article came from the May 2018-Vol49-1 edition of the bulletin.
Copyright © 2017 NARPM®. Reprinted with permission from the July 2017 issue of the NARPM® Residential Resource magazine. For additional information about the National Association of Residential Property Managers, visit www.narpm.org,
By Chuck L. Kelley, RMP®
Thousands of property management companies pay owners and vendors using Automated Clearing House (ACH) transactions. Most of us use ACH because it’s built into the software we use, it’s easy, and convenient. One of the most common methods to facilitate an ACH transfer involves a file, usually referred to as a National Automated Clearinghouse Association (NACHA) file. In this article, we are going to explore what the risks are, why a NACHA file is dangerous, and how to protect yourself and your company.
Let’s start by talking about the risk and why it matters. Ask yourself this question: “What would happen to your company if you lost all the money before you could pay your owners?” The answer is probably that you would go out of business. The answer might even be more severe, resulting in lawsuits and prison bars. No matter how big or small your company is, can your company survive if you lost other people’s money? Every time money is sent via ACH, the entire company is at risk.
Before we can dive into why a NACHA file is dangerous, we need to understand how a NACHA file is used. Every software package and banking system is a little different, but most of them operate similarly. Using your property management software, you decide how much to pay owners. Then, your software creates a NACHA file and you upload it to your bank’s website. Your bank transfers money into other people’s accounts based on the account numbers and routing numbers in the NACHA file.
So, what is a NACHA file? Most would assume that a NACHA file is a secure encrypted file, but unfortunately, it’s not. It’s just a simple text file that anyone can read. You can open any NACHA file with any text editor and see all the info. It’s just setup in a specific way so that the bank knows what to do with it. There is no encryption or verification that the data is correct. It’s just a text file, renamed with a different file extension. The crux of the problem is that it would be trivial for anyone to change all the account numbers and routing numbers in a NACHA file.
Computers are inherently complex, and VERY hard to make secure. We all take computer security for granted and just assume we are secure. Even if you are using great passwords with 2-Factor Authentication, keeping everything updated, and not surfing strange websites, it’s still hard to make sure your computer is secure. In fact, did you know that in 2014, Technewsworld.com reported that 33% of ALL computers are ALREADY infected with malware! You are probably thinking, but I have antivirus software. Well, in February 2015, Tripwire.com reported that 70% of malware infections go undetected by antivirus software. If you have read this far and thought this couldn’t happen to you, think again.
The real danger is when the NACHA file is sitting on your computer, before you upload it to your bank. It’s trivial for someone to change a NACHA file. It’s also trivial for a hacker to put a virus on your computer to modify NACHA files, so you send all the money to them instead of your owners. Unfortunately, this happens regularly to property management companies. From a hacker’s point of view, it’s extremely easy, and the payoff is huge. Hackers target property management companies because we transfer large sums of money with ACH and usually have very little understanding of computer security.
I hope I’ve convinced you that using ACH is not as secure as you may have originally thought. Before you go running to your accountant screaming to stop using ACH, let’s discuss how to protect yourself.
There are essentially three ways:
If you have any questions about this process, please reach out to your software company, bank, and insurance provider to see what protections they have in place for this. They will probably say that there is no protection in place, and they will not cover any of the lost money initiated by your company via an ACH transfer. Unfortunately, this means the risk is entirely on your company. Take the steps now to protect yourself, your business, and your reputation.
This article came from the May 2018-Vol49-1 edition of the bulletin.
At its March 2018 meeting, the Commission adopted 16 rule amendments and withdrew two proposed rule amendments, 21 NCAC 58A .0109 and 21 NCAC 58A .0502, from consideration. The 16 rule amendments were approved by the Rules Review Commission at its April 19, 2018 meeting and will become effective July 1, 2018.
The text for the adopted rule amendments may be found on the Commission’s website under License Law and Rule Changes.
Also effective July 1, 2018 is 21 NCAC 58A .0512, Death or Incapacity of Sole Proprietor. This Rule was adopted in 2017 by the Commission with a delayed effective date to allow for necessary programming changes.
If you would like to receive notifications of rulemaking proceedings, please visit www.ncrec.gov/home/subscribe or contact Melissa Vuotto, Rulemaking Coordinator.
This article came from the May 2018-Vol49-1 edition of the bulletin.
By Fred Moreno, Chief Deputy Legal Counsel
Year after year it seems that multiple cities across the state of North Carolina continue to show up on “Best of” listings and rankings. These accolades tend to bring new companies, more jobs, and an increase in population to those regions which create a demand for housing and new clients for real estate brokers.
Did you know that many of the people that make up these increases in population might be immigrants? It has been reported that the immigrant population in NC has increased from 1.7% in 1990 to 7.6% in 2014, and has steadily increased year after year.
From 2000 to 2010, NC’s Latino population, for example, ranked sixth in the nation for growth, according to the UNC Charlotte Urban Institute. With these increases to the market population, some brokers are trying to build future potential immigrant client bases by engaging in their representation. As with all clients, brokers must exercise skill, care and diligence.
Probably the largest hurdle in the representation of certain immigrant populations is that of language. Many brokers believe that certain immigrant populations do not speak English very well, if at all. However, a 2012 study by the U.S. Census Bureau found that 44% of the foreign-born population age 5 and older, who arrived in the United States in the year 2000 or later, reported high English-language speaking ability.
This may be due to the global economy and its ability to spread English music, literature, and entertainment to other parts of the world quickly. It may also be due to other countries requiring school aged children to take English courses as part of that country’s education curriculum. So, the chances that an immigrant would in fact speak English seem to be pretty good. Even in cases where a broker’s client cannot speak English, if that client has children that were born in the U.S., chances are that their children may speak English along with their parent’s native language very well.
According to a 2013 study conducted by the Pew Research Center, 73% of Latinos ages 5 and older said they speak Spanish at home and 89% of U.S.-born Latinos spoke English proficiently. It is quite common to see children act as “translators” for their parents in many situations. However, brokers should proceed with this line of communication with caution. It is difficult to know if your message is being delivered to your client exactly as you intended or if a different message altogether is being conveyed. Furthermore, there may be words that are “lost in translation” as your client’s language may not have a word similar to the English version.
To help ease the language barrier, there are now several translation options which a broker may choose from simply by tapping their smartphone.
Google, for example, allows you to freely input words, sentences, and paragraphs that can be translated into many foreign languages, all at no cost. This may also help if you can speak a certain language conversationally, but are unfamiliar with specific terms such as “contract” or “agency agreement”.
Other software programs are also readily available for a fee that can do anything from text-to-speech, email, and document translations. Finally, there are easy-to-use software programs used to learn foreign languages, which can provide for immediate understanding of basic terminology to start a conversation.
Despite technological advances in communication, issues may still persist. For example, a broker may not be able to determine if the software program made an accurate translation or if the correct word was translated but was not used in the appropriate grammatical format. The best course to overcome a language hurdle would be to hire a professional translator. Due to the country’s diverse population, certified translators are now more widely available through various business entities.
Additionally, many relevant documents are produced in Spanish language versions. For example, the Working with Real Estate Agents brochure and three Commission Q&A brochures are available in Spanish. Go to www.ncrec.gov/Publications for ordering information. Similarly, NCREALTORS® offers some Spanish language forms for use by its members, including the listing and buyer agency agreements and the 2T Offer to Purchase and Contract.
Another hurdle in the representation of certain immigrant populations is a lack of understanding of the customs or traditions celebrated by that immigrant population. After all, this population may speak a different language, dress differently, celebrate different holidays, and eat differently. When immigrants move to a new area, they may network with people who share their background as this may help with their assimilation to their new environment.
Some brokers may see an opportunity to expand their client base by building relationships within this network. With advances in technology and the Internet, brokers have more information readily available at their fingertips than ever before. Not only could a broker learn to speak the potential client’s native language as discussed above, a broker could also research the various traditions and gift-giving practices that are accepted by diverse cultures.
Implementing these practices through their representation, a broker may soon find that it brings a sense of ease and comfort to their client during what can be a stressful event of buying or renting a home or leasing commercial space. Furthermore, by successfully representing just one member of an immigrant population, a broker may tap into an excellent referral network among this population.
A broker must still use caution, however, when attempting to participate in an immigrant client’s customs or traditions. If a broker does not have a full and complete understanding of a client’s ethnic traditions and cultural background, it could work to their disadvantage. Some immigrant clients my take offense at a broker participating in certain customs or traditions when the broker does not share the same background. In addition to this, brokers must use caution when practicing common American customs and traditions with immigrant clients, as there are certain customs or practices in the U.S. that are at odds with other cultures. For example, in most Asian and Caribbean cultures, it is expected that you take your shoes off when entering someone’s home. Also, touching a person on the arm, although it may seem innocent, might be considered offensive to those who grew up in China, Thailand, Korea, and the Middle East.
Finally, another hurdle in the representation of certain immigrant populations is the belief that those persons would have difficulty in obtaining a loan due to limited credit or with transferring legal documents at closing. While it is true that obtaining financing from a lender may be more difficult for anyone with limited credit history, it is not impossible.
There are a number of loan packages offered by a variety of lenders either through the typical conventional loan or portfolio lender. Also, a number of lenders market to certain immigrant populations and provide assistance by hiring employees who speak their language and by providing translated forms. A broker could gain valuable insight by meeting with these lenders as well and learning what they have to offer. It is also possible that an immigrant client may also decide to pay cash, and this could sidestep most financing concerns.
On the flip side, brokers should expect that the closing process may take longer for immigrant clients than their American counterparts. This may be due to more stringent verification processes required by lenders or source of funds verifications in cash transactions mandated by the Internal Revenue Service. Should a broker decide to engage in the representation of an immigrant client, it would be a good idea to reach out to local law firms that specialize in immigration law for advice.
Due to shifting populations, more and more brokers are interacting with immigrant populations through representation. These potential new clients are searching for housing and looking for persons to communicate with about their new environment. It is also important to know that a broker is still obligated to follow all NC license laws and Commission rules, regardless of the ethnicity of their client or the challenges it may bring. This requires the broker to represent each client competently, and prohibits discriminatory practices.
This article came from the May 2018-Vol49-1 edition of the bulletin.
By Pamela R. Rorie, Continuing Education Officer
A record crowd of more than 250 real estate instructors, school officials, and publisher representatives participated in the 2018 Real Estate Educators Conference held March 27-28 at the Embassy Suites in Cary. Sponsored by the Real Estate Commission, this year’s event featured the theme Get in the Game.
Commission Chair Robert Ramseur opened the conference and welcomed the crowd with comments on the value of education. Commission Executive Director Miriam Baer’s State of the Commission address informed educators that the past year has seen a substantial increase in license applicants, licensees, calls, emails, and information requests and described the Commission’s accomplishments and ongoing projects.
Corean Hamlin, Director of Education and Licensing, entertained the group with a Two Truths and a Lie presentation reviewing recent Education and Licensing changes, statistics, and future initiatives. Hamlin was joined by Director of Regulatory Affairs Janet Thoren to present rule changes becoming effective July 1, 2018.
Jake Gore, Chief Technology Officer, and Diana Carnes, Systems Administrator, introduced the newly developed Instructor Login program, and addressed recent technological updates in various Commission processes and procedures.
During the first day’s luncheon, the North Carolina Real Estate Educators Association (NCREEA) held its spring meeting under the direction of President Len Elder, DREI. Following the business meeting, NCREEA Immediate Past President Oscar Agurs, DREI, officiated the traditional awards presentation and presented its “Program of the Year” award to Sandy Williams, DREI, for her continuing education elective course, Tackling What Ifs, and their “Educator of the Year” award to Len Elder, DREI.
Commission Chair Ramseur presented the Commission’s Larry A. Outlaw Excellence in Education Award to Len Elder. The award was established in memory of Outlaw, an attorney who served as Commission Director of Education and Licensing for 35 years, from the position’s inception until his retirement in 2014.
In the afternoon, educators received updates on Commission education programs. Education and Examination Officer Deborah Carpenter reminded the group of changes to the Prelicensing and Postlicensing programs, and Continuing Education Officer Pamela Rorie reviewed various continuing education processes and presented the topics for the 2018-2019 Update courses. Day one of the conference concluded with a presentation by Education Officer Katherine Buchholz on Interactivity & Engagement in the Classroom.
Day two of the conference opened with keynote speaker Ryan Ohm, Director of Educational Initiatives with REALTOR® University, whose presentation focused on gamification in education. Roundtable discussions followed in which conference attendees responded to various questions posed by Commission staff.
The conference concluded with the Regulatory Affairs Forum titled Myths and Rumors. Commission Regulatory Affairs Director Janet Thoren, Assistant Director of Regulatory Affairs Charlene Moody, Chief Deputy Legal Counsel Fred Moreno, Associate Legal Counsel II Rob Patchett, and Associate Legal Counsel I Madison Mackenzie entertained educators with discussions of myths and rumors that have circulated about the Commission and its processes and procedures.
The Commission thanks North Carolina’s real estate educators for their continued interest and support, and congratulates Sandy Williams, DREI, and Len Elder, DREI, for their accomplishments.
This article came from the May 2018-Vol49-1 edition of the bulletin.