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Spotlight: Wendell Bullard, Commissioner
Wendell Bullard of Durham was appointed to the North Carolina Real Estate Commission by Governor Roy Cooper effective August 1, 2018.
Mr. Bullard is Managing Broker at Bullard Properties, LLC, in Durham and has over 22 years of experience in the real estate industry including affiliations with Prudential Carolinas Realty, and Realty Executives Triangle Southpointe (Co-Owner).
He is past president of the Durham Regional Association of REALTORS® and the North Carolina Association of REALTORS® and past REALTOR® of the Year in both organizations.
One of several founding members for charter high schools in Charlotte and Raleigh, Bullard is past treasurer for Commonwealth and Stewart Creek High Schools and past board president of Central Wake Charter High School in Raleigh.
He is a graduate of North Carolina Central University with a B.S. in Marketing and a United States Air Force Security Specialists veteran.
Spotlight: George Bell, Commissioner
George Bell of Winston-Salem has served on the NC Real Estate Commission since 2014 and was its Chair in 2016-17.
Bell is the Managing Broker and Broker-In-Charge of Forsyth Realty Group, a residential brokerage firm, as well as Bell First Group, a commercial brokerage firm, and president of George Bell Productions, Ltd., a real estate education firm serving real estate brokers across North Carolina.
Bell entered the real estate business in 1978, following graduation from East Carolina University with a BS in Business Administration, as a broker, trainer and marketing representative. He has since held sales management, broker-in-charge, broker/owner and education positions with several brokerage firms.
Bell was inducted into the North Carolina Association of REALTORS® Hall-of-Fame in 2014, and served as the 2010 president of the Winston-Salem Regional Association of REALTORS® and its 2009 REALTOR®-of-the-Year.
In 2012, he received the Billie J. Mercer Excellence in Education Award from the North Carolina Real Estate Commission and the Educator of the Year Award from the North Carolina Real Estate Educators Association (NCREEA). He is a past president of the both the state and international Real Estate Educators Associations.
Bell is a member of the National Association of REALTORS® (NAR) and its Real Estate Brokerage Managers, Residential Specialist, and Real Estate Buyer’s Agent Councils. A licensed auctioneer, he is a member of the Auctioneer Association of North Carolina.
Be Cautious About Renos Without Permits
Reprinted from REALTOR® Magazine Online, February 26, 2019, with permission of the National Association of REALTORS®. Copyright 2019. All rights reserved.
https://magazine.realtor/daily-news/2019/02/26/be-cautious-over-a-house-reno-without-permits cce
Some homeowners bypass the permit process when they remodel their home. They may find the process too expensive or cumbersome. Permitting fees can sometimes cost hundreds of dollars or more. Some homeowners may believe that if they go ahead with a kitchen or bath remodel without a permit, they’ll likely never get caught.
But failing to get a permit could be troublesome when they go to sell the home.
Most states require homeowners to fill out a disclosure statement when they go to sell. In that form, sellers are usually asked if they completed work to the home without a required permit. Lying about it can also backfire—the sellers could be sued later by the new homeowner for making false statements.
“You can personally become liable for work carried out without permits,” writes Bill Gassett, a real estate professional with RE/MAX, REALTORS® in New England, for RISMedia’s Housecall. “Maybe the finished basement built by the previous homeowner with the fancy kitchen that sold the home has to be ripped out, or you’ll have to pay a penalty.”
Also, if there’s any incident that was caused by the lack of permits, the homeowner may face a denial of their insurance claim. If their insurance company finds they didn’t have the required permit, they could deny the claim. Many of these denied insurance claims stem from incidents that involve remodeling projects around electricity, gas, or water that were done without the appropriate permits.
Due Diligence for a New Broker-in-Charge
By Marcia M. Waldron, Auditor �~
We are often approached by licensees who have ‘acquired’ trust accounts by either becoming a Broker-in-Charge (BIC) of a firm with a trust account or by acquiring client accounts through the purchase of a company with trust account(s). Their question is “…who is responsible for any issues with the trust accounts that happened prior to me becoming the BIC?” Here is our simple but extremely important answer: You should assume that you will be held responsible.
In prior cases, both the new and former BICs have faced disciplinary action for trust account issues that remained in existence through a transition. The next question starts with “But what if…” and generally that sentence does not need to be completed. If you acquire trust accounts, once the transfer of funds occurs, YOU are responsible for both accounting and funding of the accounts. If the records are a disaster, then you will have a disaster in your name once the deal is completed. So, what is a Broker to do?
When contemplating the addition of trust accounts, first check with the Commission to see if there is a pending investigation involving the current firm or BIC. We have had situations where the current BIC attempts to divest himself/herself of trust money to avoid disciplinary action. The Broker acquiring these accounts may find themselves inadvertently a party to our investigation.
Next, do your homework: verify that the accounts are fully funded and that the records are compliant. Unless you are an accounting wizard, we recommend hiring an accountant or CPA who understands our rules, specifically those rules governing trust accounts. A business valuation process should always include a thorough due diligence review of accounts and contracts, but since trust funds are included, a specific examination of the trust account and related records is essential.
Knowledge of the monthly reconciliation process is a prerequisite to checking the accuracy of the trust account records. The bank account must be reconciled monthly; with a trust account there is an additional essential step to this monthly reconciliation. A determination needs to be made to see what balance should be held in the trust account.
The Commission calls this report a Ledger Trial Balance. The total on the Ledger Trial Balance should be equal to the reconciled bank balance, and the detail of this report must be verified through an examination of the individual ledgers that constitute the line items on the Ledger Trial Balance. If this information appears inaccurate or contains negative balances, this is a red flag that further investigation is warranted.
In addition to confirming that the trust account is properly funded, the Broker-in-Charge should assure that the accounting records are otherwise compliant with Commission rules NCAC 58A .0108, .0116, .0117, and .0118. Management and lease agreements and/or open sales transactions and agency agreements should be reviewed; cash receipting (if cash is still allowed) should be immediately evaluated. Look at office procedures surrounding all accounting functions and record retention, including keeping copies of security deposit, earnest money, and due diligence checks. Another prime area to review is the vendor list: be sure the records support disbursements, and verify that the vendors are legitimate.
If you become the Broker-in-Charge of a firm with inadequate trust account records or shortages or overages of trust money, you are immediately responsible for making certain those records and the funds are in order. Do your homework in advance; don’t put your license in jeopardy by taking on someone else’s mess.
Appearances
Janet B. Thoren, Legal Counsel, spoke to the brokers-in-charge of the Durham Regional Association of REALTORS®.
Stephen L. Fussell, Senior Consumer Protection Officer, spoke to Stearns Home Loans in New Bern.
Sheryl B. Graham, Consumer Protection Officer, spoke to the eXp Realty in Southern Pines and the Mid Carolina Association of REALTORS®.
Disciplinary Actions
WILLIAM PORTER ACETO (Boone) – By Consent, the Commission reprimanded Mr. Aceto effective June 5, 2019. The Commission found that Mr. Aceto, acting as broker-in-charge, failed to maintain the firm’s escrow accounts in compliance with Commission rules. The Commission notes that Mr. Aceto has since corrected these issues and the firm’s escrow accounts now appear to comply with these rules. Mr. Aceto, prior to entry of this Order, has also voluntarily completed the Basic Trust Account Procedures course offered by the Commission. Furthermore, no consumers were harmed by these omissions. The investigation also found that Mr. Aceto’s firm has been advertising its services under an assumed name not registered with the Commission. However, that name was timely registered with the applicable Register of Deeds and the firm has now filed the appropriate paperwork with the Commission.
MARCIA L. BICHARD (Gastonia) – The Commission accepted the voluntary surrender of the broker license of Ms. Bichard with no right to reapply for a period of 30 months effective May 1, 2019. The Commission dismissed without prejudice allegations that Ms. Bichard violated provisions of the Real Estate License Law and Commission rules. Ms. Bichard neither admitted nor denied misconduct.
BLUE RIDGE PROFESSIONAL PROPERTY SERVICES LLC (Boone) – By Consent, the Commission reprimanded Blue Ridge Professional Property Services effective June 5, 2019. The Commission found that the firm’s escrow accounts did not comply with Commission rules. The Commission notes that Blue Ridge Professional Property Services has since corrected these issues and its escrow accounts now appear to comply with these rules. The firm’s broker-in-charge, prior to entry of this Order, has also voluntarily completed the Basic Trust Account Procedures course offered by the Commission. Furthermore, no consumers were harmed by these omissions. The investigation also found that Blue Ridge Professional Property Services has been advertising its services under an assumed name that was not registered with the Commission. However, that name was timely registered with the applicable Register of Deeds and the firm has now filed the appropriate paperwork with the Commission.
CAPITAL TEAM MANAGEMENT INC. (Raleigh) – By Consent, the Commission suspended the firm license of Capital Team Management for a period of one year effective April 1, 2019. The Commission then stayed the suspension for a probationary period until April 1, 2020. The Commission found that the firm managed property for others in 2016 through April 2018 without a license or a broker-in-charge. The firm failed to maintain trust account and property management records in compliance with Commission rules including: failing to perform monthly reconciliations, failing to maintain required ledgers, failing to deliver completed leases to tenants, commingling personal funds with client funds, and depositing trust funds in the firm’s operating accounts. Capital Team Management has obtained a firm license and has designated a broker-in-charge.
JUDITH A. DECKER (Beech Mountain) – The Commission accepted the permanent voluntary surrender of the broker license of Ms. Decker effective March 13, 2019. The Commission dismissed without prejudice allegations that Ms. Decker violated provisions of the Real Estate License Law and Commission rules. Ms. Decker neither admitted nor denied misconduct.
CARA MARIA DELUCA (Fayetteville) – By Consent, the Commission suspended the broker license of Ms. Deluca for a period of 12 months effective November 1, 2018. Four months of the suspension were active with the remainder stayed effective March 6, 2019. Ms. Deluca is prohibited from being a broker-in-charge and from engaging in property management for five years from this order’s effective date. The Commission found that Ms. Deluca, as qualifying broker and broker-in-charge, managed long-term rentals for owner-clients. Ms. Deluca agreed to inspect the rental properties routinely on behalf of clients but failed to do so pursuant to her contractual obligations and thus prevent or mitigate damage to the properties. More than once, Ms. Deluca failed to appear at a summary ejectment hearing on behalf of her owner-clients despite promising to do so. Ms. Deluca failed to maintain her firm’s trust accounts in compliance with Commission rules, including failing to properly reconcile the trust accounts and allowing owner accounts to have negative balances.
JEFFREY CHARLES DEWITT (Cary) – Following a hearing, the Commission permanently revoked the license of Mr. Dewitt, effective February 7, 2019. The Commission found that Mr. Dewitt failed to execute a buyer agency agreement with his client. The Commission also found that Mr. Dewitt requested his buyer-client to make two checks for the earnest money deposit payable directly to him. Mr. Dewitt converted his client’s earnest money deposit when he deposited both checks into his personal account rather than a trust account. Mr. Dewitt failed to respond to multiple Letters of Inquiry.
FOUNTAIN MANAGEMENT INC. (Jacksonville) – By Consent, the Commission reprimanded Fountain Management effective March 20, 2019. The Commission found that Fountain Management’s agency agreements did not comply with Commission rules and did not include a definite termination date, licensee number, or conspicuous non-discrimination language. An affiliated, licensed broker did not always sign agency agreements and leases. Fountain Management failed to perform three-way reconciliations and failed to maintain ledgers and journals in compliance with Commission rules.
SANDRA G FOUNTAIN (Jacksonville) – By Consent, the Commission reprimanded Ms. Fountain effective March 20, 2019. The Commission found that, as qualifying broker and broker-in-charge, Ms. Fountain’s agency agreements did not comply with Commission rules and did not include a definite termination date, licensee number, or conspicuous non-discrimination language. An affiliated, licensed broker did not always sign agency agreements and leases. Ms. Fountain’s firms failed to perform three-way reconciliations and failed to maintain ledgers and journals in compliance with Commission rules.
JAMES MICHAEL GALLAGHER III (Asheville) – By Consent, the Commission reprimanded Mr. Gallagher effective March 6, 2019. The Commission found that Mr. Gallagher, qualifying broker and broker-in-charge of a previously licensed firm, failed to maintain all records and transaction files for the firm and its affiliated brokers as required by Commission rule and did not adequately supervise a provisional broker under his supervision.
KIM S. GARDNER (Jamestown) – By Consent, the Commission suspended the broker license of Ms. Gardner for a period of three months effective April 1, 2019. The Commission then stayed the suspension effective April 1, 2019. The Commission found that Ms. Gardner, acting as qualifying broker and broker-in-charge, without a written agency agreement, listed a friend’s property for lease at the friend’s request. At the second showing of the home, Ms. Gardner accepted a $1,500 cash deposit and $60 application fee and scheduled a move-in date. Due to a disagreement regarding the number of pets allowed, a rental contract was never signed and the tenants requested a refund of the deposit. Ms. Gardner failed to deposit the cash payment into a trust or escrow account and failed to retain records sufficient to confirm disbursement of the funds to the owner.
CONTRAIN DAVIS HOLLINS (Hope Mills) – By Consent, the Commission suspended the broker license of Ms. Hollins for a period of one year effective April 1, 2019. The Commission then stayed the suspension for a probationary period until April 1, 2020. The Commission found that Ms. Hollins, in July 2017, began managing two residential properties on behalf of a landlord-client for a fee pursuant to a power of attorney. After obtaining a broker license on inactive status, Ms. Hollins continued managing the properties and deposited rent monies into her personal checking account. Ms. Hollins failed to maintain trust account records and entered into lease agreements that did not comply with the Landlord-Tenant Act. Ms. Hollins no longer manages rental properties.
TAMMY R. HOWARD (Cornelius) – By Consent, the Commission suspended the broker license of Ms. Howard for a period of 12 months effective September 1, 2018. Three months of the suspension were active with the remainder stayed for a probationary period of nine months. The Commission found that Ms. Howard, on or about March 16, 2017, was convicted of felony use or possession of counterfeit trademark goods. She was sentenced to 6-17 months imprisonment, which was suspended for 36 months of supervised probation.
LENA LORRNETTA LURENT HUTTON (Fayetteville) – By Consent, the Commission reprimanded Ms. Hutton effective April 1, 2019. The Commission found that Ms. Hutton, as broker-in-charge, did not maintain her firm’s trust account records in full compliance with Commission rules, including checks and deposit slips not labelled trust or escrow, purpose of disbursements not included on records, not all disbursements included in ledgers, and unclear journal entries. The audit found no evidence of commingling or conversion.
KAYVAN MEHRBAKHSH (Herndon, Virginia) – The Commission accepted the permanent voluntary surrender of the broker license of Mr. Mehrbakhsh effective March 13, 2019. The Commission dismissed without prejudice allegations that Mr. Mehrbakhsh violated provisions of the Real Estate License Law and Commission rules. Mr. Mehrbakhsh neither admitted nor denied misconduct.
DARLA M NICHOLS (Matthews) – By Consent, the Commission reprimanded Ms. Nichols effective April 1, 2019. The Commission found that Ms. Nichols prepared an offer to purchase and contract to sell residential property she owned to a buyer but listed herself as dual agent on the contract. Ms. Nichols failed to adequately disclose to the buyer that the subject property was impacted by three disputed judgments totaling approximately S36,000 which she was unable to pay off before closing.
OCKULY ENTERPRISES INC. (Jacksonville), By Consent, the Commission reprimanded Ockuly Enterprises effective March 20, 2019. The Commission found that Ockuly Enterprises failed to perform three-way reconciliations and failed to maintain ledgers and journals in compliance with Commission rules.
PINNACLE INN RESORT RENTALS (Beech Mountain) – The Commission accepted the permanent voluntary surrender of the firm license of Pinnacle Inn Resort Rentals effective April 18, 2019. The Commission dismissed without prejudice allegations that Pinnacle Inn Resort Rentals violated provisions of the Real Estate License Law and Commission rules. Pinnacle Inn Resort Rentals neither admitted nor denied misconduct.
ALEXANDER JOSEPH RIVERS (Raleigh) – By Consent, the Commission suspended the broker license of Mr. Rivers for a period of one year effective April 1, 2019. The Commission then stayed the suspension for a probationary period until April 1, 2020. The Commission found that Mr. Rivers managed property for others through an unlicensed entity in 2016 through April 2018 and without having a broker-in-charge. Mr. Rivers failed to maintain trust account and property management records in compliance with Commission rules including: failing to perform monthly reconciliations, failing to maintain required ledgers, failing to deliver completed leases to tenants, commingling personal funds with client funds, and depositing trust funds in the firm’s operating accounts. Mr. Rivers has obtained a firm license and been designated as broker-in-charge.
ELIZABETH ANN STERNER (Mooresville) – By Consent, the Commission suspended the broker license of Ms. Sterner for a period of six months effective April 1, 2019. The Commission then stayed the suspension for a probationary period until October 1, 2019. The Commission found that Ms. Sterner acted as listing agent in a residential home transaction and misrepresented the square footage of a property by using the square footage reported on county tax records and a previous MLS listing. The property failed to appraise, leading the buyer to terminate the contract.
STROTHER VENTURES II INC. (Fayetteville) – By Consent, the Commission reprimanded Strother Ventures II effective April 1, 2019. The Commission found that the employees of Strother Ventures II communicated to their landlord-client that the firm was continuing to accrue charges against a tenant who had vacated the property before lease end and the firm would eventually send the accrued charges to collections. Instead, the firm staff refunded the tenant security deposit to the tenant and informed him that he did not have to continue to pay rent. An audit of Respondent Firm’s trust accounts showed that the records did not fully comply with Commission rules including checks and deposit slips not labelled trust or escrow, purpose of disbursements not included on records, not all disbursements included in ledgers, and journal entries not cleared. No evidence was found of commingling or conversion of funds.
ZIP4989 REALTY, LLC (Jamestown) – By Consent, the Commission suspended the firm license of ZIP4989 Realty for a period of three months effective December 20, 2018. The Commission then stayed the suspension for a probationary period through March 20, 2019. The Commission found that ZIP4989 Realty, without a written agency agreement, listed a property for lease. At the second showing of the home, ZIP4989 Realty accepted a $1,500 cash deposit and $60 application fee and scheduled a move-in date. Due to a disagreement regarding the number of pets allowed, a rental contract was never signed and the tenants requested a refund of the deposit. ZIP4989 Realty failed to deposit the cash payment into a trust or escrow account and failed to retain records sufficient to confirm disbursement of the funds to the owner.
New NC Real Estate Broker License Examination
The Commission is pleased to announce that the North Carolina Real Estate License Examination is changing, effective April 1, 2019.
To qualify for a North Carolina real estate license, an applicant must pass the License Examination. Since North Carolina is a “broker only” license state, there is only one license examination; it is an entry-level examination designed to determine minimal competency to practice real estate brokerage.
The examination consists of separate National and State sections. The National section is developed and provided by professional testing service PSI Services LLC (PSI). The State section is developed by the North Carolina Real Estate Commission. Both sections of the license examination are administered by PSI to only North Carolina license applicants.
In 2015, PSI embarked on a three-year evaluation of the National section content. The first phase of that project was to solicit feedback from practitioners. Salespersons and brokers from every state provided information as to their duties, tasks, and requisite knowledge. Subject matter experts then compared that feedback to the examination question bank, to determine where questions should be added, changed, or deleted. Once questions were modified or added, they were vetted for effectiveness.
In 2018, the North Carolina Real Estate Commission embarked on a similar evaluation process for the State section of the examination, beginning by creating an examination task force comprised of educators and practitioners from across the state.
Beginning April 1, 2019, the resulting revised examination will be administered to examination candidates. The National section will consist of 80 questions. To pass the National section, an individual must achieve a score of 71% or higher. The State section will consist of 40 questions; an individual must receive a score of 72.5% or higher to pass the section. The examination content outline is provided in the Commission’s Real Estate Licensing in North Carolina booklet.
Changes to examination content directly impact the 75-hour Broker Prelicensing Course. The Commission created a revised Prelicensing Course Syllabus to reflect changes in the examination content. Schools and instructors that offer the Prelicensing course were required to begin instructing courses based on the new syllabus no later than March 1, 2019.
Detailed information about the application and licensing process is provided in the Commission’s Real Estate Licensing in North Carolina booklet. If you have further questions, contact the Commission’s Education and Licensing Division at 919-875-3700.