By Glenn M. Wylie, Consumer Protection Officer
Summarized from 2015-16 GenUP/BICUP materials)
Major changes are coming October 3, 2015 to the disclosure and settlement forms used in most residential loan transactions. The former Good Faith Estimate will be replaced by the Loan Estimate and two Closing Disclosure forms, one for the buyer and one for the seller, will replace the HUD-1 settlement statement. The timing of the delivery of these forms/disclosures will also be strictly defined and mandated. While a broker’s responsibilities regarding these matters will not change, it is important that residential brokers are informed regarding these new forms and requirements.
The new TILA-RESPA integrated disclosure rules (TRID rules) were required by the Dodd-Frank Act to eliminate duplicate forms lenders were required to provide under TILA and RESPA. The new integrated disclosure forms, the Loan Estimate and the Closing Disclosures, must be used by lenders in transactions involving federally related mortgage loans governed by RESPA as well as loans for personal, family, or household purposes subject to the Truth in Lending Act (TILA). What triggers the new rules is receipt of a loan application on or after October 3, 2015 for a loan made by an institutional lender and/or to be sold in the secondary market that will be secured by a lien against real property owned by the borrower. Essentially, the new rules will affect most residential transactions involving a mortgage.
Beginning October 3rd, lenders must provide a Loan Estimate (or denial) to prospective borrowers within three (3) business days of loan application so long as the borrower has provided the lender the following information: 1) legal name, 2) statement of gross income, 3) Social Security Number, 4) property address, 5) estimate of property value, and 6) amount of mortgage loan requested. The lender may request other information, but may not require documentary support of the information prior to issuing a Loan Estimate.
Of greater importance to brokers are the new Closing Disclosures, one for the borrower/buyer and the other for the seller. The Closing Disclosure is a statement of final loan terms and closing costs.
TRID rules permit a settlement agent to provide the seller with a separate Closing Disclosure or with a copy of the Buyer/Borrowers’ Closing Disclosure as long as it contains all of the seller’s transaction information. If the settlement agent provides the seller with a separate Disclosure, then the settlement agent must also provide a copy of the Seller Closing Disclosure to the borrowers’ lender, but not to the borrower. While the buyer will not necessarily see the Sellers’ Closing Disclosure, the buyer will have a summary of the sellers’ side of the transaction on page 3 of the buyer’s Closing Disclosure, as with the current HUD-1.
A broker’s obligations concerning the accuracy of settlement statements have not substantially changed with the new forms; however, the information will be found in different locations. The Commission is aware that in some cases, brokers may not have access to the form for the other side of the transaction.
The change that may have the most significant impact is the requirement that the lender must ensure that the borrower receives the completed Borrower Closing Disclosure three (3) business days prior to consummation (defined as the point at which the borrower becomes obligated to the loan). If the Closing Disclosure is delivered to the borrower by any method other than personally, the lender generally must add three more business days for delivery, meaning that it must be sent not later than six business days prior to settlement. For Closing Disclosure purposes, “business day” includes Saturdays, excluding only Sundays and ten federal public holidays. If it is mailed or delivered electronically, the borrower is considered to have received the Closing Disclosure three business days after it is delivered or placed in the mail. However, if the lender has evidence that the borrower received the Closing Disclosure earlier than three business days after it is mailed or delivered, it may rely on that evidence and consider it to be received on that date. For example, if the borrower has consented to receive the Disclosure by email and then acknowledges receipt of the Disclosure by email, the three-day clock starts from the date the borrower acknowledged receipt.
THE 3/6-DAY TIMELINE FOR ADVANCE DELIVERY OF THE BORROWER’S CLOSING DISCLOSURE IS MANDATORY AND GENERALLY CANNOT BE WAIVED. While it is the lender’s responsibility to comply with these requirements, brokers must educate their clients and customers about these timelines. Other important facts to know:
1) The 3/6-day advance delivery applies only to the Borrower’s Closing Disclosure. There is no rule requiring advance delivery of the Seller’s Closing Disclosure. Delivery must be to the borrowers personally, not to a broker acting as a buyer agent.
2) The lender, not the settlement agent, will decide whether to issue one or two separate Closing Disclosures and any other settlement statements. If the lender decides to issue two separate Closing Disclosures, a broker acting as a dual agent should only give each party that party’s Disclosure.
3) Only three changes will require a new borrower Closing Disclosure and a new three-day waiting period:
An increase in the APR,
A change in the loan product, or
The addition of a prepayment penalty.
For any other changes, the lender must still provide a corrected Closing Disclosure with the terms or costs that have changed and ensure that the consumer receives it. However, no additional three-business-day waiting period is required.
While this article has covered the important highlights of the new TRID rules, it is only a cursory treatment of the topic. TRID is a primary focus of the 2015-16 Update Course, both General and BICUP. Brokers involved in residential sales transactions are strongly urged to take the applicable Update Course as soon as possible to be informed and prepared for these significant changes in the residential mortgage loan process.
This article came from the October 2015-Vol46-2 edition of the bulletin.
Raymond A. “Buddy” Bass, Jr., of Fayetteville, Chairman of the Commission in 1995 and 2006, and a member from 1993 to 2007.
Larry A. Outlaw, Commission Director of Education and Licensing, from 1979 to 2014.
This article came from the October 2015-Vol46-2 edition of the bulletin.
Governor Pat McCrory has reappointed Robert J. “Bob” Ramseur of Raleigh as a public member of the Commission for a three-year term beginning August 1, 2015.
This article came from the October 2015-Vol46-2 edition of the bulletin.
The 2016 Spring Educators Conference will be held at the Embassy Suites, Raleigh-Durham/ResearchTriangle (exit 287 at Harrison Oaks Blvd.), February 15-16, 2016. Information about online registration is to be available on the Commission’s website.
Commission-approved real estate instructors, school directors, and continuing education sponsors are encouraged to reserve these dates and plan to attend!
This article came from the October 2015-Vol46-2 edition of the bulletin.
Cindy S. Chandler of Charlotte has been elected Chair and George Bell of Winston-Salem, Vice Chair, of the North Carolina Real Estate Commission for the term beginning August 1, 2015, it was announced by Miriam J. Baer, Executive Director.
Chandler, owner of The Chandler Group, a commercial real estate consulting and training firm, has been in real estate for more than 30 years in the areas of investment real estate, syndication, strategic planning, management, marketing and education.
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.
A past regional vice president of the National Association of REALTORS®, Chandler was also Chair of the Mecklenburg County Zoning Board of Adjustment and Charlotte Chapter President of Commercial Real Estate Women (CREW).
Chandler is a past president of the North Carolina Association of REALTORS® and the North Carolina Real Estate Educators Association and a past Vice Chair of the Charlotte-Mecklenburg Planning Commission.
Bell is president of George Bell Productions, Ltd., a real estate education firm serving real estate brokers across North Carolina, and Qualifying Broker and Broker-In-Charge of the Bell First Group, a real estate brokerage firm. He is also a consultant to North Carolina real estate brokerage and law firms.
Bell entered the real estate business in 1978, following graduation from East Carolina University with a BS in Business Administration, with concentrations in real estate and banking.
Bell was the 2010 president of the Winston-Salem Regional Association of REALTORS® and its 2009 REALTOR® of the Year and was inducted into the North Carolina Association of REALTORS® Hall of Fame in 2014.
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 both the state and international Real Estate Educator Associations.
This article came from the October 2015-Vol46-2 edition of the bulletin.
ROBERT L. BLUM (Holly Ridge) – By Consent, the Commission suspended the broker license of Mr. Blum for a period of six months effective April 1, 2015. The Commission found that Mr. Blum signed rental agreements but did not include his broker license number or the date of acceptance; performed property management duties without first obtaining management agreements; entered into an agreement with an unlicensed entity which advertised and booked rental reservations for the firm; that advertisements posted by the entity contained no contact information for Mr. Blum or the firm; that renters booking through the entity were required to accept rental agreements that did not comply with the North Carolina Vacation Rental Act; that Mr. Blum, while still a provisional broker, relocated approximately 160 miles from his affiliate firm and conducted brokerage activities outside of the supervision of a broker-in-charge; and that while his license was designated as inactive and Mr. Blum continued to practice real estate brokerage with the inactive license.
JOHN ELLIOTT BRADFORD (Charlotte) – By Consent, the Commission reprimanded Mr. Bradford effective July 1, 2015. The Commission found that Mr. Bradford, acting as the listing agent for a property, advertised the property on the local Multiple Listing Service which listed the total square feet of heated living area (“HLA”); that the property went under contract and sold as a cash sale, and the buyer renovated it and listed it for sale three months later; that the buyer’s listing agent then measured the property and determined that the actual HLA was much less than previously listed; that Mr. Bradford admitted to using the local tax data to estimate the square footage for the property and that he did not verify that data; and that Mr. Bradford could not provide copies of square footage calculations or measurements for the Commission regarding his current listings.
LARRY B. BRUNER (Terrell) – The Commission accepted the voluntary surrender of the broker license of Mr. Bruner for a period of two years effective May 20, 2015. The Commission dismissed without prejudice allegations that Mr. Bruner violated provisions of the Real Estate License Law and Commission rules. Mr. Bruner neither admitted nor denied misconduct.
ASHLEIGH DIANE BURR (Belmont) – By Consent, the Commission suspended the broker license of Ms. Burr for a period of two years effective September 16, 2015. The Commission found that Ms. Burr was convicted of DWI level II on August 8, 2013 and received a seven-day jail sentence along with a 12-month supervised probation with conditions; that Ms. Burr failed to report this conviction within 60 days of judgment; that Ms. Burr was convicted of DWI level II on March 12, 2014 and received 30 days of in-house substance abuse treatment in lieu of a jail sentence along with an 18-month period of unsupervised probation; that Ms. Clark failed to report this conviction to the Commission within 60 days of the judgment; that Ms. Clark was convicted of DWI aggravated level I on October 21, 2014 and received a 120-days sentence along with a 36-month period of supervised probation; and that Ms. Clark failed to report this conviction to the Commission within 60 days of judgment.
LORI ANN CARDEN (Clemmons) – By Consent, the Commission reprimanded Ms. Carden effective July 1, 2015. The Commission found that Ms. Carden, acting as listing agent for a property, was aware that in 2005, the owner hired a contractor to construct a two-story garage with an upstairs, accessory apartment and that in 2010, the primary residence on the property had been destroyed in a fire; that Ms. Carden was aware that after the destruction of the primary residence, the property owner had personally converted the garage portion of the two-story garage into a heated living space; that Ms. Carden advertised the two-story garage as a one-bedroom, single family home based on the property owner’s representation that he had obtained all of the required permits to do the conversion in 2010; and that Ms. Carden failed to confirm with County officials that all required permits had been obtained or that a certificate of occupancy had been issued for the garage, when, in fact, the property owner had failed to obtain all of the required permits or a certificate of occupancy when the first floor of the garage was converted to living space in 2010.
JANE FORD CLARK (Raleigh) – The Commission accepted the voluntary surrender of the broker license of Ms. Clark for a period of three years effective December 31, 2015. The Commission dismissed without prejudice allegations that Ms. Clark violated provisions of the Real Estate License Law and Commission rules. Ms. Clark neither admitted nor denied misconduct.
KEITH L. CLARK (Dillsboro) – By Consent, the Commission suspended the broker license of Mr. Clark for a period of 12 months effective September 3, 2015. The Commission then stayed the suspension for a period of 12 months. The Commission found that Mr. Clark, acting as Broker-in-Charge and Qualifying Broker of a real estate brokerage firm, failed to maintain a journal or check stubs of its trust accounts, failed to maintain property ledgers, and failed to prepare trial balances for the accounts; that Mr. Clark admitted to discovering a $5,000 shortage in its trust account that was later replenished to make up for the shortage; and that it does not appear to the Commission that any consumers were harmed. The Commission also found that the firm was administratively dissolved from November 2012 through April 2015 and Mr. Clark did not notify the Commission about the dissolution.
COUNTRY CLASSIC REAL ESTATE, INC., (Dillsboro) – By Consent, the Commission revoked the firm license of Country Classic Real Estate effective August 12, 2015. The Commission found that Country Classic Real Estate failed to maintain a journal or check stubs of its trust accounts, failed to maintain property ledgers, and failed to prepare trial balances for the accounts; that Country Classic Real Estate had a $5,000 shortage in its trust account that was later replenished by the firm’s broker-in-charge to make up for the shortage; and that it does not appear to the Commission that any consumers were harmed. The Commission also found that Country Classic Real Estate was administratively dissolved from November 2012 through April 2015 and did not notify the Commission about the dissolution.
THOMAS WILLIAM DEVOE (Cornelius) – By Consent, the Commission reprimanded Mr. Devoe effective September 1, 2015. The Commission found that Mr. Devoe failed to respond to three Commission staff Letters of Inquiry and one letter from the Commission’s legal counsel requesting a response within 14 days of receipt.
JENNIFER GREEN ELLIOTT (Waynesville) – Following a hearing, the Commission permanently revoked the broker license of Ms. Elliott effective June 8, 2015. The Commission found that Ms. Elliott, on various occasions, broke or entered into numerous homes and removed items of value including cash, jewelry, silverware, and medication; that Ms. Elliott misrepresented to a pawnshop that she was the rightful owner of items of jewelry and was entitled to dispose of them, when in fact she was not, in order to obtain cash payments from the pawnshop; and that on December 19, 2014, Ms. Elliott pleaded guilty to 29 felonies crimes involving theft, false pretenses, and larceny.
MATTHEW C. HAGLER (Charlotte) – By Consent, the Commission suspended the broker license of Mr. Hagler for a period of 12 months effective June 1, 2015. One month of the suspension was active with the remainder stayed for a period of probation from July 1, 2015 to June 30, 2016. The Commission found that Mr. Hagler was the agent for a seller of commercial property which went under contract while Mr. Hagler was affiliated with a licensed firm (hereinafter “Firm A”); that during the due diligence period Mr. Hagler left Firm A and joined another licensed firm (hereinafter “Firm B”); that the closing occurred while Mr. Hagler was with Firm B and that after closing, the buyer of the property claimed that a salvage list was not provided by a specified date according to the contract and would therefore not be honored; that the seller sent this list to Mr. Hagler two days prior to the contract deadline, and Mr. Hagler could not provide a copy of the email with the salvage list he claims he had sent to the buyer agent within the prescribed time period; that neither Mr. Hagler, Firm A, nor Firm B could provide a copy of the transaction file; and that Mr. Hagler provided a copy of the Working With Real Estate Agents brochure that was given to his client seller the day before closing, but could not provide an agency agreement with the seller.
MARY D. HILLS (Young Harris, Georgia) – Following a hearing, the Commission ordered the permanent revocation of the broker license of Ms. Hills effective July 28, 2015. The Commission found in an audit of North Carolina licensees who are resident in and hold real estate licenses in another state, that Ms. Hills renewed her North Carolina broker license for the 2014-2015 license year by certifying that her Georgia broker license was active as required, when it was not; that Ms. Hill responded November 24, 2014 to a Commission Letter of Inquiry that her Georgia license had been put on inactive status by mistake and that she corrected this by providing the state of Georgia with proof of her residency; that the Commission verified her records through the Georgia Real Estate Commission and found that Ms. Hills’ broker license was on inactive status from November 1, 2013 through October 31, 2014; that Ms. Hills’ broker license had also lapsed for failure to renew on November 1, 2014 and its status had not been remedied as of the date of the hearing, June 18, 2015; that Ms. Hills did not respond to Letters of Inquiry on December 31, 2014 and January 28, 2015 within 14 days of each as required; and that Ms. Hills did respond in a voicemail on February 23, 2015 that she was in receipt of the letters and would not respond to any Letter of Inquiry and stated that the Commission should take action as it deemed appropriate.
JOHN J. HOROHOE (Charlotte) – By Consent, the Commission permanently revoked the broker license of Mr. Horohoe effective August 31, 2015. The Commission found that Mr. Horohoe scheduled a showing to view a property that was listed for sale; that when the owner of the property returned home early, she found Mr. Horohoe going through some of her personal belongings; and that the police were called and no charges were filed. The Commission notes that in addition to the improper conduct described above, Mr. Horohoe failed to maintain client records for a period of three years from the conclusion of the transactions. The Commission noted that Mr. Horohoe has since allowed his license to expire and does not plan to engage in the real estate brokerage business in the future. Mr. Horohoe neither admitted nor denied misconduct.
HPS REAL ESTATE, INC. d/b/a PENNINK & HUFF PROPERTY MANAGEMENT (Fayetteville) – By Consent, the Commission suspended the firm license of HPS Real Estate for a period of 18 months effective May 11, 2015. The Commission then stayed the suspension for a probationary period of 18 months. The Commission found that HPS Real Estate was managing approximately 1200 rental properties, and receiving annual rents in excess of $8 million; that a Commission audit of HPS Real Estate’s trust account records and bank statements for a 12-year period revealed that several transactions were not handled in accordance with the Commission’s trust account rules, including two checks that were received by HPS Real Estate, but not deposited into a trust account in a timely fashion, failure to escheat or otherwise disburse $29,614.85 representing checks issued by HPS Real Estate but never cashed, and improper accounting for bank service charges resulting in relatively small deficits in the management company ledger; that, in addition, on two occasions, HPS Real Estate paid a “bonus” to an unlicensed employee who referred a property management client to its sales affiliate, when that referral resulted in a successful sales transaction. The Commission noted that the audit did not find any conversion of trust money to personal use and that HPS Real Estate has agreed to put procedures in place to rectify and reconcile the items issued above and prevent them from happening in the future.
BRENDA ELAINE HUNTER (Jacksonville) – By Consent, the Commission withdrew Ms. Hunter’s Prelicensing, Postlicensing, and Continuing Education Instructor Approval effective September 1, 2014, for a period of six months. The Commission found that Ms. Hunter’s passage rate in the prelicensing course for first-time examination candidates for the North Carolina Real Estate License Examination was below 70% for two or more of the previous five annual reporting periods beginning in 2008 through 2013. Upon reinstatement, Ms. Hunter’s Approval was placed on probation for 18 months on certain conditions. At its August meeting, the Commission granted Ms. Hunter additional time to meet certain requirements of the conditions placed upon her.
ANGELA B. MCKINNEY (Greensboro) – By Consent, the Commission reprimanded Ms. McKinney effective April 22, 2015. The Commission found that Ms. McKinney acted as broker-in-charge (BIC) of an unlicensed sole proprietorship which used outdated accounting software not approved by the Commission to maintain trust and rental accounts, both of which had overages; that no reconciliations had been performed, and no journals or records had been maintained; that before Ms. McKinney became BIC, the unlicensed owner of the company loaned more money to a landlord from the rental account than was actually collected, resulting in deficit spending; that Ms. McKinney and the unlicensed owner agree that Ms. McKinney only acted at the direction of the company owner and attorney in paying the landlord less than they were owed in order to recoup funds owed on the loan. The Commission noted that the issues with the trust and rental accounts pre-dated Ms. McKinney’s employment as BIC and that she has worked to remedy the violations.
ANNA H. MCMILLAN (Laurinburg) – By Consent, the Commission reprimanded Ms. McMillan effective September 1, 2015. The Commission found that Ms. McMillan, acting as qualifying broker and broker-in-charge of a real estate brokerage firm, failed to maintain the firm’s trust account in accordance with Commission rules; that Ms. McMillan failed to keep rent monies received by the firm in a separate trust account; and that, as a result, all rent payments received were commingled with the firm’s operating funds. The Commission noted that there was no evidence of a shortage of any trust monies.
RITA K. MCVICKER (Durham) – By Consent, the Commission revoked the broker license of Ms. McVicker effective August 13, 2015, with the provision that Ms. McVicker will not be eligible to apply for reinstatement of the license for a period of 10 years. The Commission found that Ms. McVicker, acting as a property manager, failed to disburse rental proceeds and maintenance information to her landlord client despite repeated requests from the client; that Ms. McVicker failed to provide trust account records to a Commission representative after agreeing to do so; that Ms. McVicker failed to maintain trust account records and client funds in compliance with Commission rules including failing to maintain funds in a designated trust account; and that, due to Ms. Vicker’s failure to provide information and records, an accurate audit trail could not be determined, but it is estimated that approximately $26,000 of trust account monies were converted to Ms. McVicker’s personal use.
DENETRIA MONTRESA MYLES (Charlotte) – Following a hearing, the Commission permanently revoked the broker license of Ms. Myles effective August 13, 2015. The Commission found that Ms. Myles was indicted on one count each of Racketeering Conspiracy and Mortgage Fraud Scheme in United States District Court and found guilty of each count after a jury trial in October 2013 and sentenced to 51 months in Federal prison to be followed by three years of supervised probation; and that the charges and convictions were the result of Ms. Myles’ participation in a criminal enterprise in which Ms. Myles acted as a promoter and assisted the enterprise in providing false documentation to lenders in order to obtain loan proceeds for properties with inflated purchase prices.
TINA HUONG NGUYEN (Charlotte) – The Commission accepted the permanent voluntary surrender of the broker license of Ms. Nguyen effective August 31, 2015. The Commission dismissed without prejudice allegations that Ms. Nguyen violated provisions of the Real Estate License Law and Commission rules. Ms. Nguyen neither admitted nor denied misconduct.
CHESTER G. OEHME (Fayetteville) – By Consent, the Commission suspended the broker license of Mr. Oehme for a period of 18 months effective May 11, 2015. The Commission then stayed the suspension for a probationary period of 18 months. The Commission found that Mr. Oehme, acting as broker-in-charge of a licensed real estate brokerage firm, was managing approximately 1200 rental properties, and receiving annual rents in excess of $8 million; that a Commission audit of Mr. Oehme’s trust account records and bank statements for a 12-year period revealed that several transactions were not handled in accordance with the Commission’s trust account rules, including two checks that were received by Mr. Oehme, but not deposited into a trust account in a timely fashion, failure to escheat or otherwise disburse $29,614.85 representing checks issued by Mr. Oehme but never cashed, and improper accounting for bank service charges resulting in relatively small deficits in the management company ledger; that, in addition, on two occasions, Mr. Oehme paid a “bonus” to an unlicensed employee who referred a property management client to the brokerage firm’s sales affiliate, when that referral resulted in a successful sales transaction. The Commission noted that the audit did not find any conversion of trust money to personal use and that Mr. Oehme has agreed to put procedures in place to rectify and reconcile the items issued above and prevent them from happening in the future.
ROBERT G. RABON (Raleigh) – By Consent, the Commission suspended the broker license of Mr. Rabon for a period of 24 months effective July 1, 2015. The Commission then stayed the suspension for a probationary period ending July 1, 2019. The Commission found that Mr. Rabon, acting as qualifying broker for a vacation and long-term rental management firm, mistakenly allowed the firm’s license to expire on July 1, 2013, and that, as a result, the firm operated without a license until October 21, 2013. The Commission also found that Mr. Rabon agreed to maintain the firm’s trust accounts, but failed to supervise and maintain trust account records in accordance with Commission Rules; that, as a result, Mr. Rabon was unaware that all rental payments from an online promotional and booking company were deposited into the operating account of the firm from April 2013 to April 2014, and management fees were not timely removed from the trust account of Mr. Rabon’s firm; and that the trust accounts of Mr. Rabon’s firm showed a possible shortfall of as much as $14,828.82 between January and March 2014. The Commission noted that Mr. Rabon promptly corrected all possible account deficiencies.
ANDREW JOHN SAMAJ III (Cary) – The Commission accepted the permanent voluntary surrender of the broker license of Mr. Samaj effective June 17, 2015. The Commission dismissed without prejudice allegations that Mr. Samaj had violated provisions of the Real Estate License Law and Commission rules. Mr. Samaj neither admitted nor denied misconduct.
DAVID M. SMOOT (Raleigh) – The Commission accepted the voluntary surrender of the broker license of Mr. Smoot effective with its expiration June 30, 2015. Mr. Smoot voluntarily and permanently waived and surrendered any renewal or reinstatement right he may possess. The Commission dismissed allegations that Mr. Smoot violated provisions of the Real Estate License Law and Commission rules. Mr. Smoot neither admitted nor denied misconduct.
VIP REALTY NC, LLC (Greensboro) – By Consent, the Commission revoked the firm license of VIP Realty NC effective October 1, 2015. The Commission found that VIP Realty NC purchased property management clients from another firm in 2013 after the other firm’s license was revoked by the Commission due to the unlicensed owner having signature authority over the accounts, among other things, in violation of the firm’s probation sanction; that the other firm’s owner remains as the general manager of VIP Realty NC and has signature authority over the firm’s accounts; that VIP Realty NC as part of the General Manager’s compensation, pays the General Manager a percentage of rents received; that an audit of the firm’s two trust accounts shows deficit spending, a net shortage of over $13,000, and that neither account was designated as “trust” or “escrow”; and that VIP Realty NC’s website also represents that it has been in operation since 1986, even though it was not created until 2013.
LISA O. WARREN (Hendersonville) – The Commission accepted the voluntary surrender of the broker license of Ms. Warren for a period of two years effective August 12, 2015. The Commission dismissed without prejudice allegations that Ms. Warren violated provisions of the Real Estate License Law and Commission rules. Ms. Warren neither admitted nor denied misconduct.
FRANCIS P. WILDER III (Cashiers) – By Consent, the Commission reprimanded Mr. Wilder effective July 15, 2015. The Commission found that Mr. Wilder was the broker-in-charge of a licensed real estate brokerage firm when an owner of vacant land signed an exclusive listing agreement and the acknowledgment card of a Working With Real Estate Agents brochure in January, 2014; that Mr. Wilder never provided a fully executed copy of the listing agreement to the owner; that in May, Mr. Wilder still had not listed the lot on his website for sale, which prompted an email inquiry from the owner to which Mr. Wilder never replied; that in July, the owner sent a written notice of termination to Mr. Wilder and asked for documents to be returned; that Mr. Wilder did not respond to this or subsequent letters sent by the owner; that after a complaint was filed, Mr. Wilder sent the Commission a copy of the Working With Real Estate Agents brochure and the listing agreement in his possession and that the dates on these documents were changed from January to April; and that Mr. Wilder admitted that he “panicked” and made these changes before sending them to the Commission. The Commission noted that Mr. Wilder has returned the documents to the owner, that the real estate brokerage firm has closed, and that Mr. Wilder now works with another firm. Mr. Wilder may not act as broker-in-charge for a period of three years.
DAVID NORMAN ZAUBER, JR. (Summerfield) – The Commission accepted the permanent voluntary surrender of the broker license of Mr. Zauber effective July 15, 2015. The Commission dismissed without prejudice allegations that Mr. Zauber violated provisions of the Real Estate License Law and Commission rules. Mr. Zauber neither admitted nor denied misconduct.
This article came from the October 2015-Vol46-2 edition of the bulletin.
By Pamela R. Rorie, Continuing Education Officer
An eager crowd of real estate instructors, school officials and publisher representatives attended the 2015 Real Estate Educators Conference in Cary, March 16-17, at the Embassy Suites. The annual Commission-sponsored meeting drew a near- record crowd of 230 participants from across the state for this year’s event.
Commission Executive Director Miriam Baer opened the conference with the State of the Commission address. She reviewed the Commission’s accomplishments over the past year including website re-design, replacing BICAR with BICUP, publishing a new edition of the Real Estate Manual, and publishing fillable website forms. New initiatives included a Task Force on Instructor Approval and Development, reviewing ways to reinvent the Manual, creating a school bulletin template, improving the license exam question bank, and exploring distance education.
Bruce Moyer, Director, Education and Licensing, informed the group of Real Estate License Law and Commission rule changes, restructuring of the Education and Licensing Division, and a summary of the recent Instructor Development Task Force findings.
Anita Burt, Education and Examination Officer, recognized prelicensing schools whose students had exhibited outstanding performance on the license examination during the past year.
Corean Hamlin, Education and Licensing Officer, described some of the most common license application problems and offered suggestions about obtaining educational resources for both instructors and their students.
Sharon Montague, President of the North Carolina Real Estate Educators Association (NCREEA), presided over its spring meeting during which Immediate Past President Brian Pate presented the “Program of the Year” award to Jo Mangum for her continuing education elective course, Strategic Listing Specialist. Ms. Mangum also received NCREEA’s “Educator of the Year” award.
Commission Vice Chair Cindy Chandler presented the Commission’s Billie J. Mercer Excellence in Education Award to Ms. Mangum. The award is presented annually in memory of former Commission member and Chair Billie Mercer, who was especially dedicated to the cause of real estate education. The names of all award winners are engraved on the Mercer Award cup that is displayed in the Commission’s lobby. Commission members George Bell and “Vic” Knight were also in attendance for the award presentation.
Following the luncheon, Kimberly Rosenburg, President, Attorneys Title, and Elizabeth Harrison, current Chair, Real Property section of the North Carolina Bar Association, answered questions from the educators regarding the new Real Estate Settlement Forms. The new forms continued to be the focus of the remainder of the first day with a discussion of Brokers’ Responsibilities from Legal Education Officer Patricia Moylan, and information about how the new settlement forms will impact the licensing exam from Education and Examination Officer Anita Burt.
The second day of the conference opened with Crisis in the Classroom, a presentation by Education and Licensing Officer Corean Hamlin and Continuing Education Officer Pamela Rorie, in which various unforeseen issues that can arise in the classroom were described along with possible techniques and solutions for dealing with the unexpected.
Phillip Sutton, First Class Deputy, Wake County Sheriff’s Office, provided a presentation on Agent and Instructor Safety, which was a timely reminder to the attendees of behaviors that may place them in danger on the job and actions they can take to avoid being a victim.
The conference concluded with the popular session conducted by members of the Commission’s Regulatory Affairs Division – Director Janet Thoren, Assistant Director Charlene Moody, Deputy Legal Counsel Fred Moreno, and Associate Legal Counsel Eric Mine – who explained the complaint process, reviewed recently resolved cases with the group, and answered questions.
The Commission thanks North Carolina’s real estate educators for their continued interest and support, and congratulates Jo Mangum for her achievements.
This article came from the May 2015-Vol46-1 edition of the bulletin.
Use of the Mineral and Oil and Gas Rights Mandatory Disclosure Statement is, as the title states, “mandatory” beginning this past January 1, 2015.
Keep copies of it handy for those times when you assemble paperwork relating to the sale of a property. You can also conveniently access it on the Commission’s website at this link: http://www.ncrec.gov/Forms/Consumer/rec425.pdf.
Sellers of certain property must disclose their intentions in the form concerning rights to any subsurface minerals, oil and/or gas. Listing agents should emphasize that when taking a listing; buyer’s agents should inform their buyers that this is an important document among those relating to the sale of certain property.
If you have any questions about the use of the form, please contact the Commission’s Regulatory Affairs Division, 919-875-3700, for more information and to have your questions answered.
This article came from the May 2015-Vol46-1 edition of the bulletin.
By Frederick A. Moreno, Deputy Legal Counsel
As of March 17, 2015, the North Carolina Department of Environment and Natural Resources (DENR) was authorized to begin issuing permits for oil and gas exploration, including fracking.
Effective January 1, 2015, in advance of the expected approval of permitting by the General Assembly, new Commission rules require real estate brokers to provide property owners with the mandatory disclosure statement displayed and explained below.
Brokers should be aware of the process to apply for and receive a permit to conduct oil and gas exploration on a property. The rule (15A NCAC 05H 1307) governing the review process can be found on the Office of Administrative Hearings website, http://www.ncoah.com/rules/.
Briefly, an applicant completes a Form-2 Oil or Gas Well Permit Application. DENR then sends notice to various Federal and State agencies requesting that they review and provide written comment on the application within 30 days. Public notice of the application will also be given when DENR posts it on its website (and allows 30 days for the submission of public comments). Finally, DENR has 180 days from receipt of the complete application to approve, approve with conditions, or deny the application. Once a permit is issued, drilling may commence.
Development of the permitting process occurred throughout 2014 when the newly formed Mining and Energy Commission adopted rules, which were approved by the General Assembly. These rules cover items such as chemical disclosure requirements, buffer setback requirements, well spacing, water testing, and permit application procedures.
The Rules Review Commission approved the rules in January 2015 and sent the regulations to the General Assembly for their approval. On March 17, 2015, the drilling moratorium was lifted.
The Commission expects all brokers to be familiar with the required Mineral and Oil and Gas Rights Mandatory Disclosure Statement (displayed on this page). Moreover, you should apprise your clients about their rights as landowners by sharing with them the information produced by the North Carolina Department of Justice.
Note: on March 16, 2015, a three judge panel of Superior Court judges ruled that the Legislature violated the North Carolina Constitution when it was allowed to appoint members to the Oil and Gas Commission as well as the Mining Commission, which it created. The case has now been appealed to the North Carolina Supreme Court. A ruling by the Supreme Court may impact the future of oil and gas exploration in NC. As of the writing of this article, however, the permitting process has not been impacted.
Further Information
Real Estate Bulletin – October 2012:
https://bulletins.ncrec.gov/fracking-what-every-agent-needs-to-know/.
NC Department of Justice:
http://www.ncrec.gov/pdfs/oilgaslandownerrights.pdf
http://www.ncrec.gov/pdfs/OilGasSummaryOfLaw.pdf
Real Estate Bulletin – February 2013:
https://bulletins.ncrec.gov/doj-oil-and-gas-leasing-documents-merit-real-estate-brokers-attention/
This article came from the May 2015-Vol46-1 edition of the bulletin.
By Jean Wolinski-Hobbs, Consumer Protection Officer
When brokers have multiple firm affiliations, consumers can often be left wondering “Who’s our broker?”
Say, for instance, that Broker A is affiliated with ABC Realty, Inc., a sales-only firm. Broker A wants to engage in property management. ABC Realty, Inc. gives Broker A permission to establish his/her own firm for property management and yet remain affiliated with ABC Realty, Inc., for residential sales. Broker A establishes XYZ Realty, LLC, becomes qualifying broker, broker-in-charge, and starts engaging in property management.
Months later, a tenant is unhappy with Broker A’s disposition of the tenant security deposit and files a complaint with the Commission against Broker A and ABC Realty, Inc. The tenant named ABC Realty, Inc. in the complaint because Broker A used ABC Realty’s software program that auto-populates the firm name and address on the lease form.
The tenant has a reasonable belief that the rental property is being managed through ABC Realty, Inc. This could be a misrepresentation on the part of Broker A, not to mention a misuse of ABC Realty’s software, and presents a problem for Broker A with both ABC Realty and the Commission.
When brokers have multiple affiliations, they need to use business cards and forms that identify the correct real estate firm with which the consumer is dealing.
Brokers-in-charge also need to be mindful of this issue. If you are a broker-in-charge and allow brokers with your firm to establish a separate firm, or affiliate with another existing firm, then make sure that they are not engaging in any other business under your firm name or using your trust account to handle monies that are related to a transaction with the other firm. Office policy should address whether brokers may have other affiliations.
There can be many reasons a broker might be affiliated with more than one real estate firm. Brokers just need to be sure that the documentation they are using indicates the correct firm affiliation for the transaction at hand, and that everyone knows which role the broker is performing for each transaction.
This article came from the May 2015-Vol46-1 edition of the bulletin.