By Emmet R. Wood, Director, Audits and Investigations
Brokers who sell their own property must not commingle earnest money deposits received in connection with their own properties with funds they hold in trust for other third party clients.
If you are a broker in business as a sole proprietor and you receive an earnest money deposit on a house that you own, it would be commingling to deposit that earnest money deposit into your sole proprietorship’s trust account that contains trust monies for your third party clients. In this situation, you have several options to prevent commingling.
• You could have an attorney hold the deposit but be sure that the contract clearly identifies who is holding the money.
• You could open another trust account to deposit the earnest money deposit on your personally owned property making sure you do not deposit in it any trust monies for third party clients.
Now suppose you have incorporated your real estate business and want to sell a property you own personally. When you receive an earnest money deposit on your personally owned property, you can deposit that earnest money deposit into the corporate trust account and it would not be commingling. But be sure to execute a signed written listing agreement between the corporation and yourself to comply with the Commission’s Rules.
To determine if you would be commingling or not, you need to answer two questions:
1)Who owns the real estate?
2)Who owns the real estate company?
If the two entities are the same legal entity, then it would be commingling to deposit an earnest money deposit on a property owned by that entity into a trust account that maintains earnest money deposits for its third-party clients. In the first example, the owner of the property (you) and the real estate company (you as a sole proprietor) are the same legal entity; thus you would be commingling. In the second example, the owner of the property (you) is a separate legal entity from the real estate company (a corporation); thus, you would not be commingling.
What if in the second example, the owner of the property was your real estate corporation?Would it be commingling to deposit the earnest money deposit into the corporate trust account that contained earnest money deposits held for the corporation’s third party clients?Yes, because the entity that owns the real estate is the same legal entity as the real estate company.
This article came from the February 2005-Vol35-3 edition of the bulletin.
AMERICAN SOUTH, INC. (Greensboro ) – By Consent, the Commission revoked the firm license of American South effective November 1, 2004. The Commission found that American South, acting as brokers and agents for tenants, property owners, buyers and sellers in real estate transactions, failed to maintain trust money in a properly designated trust account, to properly maintain records of the funds held for others and to properly reconcile its records with bank statements. The Commission noted that there was no evidence of misappropriation of monies belonging to clients or customers.
TAYLOR C. BARBOUR (Leland) – By Consent, the Commission permanently revoked the broker license of Ms. Barbour effective November 22, 2004. The Commission found that Ms. Barbour, as a broker-associate with a real estate firm, wrote checks from the operating account at the direction and for the benefit of the firm’s broker-in-charge, but without the firm’s authorization. The Commission also found that Ms. Barbour accepted a washer and dryer for her own benefit, which she paid for with company funds without the authorization of the company. Ms. Barbour neither admitted nor denied the Commission’s findings. The Commission noted that Ms. Barbour subsequently made full restitution to the firm for the cost of the washer and dryer.
JOHN A. BAYNES (Charlotte ) – By Consent, the Commission reprimanded Mr. Baynes effective January 13, 2005. The Commission found that Mr. Baynes, as principal broker of a real estate firm, continued to renew the license of the firm after it had been dissolved by the North Carolina Secretary of State and under that renewed license operated another firm, which had not been licensed by the Commission. The Commission also found that Mr. Baynes allowed a salesperson affiliated with another firm to act on behalf of the firm he supervised before affiliating with his firm. Mr. Baynes neither admitted nor denied but did not contest the findings.
DANIEL M. BLACK (Charlotte ) – By Consent, the Commission reprimanded Mr. Black effective January 13, 2005. The Commission found that Mr. Black, while acting as broker-in-charge of a real estate firm, failed to prevent a salesperson affiliated with another firm and not yet under his supervision from bringing prospective customers to the office Mr. Black supervised and placing those prospects with another agent in the office without the knowledge or consent of the firm with which the salesperson was then affiliated. Mr. Black neither admitted nor denied but did not contest the findings.
ELIZABETH W. BLAND (Wilmington ) – By Consent, the Commission suspended the broker license of Ms. Bland for a period of 120 days effective March 1, 2005. The Commission then stayed the suspension for a probationary period of one year on certain conditions. The Commission found that Ms. Bland developed a tract of land to subdivide and sell individual lots for residential purposes and then entered into a contract with a purchaser for the sale of a lot prior to obtaining final subdivision approval from the local municipality.
BLUE RIDGE RENTALS, LLC (Blowing Rock) – By Consent, the Commission accepted the permanent voluntary surrender of the firm license of Blue Ridge Rentals effective November 18, 2004. The Commission dismissed without prejudice allegations that Blue Ridge Rentals had violated provisions of the Real Estate License Law and Commission rules. Blue Ridge Rentals neither admitted nor denied misconduct.
JACKIE C. CLANTON (Statesville ) – By Consent, the Commission suspended the broker license of Mr. Clanton for a period of one year effective December 1, 2004. The Commission then stayed the suspension for a probationary period of one year. The Commission found that Mr. Clanton listed a tract of land during 1997 and 1998 and then, after a preliminary plat was drawn to subdivide the property, solicited buyers and sold lots in the subdivision prior to receiving final subdivision approval from Iredell County .
JANE H. CREECH (Winston-Salem ) – By Consent, the Commission suspended the broker license of Ms. Creech for a period of six months effective November 18, 2004. Ninety days of the suspension were active with the remainder stayed for a probationary term. The Commission found that Ms. Creech failed to disclose a 1987 impaired driving conviction on her 1999 salesperson and 2000 broker license applications. The Commission also found that Ms. Creech failed to report in timely manner July 2003 and April 2004 convictions for impaired driving.
WILLIAM S. CROWE (Sapphire) – By Consent, the Commission accepted the permanent voluntary surrender of the broker license of Mr. Crowe effective November 18, 2004. The Commission dismissed without prejudice allegations that Mr. Crowe had violated provisions of the Real Estate License Law and Commission rules. Mr. Crowe did not admit misconduct.
OWEN G. DEVEAUX (Charlotte ) – By Consent, the Commission permanently revoked the salesperson license of Mr. Deveaux effective January 13, 2005. The Commission found that Mr. Deveaux, while affiliated with a licensed real estate firm, procured a buyer who agreed to purchase a property at a price of $159,900, then persuaded the seller to accept $31,900 less for the property and arranged for the closing attorney to pay this amount from the loan proceeds to Mr.Deveaux’s unlicensed business as a second mortgage payoff. This second mortgage fee was false, as the seller did not owe a second mortgage fee to Mr. Deveaux or his business. The Commission also found that Mr. Deveaux did not have an agency agreement to represent anyone in the transaction.
DAVID L. DICKEY (Wrightsville Beach ) – By Consent, the Commission censured Mr. Dickey effective December 11, 2004. The Commission found that Mr. Dickey, as broker-in-charge of a real estate firm, failed to properly supervise trust account record keeping in the manner required by Commission rule. The Commission noted that, after a Commission audit, the trust account was brought into balance by the firm and that no consumer lost any money and no funds were misappropriated.
DUFFUS REALTY, INC. (Greenville ) – By Consent, the Commission reprimanded Duffus Realty effective November 1, 2004. The Commission found that Duffus Realty failed to maintain its trust accounts in compliance with Real Estate License Law and Commission rules and held approximately $4,000 in unidentified funds in a rental trust account for which the firm could not account. The Commission noted that Duffus Realty corrected its accounting errors and that its sales account is now in full compliance.
STEVE J. EVANS (Greenville ) – By Consent, the Commission suspended the broker license of Mr. Evans for a period of one year effective December 31, 2004. The Commission then stayed the suspension for a probationary period of four years effective November 25, 2003 on certain conditions. The Commission found that Mr. Evans, as broker-in-charge of a sole proprietorship, failed to keep his trust account records in compliance with Commission rules.
DORISTINE F. FAULK (Fairmont ) – By Consent, the Commission reprimanded Ms. Faulk effective January 18, 2005.The Commission found that Ms. Faulk failed to disclose a 1995 conviction of misdemeanor worthless check on her 1997 salesperson application and a 1998 conviction for a similar offense within 60 days of final judgment as required by Commission rule. The Commission noted that Ms. Faulk disclosed both convictions on her 2004 broker license application.
JAMES R. HADEN (Statesville ) – By Consent, the Commission suspended the broker license of Mr. Haden for a period of one year effective December 1, 2004. The Commission then stayed the suspension for a probationary period of one year. The Commission found that Mr. Haden listed a tract of land during 1997 and 1998 and then, after a preliminary plat was drawn to subdivide the property, solicited buyers and sold lots in the subdivision prior to receiving final subdivision approval from Iredell County .
MONICA M. HAWKE (Southern Pines) – By consent, the Commission suspended the salesperson license of Ms. Hawke for a period of six months, effective December 1, 2004.The Commission then stayed the suspension for a probationary period of one year.The Commission found that Ms. Hawke entered the premises of a former employer without permission from the employer.
JOHNNY E. HEFFNER, SR. (Conover) – By Consent, the Commission suspended the broker license of Mr. Heffner for period of three years effective July 1, 2005. One month of the suspension is to be active with the remainder stayed for a probationary period of three years. The Commission found that Mr. Heffner was twice disciplined by the North Carolina Appraisal Board for, first, performing appraisals that did not comply with the applicable standards and, subsequently, while his appraisal license was suspended as a result of the first action.
DANIEL O. HENNIGAN (Charlotte) – The Commission suspended the broker license of Mr. Hennigan for a period of one year effective November 1, 2004. The Commission then stayed the suspension of a period of two years. The Commission found that Mr. Hennigan was disciplined by the North Carolina Appraisal Board, willfully inflated appraisals and failed to report the suspension of his appraisal certificate to the Commission within 60 days as required by Commission rules.
HUGH M. HOWARD (Durham ) – By Consent, the Commission accepted the permanent voluntary surrender of the broker license of Mr. Howard effective November 1, 2004. The Commission dismissed without prejudice allegations that Mr. Howard had violated provisions of the Real Estate License Law and Commission rules. Mr. Howard did not admit misconduct.
JAMES R. HUNT, JR. (Greensboro ) – By Consent, the Commission suspended the broker license of Mr. Hunt for a period of 24 months effective November 1, 2004. at least, three months of the suspension were to be active with the remainder stayed for a probationary period of 24 months under Mr. Hunt’s completion of the Basic Trust Account Course. The Commission found that Mr. Hunt, acting as principal broker and broker-in-charge of a real estate firm, and as agents for tenants, property, owners buyers and sellers in real estate transactions, failed to maintain trust money in a properly designated trust account, to properly maintain trust account records of the funds held for others and to properly reconcile those records with bank statements. The Commission noted that there was no evidence of misappropriation of monies belonging to clients or customers.
SHERWOOD D. JOHNSON, JR. (Currituck) – By Consent, the Commission suspended the broker license of Mr. Johnson for a period of three years effective October 14, 2004. The suspension was to be active for a period of 18 months with the remainder stayed for a probationary period of 18 months under certain conditions. The Commission found that Mr. Johnson, as broker-in-charge of a real estate firm, deposited the funds of others in his operating account rather than a trust account, thereby commingling the funds of others with his own. The Commission also found that Mr. Johnson failed to retain copies of his trust account records and to produce them for inspection at the request of the Commission and permitted a person not licensed as a broker to oversee the day-to-day operation of the firm without appropriate supervision. The Commission noted that Mr. Johnson made efforts to correct his records and cooperated with Commission auditors.
THOMAS S. LEACH (Gastonia ) – By Consent, the Commission suspended the broker license of Mr. Leach for a period of two years effective December 1, 2004. The Commission then stayed the suspension for a probationary period of four years under certain conditions. The Commission found that Mr. Leach improperly combined two forms to create a lease/purchase agreement which did not adequately address the needs of the parties and failed to properly complete those forms. The Commission also found that Mr. Leach failed to account for monthly payments to be applied to the purchase price for the buyer and disbursed a $5,000 deposit for items not permitted under the terms of the contract. Mr. Leach reimbursed the buyer for the deposit.
TAMMITHA L. LEWIS (Charlotte ) – By Consent, the Commission suspended the broker license of Ms. Lewis for a period of one year effective October 14, 2004. Three months of the suspension were active with the remainder stayed for a probationary period of nine months under certain conditions. The Commission found that Ms. Lewis was charged with larceny while her broker license application was pending and did not disclose the charge at that time. The Commission also found that Ms. Lewis was convicted of larceny in September 2002 and failed to disclose the conviction within 60 days of the final judgment. The Commission noted that Ms. Lewis later disclosed the conviction of her own volition.
THERESA M. LEWIS (Charlotte ) – By Consent, the Commission permanently revoked the salesperson license of Ms. Lewis effective October 13, 2004. The Commission found that Ms. Lewis operated an unlicensed real estate brokerage firm and failed to submit to the supervision of her broker-in-charge. The Commission also found that Ms. Lewis refused to provide either transaction documentation or trust account records to the Commission related to a particular transaction where she had falsely informed the seller that the buyers had deposited a $50,000 earnest money deposit into her trust account. Finally, the Commission found that, in another transaction, Ms. Lewis made changes in the MLS to another agent’s listing without either the agent’s or seller’s permission. In multiple transactions involving a seller, Ms. Lewis failed to provide material facts to the bank, the buyers or the buyers’ lender and gave the bank a contract and closing statement that were different than the documents created by the closing attorney.
STANLEY L. LONG (Matthews) – By Consent, the Commission permanently revoked the broker license of Mr. Long effective January 13, 2005. The Commission found that Mr. Long, as principal broker and broker-in-charge of a real estate firm, procured a buyer who agreed to purchase a property at a price of $164,900, got the seller to accept $27,400 less for the property, and arranged for the closing attorney to pay the difference to Mr. Long as an “assignment fee” from the loan proceeds, a fee that was false. The Commission also found that Mr. Long did not have an agency agreement to represent anyone in the transaction.
LONG REAL ESTATE INVESTMENTS LLC (Matthews) – By Consent, the Commission permanently revoked the firm license of Long Real Estate Investments effective January 13, 2005. The Commission found that Long Real Estate Investments procured a buyer who agreed to purchase a property at a price of $164,900, got the seller to accept $27,400 less for the property, and arranged for the closing attorney to pay the difference to Long Real Estate Investments as an “assignment fee” from the loan proceeds, a fee that was false. The Commission also found that Long Real Estate Investments did not have an agency agreement to represent anyone in the transaction.
DELORES MAPP (West Kenly) – By Consent, the Commission revoked the salesperson license of Ms. Mapp effective November 1, 2004. The Commission found that Ms. Mapp acted as a buyers’ agent for a group of investor-purchasers who contracted to buy a property for $348,000 but the closing statement showed the purchase price as $450,000. The difference was paid back to the investors as a second mortgage payoff; in fact, there was no second mortgage.
WILLIE C. MATTHEWS (Charlotte ) – By consent, the Commission suspended the salesperson license of Mr. Matthews for a period of six months effective December 15, 2004. The Commission then stayed the suspension for a probationary period of six months. The Commission found that Mr. Matthews failed to disclose on his 1998 salesperson application that he had been convicted of driving while license revoked on several occasions between 1987 and 1994, although he did disclose other convictions. The Commission also found that Mr. Matthews failed to disclose on his 2003 application for a broker license certain convictions for driving while license revoked, although he did disclose others, and that he failed to promptly respond to Letters of Inquiry concerning these matters.
PAULETTE ROGERS MCKOY (Garner) – By Consent, the Commission revoked the broker license of Ms. McKoy effective November 1, 2004. The Commission found that Ms. McKoy, as broker-in-charge of a real estate firm, failed to maintain trust account records in the manner required by the Real Estate License Law and Commission rules and that, as a result, funds for an investment group were not properly accounted for while under her control. The Commission also found that Ms. McKoy failed to respond to formal Letters of Inquiry from the Commission in a timely manner. Ms. McKoy will be eligible to apply for reinstatement of her salesperson license after 60 days, upon certain conditions.
PAUL L. MILLER (Winston-Salem ) – By Consent, the Commission suspended the broker license of Mr. Miller for a period of one year effective February 1, 2005. Two months of the suspension are to be active with the remainder stayed for a probationary period of three years. The Commission found that Mr. Miller failed to maintain records of receipt, deposit and disbursement of the funds held for others in the manner required by the Real Estate Law and Commission rules. The Commission noted that Mr. Miller took immediate steps to remedy the problems and completed the Commission’s Basic Trust Account Course.
NATIONS PROPERTY (Raleigh) – By Consent, the Commission revoked the firm license of Nations Property effective November 1, 2004. The Commission found that Nations Property failed to properly maintain trust account records in the manner required by Commission rules.
CHARLENE D. NIELSEN (Greenville ) – By Consent, the Commission reprimanded Ms. Nielsen effective November 1, 2004. The Commission found that Ms. Nielsen, as a real estate broker and the bookkeeper of a real estate brokerage firm, failed to maintain the trust accounts in compliance with the Real Estate License Law and Commission rules. The rental trust account contained approximately $4,000 in unidentified funds for which she could not account. The Commission noted that Ms. Nielsen corrected her accounting errors and the trust account is now in full compliance.
DARRELL S. PENDERGRAPH (Haw River) – By Consent, the Commission revoked the broker license of Mr. Pendergraph effective December 1, 2004. The Commission found that Mr. Pendergraph was convicted in U.S. District Court of 10 counts of mail fraud, seven counts of Making, Possessing, and Altering Forged Securities, and two counts of Transporting Fraudulent Securities in Interstate Commerce. The Commission also found that Mr. Pendergraph was ordered to serve 60 months of incarceration followed by three years of probation, participate in a substance abuse treatment program, refrain from opening new lines of credit without the approval of his probation officer and pay restitution in the amount of $1,431,166.69.
TAM H. PHAN (Raleigh) – By Consent, the Commission suspended the broker license of Mr. Phan for a period of two years effective January 31, 2005. Twelve months of the suspension are to be active and the remainder stayed for a probationary period of two years. The Commission found that Mr. Phan undertook to represent buyers in the purchase of two properties, but failed to disclose to the sellers of one of the properties that he represented the buyers. The Commission also found that Mr. Phan counseled the sellers of that property to cancel their listing contract with the listing broker, counseled one seller to sign the name of the other seller to a contract and to deeds, did not inform his broker of the transaction and misrepresented his relationship with the buyers to the Commission.
SONIA H. RADENCOVICI (Charlotte ) – By Consent, the Commission revoked the salesperson license of Ms. Radencovici effective January 18, 2005. The Commission found that the U.S. District Court of Connecticut adjudged Ms.Radencovici guilty of money laundering and of violating the federal Racketeer Influenced and Corruption Organizations Act (RICO Act)and sentenced Ms. Radencovici to 48 months of incarceration and three years of supervised probation on each count, with the sentences to run concurrently.
STEPHENSON & ASSOCIATES LTD. (Raleigh) – By Consent, the Commission revoked the firm license of Stephenson & Associates effective November 1, 2004. The Commission found that Stephenson & Associates, through its principal broker and broker-in-charge, Thomas A. Stephenson, both a licensed real estate broker and licensed appraiser, relied on representations of the buyer and/or representatives of the buyer in appraising three properties to the effect that numerous and substantial improvements to the properties would be made after closing and then appraised the properties as if the improvements were already in place. The Commission also found that the buyer did not make the improvements after each closing.
THOMAS A. STEPHENSON (Raleigh ) – By Consent, the Commission revoked the broker license of Mr. Stephenson effective November 1, 2004. The Commission found that Mr. Stephenson, both a licensed real estate broker and licensed appraiser, relied on representations of the buyer and/or representatives of the buyer in appraising three properties to the effect that numerous and substantial improvements to the properties would be made after closing and appraised the properties as if the improvements were already in place. The Commission also found that the buyer did not make the improvements after each closing.
C. ELIZABETH SUCHER (Sanford ) – By Consent, the Commission revoked the broker license of Ms. Sucher effective November 5, 2004. The Commission found that Ms. Sucher, as broker-in-charge of a real estate firm between June, 1987 and July, 2001 and again from July, 2002 through June 2004, failed to retain and maintain trust account records in compliance with the Real Estate License Law and Commission rules.
LARRY J. TORRENCE (Sanford ) – By Consent, the Commission revoked the salesperson license of Mr. Torrence effective January 13, 2005. The Commission found that Mr. Torrence, as an owner and sales associate with a real estate firm, failed to maintain the trust accounts of the real estate firm in compliance with the Real Estate License Law and Commission rules. The Commission noted that it is unaware of any consumers who were injured as a result of the issues with regard to maintenance of the trust accounts.
BRENDA L. VENABLE (Wake Forest ) – By Consent, the Commission revoked the salesperson license of Ms. Venable effective January 18, 2005. The Commission found that Ms. Venable failed to disclose on her salesperson license application misdemeanor convictions that occurred between 1982 and 1993 and, after being licensed, failed to disclose a 2000 conviction relating to a domestic dispute. Ms. Venable will be eligible to apply for reinstatement of her license after three months upon certain conditions.
LAWRENCE WILLIAMS (Winston-Salem ) – By Consent, the Commission revoked the salesperson license of Mr. Williams effective January 1, 2005. The Commission found that Mr. Williams failed to advise the seller of two parcels of land to seek subdivision approval by the county prior to subdividing the two lots into five and listing them for sale. Mr. Williams also failed to verify that the subdivision was approved. The Commission also found that Mr. Williams failed to properly identify the first lot being sold and, as a result, the buyer received one of the original parcels, thus making the other lots shown on the proposed subdivision layout unable to be separately marketed.
This article came from the February 2005-Vol35-3 edition of the bulletin.
Responding to recommendations from its 2004 Vacation Rental Advisory Committee, the Real Estate Commission has agreed to support efforts to amend the North Carolina Vacation Rental Act.
One change would simplify the reporting requirements for vacation rental managers and property owners when selling property subject to a vacation rental agreement. Another would subject property owners to the same requirements for refunding rent regardless of whether the tenant is forced to leave the property due to a mandatory evacuation order or is unable to occupy it due to a mandatory evacuation order.
Also upon the recommendation of the advisory committee, the Commission will publish a brochure to better inform owners of vacation rental properties regarding security deposits, vacation interruption insurance, rent refunds and related matters. The full report of the advisory committee is available on the Commission’s website, www.ncrec.state.nc.us.
Serving on the advisory committee were Timothy M. Cafferty (Corolla), Linda A. Hess (Kill Devil Hills), Kim J. Johnson (Blowing Rock), Timothy W. Midgett (Hatteras), S.R. “Buddy” Rudd, Jr. (Oak Island), J. Alan Holden (Holden Beach), Assistant Attorney General Barbara Shaw, NCAR Director of Regulatory Affairs Rick Zechini, Bill Rowe from the N.C. Justice and Community Development Center, and Real Estate Commission members Skip Alston and WandaProffitt. Commission Executive Director Phillip T. Fisher facilitated the discussion.
The Real Estate Commission thanked the advisory committee members for their valuable service in addressing these and other important issues affecting vacation rental consumers, property owners and rental managers.
This article came from the November 2004-Vol35-2 edition of the bulletin.
The North Carolina Real Estate Commission was honored to receive the 2004 “Specialty Communications” award from the Association of Real Estate License Law Officials (ARELLO). The award recognized the North Carolina Real Estate Agent Safety Guide, a cooperative venture of the Real Estate Commission and the North Carolina Association of REALTORS®’ Real Estate Safety Council. The award was presented to the Commission at ARELLO’s annual conference inPittsburgh.
Based upon a similar publication of the Washington Real Estate Safety Council, the guide contains common sense safety tips for real estate agents. Since publication in March, more than 20,000 copies have been purchased from the Commission. Every licensee who takes the 2004-2005 continuing education Update Course will receive a copy together with instruction on how to apply the helpful information in their day-to-day real estate practices.
For information on how to purchase the Safety Guide, see the order form on page 7 of this Bulletin, or the Commission’s website, www.ncrec.state.nc.us.
This article came from the November 2004-Vol35-2 edition of the bulletin.
Matthew J. “Rick” Watts of Fayetteville has been elected chairman and Marsha H. Jordan of Lincolnton, vice chair, of the North Carolina Real Estate Commission for the 2004-2005 term beginning August 1; it was announced by Phillip T. Fisher, Executive Director.
Watts is Broker Associate and Senior Sales Executive with Coldwell Banker United Realty in Fayetteville. In 12 years with Coldwell Banker, he has been a member of the President’s Elite for five years and the President’s Circle for seven years.
Watts entered the real estate business in 1992 after retiring from a 30-year career with the U. S. Army where he achieved the rank of Command Retention Sergeant Major for the XVIII Airborne Corps.
Among numerous military honors, Watts holds the U. S. Army’s Legion of Merit, the highest peacetime award for military achievement and honorable service. He was also featured in the recent book, “100 Sergeants Major of Color”, and was selected as the Fayetteville and Cumberland County Ministerial Council’s “Citizen of the Year” for 2004.
He is a member of the Veterans of Foreign Wars, American Legion, the Airborne and Special Operations Museum Foundation Board and past member of the Executive Committee of the National Association for the Advancement of Colored People, among other organizations.
Watts and his wife, Margaret, a retired teacher with 31 years of service, live in Fayetteville. Their daughter, Tiffany, recently received her doctoral degree from the University of North Carolina at Chapel Hill.
A graduate of the University of Virginia, Jordan entered the real estate business in 1986. She is owner of Apple Realty in Lincolnton, a Graduate of the REALTORS® Institute and a Certified Residential Specialist.
Jordan is a director of the North Carolina Real Estate Education Foundation and a former president of the Lincolnton Board of REALTORS® and Dean of the REALTORS® Institute. Active in community affairs, she has served on the board of directors of the Lincolnton Chamber of Commerce and as president for Downtown Development, and is a member of the Lincolnton Rotary Club.
This article came from the November 2004-Vol35-2 edition of the bulletin.
By Gary R. Caddell
Senior Auditor/Investigator, Training Officer
Have you ever asked yourself questions like those in this article? Do you know the answers? If not, there’s a place where you can get the answers and much more. Plus, you will earn continuing education credit. All you need to do is register for the Real Estate Commission’s “Basic Trust Account Procedures” and “Trust Account Procedures for Resort Property Managers” courses.
The schedule for the Spring 2005 Trust Account Caravan offers twelve “Basic Trust Account Procedures” courses and four “Trust Account Procedures for Resort Property Managers” courses at the following locations: Asheville, Fayetteville, Greensboro,Greenville, Huntersville, Kill Devil Hills, Murphy and Wilmington. You can register on line (it’s faster), or use the registration form in this issue of the Bulletin (See page 10). Each course counts as four hours of elective continuing education credit.
The “Basic Trust Account Procedures” course emphasizes instruction on the preparation and maintenance of trust account records and the reconciliation process. It covers the Commission’s rules on handling and accounting of trust funds in detail, and also covers related topics, such as the Tenant Security Deposit Act. This class is a must for brokers-in-charge and bookkeepers. (Unlicensed bookkeepers are welcome.)
The “Trust Account Procedures for Resort Property Managers” class is designed to assist resort property managers with the complicated process of maintaining trust account records on vacation rentals. This course will also cover recent recommendations from the Real Estate Commission concerning changes to the Vacation Rental Act. Since this course focuses on issues specific to resort property management, the Commission recommends that you attend the Basic course prior to attending the Resort course. The Resort course is only offered during the Spring Caravan, so don’t miss it!
The Spring 2004 Trust Account Caravan was very successful, with a total of 531 attendees. Since demand is expected to remain high, we encourage you to register early to ensure your spot at the Spring 2005 Trust Account Caravan.
Commission Initiates Rulemaking Process
The Real Estate Commission at its October meeting agreed to commence the rulemaking process.
The Commission will consider changes in rules relating to agency agreements and disclosures, proof of licensure, advertising, handling and accounting of funds, offers and sales contracts, business entities and continuing education.
A public hearing will be scheduled, most likely in January, once specific text for these rules has been developed. Licensees should visit the Commission’s website, www.ncrec.state.nc.us, for further information.
This article came from the November 2004-Vol35-2 edition of the bulletin.
The statistics here reflect the activities of the Real Estate Commission during the period from May 1, 2003 to April 30, 2004.
Contact
• 232,500 telephone calls (a 16% increase)
• 2,100,000+ website “hits” (an 840% increase)
Publications
• 805,000 publications distributed to licensees, consumers and applicants
Technology
Made more effective use of technology by:
• Completing migration of 89,000 licensee records to a new and faster Windows-based database system
• Increasing online license renewals to 31%
Licensing
• 167,000 license record changes
• 11,409 applications processed for licenses by examination (a 23% increase)
• 10,430 license examinations administered (a 23% increase)
• 5,281 licenses by examination issued (a 23% increase)
• 3,294 broker licenses issued without examination (a 20% increase)
• 374 licenses issued by reciprocity
• 1,001 firm licenses issued (a 41% increase)
• 278 expired, surrendered and suspended licenses reinstated (a 70% increase)
• 306 license applications regarding character issues reviewed
• 123 license applicant conferences conducted (a 50% increase)
• 6 new and 51 renewed private real estate school licenses
Education
• 42 approvals (a 163% increase) and 22 renewed approvals issued to instructors
• 64 new continuing education elective courses approved (for a total of 305 courses)
• 13 new continuing education sponsors approved (for a total of 179)
• 8 new continuing education Update Course instructors approved (for a total of 109)
• 48 Broker-in-Charge Course sessions conducted for 2,719 licensees
• 2,700 student rosters electronically processed for CE courses
Audits/Investigations
• 109 field investigations completed
• 228 trust accounts examined (a 34% increase)
• 481 persons interviewed
• 26 trust account sessions conducted for 794 students
• 39 “spot inspections” performed on 70 different trust accounts
Legal
• 1,117 case (complaint) files opened (+234 over last year) and 1,098 closed (+193 over last year)
• 19 licensees reprimanded
• 54 licenses suspended
• 26 licenses revoked
• 14 licenses surrendered
• 53 cases utilized conditional remedies
• 14 Recovery Fund hearings conducted
• 26 license application hearings held
This article came from the November 2004-Vol35-2 edition of the bulletin.
Dear Licensee:
The Real Estate Commission’s staff writes to licensees for many reasons, including to inquire about a complaint that has been filed against you or against another agent concerning a matter in which you were involved.
When you receive a Letter of Inquiry from the Commission, you should read and respond to it promptly, no later than 14 days from receipt. If you cannot do so, you may request an extension of time (in advance). You are not required to hire an attorney to respond on your behalf, although you are welcome to hire one if you choose.
To avoid delays, it is important that the Commission has your current residence and business addresses at all times. You must notify this office no later than ten (10) days following any change.
You are required to provide copies of all documentation requested in a Letter of Inquiry. Typically, these might include records of transactions and trust accounts, advertisements, brochures, maps, course completion certificates or even a copy of your complete file pertaining to a transaction.
Most licensees who receive Letters of Inquiry take the letters seriously and respond in a timely manner. However, those few who fail to respond are subject to disciplinary action by the Commission. If you need more time, ask for it. If you have questions, contact the staff member who wrote to you and he or she will be glad to clarify the request.
Sincerely yours,
Stephen L. Fussell
Consumer Protection Officer
This article came from the November 2004-Vol35-2 edition of the bulletin.
Gov. Michael F. Easley has reappointed Real Estate Commission Chairman Matthew J. “Rick” Watts and members Raymond A. “Buddy” Bass and Sang J. Hamilton, Sr., to three-year terms expiring July 31, 2007 and the North Carolina Senate, upon the recommendation of Senate President Pro Tem Marc Basnight, has reappointed Vice Chairman Marsha H. Jordan to a term ending July 31, 2005.
This article came from the November 2004-Vol35-2 edition of the bulletin.
By: Blackwell M. Brogden, Jr., Chief Deputy Legal Counsel
Did you know that the Real Estate License Law allows the Commission to apply to the Superior Court for an injunction to prevent unlicensed people and firms from engaging in real estate brokerage? Unfortunately, the Commission has had to turn to this remedy more often recently than at any time in its history in order to protect the public.
An injunction is an order issued by a judge directing a person or firm to refrain from specified acts or conduct. This form of judicial action is used when a simple judgment for money will not protect the rights of a party in a civil action. Injunctions are used in real property cases to enforce restrictive covenants, stop trespassers, or prevent other interference with an owner’s rights in a property; in commercial cases to prevent misuse of trademarks, copyrighted or patented material or breach of an agreement not to compete; and, in cases brought by a government agency, such as the Commission, to end continuing violations of law or prevent further violations of law.
In order to obtain an injunction, the Commission first files a complaint in civil court and serves the unlicensed person or firm. The defendants can answer the complaint and raise any defenses they may have, e.g. that they are properly licensed or that they are not engaged in unlicensed activity. Ultimately, the question of whether unlicensed conduct has occurred is decided by the court. If the Commission proves the unlicensed activity, the court can issue an injunction requiring the unlicensed person or firm to stop. Failure to comply can result in punishment for contempt of court, including fines and imprisonment.
Of course, not all unlicensed activity is prohibited by law. For example, buying, selling or leasing one’s own property has always been exempt from the License Law. However, occasionally someone without a license will attempt to broker real estate transactions, including leases or sales, without a license. Although such persons may call themselves “consultants” or “advisors,” if they are assisting others in buying, selling, or leasing, for a fee, their conduct is unlawful.
On the other hand, in some cases, unscrupulous persons and firms, while claiming to be dealing on their own account, are actually acting as unlicensed brokers by unlawfully “flipping” property or renting real estate of others through the use of unrecorded sham transactions or using recorded documents that misrepresent the true nature of the transaction.
The Commission’s Legal Division has pursued the civil remedy of injunctive relief against persons and firms who, while claiming to be dealing on their own account, are actually engaged in the unlicensed practice of real estate brokerage. In other cases, the Commission, together with the Consumer Protection Section of the Attorney General’s office, have jointly filed civil suits to halt unlicensed brokerage and to end unfair and deceptive trade practices being used against consumers. In these cases, the Commission and Attorney General’s office may pursue violations of additional statutes, such as the laws governing credit repair services, discount buying clubs, the sale of products regulated as insurance or security interests, and loan fraud.
There are several important actions a licensee can take when confronted with a transaction that may involve unlicensed brokerage activity masquerading as something else:
(1) Advise your client to consult with their own attorney before entering into a transaction with unusual documents or a “creative” approach;
(2) Consult the Consumer Protection Section of the Attorney General’s Office, (919) 716-6000 or www.ncdoj.com;
(3) Contact the Commission’s Legal Services Division, (919) 875-3700, Ext. 131 for additional information.
This article came from the November 2004-Vol35-2 edition of the bulletin.