Governor Mike Easley has reappointed Allan R. Dameron of Holden Beach to a third term on the Real Estate Commission. Dameron, Broker Associate of Alan Holden Realty/RE/Max, served two consecutive years as Chairman in 2002-03 and 2003-04.
Senate President Pro Tempore Marc Basnight has reappointed Marsha H. Jordan of Lincolnton to a third term and Speaker of the House James T. Black has reappointed Melvin L. “Skip” Alston of Greensboro to a second term. Jordan, owner of Apple Realty, was Vice Chairman in 2004-05; Alston, President of S&J Management Corp., is currently a Vice Chairman.
This article came from the October 2005-Vol36-2 edition of the bulletin.
By Emmet R. Wood, Director, Audits and Investigations
You may recall from my previous Auditor’s Corner that I defined internal controls for real estate trust accounts as policies and procedures designed to safeguard the assets of the account and provide reasonable assurance that the account’s books and records are reliable.
Special problems are posed when a real estate company accepts cash. For instance, consider the following scenario: A real estate company that manages rental units for various owners allows tenants to pay their rent and security deposits with personal checks and/or cash. The company has two rental managers who, when they collect cash, give the tenant a receipt from one of the company’s receipt books and then place the money in a cash drawer. At the end of each business day, one of the rental managers counts the cash collected, prepares the deposit ticket, and deposits the money in the bank the next morning.
Since both of the rental managers have access to the cash drawer, what internal controls could the company initiate to minimize the risk of a cash embezzlement?
The first internal control would be to assign a separate receipt book with sequentially-numbered receipts to each rental manager and limit them to writing receipts only from their own books. The second internal control would be to assign each of them their own cash drawer which only they could access. The third would be for the company to require each rental manager to total his or her cash receipts, balance the total to the money in their cash drawer and deposit ticket, and then deposit the money in the bank on a daily basis.
It may be helpful for you to place yourself in the position of those employees in your company who have access to trust funds, think about how you might take trust money if you were them, and then design a system of internal controls to prevent you from taking the funds. If you need further help, consider consulting a CPA.
This article came from the October 2005-Vol36-2 edition of the bulletin.
The 2005-2006 Update Course, mandatory for licensees as part of their continuing education requirement, covers:
• Changes to the Real Estate License Law creating a single class of “Broker” license, converting salesperson licenses to “provisional broker” licenses, increasing education requirements, and mandating more experience and training for brokers-in-charge. (See page nine in this issue of the Bulletin for a summary of key changes to the law, which takes effect April 1, 2006, and page eight for answers to frequently asked questions.)
• A new procedure allowing brokers holding disputed funds to pay the funds to the Clerk of the Court after notice to the parties.
• Commission Rule changes effective July 1, 2005, as well as revisions to standard forms of the North Carolina Association of REALTORS®.
• Discussions of radon gas and why purchasers of property should have a current survey.
• Commission rule governing real estate advertising including matters such as owner consent, “blind” ads, identification of individuals and companies, Truth-in-Lending and Fair Housing restrictions and “Do Not Call” and “Do Not Fax” laws.
All continuing education for the current licensing year that began July 1 must be taken on or before June 10, 2006. Education course sponsors are not permitted to offer courses for CE credit between June 11 and June 30 of each year to allow time for sponsors to file reports to the Commission and for the Commission to process them.
Licensees are encouraged to take the Update Course earlier rather than later in the license year. The CE schedule indicating course locations and dates for the period through December is available on the Commission’s website, www.ncrec.state.nc.us.
This article came from the October 2005-Vol36-2 edition of the bulletin.
SUSAN L. BECK (Sylva) – By Consent, the Commission permanently revoked the broker license of Ms. Beck effective July 1, 2005. The Commission found that Ms. Beck failed to turn over earnest money deposits received from several clients to her broker-in-charge and failed to deposit these funds into a trust account or properly account for the funds to her clients. The Commission also found that Ms. Beck made changes to various offers to purchase without the knowledge or permission of her clients and attempted to obtain an advance commission by creating a false contract. The Commission also found that Ms. Beck in January 2005 pleaded guilty in Cherokee County to attempted common law forgery, and received a 30-day jail sentence, which was suspended for an 18-month period of supervised probation.
GARY L. BOLING (Supply) – By Consent, the Commission accepted the voluntary surrender of the salesperson license (inactive) of Gary Boling for one year effective May 1, 2005. Mr. Boling denies any misconduct in connection with the surrender of his license. The Commission has dismissed any case against Mr. Boling.
PETRA M. BOTTOMLEY (Raleigh) – By Consent, the Commission suspended the broker license of Ms. Bottomley for a period of six months effective June 11, 2005. The Commission then stayed the suspension for a probationary period of six months. The Commission found that Ms. Bottomley failed to report a conviction of driving while impaired at a time when she held a salesperson license and later on her application for a broker license. The Commission noted that Ms. Bottomley voluntarily reported the conviction after learning in the Update course that she was required to do so.
TONNITTE G. BROWN (Research Triangle Park) – By Consent, the Commission reprimanded Ms. Brown effective July 11, 2005. The Commission found that Ms. Brown, as broker-in-charge of her own real estate office, allowed another broker, not affiliated with her firm, to act under her name as a buyer agent in a real estate transaction. The transaction was concealed from the firm with which the other broker was affiliated. The Commission also found that the buyer never signed a buyer agency agreement with Ms. Brown, her firm, the other broker or any other licensee and that Ms. Brown allowed the other broker to conduct all brokerage activities yet claim on the purchase contract that Ms. Brown was the buyer agent in the transaction.
VELMA G. BURGESS (Charlotte) – The Commission revoked the broker license of Ms. Burgess effective April 18, 2005. The Commission found that Ms. Burgess failed to provide the Commission supporting documentation of a trust account deposit, failed to appear at a scheduled meeting with the Commission’s auditor, and failed to respond within 14 days of receiving a Letter of Inquiry from the Commission. The Commission also found that Ms. Burgess failed to account for and remit monies coming into her possession which belonged others, mishandled trust monies, failed to property identify the owners of the money in her trust account, failed to retain transaction records and failed to properly maintain a trust account and records as broker-in-charge.
REBECCA J. CORDELL (Banner Elk) – By Consent, the Commission revoked the broker license of Ms. Cordell effective June 8, 2005. The Commission found that Ms. Cordell, as broker-in-charge of a real estate firm engaged in vacation rentals, failed to maintain the firm’s trust account journal and ledgers as required by Commission rules, and, for over three years, to conduct monthly trust account reconciliations.
MARGARET I. CROSBY (Charlotte) – By Consent, the Commission suspended the broker license of Ms. Crosby for a period of one year effective June 1, 2005. The Commission then stayed the suspension for a probationary period of two years. The Commission found that Ms. Crosby failed to fulfill a promise to purchasers of a property she had listed that she would repair a broken and discolored concrete driveway and walkway. The Commission noted that Ms. Crosby later reimbursed the purchasers for the repairs.
SHERI C. FEARING (Greenville) – By Consent, the Commission suspended the salesperson license of Ms. Fearing for a period of 90 days effective January 1, 2006. Thirty days of the suspension are to be active with the remainder suspended until November 19, 2006 or until such time that Ms. Fearing completes her criminal probation. The Commission found that Ms. Fearing failed to disclose to the Commission on her 1995 salesperson license application convictions for underage purchase and possession of beer/wine in 1987 and 1988, disorderly conduct in 1991 and Level 5 DWI in 1992. The Commission also found that Ms. Fearing was convicted of Level 4 DWI while licensed and for this offense was placed on unsupervised probation until November 19, 2006. The Commission noted among other things that Ms. Fearing reported this conviction to the Commission as required.
JEFFREY L. GATES (Mebane) – The Commission revoked the salesperson license of Mr. Gates effective August 1, 2005. The Commission found that Mr. Gates failed to disclose on his 2001 application for reinstatement of his salesperson license that he had been convicted of criminal offenses including writing worthless checks during 1996 and 1997; assault inflicting serious injury during 1997; assault on a child under 12 years of age during 2000; and violating his probation during 2001. The Commission also found that Mr. Gates failed to report the convictions for writing worthless checks and assault while licensed as a salesperson.
CAROL M. GERBRACHT (Durham) – By Consent, the Commission suspended the salesperson license of Ms. Gerbracht for a period of one year effective February 1, 2005. One month of the suspension was active with the remainder stayed for a probationary period of 23 months on certain conditions. The Commission found that Ms. Gerbracht, while acting as a buyer agent, assisted in obtaining the signatures of the sellers in a real estate transaction on false documents that inflated the actual sales price by means of a false second mortgage. The Commission noted that Ms. Gerbracht was inexperienced at the time of this transaction.
THOMAS D. HERMAN (Fleetwood) – By Consent, the Commission reprimanded Mr. Herman effective June 22, 2005. The Commission found that Mr. Herman, while licensed as a broker by the Commission and as a Registered Land Surveyor, consented to discipline by the North Carolina Board of Examiners for Engineers and Surveyors in 2003 and failed to report this sanction to the Commission in the time required by Commission rule.
HORACE C. HODGIN (Goldsboro) – By Consent, the Commission suspended the broker license of Mr. Hodgin for a period of two years effective June 1, 2005. The Commission found that Mr. Hodgin failed to take continuing education courses required by the Commission and conducted brokerage services knowing his license was on inactive status. The Commission also found that Mr. Hodgin failed to maintain his trust account records in compliance with Commission rules.
JACKSONVILLE REAL ESTATE ACADEMY (Jacksonville) – By Consent, the Commission suspended the license of the Jacksonville Real Estate Academy to teach prelicensing courses for a period of two years effective July 12, 2005. The Commission then stayed the suspension for a probationary period of two years. The Commission found that Jacksonville Real Estate Academy allowed a person not approved by the Commission as a real estate instructor to teach substantial portions of the salesperson prelicensing courses in excess of the number of hours permitted by Commission rule.
JAMES W. MANN (Charlotte) – By Consent, the Commission permanently revoked the salesperson license of Mr. Mann effective August 10, 2005. The Commission found that Mr. Mann, as a sales manager for a home building company, agreed to make the company’s inventory available for sale to promoters of various real estate investment groups, knowing at the time that the promoters used inflated appraisals and facilitated the use of inflated appraisals in various transactions. The Commission also found that Mr. Mann was paid by the promoters for his assistance and failed to disclose these payments to his employer or the lenders involved in the transactions in question.
KENNETH A. PEELE, JR. (Emerald Isle) – By Consent, the Commission accepted the voluntary surrender of the broker license of Mr. Peele for five years effective July 12, 2005. The Commission dismissed without prejudice allegations that Mr. Peele had violated provisions of the Real Estate License Law and Commission rules. Mr. Peele neither admitted nor denied misconduct.
HERBERT F. PERRY, JR. (Raleigh) – By Consent, the Commission revoked the salesperson license of Mr. Perry effective June 1, 2005. The Commission found that Mr. Perry accepted client funds to pay for repairs to the client’s property and deposited the funds into his personal accounts instead of turning them over to his broker-in-charge. The Commission also found that Mr. Perry accepted responsibility for various repairs in three other transactions, but failed to have the repairs performed after closing.
JEROME K. PERSON (Fayetteville) – The Commission revoked the broker license of Mr. Person effective May 1, 2005. The Commission found that between 1985 and 2002, Mr. Person was convicted of multiple criminal offenses including Driving While Impaired, Assault on a Court Security Officer, Public Disturbance and Violating a Domestic Protection Order by federal and state courts, and, his law license was suspended by the North Carolina State Bar.
AMY B. PHILLIPS (Charlotte) – By Consent, the Commission revoked the broker license of Ms. Phillips effective July 1, 2005. The Commission found that Ms. Phillips, acting as attorney-in-fact for the purchaser, had no agency relationship through her firm as defined by Commission rule with the parties in two sales transactions a month apart, yet received fees paid to her firm at closing of $26,800 for the first transaction and $40,000 for the second. The Commission also found that Ms. Phillips, again acting as attorney-in-fact for the purchase of a third property for the same buyer in October 2003 and for the purchase of three separate properties for other buyers in May 2004, executed documents certifying that each of the properties were to be the buyers’ principal residences, when those statements were false.
PROPERTY MANAGEMENT SERVICES, INC. (Summerfield) – By Consent, the Commission revoked the firm license of Property Management Services effective September 8, 2005. The Commission found that Property Management Services failed to maintain and retain records of management and other brokerage transactions sufficient to show the proper deposit and remittance of such funds and to verify the accuracy and proper use of the trust or escrow account, to account to the Commission for the money being held for others, and to make their trust account records available to the Commission upon request.
KARRIE K. ROBERTSON (Summerfield) – By Consent, the Commission revoked the broker license of Ms. Robertson effective September 8, 2005. The Commission found that Ms. Robertson, broker-in-charge of property management firm, failed to maintain and retain records of management and other brokerage transactions sufficient to show the proper deposit and remittance of such funds and to verify the accuracy and proper use of the trust or escrow account, to account to the Commission for the money being held for others, and to make their trust account records available to the Commission upon request.
AMY ROKOSKI (Wilmington) – By Consent, the Commission reprimanded Ms. Rokoski effective July 1, 2005. The Commission found that Ms. Rokoski, a salesperson with a real estate brokerage firm, acting upon instructions from her broker, assured potential buyers of a house owned by the United States Department of Veterans Affairs that the VA would repair defects in the house when, in fact, the VA would not correct the defects. Based upon these assurances, the buyers purchased the house.
JOHN M. SLAUGHTER (Supply) – By Consent, the Commission reprimanded Mr. Slaughter effective May 12, 2005. The Commission found that Mr. Slaughter failed to disclose several 1988 and 1989 misdemeanor convictions on his 2000 salesperson license application.
BRAD H. SPAHN (Charlotte) – By Consent, the Commission suspended the salesperson license of Mr. Spahn for a period of one year effective May 1, 2005. Thirty days of the suspension was active with the remainder stayed by a probationary period of 11 months. The Commission found that Mr. Spahn failed to disclose on his 2002 salesperson license application a conviction in 1995 and another in 2000 for driving under the influence and two worthless check convictions. The Commission noted that Mr. Spahn did disclose the convictions on his September 2004 broker license application and has cooperated with Commission inquiry into the matter.
DORIS Y. LOVE STAPLES (Rockingham) – By Consent, the Commission suspended the salesperson license of Ms. Staples for a period of one year effective March 1, 2005. Six months of the suspension were active with the remainder stayed for a probationary period of one year on certain conditions. The Commission found that Ms. Staples, acting as a dual agent, sold a property she had listed to a buyer without entering into a written agency agreement with either her buyer or seller clients. The Commission also found that Ms. Staples was aware that the seller was to pay certain concessions to the buyer and failed to assure that the concessions were disclosed to the lender and closing attorney, and to assure that they were set out on the closing statement.
THE EXECUTIVE GROUP (Charlotte) – By Consent, the Commission revoked the firm license of The Executive Group effective July 1, 2005. The Commission found that The Executive Group had no agency relationship as defined by Commission rule with either of the parties in two transactions a month apart, but received fees at closing of $26,800 for the first transaction and $40,000 for the second.
THE LODGING CENTER, INC. (Banner Elk) – By Consent, the Commission revoked the firm license of The Lodging Center effective June 8, 2005. The Commission found that The Lodging Center, as a licensed firm broker engaged in vacation rentals, failed to maintain the firm’s trust account journal and ledgers as required by Commission rules, and, for over three years, to conduct monthly trust account reconciliations.
BRENDA E. THIXTON (Jacksonville) – By Consent, the Commission suspended the broker license of Ms. Thixton for a period of two years effective July 12, 2005. The Commission then stayed the suspension for a probationary period of two years. The Commission found that Ms. Thixton, while not approved as a real estate instructor, taught substantial portions of the salesperson prelicensing courses in excess of the number of hours permitted by Commission rule. The Commission noted that Ms. Thixton subsequently obtained the necessary credentials to be approved and approved her to teach on a temporary basis.
ROGER D. THIXTON (Jacksonville) – By Consent, the Commission suspended its approval of Mr. Thixton to teach prelicensing courses and the Update continuing education course for a period of two years effective July 11, 2005. Six months of the suspension are to be active with the remainder stayed for a probationary period of 18 months. By Consent, the Commission also suspended the broker license of Mr. Thixton for a period of two years effective July 11, 2005. The Commission then stayed the suspension for a probationary period of two years. The Commission found that Mr. Thixton allowed a person not approved as a real estate instructor to teach substantial portions of the salespersonprelicensing courses Mr. Thixton offered through his school in excess of the number of hours permitted by Commission rule. The Commission also found that Mr. Thixton offered an elective continuing education course in which he failed to deliver appropriate information to his students, deviated from the course plan and conducted the course in less than the allotted time.
UPLAND COMPANIES LLC D/B/A UPLAND REALTY (Asheville) – By Consent, the Commission suspended the firm license of Upland Companies for a period of three months effective June 1, 2005. The Commission then stayed the suspension for a probationary period of nine months on certain conditions. The Commission found that Upland Companies, a real estate brokerage company, acted as a buyer agent in a commercial real estate transaction without obtaining a written agency agreement with the buyer.
SHIRL WEBB-ALSTON (Raleigh) – By Consent, the Commission suspended the broker license of Ms. Webb-Alston for a period of one year effective August 1, 2005. One month of the suspension was active with the remainder stayed for a probationary period of one year. The Commission found that Ms. Webb-Alston, while affiliated with one real estate brokerage firm, undertook to act as a buyer agent in a transaction under the name of a different firm, without the permission of the firm with which she was then affiliated. The Commission also found that Ms. Webb-Alston failed to obtain a written buyer agency agreement and represented on the sales contract that another broker was the buyer agent.
JAMES M. WHATMORE (Asheville) – By Consent, the Commission suspended the broker license of Mr. Whatmore for a period of three months effective June 1, 2005. The Commission then stayed the suspension for a probationary period of nine months on certain conditions. The Commission found that Mr. Whatmore, principal broker and broker-in-charge of a real estate brokerage firm, acted as a buyer agent in a commercial real estate transaction without obtaining a written agency agreement with the buyer.
This article came from the October 2005-Vol36-2 edition of the bulletin.
Use Visa or MasterCard only. Know your card’s billing address.
1 On or after May 13, click on the “Renew/Reinstate” bar along the left side at the Commission’s website.
2 Enter your license number and PIN (last four digits of your social security number if you have not changed it) numbers and click on “Login”.
3 Click on “Renew”, the first of five choices on the screen. (From this screen you can also check your Continuing Education credits and update your data records).
4 Click on next to proceed to the screen that will take your credit card information.
5 Enter your credit card number and the expiration date (drop down menus enable you to enter the date in the correct format). Be certain the information shown for your address is the same as the billing address for your credit card. If not, change it on this screen.
6 “Please wait…” appears as the charge is processed and a final screen confirms your license renewal. Please print this confirmation as a receipt.
This article came from the May 2005-Vol36-1 edition of the bulletin.
No, it’s hardly a “dream listing”, but imagine for a moment that you have just listed, knowingly or unknowingly, a former “Meth” house or lab – a place where methamphetamine, a highly addictive, controlled substance was illegally manufactured.
Or, imagine you are a licensee and property manager or agent for an owner or asset management firm and are managing such a property.
The walls of the property once witnessed the mixing and “cooking” of a witch’s brew of harmful chemicals required to produce methamphetamine. Those same walls, along with the plumbing, air vents, filters, furniture, appliances, carpets, draperies and other household components, quite likely absorbed its vapors and may still bear its splatters and spills.
Perhaps, gases and fumes from the toxic by-products of the manufacturing process exploded or caught fire, scattering contamination in a wider swath about the property. Even if nothing of such magnitude occurred, the production of just one pound of “meth” on the property could have created five to seven pounds of hazardous waste including hydrogen chloride gases. As so often happens, these wastes may have been dumped on or around the property, and in nearby rivers and streams. The septic system, well, ground water, soil and other environmental elements may have been too contaminated for safe use.
* * * *
If this scenario sounds “far-fetched,” think again. There were 322 “meth” lab “busts” in 2004 in North Carolina, up from 177 in 2003 and nine four years earlier, according to the State Bureau of Investigation. Through April 11 of this year, there have been 121.
Once a site is cleared of illegal activity and under the control of the state, law enforcement officials post a notice on the property that it was used as a “clandestine methamphetamine laboratory”. The local health department is notified, which in turn informs the property owner or agent that the site must be vacated and that “a responsible party” is required to “remediate the property”.
Clean-up is generally possible, but may be expensive, depending upon the level of contamination. Even after cleaning, some contamination may be left on surfaces, in absorbent materials such as carpet and furniture, and in sinks, drains, and ventilation systems. Lingering contaminants may pose health threats, including respiratory problems, skin and eye irritation, headaches, nausea, and dizziness. Because of the potential risk, more extraordinary remediation measures are required.
What is a real estate agent to do? First, it is important to know the law and rules concerning “meth” houses.
North Carolina law makes the manufacture of “meth” a Class C felony, and prohibits related criminal activity surrounding its manufacture, distribution, and sale.
This year, at the request of North Carolina Attorney General Roy Cooper, legislation was introduced to limit public access to pseudoephedrine, a primary ingredient in the manufacture of methamphetamine, by requiring that it be sold behind the counter in pharmacies only, and that buyers be required to register their purchases.
In addition, under a new state mandate, the Department of Health and Human Services (“DHHS”) created rules establishing decontamination standards for certain properties to assure they are reasonably safe for human habitation. The law requires compliance with these decontamination standards by the property “owner, lessee, operator, or other person in control of a residence or place of business, and who has knowledge that the property has been used for the manufacture of methamphetamine….”
The DHHS rules require a “responsible party” to:
• Perform a pre-decontamination assessment to determine the level of contamination and scope of remediation;
• Decontaminate the property; and
• Document the assessment and remediation.
The documentation must be retained by the local health department for a period of three years.
Licensee’s Duty
Next, licensees should learn how the law may impact them.
Property managers and other licensees may be viewed as persons “in control of a residence or place of business” under the DHHS law and rules. If so, this could create heightened responsibility for licensees with regard to decontamination. However, the law is unclear concerning the extent of responsibility a property manager or agent might have, if any, especially compared with that of the actual owner or lessee.
As a licensee, you are required to disclose material facts concerning a property when you are, or should be, aware of them.
Because properties used as “meth” labs may have potential lingering health consequences and responsible parties must undertake clean-up and reporting, the prior use of a property as a “meth” lab is material. However, it is also important to remember that your duty to disclose only arises when you know, or reasonably should know, that the property was once used as a “meth” lab. As with all issues concerning material facts, whether an agent reasonably should have known that a property once was a “meth” lab must be evaluated on a case by case basis.
At this time, the Commission does not require licensees to check with the county health department, local law enforcement officials, and the SBI, each time they list a property to see if decontamination or criminal records exist indicating the property was once used for the manufacture of “meth”. On the other hand, licensees who encounter properties they know or should know were formerly operated as “meth” labs should make inquiries to determine the status of the property.
If the inquiry reveals that remediation is complete, no disclosure is required, assuming that clean-up has been properly documented.
The problem of illegal manufacture of methamphetamines is growing, and the state has responded with new laws and rules. Licensees encountering properties that they suspect may have been used as a “meth” lab should take care to stay informed about the law.
This article came from the May 2005-Vol36-1 edition of the bulletin.
The time has come once again to renew your real estate license for the year beginning July 1. Do it now!
In less time than it takes to read this article, you can renew online at the Commission’s website, www.ncrec.state.nc.us. Thousands already do, having learned that it’s faster and easier.
Renewal forms have been sent out as of May 13 to the delivery address on record for you. If active, the address is that of your broker-in-charge. If inactive, it is your residence address.
The renewal fee remains at $40 and is the same whether paid by check or online.
If you completed a continuing education course in the last two or three weeks, those credits may not appear on the mailing label of this issue of the Bulletin. If that’s the case, go to the Commission’s website, log on and review your record there. You can also verify your address online and make changes to your residence and email addresses and fax number, if needed.
When renewing your license online, you will receive a confirmation notice that you should print and save in case proof is needed that you completed the payment process before receiving your pocket renewal card. With the confirmation notice, there is no doubt that your renewal has been received by the Commission before the deadline of midnight, June 30.
If reinstatement of a license is required, you should take action as follows:
–Licenses expired for more than six months (i.e., after December 31) require reinstatement through submission of a new application form with a criminal record report. In addition, salespersons must take the pre-license fundamentals course or the license examination and brokers must take the pre-license broker course or the license examination.
–Licenses expired for less than six months (i.e., before December 31) require reinstatement only with the payment of a $55 fee.
This article came from the May 2005-Vol36-1 edition of the bulletin.
The Real Estate Commission has voted to support legislation proposed by North Carolina Attorney General Roy Cooper to address abuses in real estate transactions where dealers contract to purchase for resale real estate subject to an existing loan or deed of trust.
The legislation would not apply to real estate licensees because resale dealers who have real estate licenses are regulated by the Commission.
Problems with resale dealers arise when a purchase contract enables the dealer to buy and resell property for a profit, “subject to” an existing loan. The terms of most loans call for repayment of the entire amount owed if the property is sold. Often, the person from whom the dealer purchased the property is not aware of this “due on sale” clause and assumes that the dealer is responsible for paying off the loan. However, the original owner is still responsible for the loan.
If the resale effort is unsuccessful and the dealer simply walks away, the owner may face an immediate demand for payment of the loan from the original financing source.
The legislation proposed by Attorney General Cooper would require a resale dealer to make certain disclosures at least seven days before entering into a real estate transaction with a homeowner/seller. These would include statements disclosing that:
• The homeowner/seller is not relieved of responsibility for the existing mortgage and will be held responsible for any delinquencies or defaults if the real estate resale dealer fails to make payments.
• The current mortgage loan or deed of trust may contain a “due on sale” clause obligating the homeowner/seller to inform the lender at any time title to the property is transferred and that the lender has the right to call the entire amount of the loan due at that time.
• The homeowner/seller should consult an attorney as to his or her liability and obligations for providing insurance and for maintenance of the property.
• The resale dealer has secured a bond as required by state law with the surety company’s name and address provided and advice to check with the surety company to determine the bond’s current status.
• The nature of the resale dealer’s business and people involved with it including the number of transactions entered into within the preceding 12 months and a description of services to be rendered.
Additional disclosures relate to tenant/buyers and encompass deposits, down payments and payment for options to purchase, any existing deed of trust and related obligations, advice concerning eligibility for a mortgage and the dealer’s securing of a bond.
If the law passes, copies of the disclosure statements must be filed with the Secretary of State’s office before any advertising is undertaken or representation to buyers is made. A copy of the state law must be provided to participants in any real estate resale transaction seminar. Finally, any resale dealer who offers to assist a purchaser in securing financing must be licensed as a mortgage broker.
This article came from the May 2005-Vol36-1 edition of the bulletin.
Continuing its efforts to increase its accessibility to licensees, the Real Estate Commission held its February meeting in Greensboro.
The Commission was welcomed by the Honorable Bruce E. Davis, chair of the Guilford County Board of Commissioners and by Guilford County Manager Willie A. Best and also met with members and staff of the Greensboro Regional REALTORS® Association, the High Point Regional Association of REALTORS® and the North Carolina Association of REALTORS® who joined in welcoming the Commission to its first-ever meeting in Greensboro.
The Commission will hold its July meeting in New Bern.
This article came from the May 2005-Vol36-1 edition of the bulletin.
On February 22, the Real Estate Commission dedicated its Raleigh office building in honor of State Senator Tony Rand. More than 100 persons attended a dedication ceremony including Lieutenant Governor Beverly Perdue, members of the Council of State and General Assembly, members of the Real Estate Commission, and family and friends of Senator Rand and his wife, Karen.
Commission Executive Director Phillip Fisher presided over the ceremony which began with an invocation delivered by Senate Chaplain Mike Morris, followed by the presentation of colors by the Color Guard from the Army ROTC at Senator Rand’s alma mater, UNC-Chapel Hill.
Commission Vice-Chairman Marsha Jordan led the audience in the Pledge of Allegiance, and Kirby Ann Troutman sang the National Anthem. A choral group of Commission staff members accompanied by pianist Ronald Williams then performed a state anthem composed by Mr. Fisher entitled “The Longleaf Pine”.
In her keynote remarks, Lieutenant Governor Perdue praised Senator Rand for his leadership and contributions to North Carolina, and Commission Chairman Matthew J. “Rick” Watts formally dedicated the building “The Tony Rand Building.”
Senator Rand closed the ceremony by accepting the honor, stating that “The real estate industry in North Carolina is such an important part of what North Carolina is about…not only to the economy of our state but to the human condition, that persons have a place to live and call their own, a spot that is particular to them and a place of refuge.”
In a separate ceremony following the dedication of its office building, the Commission dedicated its conference room in memory of former Commission Chairman Billie J. Mercer who served on the Commission from 1995 until her passing in 2001. In addition to members of the Real Estate Commission and staff, the ceremony was attended by former Commission members Mona Hill, John Bridgeman and Kemp Sherron who served with Mrs. Mercer, and by Immediate Past-President of the N.C. Association of REALTORS® Connie Corey who was a close friend of Mrs. Mercer.
This article came from the May 2005-Vol36-1 edition of the bulletin.