By Gary R. Caddell, Senior Auditor/Investigator, Training Officer
The Spring 2003 Trust Account Caravan is scheduled for March 18 through April 30 with seven stops in Asheville, Boone, Fayetteville, Greensboro, Huntersville, Kill Devil Hills, and Wilmington.
To register, go the Commission’s website, www.ncrec.state.nc.us, or use the form with dates and locations on page 10. Class size is limited to 40 participants and early registration is advised.
The “Basic Trust Account Procedures” course is updated to include rule changes that went into effect September 1, 2002. While this course is intended for brokers-in-charge and trust account bookkeepers, all licensees may attend. The course provides instruction in the preparation of trust account records and the reconciliation process. Related topics include the proper handling of owner/broker trust funds and the Tenant Security Deposit Act.
The “Trust Account Procedures for Resort Property Managers” course covers issues specific to resort property management, such as the Vacation Rental Act and sales taxes. This course is updated to reflect recent rule changes. The course is offered only during the Spring Caravan. Because this course focuses on issues specific to resort property management, the Commission strongly recommends that you attend the Basic course prior to taking the Resort Property Managers course.
Both courses were developed and are taught by members of the Commission’s Audits & Investigations Division. Each course counts as four hours of elective continuing education credit.
For the third year in a row, the Real Estate Commission’s Trust Account Caravan set a record for the number of attendees. A total of 593 course attendees participated in the Spring 2002 Trust Account Caravan, compared with 570 in 2001, 505 in 2000 and 291 in 1999.
The Spring 2002 Trust Account Caravan made stops in Asheville, Boone, Charlotte, Fayetteville, Greensboro, Kill Devil Hills, Morehead City and Wilmington. Eleven “Basic Trust Account Procedures” courses and five “Trust Account Procedures for Resort Property Managers” courses were offered.
Held annually, the Caravan was instituted by the Commission in 1982 to provide courses to those who cannot attend one of the monthly courses held in Raleigh. [Note: For registration information, please refer to page 3 of thisBulletin.]
This article came from the October 2002-Vol33-2 edition of the bulletin.
Brush up next February on what you should know about selling coastal real estate with the 2003 Coastal Workshops sponsored by the Commission in conjunction with UNC-Sea Grant and the Division of Coastal Management.
The series will consist of workshops at Wrightsville Beach, Holiday Inn Sun Spree Resort, February 10, 1-5 p.m. and February 11, 9 a.m-1p.m.; Nags Head, Ramada Inn Outer Banks Resort, February 20, 9 a.m.-1p.m., and Sheraton Atlantic Beach, February 21, 9 a.m.-1p.m.
Registration for the Workshop of your choice can be made online at the Commission website, www.ncrec.state.nc.us, or by mailing the form below with your check payable to the NC Real Estate Commission for the registration fee of $45 per person.
Recognized experts will discuss a variety of topics including erosion rates and control, construction standards, and disclosure requirements for real estate agents as well as identify sources for additional information on buying and selling coastal real estate.
Each workshop is limited to 125 persons, so registration will be on a first come-first served basis. Real estate licensees will receive four hours’ continuing education elective course credit for attending.
This article came from the October 2002-Vol33-2 edition of the bulletin.
Each year, the Real Estate Commission reviews what it has done during the 12-month period from May 1 to April 30. And each year, the result is an impressive array of statistics that together speak to the breadth and complexity of its role in working with the North Carolina real estate industry.
Here’s a sampling of Commission activity from May 1, 2001 to April 30, 2002:
Contact
• 225,000 telephone calls (a 42% increase over the previous period)
• 100,000 website “hits” (a 15% increase)
Publications
• 816,000 publications distributed to licensees, consumers, applicants (a 33% increase)
Technology
Made more effective use of technology by:
• Imaging 102,817 records
• Renewing 12,000 licenses online
• Re-designing Commission website
Employment
• 86 applications for employment received
• 20 applicant interviewed
• 8 positions filled
Licensing
• 113,000 license record changes
• 8,126 applications processed for licenses by examination
• 6,598 license examinations administered (94% by computer)
• 4,007 licenses by examination issued
• 3,360 broker licenses issued without examination
• 255 licenses issued by reciprocity
• 704 firm licenses issued
• 182 expired licenses reinstated
• 71 license applicant conferences conducted
• 8 new and 41 renewed private real estate school licenses
Education
• 61 pre-licensing instructors issued regular or temporary approvals
• 66 new continuing education elective courses approved (for a total of 331 courses)
• 26 new continuing education sponsors (for a total of 187)
• 53 Broker-in-Charge Course sessions conducted for 3,554 licensees (a 142% increase)
• revised and published Real Estate Manual (2002-2003 Edition)
Audits/Investigations
• 108 case investigations completed
• 63 trust accounts examined
• 414 persons interviewed
• 28 trust account courses conducted for 963 students
• 74 “spot inspections” performed on 126 different trust accounts
• 20 trust account software programs re-evaluated
Legal
• 854 case (complaint) files opened and 855 closed
• 24 licensees reprimanded
• 24 licenses suspended
• 15 licenses revoked
• 13 licenses surrendered
• 34 cases utilized conditional remedies
• 2 Recovery Fund hearings conducted
• 20 license application hearings held (a 67% increase)
This article came from the October 2002-Vol33-2 edition of the bulletin.
(With permission, portions of this article were written based upon an article appearing in the General Counsel Quarterly, a publication of the North Carolina Association of REALTORS®, Volume VI, Issue One, Summer 2002.)
Have you noticed a change in some of the standard contract forms you are using in your residential sales transactions? The Joint Forms Committee of the North Carolina Association of REALTORS® and the North Carolina Bar Association made several revisions to the standard Offer to Purchase and Contract and related forms.
Offer to Purchase and Contract – the contract now allows the buyer to ask that the seller pay a stated amount toward “any of the Buyer’s expenses associated with the purchase of the Property” (¶8), rather than paying money toward the buyer’s closing costs. This change is designed to eliminate disputes over what constitutes a “closing cost.” Conforming changes have also been made to the FHA/VA Financing Addendum which now specifically provides that the amount paid by the seller includes FHA/VA seller mandated lender and inspection costs.
The contract also now requires that the seller deliver marketable and insurable title to the buyer (¶5(e)). In addition, the contract authorizes the Seller’s current and prior closing attorney, and the Property’s title insurer, to release and disclose title documents to the buyer, agents and attorneys.
Finally, references to an inspection addendum were removed from the Inspections provision (¶12), since no such addendum exists.
Contingent Sale Addendum – the Addendum has been changed to require a buyer who waives the contingency to then close on the purchase of the seller’s property by a specified date. It is designed to assure that buyers waive the contingency only if they are in fact prepared to proceed in a timely manner with the purchase of the seller’s property.
In addition, the “time is of the essence” provision has been expanded to expressly include the closing date.
Additional Provisions Addendum – the provision concerning a Septic System Improvements Permit has been renamed “Sewer System.” It now provides that the contract is contingent upon the buyer obtaining a permit from the County for either a conventional or otherwise described sewer system. All costs are borne by the buyer, except that the seller must pay for clearing as much of the property as the County requires. A deadline must be inserted by which the test is to be performed. The buyer is required to use “best efforts” to obtain the permit and the buyer must notify the seller by a stated deadline if he cannot get the permit, “time being of the essence” – otherwise the condition is deemed satisfied.
In addition, the Appraisal provision was separated into two pieces – one addressing Appraisal with Financing Contingency and one addressing Appraisal Without Financing Contingency.
As to the Flood Hazard Zone provision, it now provides that it “may be” necessary for the purchaser to purchase flood hazard insurance rather than it “will be” necessary.
Other Jointly Approved Forms – minor changes were made to both the Owner Association Addendum and the Option to Purchase. Some of these were made in order to accommodate the use of both forms with the newVacant Land Offer to Purchase and Contract. Others were more technical in nature.
Changes to All Forms – in addition to the substantive changes, all forms are now available in an 8½ x 11 format. Each contains a new disclaimer immediately preceding the signature lines stating that the Bar Association and the Association of REALTORS® “make no representation as to the legal validity or adequacy of any provision of this form in any specific transaction.”
CAVEAT: The Commission’s Update Course this year includes coverage of the Offer to Purchase and Contract and related addenda. Many of the changes noted here also will be addressed in that course.
This article came from the October 2002-Vol33-2 edition of the bulletin.
The Real Estate Commission has approved a recommendation from its Interstate Brokerage Cooperation Advisory Committee (See Bulletin Volume 32, No. 4) to support legislation to create a “Limited Nonresident Commercial Real Estate License.” As proposed, real estate brokers and salespersons licensed in other states could obtain the license from the Commission without having to pass the North Carolina licensing examination.
The license would allow them to perform real estate brokerage acts in North Carolina only in connection with commercial real estate transactions and only while affiliated with a resident North Carolina real estate broker. The nonresident commercial licensee and the resident North Carolina broker would also be required to enter into a “Brokerage Cooperation Agreement” which, among other things, mandates that the North Carolina broker actively and personally supervise the nonresident commercial licensee.
It is anticipated that legislation authorizing the issuance of the special licenses will be considered by the North Carolina General Assembly during its 2003 Session and that, if enacted, it will facilitate and promote commercial and industrial real estate development and investment in our state.
The Commission thanked again the members of its advisory committee and real estate attorney and commercial broker Garth K. Dunklin who joined the committee at its August 7 meeting.
[The Interstate Brokerage Cooperation Advisory Committee’s reports can be found on the Real Estate Commission’s website www.ncrec.state.nc.us. Go to Site Map, then Reports]
This article came from the October 2002-Vol33-2 edition of the bulletin.
Rule A.0113 requires any licensee who is convicted of a misdemeanor or felony or who has disciplinary action taken against him or her by any other professional licensing board to file a report with the Real Estate Commission.
The reporting requirement includes convictions for driving while impaired (“DWI”). The report must be filed within sixty (60) days of the final judgment or board action.
If you have questions about this rule, please call the Commission’s legal division at 919-875-3700 for more information.
This article came from the October 2002-Vol33-2 edition of the bulletin.
Beginning January 1, applicants for North Carolina real estate licenses will be required to include with their license applications a report listing any criminal convictions or charges pending against them or stating they have no convictions or pending charges.
To assist license applicants in obtaining the reports, the new license application form lists the name and contact information for firms which prepare them. Generally, reports can be obtained within two or three days after ordering them and cost around $10; however, an additional fee and time may be required if the applicant has resided in another state within the past reporting period.
According to Commission Chairman Allan Dameron, “The new reporting requirement will better assure that persons entering the real estate business possess the character expected of real estate brokers and salespersons in our State.”
This article came from the October 2002-Vol33-2 edition of the bulletin.
The Real Estate Commission’s Errors and Omissions Insurance Advisory Committee has completed its work and filed its report and recommendations with the Commission. The committee was charged to advise the Commission on whether the Commission should support legislation to require real estate licensees to maintain errors and omissions (E&O) insurance.
As a part of its study, the committee researched insurance programs in the thirteen states which have enacted laws requiring real estate licensees to maintain E&O insurance as a condition for keeping their licenses on active status. The committee also examined the results of an e-mail survey conducted by the North Carolina Association of REALTORS® to gauge the opinion of its members regarding a possible E&O insurance requirement. The committee learned that 77% of the 1300 persons responding to the survey have E&O insurance. Also, according to the survey, a little more than half think the Commission should require all licensees to carry E&O insurance because it would reduce all agents exposure to financial loss as well as protect consumers and enhance the professional image of real estate practitioners.
At the conclusion of its study, the committee, by majority vote, recommended to the Commission that it support legislation which would permit the Commission to require all or certain of its licensees (specifically, persons with active licenses) to purchase errors and omissions insurance and that the Commission consult with the North Carolina Association of REALTORS® and other organizations and parties which may have an interest in such legislation; however, unlike other states, the committee recommended that the legislation not direct the Commission to contract with an insurance provider for a group policy, but rather merely assure that licensees maintain the required insurance. The committee also recommended that the Commission include in a future continuing education Update course instruction on risk reduction, including the benefits of errors and omissions insurance coverage. The Commission approved the committee’s recommendations.
The Commission very much appreciates the valuable assistance given by the following members of its advisory committee: Patrice F. Jones (Belmont), N.C. Association of REALTORS® General Counsel Will Martin, Sharon L. Pelt (Raleigh), David L. Perrot (Kitty Hawk), John D. Van Dyke (Asheville), and Commission Members Allan R. Dameron and Wanda J. Proffitt. The Commission’s Director of Administration, Fran Whitley, and Legal Counsel Tom Miller served as staff advisors, and Executive Director Phillip Fisher facilitated the discussions.
[The Errors and Omissions Insurance Advisory Committee’s report can be found on the Real Estate Commission website www.ncrec.state.nc.us. Go to Site Map, then Reports.]
This article came from the October 2002-Vol33-2 edition of the bulletin.
Over 6,250 licensees have taken the Broker-in-Charge course since its inception in November 2000 through August 30, 2002. Initially the Commission requested that brokers-in-charge who had five years within which to take the class not all rush to attend, as the demand would be too great. While preference still is accorded newly designated brokers-in-charge who must take the course within 120 days, five-year “BICs” are now invited to register for the class (as may any broker) which is offered monthly in Raleigh and Charlotte, bimonthly in Asheville and Greensboro, and every few months in Wilmington, Boone, Greenville and Nags Head.
Licensees receive four hours elective continuing education credit and it satisfies the BIC course requirement for five years. However, licensees should retain the course Certificate of Completion to prove their attendance in case they are designated broker-in-charge within five years, yet are notified by the Commission that they must take the course within 120 days. In that case, the licensee should mail a copy of the Certificate to the Records Division with an explanation that they are exempt from the 120-day requirement.
Lastly, be aware that as of September 1, 2002, licensees who are sole proprietors/ practitioners (i.e. brokers practicing alone) need not declare themselves broker-in-charge unless they either: 1) have associates, or 2) hold trust monies pertaining to brokerage transactions, or 3) advertise or otherwise promote their services as a broker in any manner. Any broker whose license is on active status, but who is not associated with a real estate company (and thus under a broker-in-charge) is viewed as a “sole proprietor” at the moment she/he engages in any activity requiring a real estate license. Salespersons are discouraged from taking the broker-in-charge course until they have their broker’s license.
This article came from the October 2002-Vol33-2 edition of the bulletin.
By Miriam J. Baer, Assistant Director, Legal Services
Do you advertise that you speak Spanish? If so, be certain that your Spanish skills are up to par. The Commission has recently received complaints that agents are advertising that they speak Spanish, when in fact their skills are inadequate to handle a real estate transaction.
With the rising Spanish-speaking population in North Carolina, it may be good marketing to advertise that you speak Spanish or that your firm has the resources to handle a transaction requiring Spanish (or any other foreign language). Just be sure that any representation you make is accurate.
For example, if you advertise that you speak Spanish, you should not have to rely on a translator to assist you. If you advertise that Spanish is spoken at your office, then you or your office should have a Spanish-speaking person available to take a call in Spanish or meet with a Spanish-speaker who arrives at your office.
Perhaps neither you nor any other member of your firm speaks a foreign language, but you are willing to employ a translator when the need arises. In that case, don’t advertise that you speak Spanish (or French or Norwegian). Instead, advertise your readiness to hire a translator to assist in any transaction.
The Commission recently received a complaint about a listing agent whose rider announced, “se habla Espanol” (“Spanish spoken”). The complainant left a voice mail message for the listing agent in Spanish, and didn’t receive a call back for several days. When he finally got the call, the person on the phone represented herself to be the listing agent. According to the complainant, this was not true. In fact, she was a translator, but she was holding herself out to be the agent.
This practice is deceptive. If you are using a translator, be sure to explain to the parties that they are speaking to a translator. This is particularly important if you are doing so by phone or other electronic means where the person to whom you are speaking cannot see you and the translator.
Never let a translator take over a transaction or imply in any way that he or she is licensed. Rather, have the translator do what he or she is trained to do: translate your words, as you are speaking, into the foreign language. This will avoid any misunderstanding about your respective roles in the transaction. It will also help assure that the translator does not engage in the unlicensed practice of real estate.
This article came from the October 2002-Vol33-2 edition of the bulletin.