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Why Should A Broker Ask For Copies Of Checks?
By Shanna Hardy, Consumer Protection Officer
During the course of preparing an offer on a property, a buyer observed her broker making copies of the due diligence and earnest money checks. Is this typical and why would a broker do this?
Every buyer hopes that a seller will accept an offer as soon as it is submitted. When that happens, the effective date is the same as the date of the offer. A buyer agent should anticipate that a seller might accept an offer on the same day it is submitted and collect the due diligence fee and earnest money specified in the offer. A prudent listing agent would want to verify that the buyer’s agent is in possession of the checks at the time the offer is submitted. One way of doing this is to see copies of the checks accompanied with the offer to purchase.
The reason the Commission staff has suggested this as best practice is because the Commission receives many complaints filed by sellers who are disgruntled because an offer was accepted from a buyer but no due diligence or earnest money was ever received, and the buyer decided to terminate the contract several days later. Typically in these cases, the buyer agent failed to collect the due diligence or earnest money checks when the offer was prepared and therefore was unable to deliver the funds to the sellers or the sellers’ agent on the effective date.
In addition to the best practice advice, Commission Rule A .0117 (c)(7) states that a broker shall create, maintain or retain, the following records; copies of earnest money checks, due diligence checks, receipts for cash payments, contracts, and closing statements in sales transactions. Because this rule specifically addresses earnest money checks and due diligence checks, both the listing and buyer agents should make their best efforts to obtain copies of the checks for their transaction files. A scanned or other electronic image of a check will satisfy the Commission’s record-keeping requirements. However, prior to making and sending copies, we recommend redacting certain information, such as the personal account number or a part thereof.
It is part of the modern practice of brokerage that transactions are often carried out remotely with parties and their brokers not always present in person to hand off documents and checks. A prudent listing agent will want to ensure that funds due to their client or being held by an escrow agent have been sent and received by the seller or escrow agent. A prudent buyer agent will want to ensure that their client has submitted payments as required. Obtaining copies of checks is one thing that an agent can do to help a transaction proceed to a successful close.
Disciplinary Actions
ROGER JAMES (Charlotte) – By Consent, the Commission suspended the broker license of Mr. James for a period of 2 years effective June 3, 2020. The Commission then stayed the suspension in its entirety. The Commission found that in July 2018, Mr. James, acting as a listing agent, inaccurately advertise the square footage of the listed property. In October 2018, he failed to disclose the existence of two underground storage tanks after being notified of their existence.
SUSAN A VOLZ (Charlotte) – By Consent, the Commission reprimanded Ms. Volz effective June 3, 2020. The Commission found that Ms. Volz’s seller-clients informed her that a city-funded storm water drainage improvement project would affect the subject property at a later date. Despite claiming she did disclose the Project, she failed to document disclosure to the buyers the material fact that the Project would prospectively affect the subject property.
MOUNTAIN PROPERTY GROUP LLC (Tryon) – By Consent, the Commission suspended the broker license of Mountain Property Group LLC for a period of 12 months effective July 15, 2020. The Commission then stayed the suspension for a probationary period through July 15, 2021. The Commission found that in 2019, the firm, through its BIC, acted as a dual agent in the transaction without first reviewing a “Working with Real Estate Agents” disclosure with the seller and without entering into a written listing agreement.
LINDA NOBLE TINKLER (Tryon) – By Consent, the Commission suspended the broker license of Ms. Tinkler for a period of 2 years effective April 15, 2020. The Commission then stayed the remaining 21 month suspension, effective July 15, 2020, for a probationary period through April 15, 2021. The Commission found that in 2019, Ms. Tinkler acted as a dual agent without first reviewing a “Working with Real Estate Agents” disclosure with the seller and without entering into a written listing agreement. Ms. Tinkler then gave the buyers $10,000 to use as a part of their down payment without disclosing this gift to the closing attorney or to the buyer’s lender by giving the money to the buyers’ relative for the relative to forward to the buyers.
NICHOLAS CORY MCLAMB (Clayton) – By Consent, the Commission reprimanded Mr. McLamb effective June 3, 2020. The Commission found that Mr. McLamb, acting as the firm’s broker-in-charge, listed residential properties for sale in a “limited” capacity by only inputting information, provided by its seller-client, into the Multiple Listing Service for a flat fee. Mr. McLamb failed to verify the information used to market the property in the MLS and also failed to maintain executed copies of transaction records required by the Commission Rules.
NEO REAL ESTATE MARKETING LLC (Clayton) – By Consent, the Commission reprimanded Neo Real Estate Marketing LLC effective June 3, 2020. The Commission found that the firm listed residential properties for sale in a “limited” capacity by only inputting information, provided by its seller-client, into the Multiple Listing Service for a flat fee. The Firm failed to verify the information used to market the property in the MLS. The Firm’s listing agreements lacked a broker license number and failed to place the Fair Housing language in a clear and conspicuous manner. The firm also failed to maintain executed copies of transaction records required by the Commission Rules.
ERIKA LIZETTE MENDOZA (Belmont) – By Consent, the Commission reprimanded Ms. Mendoza effective August 5, 2020. The Commission found that Ms. Mendoza acted as a listing agent in the sale of residential property for which she also assisted the seller in managing its renovations and working with contractors. After closing, the buyer discovered that there were four open permits on the subject property for mechanical, plumbing, and electrical. Ms. Mendoza failed to discover and disclose the presence of these permits to the buyer or their agent at the time of contract formation. After closing, all permits were successfully closed; however, the buyer had to expend monies to have the electrical permit satisfied.
Appearances
Starting in August 2020, staff will resume presentations via Zoom. Interested in a program presenter from the Commission? Send your request no later than 30 days before a speech: go to the Commission’s website, click on Forms, and then click on “Program Presenter.”
Disciplinary Actions
MOUNTAIN PROPERTY GROUP LLC (Tryon) – By Consent, the Commission suspended the broker license of Mountain Property Group LLC for a period of 12 months effective July 15, 2020. The Commission then stayed the suspension for a probationary period through July 15, 2021. The Commission found that in 2019 the firm, through its BIC, acted as a dual agent in the transaction without first reviewing a “Working with Real Estate Agents” disclosure with the seller and without entering into a written listing agreement.
LINDA NOBLE TINKLER (Tryon) – By Consent, the Commission suspended the broker license of Ms. Tinkler for a period of 2 years effective April 15, 2020. The Commission then stayed the remaining 21 month suspension, effective July 15, 2020, for a probationary period through April 15, 2021. The Commission found that in 2019, Ms. Tinkler acted as a dual agent without first reviewing a “Working with Real Estate Agents” disclosure with the seller and without entering into a written listing agreement. Ms. Tinkler then gave the buyers $10,000 to use as a part of their down payment without disclosing this gift to the closing attorney or to the buyer’s lender by giving the money to the buyers’ relative for the relative to forward to the buyers.
My license expired! How do I reinstate it?
To maintain a current license, brokers must renew their license annually between May 15 and June 30. The license of a broker who fails to renew during that period will expire on June 30, and that broker must cease all brokerage activities immediately.
What steps must a broker take to reinstate an expired license? That answer depends on how long the license has been expired.
To reinstate a license expired for less than 6 months:
- go to the Commission’s homepage (www.ncrec.gov);
- click on Reinstate your License;
- enter your license number and PIN (last 4 of your SSN unless you have changed it);
- answer required questions; and
- pay $90 reinstatement fee.
NOTE: To regain active status, a License Activation / Affiliation form (REC 2.08) also must be submitted.
To reinstate a license expired for 6 months but no more than 2 years:
- Successfully complete one 30-hour Postlicensing course (course must be completed within 6 months prior to submitting reinstatement application); and
- Submit a reinstatement application with $90 application fee and all required documentation, including criminal background report;
-OR-
- Submit a reinstatement application with $90 application fee and all required documentation, including criminal background report; and
- Pass National and State sections of license exam.
NOTE: To regain active status, a License Activation / Affiliation form (REC 2.08) also must be submitted.
To reinstate a license expired for more than 2 years:
- Successfully complete the 75-hour NC Broker Prelicensing course;
- Submit a license application with $100 original application fee and all required documentation, including criminal background report; and
- Pass National and State sections of license exam.
NOTE: You will be licensed as a provisional broker and be subject to the 90-hour Postlicensing education program. To gain active status, a License Activation / Affiliation form (REC 2.08) also must be submitted.
For more information, review Commission Rule 58A .0505 or visit the “Reinstate your License” page on the Commission’s website. You may also contact the Commission’s Education & Licensing Division at LS@ncrec.gov or 919-875-3700.
Extensions of CE and Postlicensing Education Deadlines
Originally published in the June 2020 edition of the eBulletin
Temporary rule 58G .0104, which has been effective since March 26, provides for automatic extensions of time for brokers to complete CE and Postlicensing education. Following are a few of the most frequently-asked questions regarding extensions.
What is the CE extension deadline?
Answer: September 30, 2020. The Commission is granting an automatic 90-day extension. No CE courses may be offered during the June 11-June 30 CE blackout period, so the 90-day extension period will begin on July 1, 2020, and end on September 30, 2020. Licensees do not have to submit an extension request for CE.
Can a broker take the 2019-20 Update course after June 10, 2020?
Answer: No. The 2019-20 GenUp and BICUP courses cannot be offered after June 10, 2020.
What if brokers do not take the 2019-20 Update course by June 10. How will they make it up?
Answer: Any broker who does not complete all 8 hours of CE by June 10 will be automatically granted a 90-day extension. The broker will then take approved elective courses [between July 1-September 30, 2020] to make up missed hours, even if those hours included the Update course.
What is the Postlicensing extension deadline?
Answer: September 30, 2020. Provisional Brokers (PBs) who have Postlicensing education deadlines between March 26-June 30, 2020, will be granted an automatic extension until September 30, 2020. PBs do not have to submit a Postlicensing Extension request.
Should brokers renew their licenses even if they don’t complete CE or Postlicensing education?
Answer: Yes. Renewal requirements have not changed. A video that answers FAQs regarding renewal and provides step-by-step renewal instructions is posted in the Commission’s Video Library.
If you have further questions, please contact the Education and Licensing Division at LS@ncrec.gov or 919.875.3700.
Commission Spotlight: Information Technology (IT)
During the COVID-19 pandemic, the Commission’s office has been closed to the public and most staff members have been working remotely. However, there has been no reduction in services provided to the public and licensees, because forms, applications, and license records are web-based, and because staff members have robust remote access capability. All of this is made possible by the efforts and talent of the Commission’s Information Technology (IT) staff.
The Commission’s IT section is led by the Chief Technology Officer (CTO) and is comprised of four staff members. IT is part of the Executive and Administration Division.
Responsibilities of IT staff members include:
- installing and maintaining the Commission’s computer network;
- managing and updating the Commission’s website;
- creating and publishing web-based forms and applications;
- managing multiple broker and applicant databases;
- managing digital and print publications; and
- delivering the monthly eBulletin and other email communications to licensees.
For more information, contact the Commission at admin@ncrec.gov or 919.875.3700.
What is an Education Provider?
As of July 1, 2020, N.C.G.S. § 93A-32 dictates that a sole proprietorship or entity must be certified as an Education Provider in order to offer NC real estate Prelicensing, Postlicensing, and CE (Update and Elective) courses.
Certification requirements are set out in N.C.G.S. § 93A-34 and Commission rule 58H .0202. Licensed / approved Schools and Sponsors will automatically be transitioned to certified Education Providers on July 1st.
A list of certified Education Providers is provided on the Commission’s website. Also, you can search for courses that Providers have scheduled. Note that Prelicensing, Postlicensing, and CE Update courses must be instructed by Commission-approved instructors.
For more information, contact the Education and Licensing Division at educ@ncrec.gov or 919.875.3700.