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Kelly Allen receives Larry A. Outlaw Excellence in Education Award

Kelly Allen of Asheville is the 2020 recipient of the Larry A. Outlaw Excellence in Education award. Sandra O’Connor, Commission Chairperson, announced the award on October 8 at the NC Real Estate Educators Conference (NCREEA) conference.

The Commission established the Larry A. Outlaw Excellence in Education Award in 2016 to honor the late former Director of the Education and Licensing Division of the North Carolina Real Estate Commission. Larry A. Outlaw, both an attorney and licensed real estate broker, served as Director of the Education and Licensing Division for 35 years, from its creation in January, 1979 until his retirement February 1, 2014.

Outlaw continually worked to improve real estate prelicensing education and to expand real estate education, creating and implementing a continuing education program in 1994 and a postlicensing education program in 2006.  He advocated for and achieved minimum standards for approval of real estate instructors that included not only effective teaching skills, but real estate brokerage experience as well. He also worked to assure the excellence of the Commission’s licensing examination. Outlaw was a Founding Member of the national Real Estate Educators Association, serving as national president in 1990-1991. 

This year, the Commission established specific criteria for the Larry A. Outlaw Excellence in Education Award, to recognize and honor Outlaw’s legacy as a pioneer in our industry.  To be selected, the 2020 recipient must have demonstrated innovation in real estate instruction during the previous 2 years. Also, the nomination had to be supported by at least three letters of recommendation.

The Commission received multiple nominations. All of the nominees were extraordinary instructors.

The 2020 recipient, Kelly Allen, currently serves as both instructor and education director for Cumbie and Trull School of Real Estate in Asheville. She uses a wide variety of unique and innovative instructional techniques, including song lyrics, props and costumes, body motions, graphic organizers, Kahoot and Connect 4 games.

Allen is a member of NCREEA and REEA, achieved a 72% license examination pass rate during the 2018-19 license year, has a BA in Education, and has mentored other instructors. 

Allen’s students have said: 

Commission Spotlight: Auditor

Did you know the Commission audits brokers’ trust accounts? Have you ever wondered who performs those audits?

When the Commission receives a complaint against a broker, a staff attorney reviews the complaint to determine whether the allegations fall under the jurisdiction of the Real Estate Commission.  The staff attorney is not attempting to determine whether the allegations are true or false at this stage.  Rather, the attorney must consider: “If all allegations in this complaint are true as written, would there be a violation of License law and Commission rules?”  If the answer is yes, then a case file is opened.

If the allegations in the complaint involve mismanagement of consumer funds, then the case is referred to a Commission Auditor who will likely visit the brokerage office to obtain statements and documents.

In addition to performing complaint-based audits, Auditors:

To learn more about the complaint process or to file a complaint, go to the Commission’s website, or contact Regulatory Affairs at RA@ncrec.gov or 919-719-9180.

How to Register for the Basic Trust Account Procedures Course

Are you interested in becoming a BIC? Did you know that if you open a trust account, Rule 58A .0110(g)(9) requires you to take the Basic Trust Account Procedures course within 120 days of opening the account?

During the Basic Trust Account Procedures course, you will learn about the laws and rules regarding maintaining a brokerage trust account in North Carolina.

The Basic Trust Account Procedures course is now easier than ever to take because it is available online. Also, once you have successfully completed the course, you will receive four (4) hours of continuing education elective credit.

Ready to register for the Basic Trust Account Procedures course? If so,

  1. go to www.ncrec.gov
  2. click Education;
  3. click Trust Account Registration
  4. click Add to Cart; and
  5. click Checkout.

For more information or to ask a question, contact Regulatory Affairs at RA@ncrec.gov or 919.719.9180.

Current Stats: Monthly Licensee Count as of October 1, 2020

Appearances

Miriam Baer, Executive Director, spoke at the HM Properties event on October 29.

Sheryl Graham, Consumer Protection Officer, spoke at the Century 21 Liberty sales meeting on October 29.

Jean Hobbs, Auditor/Investigator, spoke at the NARPM Charlotte Chapter meeting on September 16.

Disciplinary Actions

BRANDI UTOPIA BAKER (Greensboro) – By Consent, the Commission suspended the broker license of Ms. Baker for a period of 6 months effective November 1, 2020. The Commission then stayed the suspension in its entirety. The Commission found that Ms. Baker visited the condominium her buyer-client was purchasing after being notified the condominium may have been damaged by a sewage back up. Ms. Brown did not communicate the potential damage to her buyer-client before he signed the closing documents and mailed them to the closing attorney.

2020-2021 Update Course

The Commission’s GENUP-General Update and BICUP-Broker-in-Charge courses for 2020-2021 have been available since July 1, 2020, for all licensees.

The 2020-2021 GENUP course topics are:

The 2020-2021 BICUP course topics are:

A statewide Continuing Education course schedule is provided on the Commission’s website (www.ncrec.gov) under the Education menu. Licensees may search for courses by:

Licensees may take the Update course anytime between July 1, 2020 – June 10, 2021. However, the Commission encourages licensees to take the course as early as possible during the license year, to stay up-to-date on law and rule changes.

Per Commission rule 58A .1702, a licensee must take eight (8) hours of continuing education (CE) each year to maintain an active license, as follows:

*A broker with BIC-Eligible status who takes the General Update course and an elective will maintain an Active license but will lose his/her BIC Eligible status and BIC designation.

If you have questions about the CE requirement, contact the Education and Licensing Division at 919.875-3700 or LS@ ncrec.gov.

Commission Spotlight: Education Staff

Are you interested in offering or instructing Prelicensing, Postlicensing, or Update courses? Have you developed a course and want to get it approved as an elective? Do you have questions about the 12-hour BIC Course? If so, you may contact the Education section of the Commission’s Education and Licensing Division.

Education staff members focus on:

For more information or to ask a question, contact the Education and Licensing Division at educforms@ncrec.gov or 919-875-3700.

Current Stats: Monthly Licensee Count as of September 1, 2020

Regulatory Affairs Case Study: Repeated Material Omissions

By Stephen L. Fussell, Chief Consumer Protection Officer

            This article is a compilation of multiple cases where licensees failed to disclose material defects in the property to multiple buyers. In some cases, the licensees were sellers who purchased properties to renovate and resell for a profit. In most cases, the licensees were listing agents who represented unlicensed investors/“flippers” or typical sellers.

            In the cases involving sellers who were investors, most of the sellers had not inspected the properties when they purchased them. The renovations they performed usually involved cosmetic items: cabinets, countertops, appliances, flooring, plumbing fixtures (e.g. toilets, sinks, faucets, etc.), interior paint, and landscaping. In some cases, the sellers hired unlicensed persons to install HVAC systems or water heaters and did not obtain building permits for improvements that required permits, such as decks, room additions, or structural/mechanical changes. One renovation involved cutting wooden floor joists in the crawl space to make room for new ductwork and pipes without an inspection by a structural engineer or licensed general contractor to evaluate the structural integrity of the remaining floor structure.

            Nearly all of the transactions progressed in a similar manner. Following the completion of the renovations, each seller completed a Residential Property and Owners’ Association Disclosure Statement (“RPOADS”) answering “No Representation” to all of the questions.  The listing agent then entered the property into the local MLS system generally touting beautiful updates to the property.

            Buyer #1 contracted to buy the property and ordered a home inspection which revealed material defects, such as a deck that was structurally unsound, an HVAC system that was underperforming or not working at all, or a basement that was leaking. The agent for Buyer #1 sent a copy of the home inspection report and a Due Diligence Request and Agreement (“DDRA”) to the listing agent. However, due to concern over the condition of the property and the likelihood of expensive future repairs, Buyer #1 terminated the contract during the due diligence period and got the earnest money back, but lost the due diligence fee.

            After termination of the contract, the seller did not hire licensed professionals to correct the defects referenced in Buyer #1’s home inspection report and did not revise the RPOADS to disclose any defects. The listing agent put the property back on the market without disclosing any defects in the MLS system or elsewhere.

           Unaware of the previous inspection, Buyer #2 contracted to buy the subject property and ordered a home inspection which revealed the same defects as Buyer #1’s inspection. The agent for Buyer #2 sent a copy of the inspection report and a DDRA to the listing agent. The seller promised to make repairs, but when Buyer #2 asked his inspector to re-inspect the property, only a few repairs had been attempted and the quality of those repairs was very poor. Disappointed, Buyer #2 terminated his contract after the expiration of the due diligence period and the seller refused to refund the due diligence fee or the earnest money.

           The listing agent put the property back on the market for the third time, again without disclosing any material defects in the MLS or otherwise. The seller did not revise the RPOADS. Buyer #3 quickly and eagerly contracted to buy the property and again paid a due diligence fee and earnest money deposit. Buyer #3 ordered an inspection which identified the same defects reported by the first two home inspectors along with evidence that someone had attempted to conceal some of the defects. Without asking for repairs, Buyer #3 terminated her contract and asked for reimbursement of both the due diligence fee and earnest money deposit as well as the  inspection fees, believing that the seller and/or the listing agent had acted dishonestly. The seller refunded only the earnest money.

           The listing agent put the property on the market for the fourth time. Buyer #4 was a cash buyer, who had been outbid on several previous properties and was determined not to lose out on this property. Buyer #4 offered to pay full-price and close within seven days with no inspections. The seller accepted the offer and the transaction closed without incident.  After the closing, Buyer #4 discovered that the house needed thousands of dollars in repairs (i.e. the same repairs referenced in the first three transactions).

           Sometimes, the buyers who terminated filed complaints with the Real Estate Commission. Sometimes, the successful eventual buyers filed complaints, and several filed civil suits against the sellers, the listing agents and the listing firms for willfully withholding material facts.

Lessons to learn:

           A listing agent must make a reasonable effort to discover material facts by walking through and around a listed property and by asking the seller questions about the property and obtaining copies of available documentation regarding repairs and renovations. In these cases, the listing agent was put on notice about material defects but failed to confirm that repairs had been made. Unless a listing agent is able to confirm with written documentation that a repair has been made, then the listing agent must disclose the defect to all prospective buyers and/or their agents.

           Buyer agents also have a duty to verify issues that their clients have identified as being material to them. A prudent buyer agent should ask a listing agent whether the property has been inspected and, if so, ask for a copy of the inspection report. If the listing agent received a copy of the inspection report from a previous buyer, then the listing agent may give the report to a new buyer agent.  If the listing agent did not receive a copy of the previous inspection report, but the agent for the previous buyer informed the listing agent that the report revealed material defects, then the listing agent must disclose to all prospective buyers or their agents that a previous buyer’s home inspection revealed certain material defects and identify those defects.

           When a seller has owned a property for a short period of time (i.e. less than one year), a prudent buyer agent should ask whether the seller is an investor or flipper and, if so, ask for copies of all invoices for renovations performed and ask whether all contractors and vendors were licensed and whether they have been paid in full.

            Some licensees have tried to hide behind the adage that North Carolina is a buyer beware state. However, a licensee (whether a licensed seller or listing agent) must disclose all material facts that the licensee knows or reasonably should know to all interested persons in a timely manner (i.e. before a buyer enters into a contract to buy the property).