Frederick A. Moreno, Chief Deputy Legal Counsel, spoke to the Raleigh office of Fonville Morisey Real Estate.
Jean A. Wolinski-Hobbs, Auditor/Investigator, spoke to Allen Tate Company in Charlotte.
Peter B. Myers, Legal Information Officer, spoke to REMAX Leading Edge in Concord.
MARC ANDREW CASORIA (Hendersonville) – By Consent, the Commission reprimanded Mr. Casoria effective June 26, 2019. The Commission ordered Mr. Casoria to comply with all restrictions imposed on his driving privileges and, during the period Mr. Casoria is restricted to driving a vehicle equipped with an ignition interlock device, he shall not operate a motor vehicle while transporting real estate clients or customers. The Commission found that Mr. Casoria, on or about February 28, 2019, was convicted of a Level II DWI and timely disclosed this DWI on April 1, 2019. Mr. Casoria was sentenced to seven days in jail with 120 days suspended, 12 months of supervised probation, a 12-month driver’s license suspension, and substance abuse assessment and treatment.
CENTURY 21 TRIANGLE PROPERTY MANAGEMENT (Raleigh) – By Consent, the Commission reprimanded Century 21 Triangle Property Management effective June 10, 2019. The Commission found that the firm operated as a property management firm without first obtaining a license from 2014 to April 19, 2018 and allowed day-to-day operations to be run by an unlicensed individual. The firm failed to maintain trust account records in compliance with Commission rules including failure to include required information on ledgers, holding rents in an operating account and reconciliations not being performed in a timely manner. The Commission noted that the firm’s trust account records are currently in substantial compliance with Commission rules.
MENTALLA EFFAT (Charlotte) – By Consent, the Commission suspended the broker license of Ms. Effat for a period of 12 months effective June 14, 2019. The Commission then stayed the suspension for a probationary period through June 13, 2020. The Commission required that Ms. Effat’s license status remain as provisional broker for a period of five years from the effective date and required completion of all postlicensing courses within 18 months. In addition, Ms. Effat must inform current and future BIC’s of this Consent Order and provide her BIC with all executed transactional documents within 24 hours of execution, so long as she is a provisional broker. The Commission found that Ms. Effat left one firm to join another and believed that she could take two buyer clients of the former firm with her to the new firm. Ms. Effat created and provided termination agreements to the two buyer clients after her employment by the former firm had ended. Both buyers signed agency agreements with Ms. Effat and her new firm prior to signing the termination agreements with the former firm. Furthermore, the former firm did not sign the termination agreements releasing the buyers from their contract. Once Ms. Effat was advised by her new BIC that she could not bring these clients to the new firm without permission, Ms. Effat ceased communicating with those buyers. While at the new firm, Ms. Effat executed agency agreements with buyers who went under contract to purchase properties, without informing her BIC or providing the firm with copies of transaction documents.
LORI LOVE (Mount Pleasant) – The Commission accepted the permanent voluntary surrender of the broker license of Ms. Love effective July 22, 2019. The Commission dismissed without prejudice allegations that Ms. Love violated provisions of the Real Estate License Law and Commission rules. Ms. Love neither admitted nor denied misconduct.
LYRUBEC PROPERTIES LLC (Charlotte) – By Consent, the Commission suspended the firm license of Lyrubec Properties for a period of 24 months effective June 14, 2019. The Commission then stayed the suspension for a probationary period from June 14, 2019 until June 13, 2021. The Commission found in a review of Lyrubec Properties’ two trust accounts that: deposit slips were not designated “trust” or “escrow”; cancelled checks failed to identify the property or owner; bank disbursement transactions failed to identify the purpose for the disbursement; ledgers failed to identify the owner and tenant, the purpose of the monies deposited, or the purpose of disbursements; separate ledger sheets were not maintained for each security deposit; deficit spending existed; and a shortage was present in both accounts. The shortages appear to have been attributed to the former bookkeeper who was arrested and charged with felonious embezzlement. Lyrubec Properties has brought its trust accounts into compliance with Commission rules and the shortages have been funded. The Commission previously reprimanded Lyrubec Properties in 2013 for trust account related issues.
AUDRA L. MELTON (Raleigh) – By Consent, the Commission suspended the broker license of Ms. Melton for a period of 43 months effective November 30, 2017. The Commission found that Ms. Melton self-reported December 10, 2015, convictions of misdemeanor DUI and felonious Homicide by Vehicle while DUI, in Pennsylvania court. Ms. Melton was incarcerated for 18 months and released on parole. Ms. Melton has returned to North Carolina, is on supervised probation through June 30, 2021, and is unable to restore her driving privileges until December of 2020. Ms. Melton’s broker license has been inactive since July 1, 2014.
S K GOODMAN INC (Huntersville) – By Consent, the Commission reprimanded S K Goodman, Inc. effective February 1, 2019. The Commission found that Goodman’s qualifying broker and broker-in-charge supervised a provisional broker who acted as listing agent for a commercial property on which a residential house was located. The owner of the property was living in the house at the time of the listing and told the provisional broker that city water and sewer served the property. Without independently verifying that the property was connected to city sewer, the provisional broker advertised the subject property in the MLS as being connected. After closing on the property, the buyer discovered a septic tank on the premises and the city informed the buyer that the property was connected to city water but not city sewer.
SELLING SOLUTIONS REAL ESTATE (Fayetteville) – By Consent, the Commission permanently revoked the firm license of Selling Solutions Real Estate effective July 31, 2019. The Commission found that Selling Solutions managed a residential property and disbursed rent proceeds to the property owner without receiving a rent payment from the tenants, causing deficit spending. Selling Solutions was unable to produce all financial trust account documents requested by the Commission. A review of Selling Solutions Real Estate’s trust account records found that: deposit slips, checks, and bank statements were not labeled “trust” or “escrow”; cancelled checks failed to identify the purpose for disbursement; deposit tickets failed to identify the purpose of the monies deposited, the date of the deposit, or the remitter; ledger sheets failed to identify to whom disbursements were paid; there was a lack of an audit trail; and that deficit spending was occurring. Selling Solutions Real Estate failed to provide all leases and management agreements to the Commission and disbursed funds from the Tenant Security Deposit account prior to the tenant vacating the subject property and in an amount more than collected, leading to a shortage.
LOUELLA M. VENABLE (Raleigh) – By Consent, the Commission suspended the broker license of Ms. Venable for a period of 12 months effective November 1, 2018. Two months of the suspension were active with the remainder stayed on certain conditions. Ms. Venable agreed not to act as or become a broker-in-charge and not to engage in property management for a period of five years from the effective date of this order. The Commission found that Ms. Venable was qualifying broker and broker-in-charge of a property management firm when the Commission cancelled its license on December 20, 2017. Prior to securing a tenant, Ms. Venable did not have a signed property management agreement with a potential owner-client. Ms Venable, however, provided a signed property management agreement to the Commission during its investigation. Without the potential owner-client’s knowledge or authorization, Ms. Venable used DocuSign to sign the potential client’s name on the property management agreement and provided it to the Commission. Ms. Venable collected $2,125 in management fees despite not having a signed property management agreement with the owner-client. Ms. Venable failed to maintain the firm’s trust accounts and records in compliance with Commission rules.
CHERYL CUNNINGHAM WARREN (Charlotte) – By Consent, the Commission suspended the broker license of Ms. Warren for a period of 24 months effective June 14, 2019. Six months of the suspension are active with the remaining 18 months stayed for a probationary period of two years from December 14, 2019 until December 13, 2021. Ms. Warren may not act as a broker-in-charge for a period of five years from the effective date, must disclose the trust account violations to the new acting broker-in-charge, and must not have control over the firm’s trust account during this period. The Commission found in a review of the firm’s two trust accounts that: deposit slips were not designated “trust” or “escrow”; cancelled checks failed to identify the property or owner; bank disbursement transactions failed to identify the purpose for the disbursement; ledgers failed to identify the owner and tenant, the purpose of the monies deposited, or the purpose of disbursements; separate ledger sheets were not maintained for each security deposit; deficit spending existed; and a shortage was present in both accounts. The shortages appear to have been attributed to the former bookkeeper who was arrested and charged with felonious embezzlement. The firm has brought its trust accounts into compliance with Commission rules and the shortages have been funded. The Commission previously reprimanded the firm in 2013 for trust account related issues.
The NC Real Estate Commission sends communications to licensees using email and postal mail services. It is important for licensees to review all correspondence sent from the Commission in a timely manner to ensure they are in compliance with License Law and Rules. Licensees should verify that their email and mailing addresses are up-to-date, to ensure they don’t miss any correspondence.
You can update your license record by clicking here. If you need further assistance, please contact the Education and Licensing Division at 919.875.3700.
Executive Director Miriam Baer announced that Jeffery J. Malarney of Manteo has been elected as Chair, and Sandra L. O’Connor of Greensboro, as Vice Chair of the North Carolina Real Estate Commission. Their terms will begin August 1, 2019.
Malarney, a former member of the Real Estate Commission, was reappointed to the Commission in 2018 by Governor Roy Cooper. He has practiced law in the Outer Banks for over 27 years and is a principal of the Law Offices of Jeff Malarney, PLLC. He is also a licensed real estate broker and property insurance agent.
A Commander (ret.) of the United States Navy Judge Advocate Corps, he is a former Special Assistant United States Attorney, past president of the North Carolina Vacation Rental Manager’s Association, and past chairman of the Outer Banks Chamber of Commerce.
Malarney founded and operated a mortgage brokerage company, an insurance agency, and created H20BX Waterpark in Currituck, North Carolina.
Malarney holds a JD from Wake Forest University School of Law and BA (cum laude) in Economics and Management from Albion College.
Sandra O’Oconner was appointed to the Commission by Governor Roy Cooper in 2017.
A broker with the Greensboro Allen Tate office, O’Connor has been a licensed North Carolina real estate broker since 1983. From 1985 to 2005, she was the owner and sole proprietor of Sandra O’Connor & Associates.
O’Connor has been active with the national, state, and local REALTOR® organizations and in community affairs.
She is a Past Director of the National Association of REALTORS® and a past Region 4 Vice President. A past President of the North Carolina Association of REALTORS®, as well as a Region V Vice President and Treasurer, she received its REALTOR® of the Year award in 2014. She is a past President and REALTOR® of the Year of the Greensboro Regional REALTORS® Association and has been admitted to its Hall of Fame.
O’Connor is a past chair and member of the Greensboro Planning Board and a past member of the board of directors of the Guilford Green Foundation. She holds a BA degree from Carlow University in Pittsburgh and a Masters of Librarianship from the University of Washington in Seattle.
Check out the Commission’s new Support page that provides answers to licensees’ and consumers’ most common questions. To access the Support page, go to…
Click here for more information OR call the Education and Licensing Division at 919.875.3700.
Currently, Commission Rule 58A .1902 requires a Provisional Broker to complete at least one of the 30-hour Postlicensing courses during each of the first three years following the date of their initial licensure in order to maintain active license status. This rule will remain in effect as-is until June 30, 2020.
Beginning July 1, 2020, Rule 58A .1902 will require a Provisional Broker to complete all three 30-hour Postlicensing courses within 18 months of initial licensure in order to maintain active license status.
A Provisional Broker’s license will be placed on inactive status if the Provisional Broker fails to timely complete Postlicensing courses.
More information about this important change is provided during General Update (GENUP) and BICUP courses throughout the year. Also, if you are a provisional broker, be on the lookout for email communications from the Commission about the changing education deadlines.
If you have further questions regarding this rule change, please contact the Education and Licensing Division at 919.875.3700.
By Madison L. Mackenzie, Associate Legal Counsel I
Do you have “dormant” funds sitting in your trust or escrow account? Maybe a tenant failed to provide a forwarding address for you to return his or her tenant security deposit or maybe you received an earnest money deposit from a buyer who was never heard from again. If those funds are still sitting in your trust account after time has passed, it could pose a problem.
All businesses operating in North Carolina are subject to the State’s Unclaimed Property laws, codified in Chapter 116B, Article 4 of the North Carolina General Statutes.
These laws require all businesses to review their accounting records annually and determine whether they are in possession of any dormant unclaimed property. If they are, the business is required to file a report with the Unclaimed Property Division of the N.C. Department of State Treasurer and remit the unclaimed property. Failure to file this report and properly remit unclaimed property can result in interest charges, a $1,000 civil penalty for each day of delinquency, and a penalty equal to 25% of the value of the unreported property.
Any real estate firm with a trust account holding money on behalf of others is a potential holder of unclaimed property and is therefore subject to these laws. The N.C. Department of State Treasurer has outlined four steps to identify unclaimed property and properly report it.
1. Identify Property that Should be Reported
Property is unclaimed if the apparent owner has not communicated with the holder of the funds or indicated an interest in the property within a period of time known as the “dormancy period.” The dormancy period varies depending on the type of property being held. In most cases, the dormancy period for funds in an agent’s trust account is five years. However, disputed funds are not unclaimed property and should never be remitted to the State Treasurer.
For most holders, November 1st is the due date to report all unclaimed property that has reached its dormancy holding period as of the prior June 30th. The State Treasurer provides conversion tables on its website to assist with determining when reporting is due.
2. Attempt to Locate the Owners
Prior to reporting unclaimed property that has reached its dormancy holding period, the agent must make an attempt to contact the apparent owner in writing when the property being held exceeds $50. The State Treasurer refers to this written notice as a “due diligence letter,” not to be confused with the due diligence associated with real estate transactions. This notice to the apparent owner must be mailed not more than 120 days or less than 60 days from the reporting due date.
If the agent is unsuccessful in identifying the apparent owner of the funds, the agent should contact the State Treasurer for further assistance. The property will still need to be reported and remitted, even if the apparent owner is unknown.
3. Prepare your Report
The report(s) required will depend on the type of unclaimed property being reported. Most likely, the agent will be reporting unclaimed “cash”; and therefore, will need to complete the Unclaimed Property Verification Report (ASD-159) and Form ASD-21.
The agent should be prepared to provide names, last known addresses, social security or tax identification numbers, dates of birth, driver license numbers, and email addresses of the apparent owners, if known by the agent. Any other information that may be available to help in identifying the owner should be reported with each property.
4. Submit your Report and Remit Funds Due
If the agent is reporting less than 50 property owner records, the report can be filed electronically or in paper form. If more than 50 properties, the report must be filed electronically. Remitting unclaimed funds can be done by check or ACH or Wire Transfer.
For reports filed after July 16, 2012, the records accompanying the report must be retained for 5 years from the date the report is filed. (Note: record retention for reports filed before July 16, 2012 remains at 10 years.)
No report is required if there is no unclaimed property identified in the agent’s financial review. Additionally, filing extensions may be granted for good cause.
For further information, The North Carolina Holder Reporting Guide produced by the N.C. Department of State Treasurer can be found at https://www.nctreasurer.com/upp/Resources/NC_Holder_Reporting_Guide.pdf.
What you can do to Prevent Unclaimed Property? Keeping proper and current trust accounting records will keep you from later discovering a trove of unclaimed property. Ensure that accounts are reconciled timely and resolve all exceptions, review uncashed checks in ledger accounts, and review unusual journal entries.
The real estate firm is relieved of liability once they have remitted dormant unclaimed property to the State. If the apparent owner later wishes to claim the property, they must direct that claim to the State. Also, the real estate firm avoids fines and penalties by properly and timely reporting unclaimed property.
Unclaimed property laws also apply to accounts other than trust or escrow accounts. To learn more about your responsibilities as a real estate agent or firm when it comes to unclaimed property, contact the North Carolina Unclaimed Property compliance staff at email@example.com or by calling 919-814-4200.
To stay up-to-date on new laws and legislation that affect your responsibilities as an unclaimed property holder, sign up for Holder Reporting e-Updates provided by the N.C. Department of State Treasurer at https://2ec804.campgn5.com/UP-Business-Holders.