Miriam Baer, Executive Director of NC Real Estate Commission, spoke at the DeRonja Real Estate sales meeting on March 3.
Nick Smith, Consumer Protection Officer, spoke at the Mark Spain Real Estate meeting on March 15.
Sheryl Graham, Consumer Protection Officer, spoke at the HomeTowne Realty brokers office meeting on March 29.
When a real estate broker wishes to include the heated living area (“HLA”) (aka heated square footage) in any form of advertising, the broker must first verify the accuracy of the HLA by measuring and calculating the HLA or by hiring a qualified professional (preferably an experienced broker or licensed appraiser) to do so. Brokers are not permitted to rely upon the following sources for HLA: a seller’s representation, an appraisal prepared prior to the listing, a previous MLS listing, tax records, or a set of blue prints if the construction of the house has been completed. If a broker is unable or unwilling to verify the accuracy of the HLA, then the broker should refrain from including an HLA figure in any form of advertising as doing so may constitute false advertising and/or a misrepresentation of material fact.
The Commission does not specifically dictate which method a broker must use to determine the HLA. A broker may use the Commission’s Residential Square Footage Guidelines (“RSFG”) (aka “the yellow book”) or the American National Standards Institute (“ANSI”) standard or any other recognized professional standard.
What is the difference between the Commission’s Residential Square Footage Guidelines and the ANSI standard? The chart that follows this article shows a general comparison of some, but not all, of the components of the two. The chart is for comparison purposes only and is not a how-to guide for determining square footage. Any person wishing to use one of the two methods referenced in the chart should carefully review and follow all of the steps prescribed by the method chosen. The text for the Commission’s Guidelines is available on ncrec.gov under “Publications,” then “Guides.” The ANSI standard must be obtained from its publisher (American National Standards Institute).
There are two primary differences between the Commission’s Guidelines and the ANSI standard. First, the end users of the square footage data produced using the Commission’s Guidelines are residential buyers and sellers who want to know the total amount of HLA in the homes they want to buy or sell, respectively. The end users of the data produced by the ANSI standard are lenders, Fannie Mae, Freddie Mac, USDA, and the Veterans Administration who want to determine the value of the homes as collateral for the loans being requested by prospective buyers.
The second primary difference between the two methods is that the Commission’s Guidelines allow for the combination of all HLA in a home. The ANSI standard requires users to separately identify the Gross Living Area (“GLA”) as either “above-grade” or “below-grade.” When any exterior wall has soil against it, the ANSI standard requires its users to designate that entire floor as “below-grade.
Is there any reason for a broker to be familiar with both the Commission’s Square Footage Guidelines and the ANSI standard? Yes! Here are three common scenarios illustrating the need for a broker to be familiar with both methods.
Remember, HLA is a material fact, because it is an important factor used by sellers, buyers and others in making decisions. It is therefore imperative that brokers exercise skill, care and diligence in providing accurate HLA information so that consumers can make informed decisions. Knowing and properly using the methods referenced in this article will help protect brokers and their clients and customers.
| NCREC Residential Square Footage Guidelines | ANSI Z765-2021 |
|---|---|
| End Users: Prospective buyers and sellers | Lenders, Fannie Mae, Freddie Mac, VA, USDA |
| Cost: Free | ANSI membership fee, license, etc. |
| Recommended guide for brokers | Appraisers must use the ANSI standard for all loans sold to Fannie Mae (effective 4/1/22) |
| Heated Living Area: includes areas which are heated, finished, and directly accessible to main living area. | Gross Living Area: Same |
| Areas that qualify as heated living areas may be combined and reported together as total heated living area regardless of whether they are above-grade or below-grade. | Above-grade and below-grade areas must be reported separately. |
| Ceiling height: if at least 50% of room has a ceiling height of 7 ft. or more, then any floor space with a height of 5 ft. or more is included. | Same |
| Measure exterior walls from outside. When measuring from inside, add 6″ for each exterior wall. | Same for single-family attached and detached. Dimensions acquired in any manner other than by direct, exterior measurement must be explained. |
| For condos, measure from inside. Do not add thickness of walls. | ANSI is not intended for use with condos or other multi-family dwellings. |
| A finished area connected to living area via a heated, finished hallway or stairway is included. | Same |
| Unfinished areas, garages, chimneys (outside foot print of house) are not included | Same, except that unfinished areas must be distinguished as above-grade or below-grade. |
| Openings to the floor below not included. If an opening for stairs is larger than the width of the stairs, a deduction for the excess width is required. | Same |
| Make a sketch of building exterior with dimensions for all exterior walls. Identify all unfinished areas inside the dwelling. | Sketch must be computer-generated. Appraiser must disclose if he/she did not view interior. Square footage determined from building plans for a proposed house must be disclosed. |
| Recommend showing calculations. | Must show calculations. |
| Differences in the square footage of individual spaces based upon a broker’s thoughtful judgement when properly using this method will not necessarily constitute an error. | If appraiser can’t adhere to ANSI Z765-2021, he/she must insert Code “GXX001” in Additional Features field and explain reason(s) for non-compliance. |
| Annex: (informative, but not enforced) Finished floors include concrete with “decorative finishes,” but not bare concrete. |
Are you interested in joining the staff of the North Carolina Real Estate Commission? From time to time, employment opportunities become available. They are posted on the Commission’s website under the “About Us” tab.
We currently have opportunities available for the following positions:
Diversity, Equity and Inclusion Officer – Application deadline March 31, 2022.
Auditor – Application deadline April 4, 2022.
Consumer Protection Officer – Application deadline April 8, 2022.
Click here for more information.
Have you ever wanted to attend a Real Estate Commission meeting to see what it is really all about? Or have you wanted a chance to talk to a Commission member? Are you going to be in the Fayetteville area on Wednesday, April 20? If so, please join us at the Springhill Suites, 4750 Lake Valley Drive, Fayetteville, NC in the Plank/Campbell Meeting Room.
We will be welcoming the public in for coffee at 8:30 AM, with the Commission meeting starting at about 9:00. This is a great opportunity to meet the Commission Members and key staff. You are also welcome to stay for a portion or for all of the Commission’s meeting. Mark your calendars for April 20!
SUSAN JONES AMICK (CHARLOTTE) – By Consent, the Commission reprimanded Ms. Amick, effective January 17, 2022. The Commission found that Ms. Amick assisted with maintaining the trust accounts at the firm. An audit of these accounts found that two different software systems were being used, which caused reporting issues. Monthly reconciliations of the bank balance and property ledger trial balance were also not occurring. Furthermore, the software system had not been completely set up when it was implemented years ago. Deficit spending was also present and the security deposit did not hold enough personal funds to offset the bank fees. Finally, not all transactions were being reported on the same date in the journal and ledger, which lead to unreliable reporting. The Commission noted that Ms. Amick’s firm has now converted to one software management system and hired an independent auditor who assisted with bringing the accounts into compliance with Commission rules; Ms. Amick’s firm has hired a CPA to assist in oversight moving forward; and Ms. Amick has taken the Basic Trust Account Procedures course.
JANICE R COOPER (PRINCEVILLE) – By Consent, the Commission reprimanded Ms. Cooper, effective February 17, 2022. The Commission found that during her tenure as the BIC of a firm, in January 2021, a broker affiliated with Ms. Cooper listed two residential properties for a seller client. In February 2021, the broker was notified that the properties were owned in part by the heirs of the seller’s deceased ex-husband. The broker failed to disclose to the buyers or closing attorneys that there were additional owners. The first property closed after the broker provided the closing attorney with documents which falsely indicated that the seller-client was widowed, not divorced, and therefore owned the properties. All proceeds went to the seller-client. The closing attorney for the second property discovered the ownership interests. When informed of possible ownership issues, Ms. Cooper failed to advise the affiliated broker to disclose the ownership issues to the buyers but advised the broker to inform the closing attorney and that it would be caught during a title search. The Commission noted that Ms. Cooper assisted with the transaction to get the second transaction closed and the seller-clients have refunded the proceeds from the first transaction.
STEPHANIE D DAVIS (SANFORD) – By Consent, the Commission suspended the broker license of Ms. Davis for a period of 3 years, effective February 1, 2020. The Commission then stayed the suspension effective February 1, 2022. The Commission found that Ms. Davis, acting as BIC of a sole proprietorship, failed to safeguard and account for trust account money and failed to properly maintain trust account records in compliance with Commission rules. Commission staff also determined that Ms. Davis’ trust account was short $11,229.78.
SUZANNE BERNADETTE DAVIS (CHAPEL HILL/ORANGE COUNTY) – The Commission accepted the permanent voluntary surrender of the broker license of Ms. Davis effective February 16, 2022. The Commission dismissed without prejudice allegations that Ms. Davis violated provisions of the Real Estate License Law and Commission rules. Ms. Davis neither admitted nor denied misconduct.
KRISTI GALLAGHER FOSTER (BOONE) – The Commission accepted the voluntary surrender of the broker license of Ms. Foster for a period of five years, effective February 16, 2022. The Commission dismissed without prejudice allegations that Ms. Foster violated provisions of the Real Estate License Law and Commission rules. Ms. Foster neither admitted nor denied misconduct.
FOUR SEASONS PROPERTY MANAGEMENT INC (CHARLOTTE) – By Consent, the Commission suspended the firm license of Four Seasons Property Management Inc. for a period of 12 months, effective January 17, 2022. The Commission then stayed the suspension in its entirety. The Commission, during an audit of Four Seasons Property Management Inc.’s trust accounts, found that two different software systems were being used, which caused reporting issues. Monthly reconciliations of the bank balance and property ledger trial balance were also not occurring. Furthermore, the software system had not been completely set up when it was implemented years ago. Deficit spending was also present and the security deposit did not hold enough personal funds to offset the bank fees. Finally, not all transactions were being reported on the same date in the journal and ledger, which lead to unreliable reporting. The Commission noted that Four Seasons Property Management Inc. has now converted to one software management system and hired an independent auditor who assisted with bringing the accounts into compliance with Commission rules and that Four Seasons Property Management Inc. has hired a CPA to assist in oversight moving forward.
MICHAEL ROBERT GRAHAM (MOORESVILLE) The Commission accepted the voluntary surrender of the broker license of Mr. Graham for a period of two years, effective January 19, 2022. In light of the surrender, the Commission dismissed without prejudice a complaint filed against Mr. Graham relating to an alleged misrepresentation of a property’s sewage disposal system.Mr. Graham neither admitted nor denied misconduct.
HIGH COUNTRY VACATION HOMES (BOONE) – The Commission accepted the permanent voluntary surrender of the firm license of High Country Vacation Homes, effective February 16, 2022. The Commission dismissed without prejudice allegations that High Country Vacation Homes violated provisions of the Real Estate License Law and Commission rules. High Country Vacation Homes neither admitted nor denied misconduct.
MARY M. HUNT (LUMBERTON) – The Commission accepted the voluntary surrender of the broker license of Ms. Hunt for a period of five years, effective February 16, 2022. The Commission dismissed without prejudice allegations that Ms. Hunt violated provisions of the Real Estate License Law and Commission rules. Ms. Hunt neither admitted nor denied misconduct.
ELIZABETH HOLLY RAMOS (JACKSONVILLE) – The Commission accepted the permanent voluntary surrender of the broker license of Ms. Ramos effective February 16, 2022. The Commission dismissed without prejudice allegations that Ms. Ramos violated provisions of the Real Estate License Law and Commission rules. Ms. Ramos neither admitted nor denied misconduct.
FAWN ELIZABETH THAYER (DURHAM) – By Consent, the Commission suspended the broker license of Ms. Thayer for a period of 4 months, effective February 17, 2022. The Commission found that Ms. Thayer participated in a social media exam study group and actively shared confidential exam information or encouraged others to gather exam information.
JOHN C WELCH JR (CHARLOTTE) – By Consent, the Commission suspended the broker license of Mr. Welch Jr. for a period of 12 months, effective January 17, 2022. The Commission then stayed the suspension in its entirety. The Commission found that as the BIC of a firm, an audit of Mr. Welch Jr.’s trust accounts found that two different software systems were being used, which caused reporting issues. Monthly reconciliations of the bank balance and property ledger trial balance were also not occurring. Furthermore, the software system had not been completely set up when it was implemented years ago. Deficit spending was also present and the security deposit did not hold enough personal funds to offset the bank fees. Finally, not all transactions were being reported on the same date in the journal and ledger, which lead to unreliable reporting. The Commission noted that Mr. Welch Jr has now converted to one software management system and hired an independent auditor who assisted with bringing the accounts into compliance with Commission rules, and that Mr. Welch Jr has stepped down as BIC of the firm.
Are you interested in joining the staff of the North Carolina Real Estate Commission? From time to time, employment opportunities become available. They are posted on the Commission’s website under the “About Us” tab.
We currently have opportunities available for the following positions:
Diversity, Equity and Inclusion Officer – The Officer be responsible for creating, implementing, and advancing the Commission’s diversity and inclusion initiatives across the state. Application deadline March 3, 2022.
Click here for more information.
Janet Thoren, Director of Regulatory Affairs, spoke at the Durham Regional Association of Realtors meeting on February 2.
Nick Smith, Consumer Protection Officer, spoke at the Allen Tate Realtors meeting on February 8.
Dee Bigelow, Information Officer, spoke at the Dream Team Realty Group meeting on February 10.
Did you know that Bruno Mars’ real name is Peter Gene Hernandez? If Bruno had a real estate license in North Carolina, he would still need to advertise as Peter Hernandez. A broker may not use a name in their real estate business that is different from the name on their real estate license certificate (which should be their legal name). If Peter Hernandez advertised his brokerage services in the name of Bruno Mars, he would be in violation of the Real Estate License Law.
The following will help guide you in the proper use of your name in advertising.
First Names
Nicknames have always been common, and you can certainly use one in place of your legal first name. The key is to remain readily identifiable to the public and to the Real Estate Commission. Some nicknames are short versions of a longer name and are commonly known. For example, William may go by “Will” or “Bill,” Robert by “Rob” or “Bob,” and Elizabeth by “Liz,” “Beth,” or even “Betsy.” In these kinds of situations, you may use a nickname because your actual name can be easily determined. Similarly, a nickname involving the use of initials in place of your given name is acceptable, as when Thomas Joseph Jefferson goes by “T. Joseph Jefferson” or even “T.J. Jefferson.”
Other nicknames are not logically associated with the user’s first name. For example, if your name is Midlemas Phestus Jones and you use a nickname like “Purple,” a member of the public would have no way of knowing that you are actually “Midlemas.” In order to assure that you can be easily identified, your business cards and correspondence should include your full name together with your nickname. This can be done in various ways. For example, your business card might read, “Midlemas ‘Purple’ Jones, Broker,” and your social media ad could say, “For all your real estate needs, call Purple! (M.P. Jones, Broker).”
Last Names
On the other hand, using a surname that is not your own is not allowed. If you have an awkward or lengthy surname, you may wish that you could shorten or simplify it only in connection with your real estate business. While the goal is understandable, the result is misleading if you haven’t legally changed your name. For instance, if your surname is Furplesnurkle, you can’t simply call yourself “Mr. Furp” or “Mr. Jones” in your brokerage activities, if your legal name remains Furplesnurkle. If a consumer wishes to confirm that you are licensed or wants to file a complaint, it is imperative that you are identifiable. If you want to become “Furp” or “Jones,” you must legally change your name. The most straightforward way to do this is to go through a judicial name change proceeding before the clerk of court in the county where you reside.
Marital Status
But what about your wife who is also a broker–Mrs. Furplesnurkle? Before she married you, her maiden name was Myrtle Evans. What name can she use now in her brokerage activities? The answer depends on whether she legally changed her name upon her marriage. If she did, then she must use her new, legal name, “Myrtle Furplesnurkle” or “Myrtle Evans Furplesnurkle.” In addition, she must notify the Commission that she has legally changed her name by filing a Request Broker Name Change and to Reissue Real Estate License/Pocket Card form (https://www.ncrec.gov/namechange ) to have her license reissued in her new name. She will need to upload a copy of the marriage certificate and a copy of her driver’s license or other state issued ID with the new name. Myrtle cannot be Myrtle Furplesnurkle to family and friends but be Myrtle Evans on advertising.
If Myrtle did not legally take your name, she must continue to use her maiden name until she legally changes it.
If you later divorce and she wants to revert to her maiden name, she may apply to the clerk of court in the county where she lives. Upon legally resuming her maiden name, she must again notify the Commission on the same form she used when she married you and her license will be reissued in her maiden name.
Assumed Names
If you don’t want to go to the trouble of changing your name legally, then you should use your legal name in all aspects of your business. You cannot avoid the problem by filing an assumed name registration in the office of the register of deeds. That procedure is only for business names – not for individuals who wish to have a “stage name” like Bruno.
What is an “Assumed Business Name”? For example, when an individual broker/sole proprietor named Alex Robinson advertises as Robinson Realty, Alex is not using an assumed name because Robinson Realty includes the broker’s surname.
If Alex Robinson instead advertises brokerage services (with business cards, ads, etc.) as broker-in-charge of a sole proprietorship under the name, “Luxury Homes 4U Realty,” Alex is now using an assumed business name and must comply with the statute and Commission rule.
The Commission recognizes Assumed Business Names (aka DBAs) for licensed firms and for sole proprietorships, not for individual brokers. Accordingly, the designated broker-in-charge of a sole proprietorship may submit the Request Firm/Sole Proprietorship Name Change and to Reissue Real Estate License/Pocket Card form once they have filed an assumed name certificate for their company. Again, an assumed business name is not meant for Alex Robinson to use the stage name Alex Star when he is really Alex Robinson.
However, if you see an advertisement for Elton John’s brokerage services, it’s okay. He legally changed his name from Reginald Kenneth Dwight back in 1972.
Sheryl Graham, Consumer Protection Officer, spoke at the Greater Orange Chatham County Board of REALTORS meeting on January 12.
YECENIA BANEGAS (JOHNSTON COUNTY) – By Consent, the Commission suspended the broker license of Ms. Banegas for a period of 2 years effective January 10, 2022. The Commission then stayed the suspension in its entirety. The Commission found that Ms. Banegas bought and renovated a residential property and relied on unlicensed contractors’ advice in failing to obtain necessary permits. Ms. Banegas listed the property without disclosing that she had not obtained permits or hired licensed professionals to do renovations including relocating a wall, and connecting an HVAC system to a room. Ms. Banegas also failed to discover and disclose serious termite damage in the crawlspace. The Commission noted that Ms. Banegas had refunded the buyer their fees and deposits after they terminated the contract.
DANIELLE SEANTE GADDY (FAYETTEVILLE) – By Consent, the Commission suspended the broker license of Ms. Gaddy for a period of 18 months effective January 1, 2021. The Commission then stayed the suspension in its entirety. The Commission found that, as qualifying broker/broker in charge of a firm, Ms. Gaddy failed to complete required annual continuing education (CE) which resulted in her license being “inactive” from October 8, 2020, through November 6, 2020 and the firm’s license being “inactive” from October 8, 2020, through October 29, 2020. Despite this, Ms. Gaddy continued to enter into agency agreements and represent clients in submitting offers to purchase. Ms. Gaddy failed to notify the Commission within ten (10) days of the firm being administratively dissolved by the NC Secretary of State. Ms. Gaddy has since had the firm reinstated. In a transaction where Ms. Gaddy acted as the listing agent, the Commission found that she showed the subject property, with her seller-client’s approval, to a potential buyer three days prior to marketing the property in the MLS. Ms. Gaddy also added the phrase “not the procuring cause” in the selling agent section of an offer to purchase contract submitted by the buyer’s agent. The property ultimately went under contract with a different buyer.
JOHN LIGHT (KILL DEVIL HILLS) – The Commission accepted the voluntary surrender of the broker license of Mr. Light for a period of 1 year effective December 15, 2021. The Commission dismissed without prejudice allegations that Mr. Light violated provisions of the Real Estate License Law and Commission rules. Mr. Light neither admitted nor denied misconduct.
GEBA RENEA MCDANIEL (WINSTON-SALEM) – By Consent, the Commission suspended the broker license of Ms. McDaniel for a period of 2 years effective December 30, 2021. The Commission then stayed the suspension in its entirety. The Commission found that Ms. McDaniel was the broker-in-charge and qualifying broker of a property management firm which allowed an unlicensed broker, and his unlicensed firm, to conduct brokerage activities. Ms. McDaniel failed to notify the Commission within ten (10) days of her firm’s administrative dissolution by the NC Secretary of State. Ms. McDaniel’s management agreement with the property owner failed to contain all provisions as required by Commission rules. Ms. McDaniel, acting as a buyer agent, referred various clients to a credit repair/restoration company to assist with raising their credit rating and failed to disclose that this company was owned and run by her husband.
DEBORAH STALL PORTH (CHARLOTTE) – By Consent, the Commission suspended the broker license of Ms. Porth for a period of 2 years effective January 15, 2022. The Commission then stayed the suspension in its entirety. The Commission found that Ms. Porth was qualifying broker/broker in charge of a Firm, whose company policy was to run a background check on every prospective tenant 18 years of age and older. In 2019, the Firm leased a property to three adult brothers without collecting the listed tenant security deposit or prorated rent, and after obtaining a background check for only one applicant rather than each tenant. The “overall recommendation” in the background report was to DECLINE that applicant. The tenants were late with their rent or did not pay rent while they were living in the property, did not vacate when their lease expired in October 2020, and were evicted in January 2021 still owing rent. The Commission noted that Ms. Porth personally paid the owner the missing tenant security deposit funds. Ms. Porth also failed to timely account for or disburse a tenant security deposit to a tenant despite re-renting the property within three weeks of the tenant’s vacating, and failed to maintain trust account records in compliance with Commission rules.