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Anna Gregory Wagoner Elected Chair, Thomas R. Lawing, Jr., Vice Chair

Anna Gregory Wagoner, of Winston-Salem, has been elected Chair of the North Carolina Real Estate Commission and Thomas R. Lawing, Jr., of Charlotte, Vice Chair, for the term beginning August 1, 2018, it was announced by Miriam J. Baer, Executive Director.

Ms. Wagoner is a shareholder with the law firm of Blanco Tackabery & Matamoros, P.A. in Winston-Salem and practices in the areas of commercial real estate and renewable energy.

Active in the practice of real estate law for approximately 18 years, Ms. Wagoner began her legal career in Greensboro and was formerly associated as an attorney with Investors Title Insurance Company, of Chapel Hill.

Ms. Wagoner is a member of the North Carolina Bar Association, Forsyth County Bar Association, Piedmont Triad Commercial Real Estate Women, North Carolina Land Title Association, and NAIOP (Commercial Real Estate Development Association).

She is a graduate of Wake Forest University with a BA in Psychology and holds a Juris Doctor degree from the Wake Forest University School of Law.

Lawing, a former Chair of the Commission, is a Certified Property Manager and President of T. R. Lawing Realty, a family-owned residential property management company serving the Charlotte regional since 1957.

He is a past president and REALTOR® of the Year of both the NC REALTORS® and the Charlotte Regional REALTORS® Association (CRRA) and a past director of the National Association of REALTORS® (NAR).

Active in civic affairs, Lawing has held leadership positions at Hawthorne Lane United Methodist Church, is a past president of the Charlotte West Rotary, past chair of the Eagle Projects Committee of the Mecklenburg County Council of the Boy Scouts of America and has co-chaired the Will Call Committee of the Wells Fargo Championship since its inception.

This article came from the October 2018-Vol49-2 edition of the bulletin.

Wendell Bullard, Jeffery J. Malarney Appointed to Commission

Wendell Bullard of Durham and Jeffery J. Malarney of Manteo have been appointed to the North Carolina Real Estate Commission by Governor Roy Cooper, it was announced by Miriam J Baer, Executive Director.

Bullard is Managing Broker at Bullard Properties, LLC, in Durham and has over 22 years of experience in the real estate industry including affiliations with Prudential Carolinas Realty, and Realty Executives Triangle Southpointe (Co-Owner).

He is past president of the Durham Regional Association of REALTORS® and the North Carolina Association of REALTORS® and past REALTOR® of the Year in both organizations.

One of several founding members for charter high schools in Charlotte and Raleigh, Bullard is past treasurer for Commonwealth and Stewart Creek High Schools and past board president of Central Wake Charter High School in Raleigh.

He is a graduate of North Carolina Central University with a BS in marketing and a United States Air Force Security Specialists veteran.

Malarney, a former member of the Real Estate Commission, serves as General Counsel for Twiddy & Company, a North Carolina Vacation Rental Management Firm, 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 holds a JD from Wake Forest University School of Law and BA (cum laude) in Economics and Management from Albion College.

This article came from the October 2018-Vol49-2 edition of the bulletin.

Avoid These 10 Common Mistakes to Make Trust Account Management Trouble Free

By Jean A. Wolinski-Hobbs, Auditor/Investigator

The Real Estate Commission has three rules governing how brokers handle and account for trust monies – A.0116, .0117, and .0118.  Additionally, the ncrec.gov website has a number of videos available on trust account handling.  Familiarize yourself with these rules to avoid the following common mistakes.

  1. DO YOU deposit money into the trust account and then move the money into an operating account to pay clients or invoices?

A variation on the same theme is depositing trust monies into an operating account and then transferring them into the trust account.  Well, DON’T!  All trust monies must be deposited into a trust account and all clients and invoices need to be paid out from the trust account.  The only time it is acceptable to move money from a trust account into an operating account is when you are disbursing your earned commission or are reimbursing yourself for invoices that were paid by you from your operating account in advance and on behalf of the client.

If the bank account into which you deposit client monies is not identified as a trust or escrow account, then it will not be treated as such by the IRS or courts, meaning they can attach or freeze the monies. The FDIC may also deny insurance coverage for each individual customer whose money is deposited into an account not properly designated.

  1. DO YOU pay client proceeds before the rent or other incoming money clears the account?

Well, DON’T!  Ensure that incoming funds clear prior to paying the client or any invoices on behalf of the client.  Failure to do so can cause a deficit in the account if the funds do not clear.

  1. DO YOU allow bank service fees to be charged against the trust account and then reimburse the account after the fact?

Well, DON’T!  This also causes a deficit in the account. Instead, make sure that service charges are covered by depositing enough of your own money to cover them and keep a ledger to keep track of those personal funds.

  1. DO YOU leave interest, commissions, reservation fees or monies for credit/background checks that belong to the broker or others in the trust account beyond 30 days?

Well DON’T! To do so is commingling. Also, don’t use a money market  account if it requires a large balance of personal funds in order to avoid service fees – that is also commingling.  Money market accounts are acceptable if there is a large enough  balance of customer funds, such as a security deposit trust account holding a substantial number of deposits.

  1. DO YOU allow your client to be a signatory on the trust account?

Well, DON’T!  Trust accounts must be custodial and if the owner of the funds has access to make their own deposits or withdrawals, then it is no longer a custodial account.

  1. DO YOU deposit multiple homeowners’ association monies into one trust account?

Well, DON’T!  Homeowner’s associations must each have their own individual trust account.  If you manage ten (10) homeowner’s associations, then you must maintain at least ten (10) trust accounts.

  1. DO YOU allow your bookkeeper to handle every aspect of maintaining and reconciling the trust account?

Well, DON’T! Embezzlement happens even with trusted bookkeepers or long-time employees and is made easier when one person is in charge of everything. Simple steps can help ensure that trust money is safeguarded. For example, the person who receives cash should not be the same person who reconciles the trust account.  Cash receipts should be verified at the end of each day and logged by the broker-in-charge or another person in a supervisory role. And, the bookkeeper should not be the person initially receiving the bank statement. The broker-in-charge should verify the items in the bank statement against the journal and also check cash receipts against deposits on a monthly basis, prior to the reconciliation.  A bookkeeper who never takes vacations or is obsessed with getting the mail is not a good thing, it is a RED FLAG.

  1. DO YOU take possession of checks or cash but deposit the items directly into a client’s account?

Well, DON’T!  If you “touch” the money, then you must have a trust account and the money must go through your trust account.  If the check is written to the client, do not accept it.  The only time it is acceptable for a broker to deliver monies to a client is when the payment  is subject to a specific exception such as a due diligence check or check payable to a designated escrow agent.


  1. DO YOU use trust account money to pay for repairs to a property if the client does not have sufficient funds in the trust account to cover the repair?

Well, DON’T!  Just because there is $50,000 in the trust account does not mean that you can pay for a new water heater costing $1000 for client Smith if only $200 of the $50,000 belongs to client Smith. To do so means you are using other clients’ money to pay for client Smith’s water heater and causing a deficit in client Smith’s ledger.  No client should ever have a negative balance on their ledger.

  1. DO YOU disburse late fees or commissions even if the tenants have not paid the late fee or paid rent for the month?

Well, DON’T!  If a tenant owes a $15 late fee but has not paid that amount, do not pay yourself or the client the late fee.  Disbursements on rentals must be calculated upon the amount actually paid for that month.



If this sounds confusing, you are not alone.  Come to one of our monthly trust account courses and learn the rules in detail.  Bring along anyone who also handles trust accounts for your firm.  As a broker-in-charge, at a minimum you will learn what you need to know to adequately supervise your bookkeeper and what you or your software program needs to be able to produce in the way of reports in order to be compliant.  As a bonus, it qualifies as an elective continuing education course.

This article came from the October 2018-Vol49-2 edition of the bulletin.

Sellers Required by Law to Provide Two Disclosure Statements to Buyers

By Elizabeth W. Penney, Information Officer

Brokers know that most sellers of residential property are required by law to give the buyer two disclosure forms: the Residential Property and Owners’ Association Statement (RPOADS) and the Mineral and Oil and Gas Rights Mandatory Disclosure Statement (MOGS).

The four-page RPOADS form should be given prior to an offer to purchase. The seller has the option of answering each question “yes’, “no,” or “no representation.” Thus, while it is a mandatory disclosure form, it does not actually mandate any disclosure because of the “no representation” option. Sellers who choose to answer the questions “yes” or “no” should do so honestly, based on their actual knowledge as a seller can be held accountable in a court of law for the truth and accuracy of the representations made.

Sellers and brokers should understand that regardless of the seller’s decision to disclose issues and defects concerning the property, a broker must disclose any material facts to a prospective buyer. If a home inspection reveals a significant defect and the seller refuses to repair, that defect becomes a material fact which the agent has discovered and must disclose affirmatively to prospective buyers.

If the seller originally answered any of the relevant questions “no”, then the broker should also advise the seller-client to amend the RPOADS once a defect becomes known to avoid charges of misrepresentation and fraud. If the seller decides not to disclose, the seller still has the option of “no representation” but, again, the broker still must disclose the known material fact separately from the RPOADS.

Failure to provide the RPOADS can have consequences. The statement should be provided to a prospective buyer prior to the buyer making an offer. A seller or listing agent who fails to present a completed statement prior to an offer being extended opens the door to the possibility of the buyer rescinding the contract within either three days of contract formation or three days from receipt of the statement, whichever occurs first. It is the listing agent’s duty to inform seller-clients of their rights and obligations regarding the completion and distribution of this mandatory form.

Additionally, sellers of residential property are now required by law to give the buyer the single-page MOGS form prior to the Offer to Purchase. The seller has the option to mark “no representation” only as to the severance of mineral or oil and gas rights by a previous owner.

It is important to note that the fact the property is investment property and has not been owner-occupied does not negate the obligation of the seller to provide a disclosure statement to prospective buyers. When in doubt as to whether the RPOADS or MOGS must be given in a certain transaction, sellers should contact the Commission or err on the side of caution and provide the Statement.


Exemptions to Providing RPOADS/MOGS Disclosure Forms

North Carolina state law (General Statute Chapter 47E) requires that the RPOADS/MOGS be given in all transfers of residential one-to-four unit dwellings by sale, exchange, installment land sales contract or option to purchase, subject to a few very narrow exceptions in  NCGS § 47E-2 as shown below:

NCGS § 47E-2 (a)… [RPOADS/MOGS exemptions]

(1)  Transfers pursuant to court order, including transfers ordered by a court in administration of an estate, transfers pursuant to a writ of execution, transfers by foreclosure sale, transfers by a trustee in bankruptcy, transfers by eminent domain, and transfers resulting from a decree for specific performance.

(2)  Transfers to a beneficiary from the grantor or his successor in interest in a deed of trust, or to a mortgagee from the mortgagor or his successor in interest in a mortgage, if the indebtedness is in default; transfers by a trustee under a deed of trust or a mortgagee under a mortgage, if the indebtedness is in default; transfers by a trustee under a deed of trust or a mortgagee under a mortgage pursuant to a foreclosure sale, or transfers by a beneficiary under a deed of trust, who has acquired the real property at a sale conducted pursuant to a foreclosure sale under a deed of trust.

(3) Transfers by a fiduciary in the course of the administration of a decedent’s estate, guardianship, conservatorship, or trust.

(4) Transfers from one or more co owners solely to one or more other co owners.

(5)  Transfers made solely to a spouse or a person or persons in the lineal line of consanguinity of one or more transferors.

(6)   Transfers between spouses resulting from a decree of divorce or a distribution pursuant to Chapter 50 of the General Statutes or comparable provision of another state.

(7)  Transfers made by virtue of the record owner’s failure to pay any federal, State, or local taxes.

(8)  Transfers to or from the State or any political subdivision of the State.

NCGS § 47E-2 (b)… [Additional RPOADS exemptions]

(1)  Transfers involving the first sale of a dwelling never inhabited.

(2)  Lease with option to purchase contracts where the lessee occupies or intends to occupy the dwelling.

(3)   Transfers between parties when both parties agree not to complete [the RPOADS].

This article came from the October 2018-Vol49-2 edition of the bulletin.

Renewal Process Changes: Online Renewal Required in 2019

By Corean E. Hamlin, Director of Education and Licensing

Since July 1, 2014, Commission rule 58A .0503 has required brokers to renew their licenses on the Commission’s website or by calling the Commission’s office.   Despite the rule, the Commission has attempted to accommodate brokers who preferred to pay their renewal fees by check.

Effective July 1, 2018, there is no longer an option to renew by phone has been removed.  In addition, checks will no longer be accepted by mail. Going forward, brokers will renew their licenses on the Commission’s website between May 15 and June 30 each year.  Brokers who wish to reinstate their licenses within the first six months of license expiration will also be required to do so electronically.

The Commission eliminated the option to renew by phone for the security of broker information.  Entering payment information on a secure website affords better protection than communicating such information over the phone.

The decision to stop accepting checks resulted from two law changes requiring certain information to be gathered during the renewal process.

First, as required by the NC state legislature in NCGS § 143-765, all applicants for occupational licenses, including license renewal, must disclose any investigations for employee misclassification.  All applicants must certify that they have read and understand a Public Notice Statement from the Employee Classification Section of the State Industrial Commission (http://www.ic.nc.gov/121317ECSPublicNotice.pdf) and must disclose any investigations for employee misclassification.  If an applicant does not provide the certification and disclosure, the NC Real Estate Commission is not permitted to process the application or renew the license.   The certification and disclosure have been added into the online renewal program.

Second, Commission rule 58A .0503 now requires Brokers-in-Charge to disclose information regarding trust account(s) and criminal convictions or disciplinary actions.  These questions, too, have been added to the online renewal program.

If you have been in the practice of renewing by phone or sending checks by mail for your renewal fee, please be aware that these options will not be available in 2019.   Online renewal will be required.  Detailed instructions will be provided on the Commission’s website and in the Bulletin to assist you during the renewal period.  Also, Commission Staff will be happy to answer your questions regarding the process by phone (919.875.3700) or in person at the Commission office.

This article came from the October 2018-Vol49-2 edition of the bulletin.

Allan R. Dameron Legal Internship Award

Rachel E. Rogers of Fayetteville, a second year law student at Campbell University, is the recipient of the Allan R Dameron Legal Internship Award. Rogers received the award at the Commission’s June meeting.

The award is given annually in memory of and tribute to former Commission Chairman Allan R. Dameron for his dedicated service to protect the interests of consumers.

This article came from the October 2018-Vol49-2 edition of the bulletin.

Real Estate Commission Scholarship Winners

Three North Carolina brokers recently received scholarships from the Commission for academic excellence in real estate courses.

The recipients, each of whom received $400 for tuition, are Michael J. Shelton, Winston-Salem, the Joe Schweidler Memorial Scholarship Award; Melinda G. Pope, Liberty, the Blanton Little Memorial Scholarship Award; and Mike G. Montpetit, Cary, the Phillip T. Fisher Scholarship Award.

Shelton and Pope were selected by the North Carolina Association of REALTORS® for achievement in the Graduate REALTORS® Institute (GRI) program. Montpetit was selected by the North Carolina Chapter of the Council of Residential Specialists for achievement in the Certified Residential Specialists (CRS) program. Little and Schweidler were former Secretary-Treasurers of the North Carolina Real Estate Licensing Board. Fisher was Executive Director of the Real Estate Commission from 1981 to 2010.

This article came from the October 2018-Vol49-2 edition of the bulletin.

How to File An Assumed Business Name

By Charlie Moody, Legal Counsel

North Carolina law has long required individuals, partnerships, LLCs, and corporations that engage in business under an assumed name to file a certificate with the register of deeds in the county in which that person or entity does business.

Similarly, Commission Rule 58A .0103(c) requires a broker or firm to file such a certificate in compliance with GS 66-71.4 AND notify the Commission in writing of the use of such assumed name.

What is an “Assumed Business Name”? For example, when an individual broker/sole proprietor named Alex advertises as Robinson Realty, Alex is not using an assumed name because Robinson Realty includes the broker’s surname.

If Alex Robinson instead advertises brokerage services (with business cards, ads, etc.) under the name “Luxury Homes 4U Realty,” Alex is now using an assumed business name and must comply with the statute and Commission rule.

Similarly, a licensed firm has a corporate name under which it is registered to do business with the Secretary of State but may choose to advertise under one or several assumed names. “Team One Property Management” and “Team One Realty” might be two assumed names (or “trade names”) used by ABC Corporation for branding purposes. Both assumed business names must be filed with the State and the Commission must be notified of their use to assist consumers in finding the actual entity/broker with whom they are dealing.

On December 1, 2017, the legislature repealed Chapter 66, Article 14 and enacted Article 14A, the “Assumed Business Names Act.” This change modernized the assumed business name process to make it easier to register, find, and maintain assumed name information. The new Act altered the requirements for the assumed business name certificate and created the means by which a single registration in the office of one Register of Deeds can be made effective for multiple counties.

Filers will need to identify which counties they will be doing business in or check the box for “All 100 counties.” The certificates are then recorded and indexed in identified counties and scanned certificate images are transmitted by the Register of Deeds to the NC Secretary of State for entry into a single, statewide searchable database maintained by the Secretary at http://www.sosnc.gov/abn/search. The Secretary assigns an identification number to each assumed business name that is recorded, and to which any future amendments or withdrawals must refer.

Certificates filed before December 1, 2017 are still valid, at least for now. The Act allows for a five-year transitional period during which individuals and entities with pre-existing assumed business names can re-file a certificate to preserve the effectiveness of the name designation.  Filers have until December 1, 2022 to re-file a certificate for a pre-existing assumed name. Remember also that filers of assumed business names must update the filings within 60 days of the information changing.

Compliant blank certificate forms are available from registers of deeds or may be downloaded from https://edpnc.com/start-or-grow-a-business/start-a-business/business-forms/.

Go to the Secretary of State website to find additional information about when, how and why to file an Assumed Business Name: https://www.sosnc.gov/divisions/business_registration/assumed_business_names.

This article came from the October 2018-Vol49-2 edition of the bulletin.

What Does “As Is” Really Mean?

Stephen L. Fussell, Chief Consumer Protection Officer

The term, “As Is,” means that a seller has decided in advance of soliciting offers that he or she will not make any repairs to the listed property.  Disclosing this decision to prospective buyers puts them on notice that the seller will not make any repairs regardless of the results of inspections. However, it should not discourage prospective buyers from ordering inspections as doing so is a prudent means for determining the true condition of a property. One misconception is that when a seller notes “As Is” on a property, the buyer has no right to inspect. The NC Realtors Standard Form Offer to Purchase and Contract (No. 2-T) specifically gives the buyer the right to conduct their due diligence and order relevant inspections.

There is no State law or Commission rule compelling sellers to make repairs. Moreover, Section 4(c) of the NC Realtors Contract 2-T reads in part, “Buyer acknowledges and understands that unless the parties agree otherwise, THE PROPERTY IS BEING SOLD IN ITS CURRENT CONDITION.” With that said, many sellers are willing to make at least some repairs as a means of facilitating a sale.  If every seller refused to make repairs, then many transactions would fail to close for that reason. NC Realtors created the Due Diligence Request and Agreement (“DDRA”) form (No. 310-T) for buyers and sellers to identify the repairs they agree upon.  Once all parties sign this form, the seller then has an obligation to make the repairs listed on the form.

Another common misconception is that selling a property “As Is” gives a seller and/or a listing agent the opportunity to conceal material facts about the property. While a seller can always answer “No Representation” to any question on the Residential Property and Owners’ Association Disclosure Statement (“RPOADS”), a seller who answers “No” to a question when the truthful answer is “Yes,” may face civil liability for his/her misrepresentation.

Real estate brokers, including those brokers who are selling their own properties, must always disclose material facts. A listing agent has the duty to discover and disclose material facts. The Commission holds brokers responsible for the information they know or reasonably should know about or relating to a property. Therefore, even if a seller fails to disclose a material defect on an RPOADS, the listing agent must disclose it to prospective buyers or their agents prior to the formation of sales contracts.  If a seller indicates he/she does not want a listing agent to disclose a material fact, then the listing agent should decline to list the seller’s property.

This article came from the October 2018-Vol49-2 edition of the bulletin.

Broker Indicted for Fraud A Regulatory Affairs Division Case Study

By Charlie Moody, Legal Counsel

On August 15, 2018, the US Department of Justice indicted a Minnesota real estate broker, his wife, and their real estate firm on multiple counts of mail and wire fraud.

Broker Jeffrey Detloff managed and sold foreclosed properties on behalf of institutional clients and worked with his wife, Lori, an accountant.

The couple are alleged to have carried out a multi-year scheme to defraud corporate and institutional clients including Fannie Mae and Freddie Mac by collecting kickbacks from independent contractors for repairs.

The couple allegedly created and submitted sham bids to create a false appearance of competitive bidding for projects, and awarded contracts only to contractors who were willing to pay a kickback.

The couple faces up to 30 years in jail and a fine of up to $1 million. The fine may be increased up to twice the gain derived from the crime or the loss suffered by the victims. One housing repair contractor has already pled guilty in connection with the investigation.

This article came from the October 2018-Vol49-2 edition of the bulletin.