ACCENT REAL ESTATE LLC (Jacksonville) – By Consent, the Commission revoked the firm license of Accent Real Estate effective November 18, 2015. The Commission found that Accent Real Estate, a real estate brokerage firm, failed to properly maintain certain trust account records and perform trust account reconciliations.
ALICE MARIE BETTS (Richlands) – By Consent, the Commission suspended the broker license of Ms. Betts for a period of 12 months effective December 31, 2015. The Commission then stayed the suspension for a probationary period of 12 months. The Commission found that Ms. Betts represented the buyer of a property which went under contract in May and closed in December; that Ms. Betts received a copy of the signed Residential Property and Owners’ Association Disclosure Statement (“RPOADS”) from the listing agent, but the seller had left all of the answers on the RPOADS blank and Ms. Betts failed to follow up and receive a fully completed form prior to closing; that the buyer did not have a professional home inspection performed until after closing, which found various major and minor issues with the home; that it is in dispute as to whether Ms. Betts recommended that a home inspection be performed; and that despite the closing having occurred six months after the initial viewing of the property, neither Ms. Betts nor the buyer performed a final walk-through of the property prior to closing.
JEFF DALE BIGGS (Madison) – By Consent, the Commission reprimanded Mr. Biggs effective November 18, 2015. The Commission found that Mr. Biggs, acting as listing agent for a property, advertised the property as having four bedrooms, when, in fact, the septic permit for the property only allowed for two bedrooms; and that Mr. Biggs did not obtain and review the septic permit prior to advertising the property.
TOMMIE L. BUTLER (Fayetteville) – By Consent, the Commission suspended the broker license of Mr. Butler for a period of three months effective November 2, 2015. The Commission then stayed the suspension for a probationary period of three months. The Commission found that Mr. Butler represented the buyer of a residential property which contained a gas pack heating system; that after a home inspection was performed the sellers agreed, among other things, to replace the 15-year-old gas pack heating system; that, on the day of closing, the listing agent notified Mr. Butler that the sellers placed all owners’ manuals, receipts, and service warranties on the kitchen counter; that together, Mr. Butler and the buyer reviewed the documents on the kitchen counter, but they failed to notice that the stack of documents did not include any warranties or receipts for the new system; that the buyer did not hire a home inspector to perform a re-inspection of the repairs although both the buyer and Mr. Butler turned on the air conditioner during the final walk through to test the systems output; that a few months after closing, the buyer discovered that the heat was not working and called for service; that the service company discovered that instead of replacing a gas pack heating system, the sellers installed a heat pump system which was wrapped in duct tape and the gas line had not been properly capped, creating a safety hazard.
JOHN PETER CAPUTO (Greensboro) – By Consent, the Commission suspended the broker license of Mr. Caputo effective October 1, 2015 for a period of 18 months. The Commission then stayed the suspension for a probationary period from October 1, 2015 through April 1, 2017. The Commission found that Mr. Caputo was broker-in-charge and qualifying broker of a real estate brokerage firm that purchased the property management clients of another firm after the other firm’s license was revoked by the Commission due to the unlicensed owner having signature authority over the accounts, among other things, in violation of the firm’s probation sanction; that the other firm’s owner remained as the general manager of purchasing firm and has signature authority over the firm’s accounts; that the firm as part of his compensation, paid the General Manager a percentage of rents received; that an audit of the firm’s two trust accounts showed deficit spending, a net shortage of over $13,000, and that neither account was designated as “trust” or “escrow”; that the firm’s website also represented that it has been in operation since 1986, even though it was not created until 2013.
CAROLINA ADVANTAGE PROPERTIES, INC (Tryon) – By Consent, the Commission suspended the firm license of Carolina Advantage Properties for a period of 15 months effective November 1, 2015. A spot inspection of two accounts of Carolina Advantage Properties by a Commission representative found a shortage of approximately $4,400 and that Carolina Advantage Properties failed to maintain trust account records and client funds in compliance with Commission rules including failure to maintain funds in a designated trust account and failing to document transfers so that a clear audit trail could be determined.
EMMANUEL LAMAR CHOICE (Charlotte) – Following a hearing, the Commission permanently revoked the broker license of Mr. Choice effective November 25, 2015. The Commission found that Mr. Choice, qualifying broker and broker-in-charge of a real estate brokerage firm and acting as escrow and buyer’s agents for a buyer, received on December 31, 2013, a $5,000 earnest money check pursuant to a purchase contract; that the contract was terminated and a Termination of the Contract and Release of Earnest Money agreement was signed by both parties releasing the $5,000 earnest money to the Seller; that Mr. Choice and his firm released $2,500 of the earnest money deposit to the Seller, but failed to release the remaining $2,500; that after the seller’s firm filed a complaint with the Commission, Mr. Choice provided a written response disputing the allegations, noting falsely that his buyer/client disputed the disbursement of the earnest money to the seller, and that he would be depositing the remaining $2,500 with the Clerk of Court under the provisions of North Carolina General Statute § 93A-12; and that Mr. Choice failed to respond to additional Letters of Inquiry. The Commission also found that on October 13, 2014, Mr. Choice’s firm received pursuant to an agreement to purchase a property an earnest money check in the amount of $5,000 from a buyer and deposited the check into the firm’s account; that the buyer never received an Offer to Purchase and Contract executed by the purported seller and, therefore, withdrew the offer, requesting the return of the $5,000 earnest money check; that the seller was not aware that Mr. Choice’s firm had purported to list the property and had never received the buyer’s offer; and that Mr. Choice also failed to refund the $5,000 earnest money deposit. that the Commission’ also found that Mr. Choice failed to respond to additional complaints filed about him with the Commission; that an audit of Mr. Choice’s firm’s bank records showed that fourteen accounts held trust monies including rent, earnest money and tenant security deposits; and that only four were individual account audits revealed violations of Commission rules relating to the maintenance of real estate trust accounts and safeguarding of client and tenant deposits.
KAREN MAREADY CORZINE (Harrisburg) – By Consent, the Commission permanently revoked the broker license of Ms. Corzine effective October 14, 2015. The Commission found that Ms. Corzine, acting as broker-in-charge of a sole proprietorship, failed to maintain trust account records in compliance with the Real Estate License Law and Commission rules and that the liabilities of Ms. Corzine’s trust account exceeded the deposits by approximately $131,000.
CHARLES DUDLEY DAVIES (Raleigh) – By Consent, the Commission reprimanded Mr. Davies effective October 1, 2015. The Commission found that Mr. Davies listed a property for sale owned by an estate, measured the property, and accurately advertised all of the room sizes in the home, but incorrectly advertised the total living area as 2,200 square feet; that Mr. Davies later represented a buyer for the property as a dual agent and executed the necessary disclosures for representation that the house went under contract, the buyer paid cash at closing, and an appraisal was not ordered; and that after closing the buyer ordered an appraisal which concluded the property had 1,630 square feet of living area. The Commission also found that two of Mr. Davies’ seven current listings were being advertised as having inaccurate living area square footage by 12.5% and 8.5%, respectively. The Commission notes that Mr. Davies corrected these listings, has offered to refund the commission he earned on the sale to the buyer, and will have all future listings professionally measured.
DONNA LUNSFORD DUNEVANT (Roxboro) – By Consent, the Commission suspended the broker license of Ms. Dunevant for a period of two months effective November 1, 2015. The Commission then stayed the suspension for a probationary period ending January 1, 2016. The Commission found that Ms. Dunevant entered into a listing agreement with sellers of a property (hereinafter Property A) and expressed an interest in purchasing the property if she were able to sell her own home; that subsequently Ms. Dunevant entered into a contract to act as listing agent for a second property (hereinafter Property B) and the sellers listed their home with the intention of purchasing Property A; that Ms. Dunevant was aware of the seller’s intention at the time of contract formation and included a clause in the contract terminating the agreement if Property A were sold to anyone else; that Ms. Dunevant did not disclose her personal interest in purchasing Property A to the sellers of Property B; that Ms. Dunevant then entered into a contract to purchase Property A and neither disclosed the contract to purchase nor terminated the listing agreement with the sellers of Property B; and that prior to entering the contract to purchase Property A, Ms. Dunevant did not disclose her interest in the transaction to the sellers in writing.
GUY H. EAKER, JR. (Cornelius) – By Consent, the Commission reprimanded Mr. Eaker effective January 13, 2016. The Commission found that Mr. Eaker timely reported his April 15, 2015, conviction of Level One DWI in which he received a 10-day active jail sentence, 24-month supervised probation sentence, driver license revocation, and was required to complete 80 hours of substance abuse treatment; and that Mr. Eaker was previously convicted of Level Three DWI in 2013 and of Level Four DWI in 2001, which were reported to the Commission in the past. The Commission notes that Respondent has completed all substance abuse treatment.
LAWRENCE I. FEDERER (Swansboro) – Following a hearing, the Commission ordered the prelicensing and postlicensing instructor approval issued to Mr. Federer withdrawn effective July 31, 2015. The Commission then approved reinstatement of the instructor approval upon the completion of certain conditions. The Commission found that Mr. Federer compiled a licensing examination performance record for first-time examination candidates for the North Carolina Real Estate License Examination who completed Mr. Federer’s prelicensing course below 70 percent for two or more of the previous five annual reporting periods.
KITTY NELSON GIESE (Cornelius) – By Consent, the Commission suspended the broker license of Ms. Giese for a period of 24 months effective September 1, 2015. The Commission found that Ms. Giese, between 2009 and 2014, conducted property management through a sole-proprietorship and failed to register an assumed name with the Mecklenburg County Register of Deeds and failed to notify the Commission of her assumed name; that Ms. Giese failed to declare herself broker-in-charge or meet the requirements to become a broker-in-charge; that Ms. Giese in February 2014, failed to remit rent payments in a timely manner; that Ms. Giese listed another firm as the agent on a lease agreement without the firm’s knowledge; and that Ms. Giese failed to open an account designated as trust or escrow, commingled personal funds with trust funds by failing to withdraw management fees on a monthly basis, and failed to maintain trust account records in accordance with Commission Rules. The Commission noted that Ms. Giese ceased all brokerage activity beginning in November 2014.
STEVEN RUSSELL GILLOOLY (Cary) – By Consent, the Commission suspended the broker license of Mr. Gillooly for a period of four months effective November 1, 2015. The Commission then stayed the suspension for a probationary period ending March 1, 2016, on certain conditions. The Commission found that Mr. Gillooly, on February 20, 2015, pleaded guilty to one count of Assault on a Female, a class A1 misdemeanor.
DAMIAN DAVID HALL (Tryon) – By Consent, the Commission suspended the broker license of Mr. Hall for a period of 15 months effective November 1, 2015. The Commission found that, in and around 2014, a spot inspection conducted by a Commission representative on two accounts maintained by Mr. Hall showed a shortage of approximately $4,400; and that Mr. Hall failed to maintain trust account records and client funds in compliance with Commission rules including failure to maintain funds in a designated trust account and failing to document transfers so that a clear audit trail could be determined.
RADONDA JEAN HESS (Jacksonville) – By Consent, the Commission revoked the broker license of Ms. Hess effective November 18, 2015. The Commission found that Ms. Hess, acting as qualifying broker and broker-in-charge of a real estate brokerage firm, failed to properly maintain certain trust account records and perform trust account reconciliations.
KAREN MARIE HORRY (Durham) – Following a hearing, the Commission permanently revoked the broker license of Ms. Horry effective December 17, 2015. The Commission found that Ms. Horry listed a bank owned property for sale and entered the property information, including its square footage, into the local Multiple Listing Service (MLS); that the MLS listing showed that the property contained 1,680 square feet of above grade living area, which was the same amount found in the local tax records; that on or about June of 2014, an offer to purchase was submitted for the property; that Ms. Horry, when asked by the buyer’s broker, stated that she measured the property; that the buyer’s broker then had a real estate broker and formerly licensed appraiser measure the property to confirm the accuracy of the square footage representation, and a sketch by the former appraiser showed the property as having 1,188.96 square feet of living area; that Ms. Horry then stated that she took the information from the local tax records; that the buyer’s broker, at her client’s request, then retracted the offer on the property; that the property later went under contract and was purchased by a different buyer represented by another broker with no correction made to the square footage amount on the MLS; that there was never any discussion about the square footage amount between the other broker and Ms. Horry and Ms. Horry never disclosed the former appraiser’s measurements to the other broker or his buyer client; that the Commission sent Letters of Inquiry to Ms. Horry and asked her to provide measurements for her six current property listings; and that the measurements received from Ms. Horry only contained a length, width, and the total amount for square footage of five properties and contained the exact same figures as the local tax records.
JEFF BIGGS REALTY (Madison) – By Consent, the Commission reprimanded Jeff Biggs Realty effective November 18, 2015. The Commission found that Jeff Biggs Realty, acting as listing agent for a property, advertised the property as having four bedrooms, when, in fact, the septic permit for the property only allowed for two bedrooms; and that Jeff Biggs Realty did not obtain and review the septic permit prior to advertising the property.
KAIROS HOMES INCORPORATED (Durham) – Following a hearing, the Commission permanently revoked the firm license of Kairos Homes effective December 17, 2015. The Commission found that Kairos Homes listed a bank owned property for sale and entered the property information, including its square footage into the local Multiple Listing Service (MLS); that the MLS listing showed that the property contained 1,680 square feet of above grade living area, which was the same amount found in the local tax records; that on or about June of 2014, an offer to purchase was submitted for the property; that the Kairos Homes agent, when asked by the buyer’s broker, stated that she measured the property; that the buyer’s broker then had a real estate broker and formerly licensed appraiser measure the property to confirm the accuracy of the square footage representation and a sketch by the former appraiser showed the property as having 1,188.96 square feet of living area; that the Kairos Homes agent, then stated that she took the information from the local tax records; that the buyer’s broker, at her client’s request, then retracted the offer on the property; that the property later went under contract and was purchased by a different buyer represented by another broker with no correction made to the square footage amount on the MLS; that there was never any discussion about the square footage amount between the other broker and the Kairos Homes agent and the agent never disclosed the former appraiser’s measurements to the other broker or his buyer client; that the Commission accordingly sent Letters of Inquiry to Kairos Homes and asked Kairos Homes to provide measurements for the firm’s six current property listings; and that the measurements received from Kairos Homes only contained a length, width, and the total amount for square footage for five of the six properties.
GRETCHEN RENEE KENEPP (Concord) – Following a hearing, the Commission permanently revoked the broker license of Ms. Kenepp effective October 2, 2015. The Commission found that Ms. Kenepp affiliated on September 30, 2013 with a real estate brokerage firm and was given signature authority over six trust accounts and operating accounts for several related licensed firms and authorized to accept cash payments from tenants as part of her duties; that in September 2014, Ms. Kenepp left the firm and that on October 9, 2014, the owner filed a complaint with the Commission alleging that Ms. Kenepp embezzled approximately $30,000 from the affiliated firms’ trust and operating accounts; that a Commission investigation found that Ms. Kenepp wrote multiple checks from the trust accounts which she then voided in the accounting software system despite the checks having been paid by the bank; that Ms. Kenepp agreed to provide documentation that certain checks she wrote for her personal use were for reimbursement or were otherwise authorized, but she failed to provide any such documentation; and that Ms. Kenepp also made repeated transfers from tenant security deposit trust accounts to the rental trust accounts to cover negative balances which begin occurring when she was in charge of the trust accounts. The Commission also found that on August 7, 2015, Ms. Kenepp pleaded guilty to one count of Misdemeanor Larceny in a civil case filed by the owner. The Commission noted that the owner, after discovering the embezzlement, used personal funds to cure the shortages in the trust accounts caused by Ms. Kenepp’s actions.
LINDSEY DEAN LACEY (Banner Elk) – By Consent, the Commission reprimanded Mr. Lacey effective June 1, 2015. The Commission found that Mr. Lacey, acting as Qualifying Broker and Broker-in-Charge of a real estate brokerage firm, agreed with a broker affiliated with his firm that she could perform property management services separately from his firm through her own separate firm; that Mr. Lacey received bank statements purporting to be a trust account operated by the firm and believed these statements to be in reference to the affiliated broker’s property management firm; that Mr. Lacy failed to review the trust account statements or verify that this account was separate from his own firm and being received or reviewed by the broker affiliate; and that Mr. Lacey also failed to make clear to clients that the affiliated broker’s property management services were performed separately from his own firm. The Commission noted that Mr. Lacey has agreed to refund the $1,000 tenant security deposit to the owner-client for whom the broker affiliate provided property management services in another case.
JOSE NIEVES S LAGUNAS (Graham) – By Consent, the Commission suspended the broker license of Mr. Lagunas effective December 1, 2015 for a period of 24 months with the one month active and the remainder stayed for a probationary period of 23 months. The Commission then stayed two months of the active suspension for a probationary period of 23 months. The Commission found that Mr. Lagunas submitted an offer to purchase contract (“OPC”) for a property he wanted to buy for personal use; that the OPC stated that Mr. Lagunas was obtaining a conventional loan; that Mr. Lagunas also submitted a letter from a mortgage company stating that he was prequalified for a loan; and that the OPC was ultimately terminated when the seller discovered that Mr. Lagunas was not prequalified for a loan despite his having provided paperwork to the contrary.
JAY TRAVIS LAM (Raleigh) – By Consent, the Commission suspended the broker license of Mr. Lam for a period of one year effective December 1, 2015. The Commission found that Mr. Lam, on May 1, 2015, pleaded guilty to one count of maintaining a place for the purpose of manufacturing, distributing, and using marijuana, was sentenced to four months incarceration in a federal prison, followed by one year of supervised probation, and was ordered to pay a $100 assessment and a $650 fine.
DIXIE DAVIS MADDREY (Raleigh) – By Consent, the Commission reprimanded Ms. Maddrey effective December 16, 2015. The Commission found that Ms. Maddrey was the listing agent for a residential bank-owned property located near a major highway; that the property went under contract with a buyer who was aware, along with his agent, that the North Carolina Department of Transportation (“NCDOT”) had plans to widen the highway at some point in the future and that this event would impact the property; that all parties believed that this would occur years later; that Ms. Maddrey was contacted by NCDOT representatives prior to the closing and was informed by those representatives that the widening project would occur soon; that Ms. Maddrey failed to cause the information to be effectively communicated to the buyer; and that after closing, a NCDOT representative spoke with the buyer and advised that NCDOT would be acquiring the property for the widening project. The Commission notes that the buyer was compensated by the NCDOT in an amount exceeding his purchase price and that Ms. Maddrey has offered a civil settlement with the buyer.
KURT KARL MICHEL (Lillington) – By Consent, the Commission permanently revoked the broker license of Mr. Michel effective October 14, 2015. The Commission found that Mr. Michel, acting as the sole proprietor of a property management services firm, from September through November 2014, failed to remit rental payments to a property owner for whom he managed rental property; that on November 24, 2014, Mr. Michel issued a check in the amount of $2,970 to the owner for rents paid from October through November 2014, less commission and that the check was returned for insufficient funds; that the owner terminated the property management agreement and demanded Mr. Michel remit $3,300 in rent owed and a $1,650 security deposit, which Mr. Michel failed to do; that Mr. Michel failed to remit rent monies owed to a second property owner for whom he managed property from October through November 2014, and then issued a check to the owner for $2,500 and that the check was returned for insufficient funds; that the owner terminated the property management agreement and demanded that Mr. Michel remit $2,500 in rent owed and a $1,250 security deposit, which Mr. Michel failed to do; and that Mr. Michel failed to remit a total of $8,700 in trust money to his clients.
PREFERRED MOUNTAIN REAL ESTATE LLC (Banner Elk) – By Consent, the Commission reprimanded Preferred Mountain Real Estate effective June 1, 2015. The Commission found that Preferred Mountain Real Estate agreed with a broker affiliated with the firm that she could perform property management services separately from the firm through her own firm; that Preferred Mountain Real Estate received bank statements purporting to be a trust account operated by the firm and believed these statements to be in reference to the affiliated broker’s property management firm; that Preferred Mountain Real Estate failed to review the trust account statements or verify that this account was separate from the firm and being received or reviewed by the broker affiliate; and that Preferred Mountain Real Estate also failed to make clear to clients that the affiliated broker’s property management services were performed separately from the firm. The Commission noted that Preferred Mountain Real Estate has agreed to refund a $1,000 tenant security deposit to the owner-client for whom the broker affiliate provided property management services in another case.
RED BARN INC. (Charlotte) – By Consent, the Commission reprimanded Red Barn Inc. effective December 1, 2015. The Commission found that Red Barn, acting as a property manager around 2013, was aware that tenants had to be approved by the Homeowners’ Association (HOA) as required by its covenants and bylaws;. that, while Red Barn disclosed the approval requirement to a potential tenant, it allowed the tenant to move into a residence without disclosing that her tenant application had not, in fact, been approved by the HOA, which resulted in the tenant’s vehicle being towed 7 times in 12 months; and that Red Barn’s landlord-client reimbursed the tenant for the costs related to the towing.
CECILIA ANNE REEL (Marion) – By Consent, the Commission reprimanded Ms. Reel effective October 14, 2015. The Commission found that Ms. Reel acted as listing agent for a property which she advertised as having a connection to city sewer when, in fact, the property had a septic system; and that Ms. Reel failed to obtain and review county or city records and instead relied solely on the representations of the property owner and a previous MLS listing.
RENTAL PROPERTY MANAGEMENT, INC. (Wilson) – The Commission accepted the permanent voluntary surrender of the firm license of Rental Property Management, Inc., effective October 14, 2015. The Commission dismissed without prejudice allegations that Rental Property Management violated provisions of the Real Estate License Law and Commission rules. Rental Property Management, Inc., neither admitted nor denied misconduct.
KIM C. RUEST (Rockingham) – By Consent, the Commission reprimanded Ms. Ruest effective December 31, 2015. The Commission found that Ms. Ruest managed a property for a client from 2009 through 2015; that Ms. Ruest was to be paid a percentage of the monthly rent paid by tenants as her management fee and reimbursed for needed repairs made to client’s property; that, for a period of 34 months, Ms. Ruest failed to deduct her management fee and was also not reimbursed for repairs; that Ms. Ruest used a bookkeeper to assist in her accounting, but delivered these statements to her client personally; and that prior to termination of the management contract, Ms. Ruest kept all of the rents collected over a six-month period in order to reimburse herself, in violation of the management agreement.
VINCENT SARDO (Charlotte) – Following a hearing, the Commission permanently revoked the broker license of Mr. Sardo effective November 10, 2015. The Commission found that in June 2010 Mr. Sardo represented to a potential investor his intention to set up and to buy and resell investment properties, indicated that he and the investor was to be the company’s members, and solicited a $19,500 payment from the investor to purchase a property; that Mr. Sardo failed to disclose that the property was already owned by Mr. Sardo’s wife; that Mr. Sardo misappropriated the $19,500 payment from the investor and falsely represented that he had filed the LLC formation documents with the Secretary of State and had purchased the property in the name of the LLC; that in April 2011 Mr. Sardo falsely represented to the investor that he had been unable to sell the property and would, instead, lease the property; that to conceal the fact that he had never purchased the property and had misappropriated the $19,500 payment, he began sending payments to the investor of $205; that Mr. Sardo’s real estate license expired on June 30, 2013; that in July 2013, Mr. Sardo approached the investor and his wife and offered to sell them a duplex, falsely represented that he was in the process of purchasing it when, in fact, it was part of a complex containing 46 units listed for sale as a whole; that Mr. Sardo and the investor then entered into an Offer to Purchase; that Mr. Sardo, who was named in the contract as seller, designated dual agent and escrow agent, accepted a $25,000 earnest money check from the investor and deposited it into his personal bank account; that he did not enter into a buyer agency agreement with the investor; that he listed a brokerage firm as the selling agent even though he had been terminated from the firm previously, and without its knowledge or consent; that the investor terminated the contract within the due diligence period, and that Mr. Sardo failed to refund the $25,000 earnest money deposit and ceased communicating with the investor and his wife and ceased making the $205 monthly payments; and that Mr. Sardo failed to respond to inquiries by the Commission.
PAUL SCHAEFER JR. (Leland) – By Consent, the Commission suspended the broker license of Mr. Schaefer for a period of three months effective January 1, 2016. The Commission then stayed the suspension for a probationary period of three months. The Commission found that Mr. Schaefer signed his application for a North Carolina real estate broker’s license on December 13, 2013, and it was received by the Commission on January 6, 2014; that Mr. Schaefer held a New Hampshire real estate broker’s license at the time of his North Carolina application; that, as part of the North Carolina real estate broker’s application, Mr. Schaefer was asked, “…are there currently any complaints pending against you in connection with any professional license that you hold?” and Mr. Schaefer marked “NO” as his response; that, in fact, a complaint against Mr. Schaefer was pending with the New Hampshire Real Estate Commission and that Mr. Schaefer was aware of the complaint when he signed his application for a North Carolina real estate license.
FRANK A. SHEPHERDSON (Charlotte) – By Consent, the Commission reprimanded Mr. Shepherdson effective December 1, 2015. The Commission found that Mr. Shepherdson, acting as a property manager in and around 2013, was aware that tenants had to be approved by the Homeowners’ Association (HOA) as required by its covenants and bylaws; that, while Mr. Shepherdson disclosed the approval requirement to a potential tenant, he allowed the tenant to move into a residence without disclosing that her tenant application had not, in fact, been approved by the HOA, which resulted in the tenant’s vehicle having been towed 7 times in 12 months; and that Mr. Shepherdson’s landlord-client reimbursed the tenant for the costs related to the towing.
KENT ROBERT VAN SLAMBROOK (Charlotte) – By Consent, the Commission suspended the broker license of Mr. Van Slambrook for a period of three months effective January 1, 2016. The Commission then stayed the suspension for a probationary period of three months until April 1, 2016, on certain conditions. The Commission found that Mr. Van Slambrook managed property belonging to others through an unlicensed company beginning in 2013 and continuing through 2015. The Commission noted that Mr. Van Slambrook maintained all trust money received in trust accounts and maintained trust accounts in compliance with Commission rules.
TINA CROSBY SMITH (Gastonia) – By Consent, the Commission suspended the broker license of Ms. Smith for a period of one year effective December 1, 2015. The Commission then stayed the suspension on certain conditions. The Commission found that Ms. Smith acting as qualifying broker and broker-in-charge of a real estate brokerage firm, failed to supervise trust account procedures and perform reconciliations on various trust accounts, leading to an embezzlement and trust account shortages totaling approximately $36,000. The Commission noted that upon discovering the embezzlement, Ms. Smith promptly notified the Gastonia Police Department and the North Carolina Real Estate Commission and has since funded the shortage in the account.
KENDRA CHAVIS STURDIVANT (High Point) – By Consent, the Commission reprimanded Ms. Sturdivant effective August 17, 2015. The Commission found that from April-July, 2014, Ms. Sturdivant was the Broker-In-Charge (“BIC”) of a property management firm which was a sole proprietorship; that during her time as BIC for the firm, an audit found that the firm’s accounts contained deficits which preceded her employment; that Ms. Sturdivant failed to reconcile the accounts, and allowed the unlicensed owner to have access and control over the accounts; that further evidence found that Ms. Sturdivant executed four property management agreements showing the names of two firms at the direction of the unlicensed owner and that both of these firms’ licenses had been revoked by the Commission in October 2013. The Commission noted that Ms. Sturdivant resigned as broker-in-charge in July, 2014.
ROY DAVID THOMAS, III (Charlotte) – By Consent, the Commission suspended the broker license of Mr. Thomas for a period of one year effective January 1, 2016. The Commission then stayed the suspension for a probationary period of one year. The Commission found that Mr. Thomas entered into an agreement with his seller client to facilitate a short sale on the listing; that pursuant to that agreement, if the seller received a bank incentive in the transaction, the seller would keep $3500 and, in addition to his listing commission, Mr. Thomas would receive any remaining amount of bank incentive funds, to be split with an unlicensed translator; that the bank incentive totaled $10,618.13 of which the seller received $3000; that Mr. Thomas failed to document his portion of the bank incentive on the HUD-1 Settlement Statement, as required by the bank; and that the seller was charged additional taxes by the IRS due to the misallocation of incentive monies on the HUD-1 Settlement Statement.
TINA SMITH PROPERTY MANAGEMENT LLC (Gastonia) – By Consent, the Commission suspended the firm license of Tina Smith Property Management for a period of one year effective December 1, 2015. The Commission then stayed the suspension on certain conditions. The Commission found that Tina Smith Property Management failed to supervise trust account procedures and perform reconciliations on various trust accounts, leading to an embezzlement and trust account shortages totaling approximately $36,000. The Commission noted that upon discovering the embezzlement, Tina Smith Property Management promptly notified the Gastonia Police Department and the North Carolina Real Estate Commission and has since funded the shortage in the account.
RHONDA L. TURBYFILL (Greensboro) – By Consent, the Commission reprimanded Ms. Turbyfill effective December 31, 2015. The Commission found that Ms. Turbyfill acted as the listing agent for a property that went under contract on August 30, 2015, with closing scheduled to occur in 30 days; that, at the time of receiving the offer, Ms. Turbyfill was told by the buyer agent that the buyer was paying cash through an equity line and received a copy of a prequalification letter from the lender; that Ms. Turbyfill did not share the prequalification letter with her seller clients which showed that an equity line of credit was not currently in place; that due to numerous delays, the buyer and their lender did not close on the equity line of credit until November, and the buyer then purchased the subject property on November 12, 2015; and that Ms. Turbyfill shared the prequalification letter with her seller clients on October 14, 2015, after the closing had been delayed. The Commission noted that the sellers were compensated for the delay in closing through various concessions by the buyer and Ms. Turbyfill’s firm. Ms. Turbyfill neither admitted nor denied misconduct.
WILBURN T. VANHOY (Charlotte) – By Consent, the Commission permanently revoked the broker license of Mr. Vanhoy effective October 14, 2015. The Commission found that Mr. Vanhoy made an appointment to preview a home and, during the appointment, stole property valued at approximately $36,000; that Mr. Vanhoy was arrested on November 5, 2014, and, while in custody, he admitted to stealing property from at least 12 homes; that on March 19, 2015, Mr. Vanhoy pled guilty to five counts of misdemeanor larceny in Mecklenburg County and was sentenced to 45 days incarceration, which was fully suspended, 18 months supervised probation, 100 hours of community service, and ordered to pay $5,000 in restitution.
TERASHA MARIE WEATHERSBE (Raleigh) – The Commission accepted the permanent voluntary surrender of the broker license of Ms. Weathersbe effective November 18, 2015. The Commission dismissed without prejudice allegations that Ms. Weathersbe violated provisions of the Real Estate License Law and Commission rules. Ms. Weathersbe neither admitted nor denied misconduct.
JAMES W. WILSON (Zebulon) – By Consent, the Commission reprimanded Mr. Wilson effective October 14, 2015. The Commission found that Mr. Wilson, in 2008, while acting as a listing broker, advertised a property as having four bedrooms when, in fact, the septic permit for the property specified three bedrooms; and that Mr. Wilson relied solely on tax records and failed to obtain and review the septic permit.
This article came from the Feb 2016-Vol46-3 edition of the bulletin.
The following article is copyrighted by and reprinted with the permission of the Association of Real Estate License Officials (ARELLO).
A recent enforcement action announced by the Consumer Financial Protection Bureau (CFPB) serves as a timely reminder of federal Real Estate Settlement Procedures Act (RESPA) provisions that govern the business relationships, and marketing services agreements in particular, between “settlement service providers” including real estate licensees.
Among those provisions, RESPA section 8(a) prohibits giving or accepting a “fee, kickback, or thing of value” pursuant to an agreement or understanding to refer business related to real estate settlement services for a federally-related mortgage loan [12 U.S.C. section 2607(a)].Covered services include, but are not limited to, those provided by title compani es attorneys,surveyors, appraisers, real estate agents/brokers, mortgage loan originators and others.
In the real estate industry, marketing services agreements (MSAs) are sometimes executed to create a business relationship in which a real estate brokerage agrees to market or promote the services of a title or mortgage company, for example, which pays a marketing fee to the brokerage. In general, such agreements are not necessarily unlawful. However, any “fee, kickback or thing of value” that is given or accepted for the referral of settlement service business violates RESPA and can have serious consequences;such as cases in which MSAs are used to circumvent RESPA through payments to real estate brokers that are disguised as advertising or marketing fees.
In its recent announcement,the CFPB said that Michigan-based Lighthouse Title will pay a $200,000 civil monetary penalty for illegal “quid pro quo” agreements. The CFPB found that the company entered into MSAs with various companies, including real estate brokers, with the understanding that the companies would refer mortgage closing and title insurance business. According to the CFPB, the agreements made it appear that payments would be based on marketing services the companies would provide to Lighthouse. However, the CFPB said, “… Lighthouse actually set the fees it would pay under the MSAs, in part, by considering the number of referrals it received or expected to receive from each company.” The CFPB also found that “The companies on average referred significantly more business to Lighthouse when they had MSAs than when they did not.” Pursuant to a stipulated consent agreement, the company agreed to pay the civil penalty, but neither admitted nor denied the CFPB findings.
The CFPB’s announcement and consent order do not specifically identify the MSA terms, or the services provided by real estate agents and/or others, that allegedly violated RESPA. However,the order notes that repeated payments “connected in any way with the volume or value of the business referred” are evidence of a prohibited referral agreement. Also, “If the payment of a thing of value bears no reasonable relationship to the market value of the goods or services provided, then the excess is not exempt.” And, “A fair market value… is based only on the value of the goods or services in and of themselves and cannot include any consideration of the value of any referrals of [settlement service] business…” [citations omitted].
In addition to the civil penalty,the company must refrain from entering into future MSAs to provide any “thing of value” to any person who is in a position to refer RESPA-covered mortgage settlement service business, in exchange for advertising or endorsing the company’s services; except mass advertising provided by a non-settlement service provider.
This article came from the October 2015-Vol46-2 edition of the bulletin.
By Steven L. Fussell, Senior Consumer Protection Officer
When listing and selling properties in residential subdivisions, especially newly developed subdivisions, brokers should check on the status of the streets (public vs. private). Brokers should not assume that all streets are public. All streets essentially begin as private streets and some eventually become public streets.
A public street is one that was constructed in compliance with state (North Carolina Department of Transportation – NCDOT) standards and then was transferred to the NCDOT – usually upon the sale of a certain number of dwellings along the street or in the subdivision, .
Upon acceptance of a street by the NCDOT, ownership and maintenance of the street will lie with the NCDOT. During the period between the construction of the street and the transfer of the street to the NCDOT, the developer and/or the lot owners are responsible for street maintenance. A street that is constructed to State standards, but falls into disrepair while waiting for the NCDOT to accept the street, may have to be repaired by the developer and/or residents before the NCDOT will accept it.
Private streets may or may not be constructed to state standards and the responsibility for maintaining them remains with the developer and/or the residents who live along the street. Persons who live on private streets that were not constructed in compliance with State standards would be wise to have a written road maintenance agreement signed by all of the property owners on that street.
Pursuant to North Carolina General Statute § 136-102.6(f), developers are required to give lot purchasers a subdivision street disclosure statement. This requirement applies to the first sale of a lot. Brokers who list lots for developers should remind the developers of the requirement.
There is no standard preprinted form for making this disclosure. Brokers assisting buyers of lots from developers should request a copy of the disclosure statement from the developer. Brokers who list and/or sell homes in relatively new subdivisions should inquire about the status of the roads, because the roads may not have been transferred to the NCDOT and a buyer may bear some or all of the responsibility for road maintenance until this transfer occurs.
The high cost of maintaining and repairing streets makes the status of a street a material fact. Over the years, the Commission has dealt with a number of complaints, usually from buyers who learned after their closings that the streets in their subdivision were private and that they would share in the cost of maintaining and repairing the roads.
In a few cases, buyers learned shortly after their closings that the neighborhoods were preparing to issue assessments to obtain the money necessary to repair the streets. In one case, the buyer of an unimproved lot in a 20-year old subdivision learned that the streets in his section of the neighborhood were private. Two years later, the streets had fallen into such disrepair that public school buses and emergency vehicles were unable to travel the streets.
Astute brokers will add “Verify street status” to their regular transaction checklist and verify the status of streets in order to better protect their clients. To verify that a street has been accepted into the State system, you may visit either the NCDOT website, https://apps.ncdot.gov/srlookup/, and enter the necessary information or go to www.ncdot.gov/doh/divisions/, hover over each division on the state map to determine the correct division for the county in which a road is located, click on the correct division and select “Directory” to contact someone within that division to confirm that a street has been accepted into the state system.
Verifying that a street has or has not been accepted into the State system will better protect your clients as well as reduce the incidence of complaints and the likelihood of disciplinary actions against brokers.
This article came from the October 2015-Vol46-2 edition of the bulletin.
The following article is copyrighted by and reprinted with the permission of the Association of Real Estate License Law Officials (ARELLO®).
The U.S. Federal Housing Administration (FHA) has announced that, for the first time since 2010, it will not extend its waiver of the “anti-flipping rule”; which means that, effective December 31, 2014, federal regulations will prohibit the use of FHA-insured financing to purchase single family properties that are resold within 90 days of their previous acquisition.
The FHA defines “property flipping” as the practice in which recently acquired properties are resold for a considerable profit at an artificially inflated price, often as the result of a lender’s collusion with an appraiser [or other transaction participants, such as mortgage originators and real estate licensees.]
According to the FHA, most property flipping occurs within a matter of days after acquisition, and usually with only minor cosmetic improvements, if any, to the property.
In an effort to preclude the practice with respect to FHA-insured mortgages, HUD issued a final rule in May 2003 [24 CFR 203.37a] that prohibits the issuance of FHA insurance if the contract of purchase and sale for the property securing the mortgage is executed within 90 days of the prior acquisition by the seller.
Under the rule, re-sales occurring between 91 and 180 days and between 91 days and one year, from acquisition may be eligible for FHA insurance, subject to special valuation documentation requirements. Exemptions from the resale restrictions apply to HUD and other federal agency sales of real estate-owned (REO) properties, sales by approved nonprofit organizations, sales by state- and federally-chartered financial institutions and government-sponsored enterprises (GSEs), and sales of properties in designated federal disaster areas.
In 2010, the FHA waived the 90-day anti-flipping rule in order to encourage investors to renovate foreclosed and abandoned homes, help stabilize real estate prices and support communities with high foreclosure activity.
To qualify for the waiver, transactions had to be “arm’s length” (as defined by the waiver rules) and if the sale price was more than 20 percent above the seller’s acquisition cost, the lender was required to take specific steps to document and justify the increase.
FHA’s waiver of the 90-day rule has been periodically extended through 2014, with strong support from industry groups such as the National Association of REALTORS®.
However, the Office of the Inspector General for the U.S. Department of Housing and Urban development (OIG-HUD) recently issued a report raising concerns about HUD’s oversight of lender compliance with the waiver requirements The OIG report estimated that the situation presented significant risk to the FHA Mutual Mortgage Insurance Fund (MMIF), which supports the insurance program. The OIG recommended that HUD either strengthen tis oversight controls or discontinue the waiver at the end of 2014. FHA apparently has made its choice, announcing in early December that it will not extend the waiver beyond December 31, 2014.
In a November news release, RealtyTrac®, “the nation’s leading source for comprehensive housing data”, released its “Q3 2014 U.S. Home Flipping Report” showing that 26,947 U.S. single family homes were “flipped” (purchases followed by re-sales within 12 months) nationwide in the third quarter of 2014.
The statistic represents 4.0 percent of all U.S. single family home sales and is down from 4.6 percent in the second quarter of 2014 and 5.6 percent in the third quarter of 2013; the lowest level since the second quarter of 2009.
This article came from the October 2015-Vol46-2 edition of the bulletin.
The Commission’s Video Library has added six new videos covering:
Real Estate Safety – common sense safety guidelines for brokers to follow
Trust Account Reconciliation – how to reconcile trust account records to comply with Commission rules
Broker-in-Charge Statement of Eligibility – how to maintain your broker-in-charge eligibility
Complaints – how to file a complaint
AMP Licensing Examinations for Brokers – everything you need to know about testing for a broker license
Continuing Education Requirements – CE requirements in order to maintain a broker license
This article came from the October 2015-Vol46-2 edition of the bulletin.
The North Carolina Real Estate Commission monitors applicant performance on the license examination and regularly reports this information to schools and instructors. In particular, the Commission uses information about the performance of applicants who are taking the licensing examination for the first time in order to assure that quality instruction is being provided in prelicensing courses by schools and instructors. The most recent performance record for each school can be found on the Commission’s website at http://www.ncrec.gov/Pdfs/Schools/LicExamPerfRep.pdf.
The overall examination performance (passing rate) for all first-time candidates taking the comprehensive real estate examination for the license year July 1, 2014 – June 30, 2015 was 60%. The Commission congratulates each of the following schools and instructors for achieving an outstanding examination performance record of 80% or higher during the most recent annual reporting period. The Commission recognizes that to have students perform at such a level on the license examination requires a combination of high quality instruction and high course completion standards.
School
Agent’s Choice School of Real Estate, Charlotte Central Carolina Community College, Sanford Sandhills Community College, Pinehurst Pitt Community College, Greenville American Properties Real Estate School, Jacksonville.
Instructor
Travis Everette Stephen Lawson Jack Marinello Andrew McPherson Arthur Poling Tiffany Stiles Erica Thomas Kathy Woodell Melea Lemon Parker Dunahay Oscar Agurs James Weese Jan Secor Christopher Barnett Judith Elliott Roy Faron Scott Greeson Allan Nanney, Jr. Pamela Trafton Pamela Vesper
This article came from the October 2015-Vol46-2 edition of the bulletin.
Miriam J. Baer, Executive Director of the Real Estate Commission, has been elected as President-Elect of the Association of Real Estate License Law Officials (ARELLO)®.
This article came from the October 2015-Vol46-2 edition of the bulletin.
Cindy S. Chandler, Chairman of the Real Estate Commission, has been named 2015 REALTOR® of the Year by the North Carolina Association of REALTORS®.
This article came from the October 2015-Vol46-2 edition of the bulletin.
By Glenn M. Wylie, Consumer Protection Officer
Summarized from 2015-16 GenUP/BICUP materials)
Major changes are coming October 3, 2015 to the disclosure and settlement forms used in most residential loan transactions. The former Good Faith Estimate will be replaced by the Loan Estimate and two Closing Disclosure forms, one for the buyer and one for the seller, will replace the HUD-1 settlement statement. The timing of the delivery of these forms/disclosures will also be strictly defined and mandated. While a broker’s responsibilities regarding these matters will not change, it is important that residential brokers are informed regarding these new forms and requirements.
The new TILA-RESPA integrated disclosure rules (TRID rules) were required by the Dodd-Frank Act to eliminate duplicate forms lenders were required to provide under TILA and RESPA. The new integrated disclosure forms, the Loan Estimate and the Closing Disclosures, must be used by lenders in transactions involving federally related mortgage loans governed by RESPA as well as loans for personal, family, or household purposes subject to the Truth in Lending Act (TILA). What triggers the new rules is receipt of a loan application on or after October 3, 2015 for a loan made by an institutional lender and/or to be sold in the secondary market that will be secured by a lien against real property owned by the borrower. Essentially, the new rules will affect most residential transactions involving a mortgage.
Beginning October 3rd, lenders must provide a Loan Estimate (or denial) to prospective borrowers within three (3) business days of loan application so long as the borrower has provided the lender the following information: 1) legal name, 2) statement of gross income, 3) Social Security Number, 4) property address, 5) estimate of property value, and 6) amount of mortgage loan requested. The lender may request other information, but may not require documentary support of the information prior to issuing a Loan Estimate.
Of greater importance to brokers are the new Closing Disclosures, one for the borrower/buyer and the other for the seller. The Closing Disclosure is a statement of final loan terms and closing costs.
TRID rules permit a settlement agent to provide the seller with a separate Closing Disclosure or with a copy of the Buyer/Borrowers’ Closing Disclosure as long as it contains all of the seller’s transaction information. If the settlement agent provides the seller with a separate Disclosure, then the settlement agent must also provide a copy of the Seller Closing Disclosure to the borrowers’ lender, but not to the borrower. While the buyer will not necessarily see the Sellers’ Closing Disclosure, the buyer will have a summary of the sellers’ side of the transaction on page 3 of the buyer’s Closing Disclosure, as with the current HUD-1.
A broker’s obligations concerning the accuracy of settlement statements have not substantially changed with the new forms; however, the information will be found in different locations. The Commission is aware that in some cases, brokers may not have access to the form for the other side of the transaction.
The change that may have the most significant impact is the requirement that the lender must ensure that the borrower receives the completed Borrower Closing Disclosure three (3) business days prior to consummation (defined as the point at which the borrower becomes obligated to the loan). If the Closing Disclosure is delivered to the borrower by any method other than personally, the lender generally must add three more business days for delivery, meaning that it must be sent not later than six business days prior to settlement. For Closing Disclosure purposes, “business day” includes Saturdays, excluding only Sundays and ten federal public holidays. If it is mailed or delivered electronically, the borrower is considered to have received the Closing Disclosure three business days after it is delivered or placed in the mail. However, if the lender has evidence that the borrower received the Closing Disclosure earlier than three business days after it is mailed or delivered, it may rely on that evidence and consider it to be received on that date. For example, if the borrower has consented to receive the Disclosure by email and then acknowledges receipt of the Disclosure by email, the three-day clock starts from the date the borrower acknowledged receipt.
THE 3/6-DAY TIMELINE FOR ADVANCE DELIVERY OF THE BORROWER’S CLOSING DISCLOSURE IS MANDATORY AND GENERALLY CANNOT BE WAIVED. While it is the lender’s responsibility to comply with these requirements, brokers must educate their clients and customers about these timelines. Other important facts to know:
1) The 3/6-day advance delivery applies only to the Borrower’s Closing Disclosure. There is no rule requiring advance delivery of the Seller’s Closing Disclosure. Delivery must be to the borrowers personally, not to a broker acting as a buyer agent.
2) The lender, not the settlement agent, will decide whether to issue one or two separate Closing Disclosures and any other settlement statements. If the lender decides to issue two separate Closing Disclosures, a broker acting as a dual agent should only give each party that party’s Disclosure.
3) Only three changes will require a new borrower Closing Disclosure and a new three-day waiting period:
An increase in the APR,
A change in the loan product, or
The addition of a prepayment penalty.
For any other changes, the lender must still provide a corrected Closing Disclosure with the terms or costs that have changed and ensure that the consumer receives it. However, no additional three-business-day waiting period is required.
While this article has covered the important highlights of the new TRID rules, it is only a cursory treatment of the topic. TRID is a primary focus of the 2015-16 Update Course, both General and BICUP. Brokers involved in residential sales transactions are strongly urged to take the applicable Update Course as soon as possible to be informed and prepared for these significant changes in the residential mortgage loan process.
This article came from the October 2015-Vol46-2 edition of the bulletin.
Raymond A. “Buddy” Bass, Jr., of Fayetteville, Chairman of the Commission in 1995 and 2006, and a member from 1993 to 2007.
Larry A. Outlaw, Commission Director of Education and Licensing, from 1979 to 2014.
This article came from the October 2015-Vol46-2 edition of the bulletin.