Proper Use of the Working with Real Estate Agents Brochure

By Sheryl B. Graham, Consumer Protection Officer

The Working with Real Estate Agents brochure (“WWREA”), first published in May 2001, is required to be used by brokers in every real estate sales transaction. Not only is the brochure to be presented in every real estate sales transaction, it is to be reviewed by the broker at the first substantial contact with both buyers and sellers.

What determines first substantial contact?  It is not the length of a conversation or communication; it is the substance of that communication. Substantial contact occurs when a buyer or seller begins to talk about personal or confidential information. Examples include a buyer discussing their price range. It may be a seller talking about their motivation to sell or reason for the move.

Commission Rule 58A. 0104 ( c) states:  In every real estate sales transaction, a broker shall, at first substantial contact with a prospective buyer or seller, provide the buyer or seller with a copy of the publication WWREA, set forth the broker’s name and license number thereon, review the publication with the buyer or seller, and determine whether the agent will act as the agent of the buyer or seller in the transaction.

The WWREA brochure explains the various types of agency relationships with the goal of educating the consumer and defining expectations. The WWREA is a broker’s opportunity to discuss and clarify what their agency role is in the transaction. The WWREA starts the conversation concerning the contemplated agency status and future options.

When first substantial contact with a buyer or seller is via telephone or email, a broker must transmit or mail the brochure to the buyer or seller within three days of that first substantial contact. A broker should then follow up with a conversation with the buyer or seller to review the brochure and answer any questions the consumer may have. Sometimes, a broker’s first substantial contact with a buyer or seller is in person, at the office or at an open house. The same rule and expectations apply: when a consumer acts as though an agency relationship exists by discussing personal or confidential information, the broker must present and review the WWREA brochure.

A link to the brochure provided at the foot of a broker’s email without further review or discussion is not sufficient. Similarly, sending both the WWREA and the completed agency agreement to the buyer or seller for electronic signature at the same time could indicate that the broker has delayed delivery of the WWREA past first substantial contact and may never have had the substantive discussion or review with the client.

Not every potential buyer or seller decides to sign an agency agreement with the first broker they meet. A broker would be expected to have a folder full of signed WWREA brochures for prospective customers who do not become clients. Every time a buyer or seller starts to communicate substantial information, the broker should present, review and have signed a WWREA brochure. Like all records of sales, rentals and other transactions, the signed WWREA brochure copies should be retained for three years. A broker may want to have a folder full of blank WWREA brochures, ready for the next conversation.

Appearances

Charlene D. Moody, Assistant Director of Regulatory Affairs, spoke to REMAX Advantage in Raleigh.

Jean A. Wolinski-Hobbs, Auditor/Investigator, spoke to Allen Tate-Charlotte SouthPark, to the Jacksonville Board of REALTORS®, and to United Real Estate East Carolina in Greenville.

Sheryl B. Graham, Consumer Protection Officer, spoke to Cape Fear REALTORS® in Wilmington, Realty Executives of Hickory and Lake Norman, and to the Salisbury Rowan Association of REALTORS®.

Nicholas T. Smith, Consumer Protection Officer, spoke to Real Estate By Design in Durham.

Peter B. Myers,Information Officer, spoke to Landmark Realty Group in Cashiers and to Premier Sotheby’s International Realty in Charlotte.

Spotlight: Cindy S. Chandler, Commissioner

Cindy S. Chandler of Charlotte has served on the North Carolina Real Estate Commission since July 2011, and was its Chair in 2015-2016.

Chandler, owner of the Chandler Group, a commercial real estate consulting and training firm, has been in real estate for more than 40 years in the areas of investment real estate, syndication, strategic planning, property management, marketing and education.

Chandler has served as the 2007 Chair of the commercial division (REALTORS® Commercial Alliance – RCA) of the National Association of REALTORS® and the 2008 Liaison for Business Specialties. She was the 2006 President of the North Carolina Association of Realtors®, was an NCAR Director and an NAR Director. She was Chair of RCA-NCAR for 2003 (Realtors® Commercial Alliance – NC Association of Realtors® ), 2004 Chair for NCAR’s Professional Standards Committee, a member of Leadership NCAR 2003, 2004 Chair of CRRA’s (Charlotte Regional Realtor® Association) Grievance Committee and still serves on CRCBR’s (Charlotte Region Commercial Board of Realtors®) Professional Standards Committee in many capacities. She was also the 2005 Chair of NAR’s RCA Leadership Forum, served on the RCA Committee and Convention Advisory Committee and chaired NAR’s RCA Committee in 2007.

Chandler was a past regional Vice President and Secretary of the Real Estate Educators Association. She was also Chair of the Mecklenburg County Zoning and Planning Committee and Charlotte Chapter President of Commercial Real Estate Women (CREW).

Chandler is a past President of the North Carolina Real Estate Educators Association and a past Vice Chair of the Charlotte-Mecklenburg Planning Commission.

She is a 2011 recipient of the Billie J. Mercer Excellence in Education Award of the Real Estate Commission and is the author of The Insider’s Guide to Commercial Real Estate, published by Dearborn/Kaplan Publishing.

In 2015, CCIM endowed a scholarship in Chandler’s name due to her outstanding achievements in commercial real estate. Also during 2015, she was named Realtor® of the Year for CRRA, CRCBR, and NCAR.

She currently serves on NAR’s Executive Committee and has done so for several years.

Chandler is very committed to education and has earned several designations including: Counselor Real Estate (CRE®), Certified Commercial Investment Member (CCIM), and Distinguished Real Estate Instructor (DREI). In addition, she was also awarded the 1996 Educator of the Year Award and Outstanding Program of the Year Award in 1998 by the North Carolina Real Estate Educators Association. The Real Estate Educators Association presented her with the Educator of the Year Award in 2001, and Education Program of the Year Award in 2005.

How to Register for a Commission Course

Did you know that the North Carolina Real Estate Commission sponsors the 12-Hour Broker-in-Charge Course, Issues and Answers in NC Real Estate Practice, and Basic Trust Account Procedures Courses? Are you interested in taking a Commission Course? If so, click here for a detailed description of the course and registration information. If you have any further questions, please call the Commission at (919) 875-3700.

Licensees as of May 1, 2019

The New Interactive NC Real Estate Manual

The new web-based version of the North Carolina Real Estate Manual is now available!

The Commission publishes the Real Estate Manual for brokers and the public to use as a practical guide for real estate concepts and brokerage practice. Also, it is the required textbook for Postlicensing courses. Individuals who take Postlicensing courses are required to have a current edition of the Real Estate Manual with them during all class sessions, either in print or electronic form.

The new version of the Real Estate Manual is web-based, making it more accessible and user-friendly. Features of the new version include: comic strips that display brokerage activities and examples of agency relationships between brokers and clients, self-check assessments, informative graphics, keyword searches, quick access to Postlicensing course content, and a database of sample contract forms.

The new web-based Real Estate Manual will be updated on a real-time basis. When laws, rules, and/or forms change, the Real Estate Manual will be updated immediately to reflect the changes. As a result, users will always have an up-to-date resource.

During the month of June, the web-based Real Estate Manual may be accessed for free using this link: https://remtest.ncrec.gov.  When prompted, enter the following login credentials:

• Username: Noreply@ncrec.gov
• Password: Test@1234

Beginning July 1, 2019, subscription fees will apply. Access to the web-based version of the Real Estate Manual will be $25.00 per license year. All subscriptions will expire each year on June 30.

Brokers will still be able to order and use the printed version of the Real Estate Manual if they prefer to do so. Please note that the print version of the Real Estate Manual is only updated every two to three years. The current edition of the print version is dated 2017.

If you have questions about the North Carolina Real Estate Manual, contact the Commission’s Education and Licensing Division at (919) 875-3700.

How to Request Continuing Education Credit

Would you like to request Continuing Education Credit from the Commission for a course that is not approved by the Commission or for a real estate education activity that is equivalent to a Commission-approved continuing education course? Click here for information and application OR call the Commission at 919.875.3700.

Cases Opened by Month

Renew your License between May 15 and June 30!

The annual period for renewal of your real estate license begins at midnight on May 15 and continues until midnight June 30. If you do not renew by June 30, your license will expire.

Per Commission Rule 58A .0503, you must renew online. To renew online, login to your record on the Commission’s website, www.ncrec.gov, on or after May 15. Your PIN (password) will be the last four digits of your Social Security number unless you have changed it.

You must provide the “Employee Misclassification” disclosure and certification during the renewal process. Additionally, if you are a Broker-in-Charge, you will be required to disclose information regarding your trust account(s) and any criminal convictions or disciplinary actions that have occurred within the previous year, if applicable.

The renewal fee is $45.00.  You may pay by Visa, MasterCard, Discover, American Express, or PayPal. A printable confirmation of renewal will appear on your screen when the process is complete.

If your renewal fee has not been received by the Commission by June 30, your license will expire. To reinstate an expired license, you must pay a $90 fee between July 1 and December 31. Failure to reinstate the former license by December 31 will result in your having to submit a new application, including application fee and criminal background report. You will also be required to take additional education and/or pass the state license examination. Refer to the “Reinstate your License” page on the Commission’s website (www.ncrec.gov) for detailed information regarding the reinstatement process.

Be sure to renew your license by June 30, even if you do not complete your continuing education by June 10. By doing so, your license will be changed to inactive status on July 1, rather than expired. Refer to Rule 58A. 1703 for license activation instructions.

NOTE: If you hold BIC Eligible status and your license expires or changes to inactive status on July 1, you will automatically lose BIC Eligible status and, in turn, BIC designation (if applicable).  If that happens, and you wish to regain BIC Eligible status, you must (1) return the license to active status; (2) meet the experience requirements for BIC designation; (3) take the 12-hour Broker-in-Charge Course before re-designation; and (4) complete and submit the Request for BIC Eligible Status and/or Designation form(REC 2.25).  Do NOT take the 12- hour BIC Course before your license is on active status! Refer to Rule 58A. 0110 for detailed instructions regarding regaining BIC Eligible status and BIC designation.

Intentional Ignorance

Stephen L. Fussell, Chief Consumer Protection Officer

           Ignorance is a lack of knowledge.  Intentional ignorance is when you choose to avoid learning information or skills. Why would a broker choose to avoid learning information or skills? One reason is that some brokers mistakenly believe that if they don’t know a material fact then they can’t be required to disclose it.

            Here are almost a dozen examples of intentional ignorance which could lead to damage to a client and disciplinary action being taken against a broker: i

1. A commercial listing broker lists a large tract of land and subsequently hears a rumor regarding a former unregulated dump site on the property, but fails to make any inquiry into the possible former dump site.
2. A residential property manager has been leasing a property to the same tenant for five years, but has not inspected the property since the tenant moved in and therefore doesn’t know about the condition of the property or whether the tenant is complying with the terms of the lease, such as unauthorized occupants or pets.
3. A vacation rental manager learns of a beach renourishment project but doesn’t inquire about planned dates or potential impact on guests.
4. A residential buyer agent shows a house to a buyer-client and silently doubts the accuracy of the square footage advertised in the MLS, but says nothing to anyone, because the buyer instantly fell in love with the property.
5. A commercial broker representing a tenant, who wants to lease a space for a daycare center, fails to ascertain whether the space meets the requirements for operating a daycare center or to advise their client to do so.
6. A property manager notices rust-colored stains in sinks, toilets and tubs, but fails to inquire about water quality or water filtration systems or suggest that the owner test the water quality.
7. A residential listing agent, whose market area includes a town bordering a river that floods during periods of heavy rain, does not inquire about flooding on the listed property or in the surrounding neighborhood.
8. A group of brokers buy an investment property to renovate and resell, but do not order any inspections or discuss conditions with contractors thinking that, if they do not discover material facts about the property, then they will not have to disclose them on resale.
9. A residential listing agent lists a house with a septic system, but does not pull and review the septic permit or inquire about the pool of foul-smelling water standing in the yard.
10. A residential buyer agent knows their buyer-client wants to construct a barn and raise chickens, goats and other farm animals, but fails to obtain and review the restrictive covenants, zoning restrictions and other regulations that may affect the buyer’s intended use or to advise their client to do so.
11. A buyer agent has a client they know to have respiratory issues and notices standing water in the crawl space of a property, but does not inquire about mold or suggest that the buyer hire a mold inspector.

The aforementioned examples illustrate brokers who chose to avoid acquiring information to improve their knowledge and/or skills and thereby failed to position themselves to better represent their clients and protect consumers.

The flaw in using intentional ignorance as a strategy is that a broker is required to discover and disclose material facts. This duty to discover eliminates a broker’s option to avoid learning about a material fact. Moreover, a broker is held responsible for what he/she knows or reasonably should know. This responsibility also applies when a broker is selling or leasing his/her own property (see N.C.G.S. § 93A-6(b)(3)). So, even if a broker doesn’t know a material fact, if the Commission determines that a prudent agent would know it, then the ignorant agent can be disciplined for failing to disclose the fact.

N.C.G.S. § 93A-6(a)(1), (8) and (10) authorize the Commission to pursue disciplinary action against a broker who omits a material fact, is incompetent or unworthy to act in a manner which protects the public or who engages in improper or dishonest dealing, respectively.  Therefore, intentional ignorance is not an option for a broker. Every broker must exercise reasonable care and diligence in discovering and disclosing all material facts to all interested persons in a timely manner.