New Settlement Forms Among Topics At 2015 Spring Educators Conference

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.

One-Page Mineral, Oil and Gas Disclosure Form Is Mandatory

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.

State Begins Oil and Gas Permitting (Fracking Included)

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.

Who’s Your Broker?

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.

2015 General Update, BICUP Topics

Topics for the General Update and Broker-in-Charge Update (BICUP) Courses are as follows:

General Update: RESPA/HUD-1 changes, revisions to the Vacation Rental Act, Safety Update, Mineral and Oil and Gas Disclosure, Commission Rule and NCAR Forms update, and Licensing and Education Issues.

Broker-in-Charge Update (BICUP): All of the General Update Course topics, plus How to Handle Complaints and a review of Rule A.0116, Trust Money Handling Procedures, but not record-keeping requirements.

All non-BIC licensees must take the four-hour General Update Course and a four-hour elective course between July 1 and June 10 each licensing year after first license renewal and prior to second renewal.

Brokers who are acting as a broker-in-charge or who are broker-in-charge eligible (i.e., previously declared as BIC and satisfied both qualification requirements, but later stepped down) must take the BICUP Course plus one four-hour elective course between July 1-June 10 each licensing year. The BICUP Course will satisfy the broker’s Update Course requirement, and maintain broker-in-charge eligibility.

This article came from the May 2015-Vol46-1 edition of the bulletin.

Inspections: Varied Tests, Verifications, Property Evaluations Offer Many Choices for Prospective Homebuyers

By Stephen L. Fussell, Senior Consumer Protection Officer

The following is a list of inspections and verification measures that a prospective homebuyer should consider. Some lenders require certain inspections. However, even if a lender does not require a particular inspection or test, buyers should consider the following in order to protect their long-term interests. Declining an inspection in an effort to save money may cost the buyer much more than the cost of the inspection in the long run. This list is not exhaustive, but is intended to cover the most common inspections and verifications utilized by buyers.

Home Inspection –This is a general overview of the condition of a house. It is a visual inspection and is not exhaustive (i.e. it may not detect hidden defects). It does not provide a guarantee that defects will not arise in the future. Even buyers of newly-constructed homes should have home inspections. A residential home inspector must be licensed. Buyers should pay close attention to any recommendation by a home inspector for further, specialized inspections.

Wood-destroying insects – Every house should be inspected for insects that eat wood because the presence of such insects can damage or destroy a house. Evidence of a previous infestation of wood-destroying insects may warrant an inspection by a general contractor or structural engineer to determine the extent of the damage.

Radon – This is a colorless, odorless, carcinogenic gas that rises through the soil and enters a house through the crawl space or concrete slab. There are several methods for testing for the presence of radon. The EPA has indicated that corrective action is necessary when the radon level inside a home is 4.0 pCi/L or higher as this can be harmful to one’s health. Every buyer should consider having a radon test.

Survey – This will indicate whether there are any encroachments (e.g. fences, buildings, driveways, landscaping, etc.) by the subject property or adjacent properties.

Lead – Lead-based paint and lead pipes are the primary source of lead in homes. If a home was built before 1978, the seller must provide a lead-based paint disclosure. If a buyer has children, it may be wise to test the property for the presence of lead.

Mold – While mold is found everywhere and most types of mold are harmless, some types carry health risks. Also, persons with asthma and other respiratory health issues may be more sensitive to mold than the general population. If there is evidence of significant mold or if the buyer expresses a sensitivity to mold, an inspection by a qualified mold inspector would be wise.

Gas furnace – If the heat exchanger in the gas furnace is cracked, the furnace may produce carbon monoxide which can be fatal. A gas furnace should be inspected by a licensed HVAC firm.

Fireplace/Chimney – Fireplaces and chimneys should be inspected for cracks, creosote build-up and/or weak foundations that may allow the chimneys to lean away from the house creating gaps that enable moisture and pests to enter the gaps and the house. Also, don’t forget to inspect flues for gas stoves and gas logs.

Moisture (crawl space, basement, roof leak, plumbing leak) – Moisture is a home’s worst enemy. It promotes wood decay, mold and wood-destroying insects. Any evidence of moisture in a crawlspace or basement or stains on ceilings should lead to further examination.

Foundation cracks – This can be a sign of structural weakness caused by uneven settling of the soil under the house. The buyer should consider hiring a structural engineer to evaluate suspicious foundation cracks.

Septic systems – Check the septic permit for the specified number of bedrooms to make sure it meets or exceeds the advertised number of bedrooms and to locate the septic system on the property. If the area in which the septic system is located is wet or smells like sewage, the buyer should contact either the county environmental health department or a septic contractor to evaluate.

Wells – Test for contamination by bacteria, heavy metals, pesticides and other toxins. Drinking water containing any of these could be harmful to one’s health. A buyer or buyer’s agent may look at the water (Is it clear or brown?) and taste the water to help make the decision on how extensively to test the well water.

Underground fuel tanks – If a property depends upon well water and it has or previously had an underground fuel storage tank, it will be very important to determine whether there was any leakage from the tank. An unused tank should be removed or filled with sand to prevent collapse and the soil around the tank should be tested for fuel contamination.

City water/sewer – If a property is advertised as having “city water/sewer,” it would be wise to contact the local utility provider(s) to confirm that the property is connected to city water and sewer services.

Fire – If there is information or evidence indicating that a fire occurred, the buyer should hire a structural engineer to evaluate the structural integrity of the house.

Cracked concrete slabs, driveways, patios – If a house is built on a concrete slab (instead of a crawl space) and the slab is cracked, a buyer should consider hiring a structural engineer to evaluate the crack. Minor cracks in driveways, sidewalks and patios are normal. However, if a crack appears to be wide or uneven in elevation, the buyer should consider hiring a structural engineer to evaluate.

Flooding issues – Is the property in a designated flood plain? If so, the lender may require flood insurance. If the property is not located in a flood plain, but is located near a drainage ditch or a body of water or, if the ground around the house slopes downward toward the house causing surface water to drain toward the house, then there could be a flooding or moisture issue that should be examined.

Homeowners’ Association – Does an HOA exist? If so, who controls it, what is its financial condition, how much are the dues and what exactly do the dues cover?

Area – Prospective buyers and their agents should drive around the area, speak with neighbors, and check websites containing local information to identify potential problems regarding the property, neighborhood and general area.

Previous service/repair – If the seller or seller’s agent indicates that something was serviced or repaired, it may be wise for the buyer to closely inspect the item to assure that it is in good working order and not in need of further service/repair.

Building permit – If a room has been added to the house or if a previously unfinished area was finished or if a new deck was constructed, a buyer would be wise to contact the county building inspection department to confirm that a building permit was obtained. The issuance of a permit ensures that the construction was done properly and approved by the county.

While all of the items in this list may not apply to every transaction, they provide a reasonable guide for prospective buyers and their agents to complete their due diligence and to help buyers determine whether to complete their purchases.

This article came from the May 2015-Vol46-1 edition of the bulletin.

65 Years of Service to the Commission

Five members of the Commission staff received awards for service recently. Commission Chairman Thomas R. Lawing, Jr., (left) and Vice Chair L. S. “Cindy” Chandler (right) presented the awards to (l. to r.) Curtis E. Aldendifer, Associate Legal Counsel, five years; Pui “Peggy” Y. Chow, Accounting Technician, 15 years; Wendy C. Harper, Office/Human Resources Manager, 25 years; Patricia A. Moylan, Legal Education Officer, 15 years; and D. Scott Schiller, Financial Fraud Investigator, five years.

This article came from the May 2015-Vol46-1 edition of the bulletin.

Paula Ricard Named Chief Financial Officer

Paula L. Ricard has been named Chief Financial Officer. She was formerly Financial Officer. With the Commission since 1990, she holds an MBA from Meredith College and is a Certified Public Accountant.

This article came from the May 2015-Vol46-1 edition of the bulletin.

Make Safety the First Order of Business

By Corean E. Hamlin, Education/Licensing Officer, and Pamela R. Rorie, Continuing Education Officer

Viewing vacant properties, going on listing appointments, hosting open houses…if you are a real estate professional, you undoubtedly perform these tasks routinely. However, these everyday situations have the potential to put brokers in danger, susceptible to becoming victims of violent crimes.

Research involving survivors of violent crimes indicates that taking protective steps to stay safe can lessen your chances of being attacked. Don’t be a crime statistic. Use the following tips and make personal safety your first priority.

Be suspicious. Take steps to get to know your prospects and customers when meeting them for the first time. Perform name searches through search engines and social networking websites. Insist that new prospects meet you at your office, provide identification, and complete information forms.

Tell someone and then stay in touch. Before showing property, give a co-worker or peer your itinerary, including your estimated return time and the names of your customers/clients. Ask someone to call you at a pre-determined time to check on you. Avoid showing property after dark.

Have a fully charged cell phone and have it readily available – not in your purse or pocket. Program “911” and other emergency numbers into speed dial. Consider using a safety mobile app on your smartphone; several are available – some created especially for real estate brokers – and can do everything from instantly alerting others to accessing your GPS coordinates to requesting help.

Have a pre-determined distress code. Create a distress code within your office and make sure that all brokers and staff members know it. Using a prearranged distress code, a broker can alert another office member that s/he is feeling uneasy with a client/customer (without letting the client/customer know). If a broker calls another office member and gives the distress code, that office member knows that the broker needs immediate assistance. One suggestion is to use an acronym for “help;” for example: “Have Elizabeth Leave the Papers.”

Implement a buddy system. Predators thrive on isolation, so team up with another broker whenever possible. Working in pairs will lessen the chance of attack.

Practice vehicle safety. Make sure your car is in good working order and keep your keys readily available. When parking, take stock of your surroundings and avoid areas where you could be blocked in. When showing property to a new prospect (stranger), ask the prospect to follow you in his/her own car. If you must ride together, you should drive.

Dress for safety and success. Dress professionally. Don’t wear expensive jewelry as it may make you a target. Wear shoes that won’t hinder your ability to run, kick, or fight back.

Walk behind. Encourage prospective buyers to walk ahead of you when you’re showing property. Be aware of possible escape routes, and be wary of attics and basements.

Conduct safe personal marketing and be careful how you use social media. Keep your photos strictly professional – avoid “glamour shots.” Limit the amount of personal information you share. Make sure to control the privacy settings in your social media accounts, including the geolocation features. Many social networking sites will share your precise location with others unless you disable that feature.

Plan for a safe open house. Prior to an open house, introduce yourself to the neighbors. Evaluate the property and identify vulnerable points. Avoid advertising the property as “vacant”. On the day of the open house, keep your cell phone with you and check in with your office routinely. Ask another broker to join you for the event.

Trust your instincts. If you feel apprehensive or have the sense that something isn’t quite right, trust your gut!

Know your options and how you’ll respond to save your life. No resistance may be the best choice in some situations. If a would-be robber confronts you with a lethal weapon, give up your property. However, if you’re in a situation in which you must defend yourself, scream and fight back. Consider taking a course to learn self-defense techniques and skills.

All of these and many more tips are available in the North Carolina Real Estate Safety Guide, which was created in association with the NC Association of REALTORS®.

Special thanks to the Washington Real Estate Safety Council for allowing NCREC to use their Personal Safety Guide as the basis for development of the North Carolina Real Estate Agent Safety Guide.

To view or order the brochure, visit the Commission’s website, www.ncrec.gov. For more real estate agent safety resources, visit the North Carolina Association of REALTORS® website (www.ncrealtors.org) and National Association of REALTORS® website (www.realtor.org).

This article came from the May 2015-Vol46-1 edition of the bulletin.

Robert Ramseur Appointed to Commission

Robert J. Ramseur, Jr., of Raleigh, has been appointed to the North Carolina Real Estate Commission by Governor Pat McCrory, announced Miriam J. Baer, Executive Director of the Commission.

Ramseur is a partner at the law firm of Ragsdale Liggett PLLC and chair of its real estate department. His practice focuses on residential and commercial real estate transactions, real estate financing and development, tax and entity structuring, lease negotiations and drafting and real estate litigation.

Licensed to practice law in North Carolina in 1996, Ramseur formed his own firm in 1997 and merged his practice with Ragsdale Liggett in 2001. He is licensed to practice in all state courts in North Carolina, the District Court of the United States (Eastern District of North Carolina), and the U.S. Supreme Court.

He is past president of the Wake County Real Property Lawyers Association, past co-chair of the Joint Forms Task Force for the North Carolina Bar Association and North Carolina Association of REALTORS^®, and past president of the Real Estate Lawyers Association of North Carolina, Inc., a trade association with over 350 members.

A native of Raleigh, Ramseur graduated with honors from Needham B. Broughton High School and received a Bachelor of Arts in History, cum laude, from Wake Forest University in 1992 and a law degree from Wake Forest in 1995.

Active in civic and charitable activities, he is a past president of the Rotary Club of the Capital City and the Board of Directors of Raleigh’s Theatre In The Park and participates each year as a fund raising volunteer for the Triangle Area YMCA.

This article came from the May 2015-Vol46-1 edition of the bulletin.