Stephen L. Fussell, Senior Consumer Protection Officer, has received the 2014 Investigator of the Year Award from the Association of Real Estate License Law Officials (ARELLO®), an international organization.
Fussell’s investigation involved the activities of a real estate broker whose conduct went outside the scope of her employment, without her employer’s knowledge. Fussell obtained evidence that the broker offered to assist a disabled tenant, whose rental unit was being demolished as part of a right-of-way taking by NCDOT, in relocating from the property and convinced the tenant to purchase a property that resulted in a windfall profit, not to the broker, but, in secret, to her close friend. The Commission suspended her real estate license as a result.
Distinguishing Fussell from other real estate investigators was his role as a Consumer Protection Officer (CPO) rather than a field/auditor investigator. Fussell performed his investigation entirely from within the office by letter, telephone, fax, and email, not in person as a field investigator. Most complaints received by the Commission every year are handled by CPO’s, who can complete certain types of cases much faster than a field investigator. Fussell’s knowledge, expertise, and experience enable him to investigate difficult cases without outside field assistance.
Fussell, who has been with the Commission for 23 years, holds an undergraduate degree from the University of North Carolina at Chapel Hill and a graduate degree from Campbell University. He is a licensed real estate broker and a Certified Fraud Examiner.
This article came from the October 2014-Vol45-2 edition of the bulletin.
By Charlene D. Moody,
Assistant Director, Regulatory Affairs
Effective January 1, 2015, sellers must provide a new Mineral and Oil and Gas Mandatory Disclosure Statement (MOGMDS) to buyers prior to making an offer.
The form for the Statement is being developed by the Real Estate Commission and will be available on the Commission Web site, www.ncrec.gov., in December to allow sellers time to complete the disclosure for any properties on the market as of January 1. It will be separate from and in addition to the Residential Property and Owners’ Association Statement (RPOADS).
The new requirement results from the legislature’s amendment of the Residential Property Disclosure Act (North Carolina General Statutes Chapter 47E), which previoiusly required that oil and gas disclosures be included in, not separate from, contracts for the sale of any real property subject to the Act. In the amended Act, there is no exemption from the MOGMDS for new construction, properties under a lease/purchase agreement, and properties for which the parties have agreed that RPOADS is not required. (These exemptions still apply to the RPOADS.
The amendment adds the requirement of the disclosure of the severance of mineral rights to the severance of oil and gas rights. Minerals are not specifically defined, but other North Carolina statutes provide some guidance: under the NC Mining Act of 1974 (NCGS §74-49(6)), “mineral” is defined as soil, clay, coal, stone, gravel, sand, phosphate, rock, metallic ore, and any other solid material or substance of commercial value found in natural deposits on or in the earth.
Sellers are allowed the option to mark No Representation in the Disclosure Statement as to whether mineral and oil and gas rights were severed from the property by a previous owner. Sellers must mark “yes” or “no” as to their own previous severance of rights or their intended severance prior to transfer of title to the buyer.
The Commission is proceeding with temporary rulemaking to have appropriate rules and the Statement form in place by January 1. Information about the rulemaking process is available on the Commission Web site.
This article came from the October 2014-Vol45-2 edition of the bulletin.
By Thomas R. Lawing, Jr., Commission Chairperson, and Curtis E. Aldendifer, Associate Legal Counsel
In a tight rental market, competition between multiple applicants for a single vacancy is becoming the norm rather than the exception. While this is good for the landlord, it places additional challenges on the property manager to properly screen prospective tenants with the goal of selecting the applicant who best meets the owner’s requirements. A thorough tenant screening increases the chances of procuring a tenant who will maintain the landlord’s property and pay rent on time.
In order to determine the minimum qualifications for a prospective tenant, the property manager must first determine the owner’s needs and expectations. Typical issues to address include whether pets will be allowed, whether smoking will be permitted, and the number of permitted occupants. The property manager and landlord should also review the application form to ensure that it covers the essential questions. These and related questions should be resolved at the time the property management agreement is formed.
While many property managers may attempt to pre-screen tenants to eliminate unqualified candidates early in the process, it is important that each interested person be provided with an application regardless of their qualifications. Each applicant should receive an identical application form and be asked the same questions. Picking and choosing who receives an application form or providing different application forms to different applicants may violate state and federal fair housing laws.
The property manager should take care to inform each applicant in writing regarding non-refundable application and “hold/reservation” fees, and what will be required for the formation of a binding rental agreement. In a situation where multiple applications have been submitted, each applicant should be informed of the existence of competing applications and the manner in which the applicants will be notified as to whether or not they were selected. The applicant should also be informed regarding the types of information that will be accessed during the screening process, such as credit reports, criminal history, rental history, employment verification and history, and personal references. The property manager should also explain how the information obtained during the background check will be used in the selection process, and the type of information that might result in a rejection of the application, such as a low credit score or prior eviction. The tenant will have to provide written consent for the property manager to obtain some of the required information.
When the application has been submitted, the property manager’s next task is performing the background check to verify the information provided by the applicant. A typical background check might include obtaining a credit report, criminal history, rental history, and employment verification.
After the background check has been completed, the property manager is ready to make a selection in accordance with the tenant qualifications agreed upon with the landlord. The selection process should be based on an objective and documented system to avoid possible fair housing issues.
Once the applications have been evaluated, the best qualified applicant should be notified of the deadline (e.g., within 72 hours of acceptance) for submitting the signed lease agreement, security deposit, and applicable pet fee. If the applicant fails to respond within the prescribed time limit, the next most qualified applicant would then be notified. While some property managers notify all qualified candidates and award the rental to the first applicant to submit a signed lease agreement and security deposit check, such an approach invites claims of discrimination and may even result in a fair housing complaint.
The unsuccessful candidates should also be notified. If the applicants are otherwise qualified, the property manager can suggest other available rental properties for them to consider. If an applicant was rejected, the property manager may notify him or her of the basis of the rejection, such as poor credit score, adverse rental history, or unacceptable criminal history; however, such notification is not required. If the rejection was based on information obtained from a credit agency, the property manager will need to provide the applicant with information regarding the credit agency that provided the information in accordance with Fair Credit Reporting Act requirements.
Thorough tenant screening will benefit both the landlord and property manager. The selection of a reliable tenant who maintains the property will provide the landlord with a steady source of income and will reduce the time and energy expended by the property manager in servicing the account.
This article came from the October 2014-Vol45-2 edition of the bulletin.
James W. Nelson, a second-year law student at the Charlotte School of Law, is the recipient of the 2014 Allan R. Dameron Legal Internship award. Nelson received the award from then Commission Chairman Everett “Vic” Knight and then Vice Chairman Thomas R. Lawing, Jr., in June. The award is given annually in memory of and tribute to former Commission Chairman Dameron for his dedicated service in protecting the interests of consumers.
This article came from the October 2014-Vol45-2 edition of the bulletin.
Scholarships for academic excellence were presented by then Commission Chairman Everett “Vic” Knight, left, and then Vice Chairman Thomas R. Lawing, Jr. to three brokers at the June Commission meeting.
The recipients of the Commission scholarships, which honor former Commission Executive Directors, are Thao-Van “Amy” Thai, Cary, Joe Schweidler Memorial Scholarship; Ray Gasperson, Columbus, Blanton Little Memorial Scholarship; and Deborah Kempter, Charlotte, Phillip T. Fisher Scholarship.
Winners received reimbursement of course tuition fees. Thai and Gasperson were selected by the North Carolina Real Estate Educational Foundation (NCREEF) for courses in the REALTORS® Institute, and Kempter was selected by the North Carolina chapter of the National Association of REALTORS® Council of Real Estate Specialists (CRS).
This article came from the October 2014-Vol45-2 edition of the bulletin.
By Eric A. Mine, Associate Legal Counsel II
With the recent upgrades to its web portal, www.homepathforshortsales.com, Fannie Mae now allows real estate professionals to submit problems in short sale transactions directly to a representative. Other features rolling out soon will allow brokers to negotiate and receive first lien approval directly from Fannie Mae. While this may appear to be a welcome change to the process, licensees should bear in mind that in North Carolina negotiating the settlement of a debt and counseling a seller or buyer on the legal or tax implications that may result from a short sale are both considered the practice of law. Potential clients considering selling property through the short sale process should be directed to consult with a licensed attorney.
Upgrades to the Fannie Mae web portal aren’t the only changes that will affect brokers in North Carolina. With the release of Servicing Guide Announcement SVC-2014-09, the mortgage giant announced changes to some short sale servicing requirements which took effect on August 1, 2014.
For all new short sales in which Fannie Mae is the lender, borrowers will be prohibited from listing their own property. Practically, this change means that all short sale properties now must be listed with a licensed real estate professional who is not the borrower before Fannie Mae will approve an offer.
Fannie Mae has also announced a change to its Short Sale Affidavit (Fannie Mae Form 191). Since 2012 Fannie Mae has required that all parties involved in a short sale, including real estate brokers, sign that affidavit at the time of closing to confirm that the transaction was conducted at arm’s-length. The affidavit has now been updated to include an attestation from the listing broker affirming that all purchase offers have been presented to the seller/borrower and that no offers have been held or concealed. While the attestation is new, the requirement to deliver all offers to a seller is not.
Commission Rule 58A.0106(a) requires that all agency agreements, contracts, offers, leases, or options affecting real property be delivered immediately, but in no event more than five (5) days after execution. Licensees should also keep in mind that in a short sale transaction, once an offer has been submitted to the lender, all subsequent offers must also be submitted to the lender, even after an offer has been accepted by the seller. Fannie Mae, as lienholder, is an interested third party and must approve the short sale; therefore Fannie Mae is owed a duty of honesty and fair dealing in the transaction.
The changes implemented by Fannie Mae are designed to stream-line the short sale process. But they do not make the pit-falls and problems inherent in short sale transactions any less significant. Licensees should be well aware and well versed in the risks posed to their clients, whether buyer or seller, before engaging in a short sale transaction.
This article came from the October 2014-Vol45-2 edition of the bulletin.
© ARELLO® (Association of Real Estate License Law Officials)
Reprinted courtesy of ARELLO® Boundaries magazine.
Government-sponsored enterprise (GSE) Fannie Mae recently launched enhancements to its online tool that helps real estate professionals to navigate and close notoriously slow, cumbersome and complicated short sale transactions.
Along with its counterpart GSE Freddie Mac, Fannie Mae supports secondary U.S. mortgage markets by acquiring and securitizing mortgage loans. The GSEs own or guarantee about half of all U.S. mortgages and currently back the vast majority of new mortgage loans. Short sales, of course, involve homes that are sold for less than the amount owed on the existing mortgage. For loans owned or guaranteed by Fannie Mae, the GSE must approve the transaction since it will incur any resulting loss.
Fannie Mae’s www.homepathforshortsales.com portal is a resource for listing agents who are working with clients considering or pursuing a short sale on a property whose first lien is held by the GSE. Over the last few years, the system has been upgraded several times. A recent enhancement allows real estate professionals to “escalate” short sale problems such as valuation disputes, servicer delays and uncooperative subordinate lien holders.
Upon submission of an “inquiry”, a Fannie Mae representative responds and gets directly involved in an attempt to resolve the problem. With the latest round of system upgrades, the portal now allows listing agents to determine if Fannie Mae owns the mortgage, understand Fannie Mae homeowner short sale eligibility requirements, request list price guidance, submit an accepted contract offer and take steps to close the transaction.
One of the primary new features will soon allow listing brokers to negotiate and receive first lien approval on a short sale directly from Fannie Mae, which allows earlier contact with Fannie Mae representatives and the ability to preempt some of the problems that continue to plague short sale transactions. Fannie Mae says that allowing real estate professionals to directly negotiate short sales is an important step in its continuing efforts to streamline the short sale process. (See the article, “New Requirements for Fannie Mae Short Sales”, concerning North Carolina limits on negotiating and counselling “short sales” in the same issue of the Bulletin (October 2014).
This article came from the October 2014-Vol45-2 edition of the bulletin.
The Real Estate Commission has received two awards for Education and Communications from ARELLO® (Association of Real Estate License Law Officials).
A new course and publication, Issues and Answers in North Carolina Real Estate Practice, received the Education award. The course reviews selected issues which often result in violations of the Real Estate Law and Commission rules.
The re-designed Commission Web site received the ARELLO® Communication award.
This article came from the October 2014-Vol45-2 edition of the bulletin.
The Commission changed the broker-in-charge rule effective July 1, 2014, and, in doing so, eliminated the Broker-in-Charge Annual Review (BICAR) course, and created two versions of the Update course: the Broker-in-Charge Update course (BICUP) and the General Update course.
Rule 58A.0110(k) now requires brokers-in-charge and those brokers wishing to maintain BIC eligibility, to complete the BICUP course beginning the first full license year after the license year in which the BIC declares her/himself as BIC. The four-hour BICUP will satisfy the mandatory CE portion of the BIC’s CE requirement for the license year, and the elimination of the required BICAR elective will allow brokers-in-charge to select an approved elective of their choice to satisfy the remaining 4 hours.
Those brokers who are NOT BICs or are not BIC-eligible will take the four-hour General Update course as their mandatory CE, and will also select an approved elective of their choice to satisfy the remaining four hours. Licensees who are neither BICs nor BIC-eligible will not receive any CE credit if they mistakenly take the BICUP course instead of the General Update course.
If a BIC or BIC-eligible licensee mistakenly takes the General Update instead of the BICUP, s/he will receive CE credit for the General Update course; however, s/he will lose his/her BIC status or eligibility the following July 1. The only way to prevent loss of BIC status/eligibility is to also take the BICUP course and a 4-hour elective.
(Verify BIC status on the Commission’s Web site under “Licensing” from the Navigation Bar and “BIC Only” from the drop-down menu. From here, BICs can obtain an eligibility statement/certificate/verification that their BIC status is current.)
This article came from the October 2014-Vol45-2 edition of the bulletin.
Judy F. Greenhill of Hickory has been appointed to the North Carolina Real Estate Commission by Governor Pat McCrory, it was announced by Miriam J. Baer, Executive Director.
Greenhill succeeds S. R. “Buddy” Rudd, Jr., of Oak Island.
The broker/owner of Classic Properties of the Catawba Valley in Hickory, Greenhill has been a licensed broker since 1983.
She is a past director of the North Carolina Association of REALTORS®, past president, vice president and director of the Catawba Valley Association of REALTORS®, past president and director of the Multiple Listing Service of Catawba Valley, and past director of the North Carolina Real Estate Educational Foundation.
Greenhill received the North Carolina Association of REALTORS® Lifetime Achievement Award in 2008 and the Regional Service Award in 1997. She received the Catawba Valley Association of REALTORS® Lifetime Service Award in 2014 and was named the Association’s REALTOR® of the Year in 1996.
This article came from the October 2014-Vol45-2 edition of the bulletin.