Every year the Commission’s auditors perform spot inspections of trust account records to determine the records’ compliance with the Real Estate License Law and Commission rules. For the 2013-14 year, the Regulatory Affairs Division has created a new spot inspection program designed to target 20 counties per year so that all 100 counties are covered in a five-year period. A few inspections will be done via U.S. mail, but most will be in-office.
This fall, inspections will be conducted in the following counties: Yancey, Cleveland, Yadkin, Union, Caswell, Granville, Franklin, Sampson, Craven, and Pasquotank.
In the spring of 2014, auditors will be in the following counties: Cherokee, Madison, Ashe, Stokes, Lee, Scotland, Columbus, Wayne, Northampton, and Camden.
Brokers in these areas who maintain trust accounts should be able to produce records that include trial balances, reconciliations, bank statements, checks, deposit tickets, journals, ledgers, transaction files with agency agreements and disclosures, and files for any broker price opinions performed.
This article came from the October 2013-Vol44-2 edition of the bulletin.
Termination of rental contracts (leases or other agreements) entered into by members of the military is the focus of a new Commission Web site page and brochure, Questions and Answers on: N.C. Military Personnel Residential Lease Termination.
The Web page contains general information about special federal and state landlord and tenant laws for military personnel, links to pertinnent state statutes, the federal Civil Relief Act, the North Carolina State Bar Standing Committee on Legal Assistance for Military Personnel, and Small Claims court forms.
The brochure is free and written for those serving in the United States Armed Forces. However, it is also informative for owners and landlords of rental properties occuplied by military personnel.
Orders for the publication may be placed online at the Commission’s Web site, www.ncrec.gov, or by the publications order form in this issue of the Bulletin.
This article came from the October 2013-Vol44-2 edition of the bulletin.
In the May, 2013 issue of the Bulletin, an article appeared entitled New Brokerage “Coming Soon”. The article addressed increased calls to the Commission regarding the use of “Coming Soon” sign riders attached to “For Sale” signs, and it generated so much conversation about issues stemming from this marketing tool that we felt it warranted a place in the Update Course as well as a follow-up article addressing a few lingering questions.
Q: I have a client who is ready to list, but needs to clean up the inside and make a few repairs. Can I list the property but not show it until it’s ready, and can I place a “For Sale” sign in the yard with a “Coming Soon” sign rider to generate interest in the meantime?
A: Maybe. You must first enter into a written agency agreement with the owner that authorizes you to advertise the property. Once you have that, you can place a sign in the yard. If the property is not ready to be shown TO ANY potential buyers, you may attach a “Coming Soon” rider. Remember that your sign must comply with Rule A .0105 Advertising.
Q: My client wants me to list his home but he’s not ready to sign a listing agreement yet. Can I advertise his property as “Coming Soon”?
A: Maybe. A broker is prohibited from advertising property belonging to another without first entering into a written brokerage agreement. The brokerage agreement must comply with the requirements of Rule A .0104, Agency Agreements and Disclosure, but the owner could limit the agreement to advertisement of the property as “Coming Soon” only. If that is the case, the broker may place a “Coming Soon” sign in the yard but may not place a”For Sale” sign, as the owner has not listed the property for sale. Under those circumstances, the broker may not advertise or disclose a list price and may not show the property to any potential buyers.
Q: My client wants to list now, but she doesn’t want a lot of traffic in her home. I’d like to take the listing and place a “Coming Soon” sign, either as a rider to a “For Sale” sign or as an independent sign, in the yard, but not advertise the property in the multiple listing service and only show it to a few buyers I know are interested in that type of property. That way I can generate leads without opening her home to a lot of traffic.
A: No. Once the property is listed for sale, it should be available for viewing by any interested buyers unless legally and specifically excluded by the seller. For example, a seller may direct you to not advertise the property on a particular site or not to show the property to a specific person as long as the basis of the denial is not discriminatory. By limiting the market of potential buyers to those within a broker’s firm or those with a business relationship to the broker or another broker, you may subject yourself to a claim of discrimination or even antitrust violations. In addition, you are likely doing a disservice to your seller client. Limiting potential buyers may also limit the potential selling price of the property. If you belong to a multiple listing service, you may be required to enter a new listing within a certain period of time. Post-dating a listing to avoid a problem with the MLS could be considered a misrepresentation. If you are a member of the North Carolina Association of REALTORS®, this type of conduct may constitute a violation of their Code of Ethics as well.
Remember, the goal is to sell the property under the most favorable terms for your client, not yourself. If your client isn’t prepared to have buyers view the property, that means none, including your own or your buddy’s. Please call the Regulatory Affairs Division at 919-875-3700 if you have further questions about this or any other topic.
This article came from the October 2013-Vol44-2 edition of the bulletin.
The Commission has approved a policy to segregate public and private licensee data, in response to the changes to the Real Estate License Law. Currently, email and delivery addresses, whether business or home, are considered to be public.
A method for retaining a personal email address that is not public record is being created. Licensees will be able to log into the Commission’s Web site and use a new icon on their personal screen which will allow them to either add a “private” email address or move the existing email address to the “private” area.
The Commission will be the only organization that will use the “private” email address (for purposes such as renewal reminders, Bulletins, and important licensee notifications).
A licensee on inactive status, or on active status working from home, will still have their home address shown as their delivery address unless they change that address to a post office box. All information from the application of a new licensee will be considered private, again with the exception of the home address, until the applicant either provides a post office box or business address.
All pertinent Commission forms are being updated to permit the inclusion of two email addresses, public and private, should a licensee wish to provide them.
This article came from the October 2013-Vol44-2 edition of the bulletin.
Following is a summary of proposed rule changes to be effective July 1, 2014:
A .0104: Amend paragraph (d) of the rule governing agency agreements and disclosures to prohibit a broker who is also a party to a transaction from representing an opposing party in the same transaction; clarify circumstances under which a listing broker may purchase his/her client’s property.
A .0109: Amend the rule governing brokerage fees and compensation to prohibit a broker from accepting compensation from a vendor in exchange for recommending the vendor’s services to a party
A .0112: Amend the rule governing offers and sales contracts to incorporate minor technical changes.
A .0114: Rephrase Question #24 on the Residential Property and Owners’ Association Disclosure Statement to inquire whether, based upon the seller’s knowledge, the property is in violation of any local zoning ordinances, restrictive covenants, building code requirements, or other land-use restrictions, and eliminate the reference to notice from a government agency about those restrictions.
A. 0117: Amend Paragraph (f) of the rule governing accounting for trust money to incorporate minor technical changes.
A .0118: Amend the rule governing the handling of trust money belonging to owners’ associations to incorporate minor technical changes.
A .0404: Amend the rule prohibiting cheating and certain other misconduct in connection with the licensing examination to add violations of various examination instructions as rule violations and to add dismissal from an examination, invalidation of examination score and forfeiture of examination and application fees as possible consequences in addition to denial of a real estate license and disciplinary action if an applicant becomes licensed prior to the discovery of the violation.
A .0502: Amend Paragraphs (a) and (d) governing the licensing of business entities to incorporate minor technical changes.
A .1709: Amend the rule governing brokers’ requests for extensions of time within which to complete CE to clarify that a request for extension must be made by a licensee on active status and submitted not later than June 10.
A .1808: Amend the rule governing the handling of trust monies by a non-resident commercial broker to incorporate minor technical changes.
C .0209: Amend the rule governing private real estate school enrollment procedures to require that the mandatory student enrollment contract for post-licensing courses include a description of the provisions in Rules C .0302(c) and A .1904(a)(3) prohibiting schools from knowingly allowing postlicensing students to enroll in two courses simultaneously if the student would be in class for more than 21 hours in a seven-day period and authorizing the Commission to deny or withdraw postlicensing credit as to a student participating in simultaneous courses exceeding 21 hours in seven days.
C .0309(a): Amend the rule to allow school officials’ signatures on course completion certificates to be provided electronically rather than only by signature or signature stamp in a color other than black.
E .0304: Amend the rule governing the criteria for elective course approval to provide that where a proposed new course has been reviewed by the Commission twice and found unsatisfactory after both reviews, any subsequent submission will be treated as an initial application requiring the payment of a $100 course application fee.
E .0408: Amend rule on changes in CE sponsor ownership to be consistent with proposed new rule clarifying G.S. 93A-35(c) on changes in private real estate school ownership.
This article came from the October 2013-Vol44-2 edition of the bulletin.
By Everett “Vic” Knight, Chairman, NC Real Estate Commission
There is NO prohibition against real estate brokers contacting and “talking” to the appraiser. However, there are clearly topics and facts that the appraiser CANNOT discuss or share with anyone other than the appraiser’s client. (Typically, the client is the LENDER.)
Appraisers are highly regulated both on the state and federal levels. “Appraiser Independence” is the Law under Dodd-Frank (Wall Street Reform and Consumer Protection Act), and there are certainly circumstances where a broker can contact and “talk” to the appraiser.
The national housing market downturn brought numerous regulatory changes to the real estate industry, including the entire appraisal process. Dodd-Frank legally sunset the Home Value Code of Conduct and required the Federal Reserve to amend the appraisal independence rules of Regulation Z of the Truth in Lending Act. The interim final rule effective April 1, 2011, applies to all consumer credit transactions secured by a consumer’s principal dwelling. Fannie Mae and Freddie Mac servicing guidelines now reflect this rule. In addition, state laws and regulations require appraisers to comply with Uniform Standards of Professional Appraisal Practice (USPAP). Among many other things, this legislation and the accompanying rules include exactly what can be “asked” of an appraiser.
Recognize that the appraiser’s function is to develop an independent, impartial and objective opinion of the value of the property for the lender to determine what the underlying collateral value is to base their financial lending decision on.
First, the Ethics Rule of USPAP prohibits appraisers from “Disclosing” 1) confidential information or 2) assignment results to anyone other than the “Client” (ie; entities or persons authorized by the client).
Secondly, language in Dodd-Frank states: “The requirements …. shall not be construed as prohibiting a ….. real estate broker, …..or any other person with an interest in a real estate transaction from asking an appraiser to undertake one or more of the following: 1) Consider additional, appropriate property information, including the consideration of additional comps ….. to make or support an appraisal, 2) Provide further detail, substantiation, or explanation for the appraiser’s value conclusion, 3) Correct errors.”
This language does not allow a full blown “conversation” or “discussion” with the appraiser, but it does address the points that brokers can “ask” of an appraiser. However, this does imply that the flow of information is essentially one-way, from the broker to the appraiser. The broker CANNOT anticipate there will be any substantial “conversation” or “discussion” about the appraisal or conclusions.
It is unfortunate that some AMC’s have instructed appraisers to significantly limit their interaction with otherwise interested parties to the transaction, creating much of the confusion on what type of contact and talk can be held with appraisers.
The most favorable “window-of-opportunity” to “talk” to the appraiser is as soon as the “appraisal inspection” is scheduled. There are many things that brokers and sellers can do to put the property in the best position possible for the most favorable appraised value outcome. The most important is providing as much accurate, current and detailed information on the subject property as possible. Most of that information can easily be provided through the local MLS (including as many photos as the MLS will allow), which is not only beneficial to the appraiser of the subject property but equally beneficial when the appraiser uses that same information as a future comparable and especially to potential buyers during their search process. This important information is the first opportunity for the listing broker to provide factual insight into the subject property and also disseminates the broker’s unique knowledge of the local real estate market through supporting information and often supporting documentation.
Brokers are allowed to contact appraisers and provide additional property information, including a copy of the sales contract for purchase transactions. Brokers may not intimidate or bribe an appraiser and an appraiser may not disclose confidential information about the appraisal or the assignment at any time.
Therefore, the “new-normal” is the development of an “appraisal package” on every property which comes under contract and subject to a mortgage. Make the “appraisers package” available at the property for the appraisal inspection, or meet the appraiser at the property so you can answer any questions, and inform the appraiser of the unique factual features of the property or neighborhood, and make sure you allow the appraiser the space and time to complete their inspection. The appraisers package could include plats, surveys, deeds, covenants, HOA documents, floor plans, specifications, inspection reports, neighborhood details, recent similar quality comparables, detailed list and dates of upgrades, remodels or repairs, recent CMA’s, etc. Provide the seller/buyer a copy of the brochure developed by The Appraisal Foundation entitled “A Guide to Understanding a Residential Appraisal” available for download at http://www.realtor.org/appraisal/a-guide-to-understanding-a-residential-appraisal.
This article came from the October 2013-Vol44-2 edition of the bulletin.
The Commission awarded three scholarships at the June meeting to brokers who have achieved outstanding academic performance while pursuing real estate education beyond what is required for a broker license.
Winners of the scholarships, which honor former Commission Executive Directors, are Geri Mullinix, Charlotte, Joe Schweidler Memorial Scholarship; Katherine Pierce, Apex, Blanton Little Memorial Scholarship; and Richard Cooke, Asheville, Phillip T. Fisher Scholarship. Cooke was unable to be present. Recipients received a plaque recognizing their achievement and reimbursement of course tuition fees.
Mullinix and Pierce were selected by the North Carolina Real Estate Educational Foundation for courses in the REALTORS® Institute, and Cooke was selected by the North Carolina chapter of the National Association of REALTORS® Council of Real Estate Specialists (CRS).
This article came from the October 2013-Vol44-2 edition of the bulletin.
Michael B. Gray, Chief Financial Fraud Investigator, received the 2013 Investigator of the Year Award from the Association of Real Estate License Law Officials (ARELLO®).He was also recognized by ARELLO® as Investigator of the Year in 2004.
Gray investigated a complex “builder kickback” scheme in which real estate agents and firms listed properties at inflated prices for a builder and solicited buyers through promoters.
Kickbacks were paid to promoters and buyers from property sales proceeds and not disclosed on loan application documents or HUD-1 settlement statements. Real estate licensees collected and distributed the illegal kickbacks and/or received real estate commissions from transactions involving hundreds of homes and over $42 million in illegal loans. Property foreclosures resulted when investors were unable to rent or sell as promised.
Gray’s work led to license revocations for North Carolina licensees and enabled federal law enforcement officials to obtain criminal convictions and sentences for the licensees and other participants.
With the Commission for 17 years, Gray was named Chief Financial Fraud Investigator in 2010 for the Financial Fraud Unit, which investigates mortgage fraud cases involving real estate licensees. His work fostered a cooperative relationship with federal officials in the investigation and prosecution of fraudulent real estate transactions. He holds the ARELLO® “Certified Real Estate Investigator” (CREI) designation.
This article came from the October 2013-Vol44-2 edition of the bulletin.
The Commission requires all brokers-in-charge (BICs) to take a Broker-in-Charge Annual Review (BICAR) course, along with the required Update course. This completes the BIC’s annual continuing education (CE) requirement.
At its August meeting, the Commission considered whether to change the requirement to a biennial review, so that BICs could choose an elective every other year, an approach favored by many. Mindful of its goal to provide BICs with timely information critical to their role, the Commission determined to retain the annual requirement, but to make improvements to the course.
The Commission will be convening a focus group to develop its plan for BICAR course improvements.
The group will include BICAR educators and BICs representing sectors of the brokerage industry including:
• Residential brokerage
• Commercial brokerage
• Property management
• Solo practice
• Firms with multiple associates
The Commission may also survey BICs for more input. If you receive a survey, please respond to give the Commission direct feedback about what would be most useful to you as a BIC.
Watch the Commission’s Web site, blog, and social media for further developments.
This article came from the October 2013-Vol44-2 edition of the bulletin.
Governor Pat McCrory has appointed three new members to the Commission for terms ending July 31, 2016.
Leonard H. “Tony” Craver of Durham, Craver Real Estate;
George Bell of Winston-Salem, G. Bell Properties and George Bell Productions; and Anna Gregory Wagoner of Winston- Salem, attorney with Blanco Tackabery and Matamoros.
This article came from the October 2013-Vol44-2 edition of the bulletin.