A Regulatory Affairs Case Study
By Shanna Hardy, Consumer Protection Officer
The Complaining Witness in this case was a buyer who was bidding on a judicial sale property (i.e. auction sale). The Respondent was a broker-in-charge who was bidding on the same property. The Complaining Witness was represented by a buyer agent.
Before an online auction bid is declared successful or is confirmed, the court places the property in a 10-day “upset bid period,” during which the court waits to see if a higher or better bid is submitted, resulting in an “upset” to the original bid. In these types of transactions, the bidding continues until all but one party discontinues the submission of bids. A bidder is not permitted to interfere with or intimidate another bidder or to offer to pay another bidder not to bid as this would be considered to be illegal “bid-rigging.”
In early 2019, the Complaining Witness and the Respondent began bidding on the same property. The bidding went back and forth for weeks. The Respondent then called the Complaining Witness’ buyer agent and stated, “Tell your client if he is willing to pay me $2000, I’ll make my offer go away.” The buyer agent informed the Complaining Witness about the Respondent’s offer and recommended against paying the $2000 to the Respondent.
The Complaining Witness called the Respondent directly and recorded the conversation between the two. The Respondent first claimed that it was his unidentified client who directed him to request the payment but, when the Complaining Witness pressed further, stated that the $2000 was for himself and his business partner. The Complaining Witness then filed a complaint against the Respondent.
The evidence in this case showed that the Respondent was, in fact, bidding on the property for himself and the business partner was his wife. The Commission found probable cause to have a hearing. but, Prior to the hearing, the Respondent voluntarily surrendered his license. Had the case proceeded to a hearing, the Commission could have found that the Respondent’s statements to the Complaining Witness constituted a willful misrepresentation of material facts, that his actions were evidence that he was unworthy or incompetent to act as a real estate broker in a manner as to endanger the interest of the public, and/or that he had engaged in conduct that constituted improper, fraudulent, or dishonest dealings in violation of N.C.G.S § 93A-6(a)(1), (8) and/or (10). While the Respondent was not acting as a broker in this matter, he was still subject to discipline for violating License Law while selling, leasing, or buying his own property under N.C.G.S § 93A-6(b)(3).