HARRY F. ANDERSON (Whittier) – The Commission revoked the broker license of Mr. Anderson effective April 22, 2002. The Commission found that while his firm was no longer authorized to conduct business in North Carolina because of the suspension of its corporate charter by the state in 1991 and its administrative dissolution in 1993, Mr. Anderson continued to renew the firm license annually until its expiration June 30, 2001. The Commission further found that Mr. Anderson failed to enter into a written listing agreement for property he advertised and sold, misrepresented the true condition of property to buyers, failed to obtain the buyers’ signatures on and to deliver a Residential Property Disclosure Statement and employed an unlicensed receptionist, to whom he paid commissions on firm transactions.
ARRAN REALTY, INC. (Fayetteville) – By Consent, the Commission reprimanded Arran Realty effective February 15, 2002. The Commission found that the firm failed to maintain accurate trust account records and perform monthly reconciliations in accordance with Commission rules. The Commission noted that Arran Realty cooperated fully in the inquiry and implemented requested bookkeeping improvements.
B & B ON THE BEACH, INC. (Corolla) – By Consent, the Commission suspended the firm license of B & B On The Beach, Inc., for a period of two years effective March 1, 2002. The Commission then stayed the suspension for a probationary term of three years. The Commission found that the firm had failed for a period of two years to perform the monthly reconciliation of its trust accounts required by Commission rules. The Commission further found that, as a result, the firm had not properly applied funds held for others to the purposes for which those funds were held. The Commission noted that B&B undertook to remedy the situation and implement required record keeping procedures.
CENTRAL REAL ESTATE CORP, d/b/a HARVEST TIME REAL ESTATE CENTRAL (Rocky Mount) – The Commission revoked the firm broker license of Central Real Estate Corp., effective March 8, 2002. The Commission found that the firm failed to accurately account for and remit funds it held for others as a broker, failed to maintain a system of ledgers, journal and monthly reconciliation, could not account for funds of others it received in the course of its brokerage business, and continued to deposit and disburse trust money from accounts with insufficient funds to meet liabilities. The Commission further found that the firm failed to maintain records of the transactions it conducted, allowed its broker to submit false documents to obtain loan approval, and unlawfully allowed unlicensed persons affiliated with it to engage in conduct for which a real estate license was required.
DANE Z. CLAY (Fayetteville) – By Consent, the Commission revoked the salesperson license of Mr. Clay effective March 1, 2002. The Commission found that Mr. Clay failed to submit himself to the supervision of his broker-in-charge in multiple transactions. The Commission further found that after leaving the broker-in-charge, Mr. Clay failed to submit himself to the supervision of his next broker-in-charge when acting as a licensed agent.
EARLY AMERICAN HOMES, INC. (Whittier) – The Commission revoked the firm broker license of Early American Homes, Inc., effective April 22, 2002. The Commission found that while the firm was no longer authorized to conduct business in North Carolina because of the suspension of its corporate charter by the state in 1991 and its administrative dissolution in 1993, the firm continued to renew its license annually until its expiration June 30, 2001. The Commission further found that Early American Homes, Inc., failed to enter into a written listing agreement for property it advertised and sold, misrepresented the true condition of the property to buyers, failed to obtain the buyers’ signatures on and to deliver a Residential Property Disclosure Statement and employed an unlicensed receptionist to whom it paid commissions on firm transactions.
JONATHAN H. ELLIOT (Fayetteville) – By Consent, the Commission reprimanded Mr. Elliot effective February 15, 2002. The Commission found that Mr. Elliot failed to maintain accurate trust account records and perform monthly reconciliation in accordance with Commission rules. The Commission noted that Mr. Elliot cooperated fully in the inquiry and implemented requested bookkeeping improvements.
MICHAEL J. FOX AND ASSOCIATES REALTORS, LLC (Charlotte) – The Commission accepted the voluntary surrender of the Michael J. Fox and Associates Realtors’ firm license for a period of one year effective April 1, 2002. The Commission dismissed without prejudice allegations that the firm violated provisions of the Real Estate License Law and Commission rules. The firm neither admitted nor denied misconduct.
ROBERT E. GARDINIER, JR. (Atlantic Beach) – By Consent, the Commission revoked the broker license of Mr. Gardinier effective May 1, 2002. The Commission found that Mr. Gardinier failed to disclose on his 1997 license application that he then had a forgery charge pending against him in South Carolina. The Commission further found that Mr. Gardinier was convicted of the forgery charge and was subsequently convicted in North Carolina of other unrelated criminal charges. Mr. Gardinier was allowed to apply for a new license on certain conditions including that he make a complete and accurate application.
JON C. GILLMAN (Charlotte) – By Consent, the Commission revoked the salesperson license of Mr. Gillman effective March 1, 2002. The Commission found that, in his application for licensure, Mr. Gillman failed to make a full disclosure of his criminal history. Mr. Gillman was allowed to apply for the reinstatement of his salesperson license thirty days following its revocation on certain conditions including that he provide the Commission with complete information concerning his criminal convictions.
JAMES E. HARRISON (Fayetteville) – By Consent, the Commission revoked the broker license of Mr. Harrison effective April 1, 2002. The Commission found that Mr. Harrison failed to properly account for monies coming into his possession and failed to adequately maintain his trust account records as required by Commission rules. The Commission also found that Mr. Harrison failed to reconcile his trust accounts on a monthly basis and that liabilities of his two trust accounts exceeded funds in those accounts. The Commission noted that Mr. Harrison since reimbursed those accounts and no consumer was harmed as a result.
SUSAN C. HASTY (Raleigh) – The Commission revoked the broker license of Ms. Hasty effective December 15, 2000. The Commission found that Ms. Hasty failed to accurately account for and remit to others funds held for them as a broker, failed to maintain a system of ledgers, journal and monthly reconciliations, continued to deposit and disburse trust funds from accounts with insufficient funds to meet liabilities, used a bookkeeping system that did not comply with Commission rules and used funds of some owners to pay expenses of other owners. The Commission also found that Ms. Hasty failed to supervise a firm salesperson and misrepresented to the Commission her supervision of that salesperson. Ms. Hasty appealed to the Superior Court of Wake County, which upheld the order of the Commission.
JAY C. JOHNSON (Fayetteville) – The Commission accepted the voluntary surrender of the broker license of Jay C. Johnson for a period of two years effective February 19, 2002. The Commission dismissed without prejudice allegations that the firm violated provisions of the Real Estate License Law and Commission rules. Mr. Johnson neither admitted nor denied misconduct.
NEW DIMENSIONS REALTY, INC. (Fayetteville) – The Commission accepted the permanent voluntary surrender of the firm license of New Dimension Realty, Inc., effective February 19, 2002. The Commission dismissed without prejudice allegations that the firm violated provisions of the Real Estate License Law and Commission rules. The firm neither admitted nor denied misconduct.
LOU ANN NORRIS (Emerald Isle) – By Consent, the Commission revoked the salesperson license of Ms. Norris effective April 1, 2002. The Commission found that Ms. Norris pled guilty in United States District Court, Eastern District of North Carolina, to Bank Larceny in violation of federal law.
PINNACLE INN RESORT RENTALS & SALES, INC. (Banner Elk) – By Consent, the Commission suspended the firm license of Pinnacle Inn Resort Rentals & Sales effective April 1, 2002 for a period of three years. The Commission then stayed the suspension effective April 1, 2002, for a probationary a period of five years. The Commission found that Pinnacle Inn contracted with an individual to act as its broker-in-charge who did not properly maintain its trust accounts as required by Commission rules. The Commission further found that Pinnacle allowed the situation to continue for six months before taking remedial action.
RENTAL RESOURCES INTERNATIONAL, INC. (Raleigh) – The Commission revoked the firm broker license of Rental Resources effective December 15, 2000. The Commission found that the firm failed to accurately account for and remit to others funds held for them as a broker, failed to maintain a system of ledgers, journal and monthly reconciliations, continued to deposit and disburse trust funds from accounts with insufficient funds to meet liabilities, used a bookkeeping system that did not comply with Commission rules and used funds of some owners to pay expenses of other owners. The firm appealed to the Superior Court of Wake County, which upheld the order of the Commission.
MELANIE C. SHANNON (Oak Island) – The Commission accepted the voluntary surrender of the salesperson license of Ms. Shannon for a period of one year effective March 15, 2002. The Commission dismissed without prejudice allegations that Ms. Shannon violated provisions of the Real Estate License Law and Commission rules. Ms. Shannon neither admitted nor denied misconduct.
GLENN A. SHORT (Shelby) – By Consent, the Commission suspended the salesperson license of Mr. Short effective April 1, 2002 for a period of 12 months. The Commission then stayed the suspension effective May 1, 2002 for a probationary term of 12 months. The Commission found that Mr. Short, during the final examination of a pre-licensing broker course, consulted course preparation materials contrary to the instructor’s policy for the examination and the rules of the Real Estate Commission.
SUGAR MOUNTAIN LODGING, INC. (Banner Elk) – By Consent, the Commission reprimanded Sugar Mountain Lodging effective March 27, 2002. The Commission found that Sugar Mountain Lodging, at a time when it had no principal broker or broker-in-charge, continued to conduct its rental management business through its unlicensed officers and employees.
T&T RENTALS, INC. (Washington) – By Consent, the Commission revoked the firm license of T&T Rentals effective April 18, 2002. The Commission found that the firm issued a check in the amount of $25,000 to clients against insufficient trust account funds to reimburse security deposits for property managed by the firm. The Commission also found that a salesperson issued a personal check in the amount of $52,000 also against insufficient funds to the same clients to be held as collateral for rental income from the property. Neither the security deposits nor the rental income have been reimbursed.
SHERRY T. TOLER (Washington) – By Consent, the Commission revoked the salesperson license of Mrs. Toler effective April 18, 2002. The Commission found that Ms. Toler managed a brokerage firm without the supervision of a broker-in-charge. The Commission also found that Ms. Toler issued a firm check in the amount of $25,000 to clients against insufficient trust account funds to reimburse security deposits for property managed by the firm and a personal check in the amount of $52,000 also against insufficient funds to the same clients to be held as collateral for rental income from the property. Neither the security deposits nor the rental income have been reimbursed.
VIRGINIA S. WARREN (Washington) – By Consent, the Commission revoked the broker license of Ms. Warren effective April 1, 2002. The Commission found that Ms. Warren, as broker-in-charge of a firm, failed to perform the duties of broker-in-charge.
CHRISTOPHER S. WEBB (Rocky Mount) – The Commission revoked the broker license of Mr. Webb effective March 8, 2002. The Commission found that Mr. Webb, while in actual control of a real estate firm’s trust account records and, later, after becoming the broker-in-charge of the firm, failed to accurately account for and remit to others funds the firm held for them as a broker, failed to maintain a system of ledgers, journal and monthly reconciliations, could not account for funds of others received by him and his firm in the course of their brokerage business, and continued to deposit and disburse trust money from accounts with insufiicient funds to meet liabilities. The Commission further found that Mr. Webb engaged in a series of two real estate transactions in which he acted both as agent for another and as a principal in which he falsified documents submitted to obtain loan approval, misrepresented material facts about the transactions to different parties, and failed to maintain or produce for inspection by the Commission the records required to be kept concerning these transactions.
This article came from the June 2002-Vol33-1 edition of the bulletin.
The new Questions and Answers on: Residential Subdivisions and Planned Communities brochure will educate consumers in both the new development and re-sale markets. It is the 10th Q&A brochure in the series including three in Spanish.
A companion brochure to Questions & Answers on: Condos and Townhouses, it includes information on road maintenance issues and how North Carolina’s Planned Community Act applies to residential developments.
The brochure is free and may be ordered using the Publications Order Form on page 7 of this issue of the Bulletin.
This article came from the February 2002-Vol32-4 edition of the bulletin.
The North Carolina Real Estate Commission currently has arrangements with the following states enabling North Carolina brokers and salespersons to obtain nonresident licenses there without taking their licensing examination:
Alabama, Arkansas, Connecticut, Georgia, Indiana, Iowa, Kentucky, Mississippi, Nebraska, Oklahoma, South Carolina, Tennessee, West Virginia.
This article came from the February 2002-Vol32-4 edition of the bulletin.
The Real Estate Commission also regrets to announce the passing of former member and Chairman John W. Olive (Wilmington) who served with distinction on the Commission from 1969 to 1973.
This article came from the February 2002-Vol32-4 edition of the bulletin.
I went to lunch one day and ended up in a slow line at my favorite fast food outlet. The fellow next to me in that line was a respected licensee with a similar taste in traditional southern cuisine. We fell to “talking shop,” including the various methods for valuing an ongoing real estate brokerage business. At the end of a complex discussion of ratios and formulas, he explained, “Now if the trust account is short, the value of the business is either zero or a negative number.”
OK. Simple. According to at least one licensee, if your trust account is short, no matter how many clients, contracts and other assets you have, your business is worthless. Does that mean that if the bank statement shows money in the trust account, you can just stop there? No!
Firm A does not correctly utilize an owner ledger system that balances to a journal, or perform the monthly reconciliation required by Commission rule. It is only when the Commission trust account auditor comes around for a visit that the BIC finds out that the firm routinely pays out earnest money from the trust account for closings when it is not actually holding that money because the deposit went to a builder. One would expect this to show up pretty soon with bounced checks, so the BIC at first can’t believe this.
However, because the BIC also was not closely reviewing the trust account records, he also had not figured out that in other transactions, where the closing attorney had credited the earnest money held by the firm in the trust account against the total amount of commission due at closing, Firm A had never taken those funds out of the trust account after closing. So, by unlawful commingling (which kept money belonging to the firm in the trust account instead of being transferred to its operating account, reducing the actual amount of the firm income it could spend), the BIC managed to keep himself from finding out that trust money was being misapplied!
I don’t have to make this example up — it happens all too often. Done intentionally, this kind of misconduct can be used by crooks to hide trust account embezzlement for awhile. Done unintentionally, the BIC disguises the value of the firm with a pretense of solvency. Either way, the licenses of the firm and its BIC are at risk, as is the money of the firm’s clients and customers.
The heart of the problem is that all too often, the BIC views the trust account record keeping as a burden or a homework assignment in a foreign language. Yet, how can the BIC know if the business itself is healthy and profitable if he or she really does not understand what the trust account is doing on a regular basis? Brokers-in-Charge have a responsibility to understand their office bookkeeping systems and to know what’s going on.
The key is that the BIC must understand how a ledger system is created, how the ledger system relates to the journal, and that simply balancing the bank statement to the journal is only the first step in the monthly reconciliation. The total of all the pending or open ledger balances should equal the reconciled bank balance which should equal the running balance on the journal. If to reach this balance, the firm must include negative balances on owner ledgers, there is a serious problem. No owner ledgers should ever have a negative balance.
If you are the BIC or bookkeeper and if the concepts described above don’t make sense to you, it’s time to take the trust account course and other educational programs to get yourself up to speed. Otherwise, you may wind up asking yourself, “Why isn’t my business worth more than zero?”
This article came from the February 2002-Vol32-4 edition of the bulletin.
Greta S. Frye of RE/MAX Hallmark Realty in Winston-Salem and Cathy A. Phillippi of Dickens-Mitchener and Associates in Charlotte are the recipients of the Commission’s Joe Schweidler and Blanton Little Memorial Scholarships for 2001.
The Commission awards the scholarships, in honor of Schweidler and Little, both former Commission Executive Directors, to persons selected by the North Carolina Real Estate Educational Foundation for outstanding scholastic achievement in the North Carolina REALTORS® Institute program during the previous calendar year.
This article came from the February 2002-Vol32-4 edition of the bulletin.
The Real Estate Association of Egypt (REA) has requested the North Carolina Real Estate Commission to provide technical assistance in helping it modernize the real estate industry in Egypt that, the Association proudly proclaims, has “survived seven millenniums”. The Commission has agreed to assist REA by preparing for its use a document identifying the major components of a real estate licensing and regulatory program based upon the North Carolina model and licensing programs in other states.
According to Association General Secretary Fathallah Fawzi and REA founding member Dr. Ahmed El-Sharkawy, “Current market conditions and the increasing sophistication of the market players (buyers and sellers) demand initiating a more formal, transparent and sophisticated framework to better regulate the real estate market in Egypt. REA believes that a framework will create the right environment to foster continuous improvement in the real estate market, which constitutes a considerable part of Egypt’s economy.” They add that the “proposed document identifying the major components of the licensing program shall be the foundation on which REA will work towards defining the blueprints of the REA licensing program.”
Hesham El-Boulaki, MCE, PE, who is both a native of Egypt and a North Carolina resident, will on behalf of REA, liaise with Commission Executive Director Fisher, Director of Education and Licensing Larry Outlaw and Legal Counsel Thomas R. Miller in developing the document and furthering the working relationships between REA and Real Estate Commission.
This article came from the February 2002-Vol32-4 edition of the bulletin.
Agency agreements authorize a real estate firm and its associates to act on behalf of their clients — to market a seller-client’s property, to search for and assist a buyer-client with purchasing a suitable property or to manage an owner’s rental property. All agency agreements authorize agents to perform certain duties, but they do not give the agents unlimited authority to act on behalf of clients or to make decisions for their clients or customers. The following is a partial list of services for which agents must obtain authorization.
1 A listing agent may not advertise a seller’s property or perform any service on behalf of a seller-client without first entering into a written listing agreement with the seller.
2 A listing agent should not advertise a seller’s property at any price other than the price selected by the seller.
3 A listing agent must not decide on his or her own whether an offer is acceptable. The agent must deliver the offer to the seller to enable the seller to decide whether the offer is acceptable. [Note: Even when an offer is negotiated via telephone, the listing agent must send or deliver any written offer to the seller for review.]
4 A listing agent or buyer agent should refrain from giving a buyer or prospective buyer keys or possession of a seller’s property without first obtaining the seller’s express permission. If a closing occurs so late on a Friday afternoon that the new deed will not be recorded until the following Monday or later, then the agents must obtain the seller’s permission before giving keys to the buyer and should recommend that the parties enter into a written agreement to permit the buyer’s possession before closing. (Remember, the standard form Offer to Purchase and Contract defines “closing” as the date and time the deed is recorded.)
5 A listing agent or buyer agent should avoid signing closing statements or other documents on behalf of a client without first obtaining written authority, preferably in the form of a power of attorney. Agents should avoid signing anything for customers.
6 A listing agent or buyer agent should not contract for services (e.g. repair services, inspections, closing attorneys, surveys, termite treatments, etc.) on behalf of a client or customer without first obtaining authorization from the client or customer. Otherwise, the agent may be held responsible for paying for the services rendered.
7 A listing agent or buyer agent should refrain from advising clients and customers that a contract has been formed or that they have a “done deal” until all parties have signed the offer, initialed all changes made to it and communicated to all parties that the offer has been signed and initialed by all parties. Until then, agents must refrain from using the term, “verbal contract,” as it falsely implies that a valid, binding agreement has been formed.
8 A property manager must refrain from entering into a lease containing terms not authorized by the owner including the lease rate and lease term.
9 A property manager may not permit a tenant to use a property for any purpose other than that which is authorized by the owner, by restrictive covenants and by zoning restrictions.
10 A property manager may not permit a tenant to have pets or to exceed the occupancy limit set by the owner without first obtaining the owner’s permission.
Real estate agents must act in the best interests of their clients at all times and should avoid taking any action for which they have not received express authority from their clients and customers. A real estate agent’s duty is to communicate information to the parties involved so that they can make informed decisions rather than the agent making them alone. Complaints received by the Commission alleging any of the ten items listed above may result in disciplinary action. Therefore, to protect your license, obtain authorization before acting on behalf of someone else.
This article came from the February 2002-Vol32-4 edition of the bulletin.
The Real Estate Commission has accepted and begun to implement the recommendations of an advisory committee to work with interested education sponsors to improve educational opportunities in the field of commercial real estate brokerage and to enhance licensees’ awareness of the need for greater education in this and other specialty areas of practice.
Specific Proposals
The Commission’s Commercial Brokerage Education Advisory Committee (CBEAC) recently reviewed commercial brokerage educational opportunities and specifically proposed that the Commission:
Formed in 2001
The CBEAC was formed in 2001 to assist the Commission in developing a plan for a commercial brokerage education certificate program designed to make available basic instruction to licensees, especially those with occasional commercial transactions.
The development and operation by the Commission of such a program had been recommended by the Commission’s Specialty Licensing Advisory Committee that studied the issue of possible separate licensure or certification of commercial brokerage and property management practitioners. The Commission agreed with the committee’s recommendation After considerable deliberation, the CBEAC recommended that the Commission reconsider its tentative plans to develop and administer a basic commercial brokerage education certificate program.
Primary Concern
Several factors contributed to the CBEAC’s conclusion. A primary concern was that issuance of a program certificate by the Commission would imply to licensees and consumers that certificate holders are especially competent to practice commercial brokerage.
The fact is, however, that the amount of information that could be conveyed in even a high quality introductory-level program of some 30 classroom hours would be completely inadequate to achieve the necessary level of competence. The committee also had other concerns about the likelihood of program participation by the primary target audience, competition with an existing similar program in Charlotte and the high cost of development.
The CBEAC members were Peter T. Chenery, Raleigh, Richard D. Whitney, Asheville, and William C. Maus, Wilmington, Commercial Brokers; Ernest D. Wilkinson III, Atlantic Beach, Dewey L. Brantley, Jr., Wilson, and Roy H. Harvel, Southern Pines, General Practitioners; Cindy S. Chandler, Charlotte, Educator and Commercial Broker; William C. Lackey, Jr., Charlotte, General Practitioner and Commission Member; and Chris Rhodes, Director of Professional Development, NC Association of REALTORS®, Ex Officio Member. Commission staff advisors for the committee were Larry Outlaw, Director of Education and Licensing, and Pamela Rorie, Continuing Education Officer.
The Commission appreciates the contributions of the CBEAC members who willingly devoted their valuable time to assist the Commission in this matter.
This article came from the February 2002-Vol32-4 edition of the bulletin.
When the Veterans Administration is forced to foreclose on a real estate loan which it has guaranteed, it typically arranges with a local real estate broker to act as its “property manager” to get the property ready to re-sell. It then posts the property on its website for any licensed real estate broker to sell.
Selling VA-foreclosure properties can be rewarding, but agents should be aware that:
The VA will not list its property with any individual agent or company. Therefore,
You cannot give a “broker price opinion” (BPO) on the property, even if you are the “property manager.” Real estate brokers and salespersons can perform BPO’s only if they expect to obtain a listing on the property (which they cannot) or if they are licensed appraisers.
You cannot act as a seller’s agent or subagent. To act as agent for the seller, you must have a signed listing agreement (which you cannot have). You can only act as a buyer’s agent. And, if you act as both the buyer’s agent and the VA’s “property manager”, you should disclose to the VA and the buyer what your relationship is to each of them.
You must not imply in your advertisements that the VA foreclosure property is listed with your firm or that you have the exclusive right to market it. By including “this is not a company listing” or “inventory available on VA website” in your advertising, you can dispel this impression.
The VA sells its property “as is” and does not require an attorney to close the transaction. Therefore,
You should encourage your buyer-client to have the property inspected by a licensed home inspector, get a pest inspection, a survey, etc., and to retain an attorney to protect the buyer’s legal interests. [Document in your files that you made these recommendations to the buyer.]
This article came from the February 2002-Vol32-4 edition of the bulletin.