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Inside the Hearing Room: A Closer Look
Part Four of an in-depth Five-Part series on the Complaint and Disciplinary Process in Regulatory Affairs. See Part One “Navigating Complaints: A How-To Guide” from the August 2024 eBulletin, Part Two “The Road Ahead: After the Investigation” from the September 2024 eBulletin, and Part Three “Beneath the Surface: The Pre-Hearing Process” from the October 2024 eBulletin.
In Part Four, we take a close look at what happens when a disciplinary case goes to a hearing before the Commission.
Administrative hearings before the Commission are formal in nature and are conducted according to Article 3A of Chapter 150B of the North Carolina General Statutes, also known as the Administrative Procedures Act. The North Carolina Rules of Evidence and the Commission’s Local Rules also apply to contested hearings, although the Rules of Evidence are more loosely applied than in civil or criminal court settings.
A hearing before the Commission resembles what you might see at a trial in a local courthouse. Present in the hearing room are the Commission members, the Respondent and any attorney for the Respondent, the Commission staff attorney, witnesses, and the court reporter. The Respondent is the real estate broker, either an individual or a firm, accused of violating real estate license law and/or Commission rules. The hearing room and the proceedings are open to the public.
The Commission staff attorney prosecutes the allegations and has the burden of proving the case by a preponderance of the evidence. This legal standard requires the staff attorney to prove that it is more likely true than not that the Respondent violated the License Law or rules. There may be evidence on both sides, and the Commission members determine the weight given to each piece of evidence.
In a hearing, a quorum of the Commission members sit as both judge and jury. The members present for the hearing are considered the hearing panel. They evaluate the evidence impartially and make a decision. One member of the hearing panel, usually the Chair of the Commission, is designated to preside over the hearing and make decisions regarding the admissibility of evidence.
A court reporter is also present in the hearing room. The court reporter swears in witnesses, documents the testimony of witnesses and arguments of the parties, and produces an official transcript of the proceedings.
A contested hearing begins with the opportunity for each party to make an opening statement. An opening statement is not considered evidence and is not an argument but is an opportunity to introduce the case, forecast the admissible evidence, and present a theory of the case to the hearing panel.
Following the opening statements, each party may present evidence. This may include the testimony of witnesses, the introduction of documents, and other material deemed relevant. The Commission staff attorney, who has the burden of proof, presents evidence first. Once the staff attorney has presented all of their evidence, the Respondent may present evidence.
After all of the evidence has been presented, each party has the opportunity to make closing arguments. Like the opening statement, the closing argument is not evidence but is an opportunity for each party to summarize the evidence that has been presented and attempt to argue, or persuade, the hearing panel to come to a particular outcome.
After closing arguments, the Commission retires to their deliberation room where, in private, they discuss the case and determine whether the allegations have been proven more likely than not. If the Commission decides that it is more likely than not that the Respondent has violated the law, the Commission will also decide what disciplinary sanction to impose. The Commission may impose a reprimand, a suspension of the Respondent’s license, some or all of which may be stayed on conditions, or even a revocation of a license. A revocation can be without the right to apply for reinstatement for a period of time, or it may be permanent. Following deliberations, the Commission typically returns to the hearing room to announce its decision. Occasionally, they take additional time and announce the decision within thirty days of the conclusion of the hearing. A written order issued by the Commission shortly thereafter formally documents the Commission’s decision regarding the matters at issue during the hearing and is sent to the Respondent.
A Respondent has the right to seek judicial review of a final agency decision. The process and requirements to seek this review, often referred to as an “appeal,” are outlined in Article 4 of Chapter 150B of the North Carolina General Statutes. Petitions for Judicial Review are heard in the Superior Court Division.
Next month, we conclude our series of the disciplinary process with a look at what happens during compliance review.
Disciplinary Actions
TERESA A BROOKS (BURLINGTON) – By Consent, the Commission suspended the broker license of Brooks for a period of 3 months, effective September 9, 2024. The Commission then stayed the suspension in its entirety upon certain conditions. The Commission found that in December 2021, Brooks, acting as broker-in-charge, approved a new listing for a provisional broker. The provisional broker knew the property was partially destroyed by fire, and the owner performed renovations without obtaining permits. The provisional broker disclosed the unpermitted work in the MLS but failed to disclose the fire. A buyer went under contract and their home inspection revealed issues. The buyer shared the inspection report with the provisional broker and subsequently terminated the contract due to the issues. The provisional broker relisted the property but failed to disclose the material facts found in the home inspection report. A second buyer discovered no certificate of occupancy had been obtained for the property. Brooks failed to supervise the provisional broker during the transaction to ensure compliance with the License Law and Commission rules and failed to review advertisements for accuracy and compliance.
BURLINGTON MARKET CENTER LLC (BURLINGTON) – By Consent, the Commission suspended the firm license for a period of 3 months, effective September 9, 2024. The Commission then stayed the suspension in its entirety upon certain conditions. The Commission found that the Firm listed a property for sale and had knowledge of, but failed to disclose, a fire or subsequent renovations performed by the owner without proper permitting. The lack of permits was originally disclosed in the MLS, but not the fire. The first buyer went under contract and obtained a home inspection which revealed numerous issues. The buyer shared the inspection report with the firm but subsequently terminated the contract due to the issues. The firm relisted the subject property but failed to disclose the materials facts found by the home inspection to a subsequent buyer.
KAREN B CLEGHORN (BANNER ELK) – By Consent, the Commission suspended the broker license of Cleghorn for a period of 12 months, effective October 1, 2024. The Commission then stayed the suspension in its entirety upon certain conditions. The Commission found that Cleghorn, acting as a listing agent, had a property go under contract with five different prospective buyers before it was ultimately sold. Cleghorn was informed by the agent for Buyer 3 that the contract was terminated due to multiple issues identified in an inspection report which recommended further investigation by an engineer. This report was provided to Cleghorn. The seller made several repairs to the subject property but did not make any structural repairs and thereafter stated in the RPOADS that they were not aware of any material issues or defects in the subject property. Cleghorn advertised that the property “was inspected recently and everything that came up has been corrected and an engineer signed off on everything.” A subsequent inspection revealed material defects in the property, some of which were previously identified in the inspection report for Buyer 3. Buyer 4 terminated the contract but refused to provide a copy of their inspection report to Cleghorn. The property was relisted ‘as is’ with updated disclosure statements from the Seller and was sold to Buyer 5. Cleghorn negligently failed to fully investigate or independently verify the extent of all repairs undertaken by the Seller after the termination of contract by Buyer 3 and before relisting the property.
LEONARD N EUDY (SALISBURY) – The Commission accepted the two-year voluntary surrender of the real estate license of Eudy, effective October 16, 2024. The Commission dismissed without prejudice allegations that Eudy violated provisions of the Real Estate License Law and Commission Rules. Eudy denied any misconduct.
ZYGMUNT C GROMADZKI (RALEIGH) – The Commission accepted the permanent voluntary surrender of the real estate license of Gromadzki, effective October 15, 2024. The Commission dismissed without prejudice allegations that Gromadzki violated provisions of the Real Estate License Law and Commission Rules. Gromadzki neither admitted nor denied misconduct.
JAMES DUANE HOLLAND (BURLINGTON) – By Consent, the Commission suspended the broker license of Holland for a period of 3 months, effective September 9, 2024. The Commission then stayed the suspension in its entirety upon certain conditions. The Commission found that Holland represented a buyer who purchased a property. During the due diligence period, the listing agent discovered there was no certificate of occupancy for the subject property and disclosed this to Holland. Holland notified his buyer that the property did not have a current certificate of occupancy but failed to fully disclose the importance of the issue. The buyer has been unable to obtain a certificate of occupancy.
TAMMY LYNN IDLER (RALEIGH) – By Consent, the Commission suspended the broker license of Idler for a period of 12 months, effective October 1, 2024. The Commission then stayed the suspension following a 1 month active period upon certain conditions. The Commission found that in 2022, Idler represented the seller of a property but failed to disclose that work done on the property was not properly permitted by the seller and that a general contractor did not conduct the renovations as required by law.
GILBERT JENKINS, JR. (EURE) – By Consent, the Commission reprimanded Jenkins Jr. effective October 31, 2024. The Commission found that Jenkins Jr. represented a buyer in purchasing a property but failed to fully explain to his client the problems with the property having unpermitted heating, ventilation, and air conditioning systems.
STELLA ANN MAYO (FAIRFIELD) – The Commission accepted the two-year voluntary surrender of the real estate license of Mayo, effective September 30, 2024. The Commission dismissed without prejudice allegations that Mayo violated provisions of the Real Estate License Law and Commission Rules. Mayo neither admitted nor denied misconduct.
STEPHEN GRANT NILSON (GREENVILLE) – By Consent, the Commission reprimanded Nilson effective October 31, 2024. The Commission found that Nilson represented the seller of a property but failed to disclose in advertising that the heating, ventilation, and air conditioning system that was installed by a licensed contractor was unpermitted.
EMILY COBB RUSSELL (BURLINGTON) – By Consent, the Commission suspended the broker license of Russell for a period of 3 months, effective September 9, 2024. The Commission then stayed the suspension in its entirety upon certain conditions. The Commission found that Russell listed a property for sale and was made aware that it had been partially destroyed by a fire and the owner performed renovations without obtaining permits. Russell disclosed the lack of permits in the MLS but failed to make any inquiry as to the extent of damage or repairs. A buyer went under contract and obtained a home inspection, which revealed numerous issues. The buyer shared the inspection report with Russell, and subsequently terminated the contract due to the issues. Russell relisted the property and advertised that all requested repairs were made but failed to disclose the material facts found in the home inspection report to a subsequent buyer. The Commission noted that during the due diligence period, Russell learned there was no certificate of occupancy for the subject property and disclosed this to the buyer agent.
CHARLES JOHNATHAN ALAN SHORT (ASHEVILLE) – By Consent, the Commission suspended the broker license of Short for a period of 6 months, effective October 1, 2024. The Commission then stayed the suspension in its entirety upon certain conditions. The Commission found that Short was the qualifying broker and broker-in-charge of CJ & Jess Real Estate Group Inc. Short listed a property and on the Residential Property and Owners’ Association Disclosure Statement the seller indicated “No Representation” with regards to the water source. Short’s employee inserted the listing information into the Multiple Listing Service to be advertised and mistakenly identified the property as being on city water and city sewer. Short failed to verify the accuracy of the advertisement. A buyer purchased the property and later discovered it was on a septic system.
MCKAY MARQUIS STEIN (CAROLINA BEACH) – By Consent, the Commission suspended the broker license of Stein for a period of 6 months, effective October 1, 2024. The Commission then stayed the suspension in its entirety upon certain conditions. The Commission found that Stein timely reported a guilty plea conviction for Misdemeanor Assault on a Government Official. The conviction stemmed from an incident where, while intoxicated, Stein spat on or at an officer investigating a situation. Pursuant to his conviction, Stein was sentenced to a 1 year term of probation with conditions, including no alcohol consumption or possession.
STELLAR BEACH REALTY & RENTALS LLC (OCEAN ISLE BEACH) – The Commission accepted the permanent voluntary surrender of the real estate firm license, effective October 16, 2024. The Commission dismissed without prejudice allegations that the Firm violated provisions of the Real Estate License Law and Commission Rules. The Firm neither admitted nor denied misconduct.
SANDRA STEUER (JACKSONVILLE) – By Consent, the Commission reprimanded Steuer effective October 1, 2024. The Commission found that Steuer was broker-in-charge of a licensed real estate firm and maintained a trust account. Steuer failed to complete the basic trust accounting course as required. An audit of the trust account revealed a number of issues, including failure to designate the account as “trust” or “escrow,” incomplete property ledgers, and the lack of a journal. There was no clear audit trail or bank reconciliations. In two separate transactions, Steuer, while broker-in-charge, improperly acted as a designated dual agent with a provisional broker under her supervision acting as a designated dual agent for the other party.
GARETH BRYAN WILKINSON (ASHEVILLE) – By Consent, the Commission suspended the broker license of Wilkinson for a period of 12 months, effective October 1, 2024. The Commission then stayed the suspension in its entirety upon certain conditions. The Commission found that Wilkinson acted as a dual agent in a land transaction and knew the seller wished to retain a 0.53-acre parcel of the land. Wilkinson failed to ensure that the contract or deed excluded the 0.53-acre parcel as the seller had requested and the seller was unable to retain the parcel as planned. In addition, Wilkinson obtained the signature of one of the two buyers on the Working with Real Estate Agents disclosure (“WWREA”) and submitted an offer for the property for both buyers on the same day. Wilkinson did not mark any of the agency types on the WWREA, and Wilkinson did not obtain the signature of the second buyer on the WWREAD until after submission of the offer.
MICHAEL ROBERT WILSON (RALEIGH) – By Consent, the Commission reprimanded Wilson effective October 1, 2024. The Commission found that in 2022, Wilson represented a buyer but failed to notify his client that a general contractor was required by law to perform renovations to the property exceeding $40,000 and failed to verify that the proper permits had been obtained for the renovations.
DOMINIQUE NICHOLE WILFONG ZAMORA (JACKSONVILLE) – By Consent, the Commission suspended the broker license of Zamora for a period of 18 months, effective July 1, 2024. The Commission then stayed the suspension following a 3-month active period upon certain conditions. The Commission found that Zamora was the listing agent for the subject property. Previously, Zamora acted as the buyer’s agent for the same property where it was disclosed to her that the first floor of the property flooded during Hurricane Florence. Zamora failed to disclose the previous flooding to the buyer prior to closing.ooding to the buyer prior to closing.
New Commission Members Appointed
Two new members have been appointed to the Commission: Melvin “Skip” Alston and Patrick Bell.
Melvin “Skip” Alston was recently appointed to the Commission by Governor Roy Cooper. Mr. Alston is the owner and founder of The Alston Realty Group, Inc. in Greensboro, NC, which has been in continuous operation serving the greater Greensboro area for over 42 years. A recipient of the Order of the Long Leaf Pine, Mr. Alston has served as a leader in his community, across North Carolina and the nation since 1987. He has served in numerous capacities and on several Boards. He is the current chairman for the Guilford County Board of Commissioners and has served on the board for 27 years. He is also a Diamond-Life Member of the NAACP and has served on their local, state and national levels for over 25 years. Mr. Alston has also served as the North Carolina NAACP President.
He is the Co-Founder and Co-Chairman of the Board of Directors for Sit In Movement, Inc. a nonprofit corporation formed for the purpose of purchasing and renovating the Historical Woolworth Building in downtown Greensboro into an International Civil Rights Center and Museum, which opened February 1, 2010.
Mr. Alston previously served on the North Carolina Real Estate Commission, appointed in 2003 by the Speaker of the House and elected Chairman of the Commission in 2007 and again in 2008.
A Durham native, Mr. Alston attended North Carolina Central University, with a major in Business Administration. He has been licensed as a broker since 1982. Mr. Alston, his wife Gwendolyn and their adult sons, DeSean and Ryan, are based in Greensboro and are all North Carolina real estate brokers.
Patrick H. Bell was also appointed to the Commission by Governor Cooper. Patrick H. Bell, CCIM serves as Vice President of Land Acquisitions for the Carolinas at the Kolter Group. He has practiced real estate brokerage and investment in the Carolinas for over 18 years, and in real estate development for over 30 years.
Mr. Bell has served in several capacities for his communities, including as Planning Commission Member for the Charleston County Planning Commission, where he Chaired the Short-Term Rental Committee and the Affordable Housing Committee. In non-governmental service, Mr. Bell Chaired the Sponsorship Committee for the Charleston, SC Heart Ball, served as a board member for Operation R&R, a nonprofit charity that offers opportunities to “reconnect and reintegrate” to military families, and served as a board member for Speedway Children’s Charities.
Mr. Bell has a particular fondness for aviation, receiving both his Commercial Pilots License and degree in Aviation Management from the Florida Institute of Technology. In addition, he holds a Commercial Real Estate Designation from the CCIM Institute. Mr. Bell resides in Raleigh.
Case Study: Fair Housing
Information obtained from Fair Housing Project, A Project of Legal Aid of North Carolina
FACTS: A tenant rents an apartment for a year. Three months after entering the lease, the tenant is involved in a car accident. As a result of the car accident, the tenant uses a wheelchair due to their mobility impairment. Additionally, the tenant’s disability prevents them from safely using the stairs inside their loft apartment.
The tenant asks the landlord to break the lease 6-months early without paying an early termination fee. The landlord informs the tenant they may terminate the lease early; however, they must pay the remaining rent due under the terms of the lease.
ISSUE: Does the Fair Housing Act allow early termination of a lease without having to pay a fee?
ANALYSIS: Yes. The Fair Housing Act, as amended by Congress in 1988 makes it unlawful to discriminate in the rental of housing, or in the terms, conditions or privileges of housing, because of a disability. A disability is a physical or mental impairment that substantially limits a major life activity, such as walking, seeing, hearing, speaking, learning, working, or caring for oneself.
Discrimination under the Fair Housing Act includes refusing to make reasonable accommodations in rules, polices, practices, or services, when such accommodations may be necessary to afford such a person equal opportunity to use and enjoy housing. In this case, the tenant has a mobility impairment which will affect their usage of the stairs in their apartment. Therefore, the tenant requests a termination of the lease without incurring a penalty or paying the remainder of the rent as their reasonable accommodation.
For clarity, the Court held in Hughes v. Banfield, 84 Va. Cir. 214 (Va. Cir. Ct. 2012), that allowing a tenant to terminate their lease early without charging fees due to a disability is a common reasonable accommodation. While this is a Virginia case, its reasoning is instructive. Further, the U.S. Department of Housing and Urban Development has issued numerous guidance documents regarding reasonable accommodations under the Fair Housing Act, including setting out a process for housing providers when considering a reasonable accommodation request.
These documents also provide housing providers guidance on suggesting alternative accommodations, participation in the interactive process, and the ability of an individual with a disability to refuse to accept any offered alternative(s) due to the alternative(s) not meeting their specific disability need.
In addition, the Joint Statement from HUD and the United States Department of Justice (“DOJ”) on Reasonable Accommodations (“Joint Statement on Reasonable Accommodations”) also makes clear that a reasonable accommodation may be denied if providing the accommodation is not reasonable, such as imposing an undue financial and administrative burden, or it would fundamentally alter the nature of the provider’s operations.
Reasonable accommodations are determined on a case-by-case basis. However, courts and HUD have recognized circumstances where a person with a disability has a right under the Fair Housing Act to terminate a lease early without fee or penalty. Further, housing providers may not require persons with disabilities to pay extra fees or deposits as a condition of receiving a reasonable accommodation.
In conclusion, if the landlord requires the tenant to pay the remainder of the lease, the landlord may be committing housing discrimination and therefore may open themselves up to liability under the Fair Housing Act.
Resources:
N.C.G.S. § 93A-6(a)(8), and 93A-6(a)(10)
License Law and Commission Rules: Rule 58A .1601
Does the Fair Housing Act Allow Early Termination of a Lease without having to pay a fee?
Did You Know? Brokers must disclose material facts on their own properties
Brokers who buy, sell, or lease properties they own or will own are held to a higher standard than other buyers and property owners. Brokers are required to disclose all material facts to all parties, whether they own the property being sold or are buying a property.
Most sellers of residential properties of one to four units are required to provide the Residential Property and Owners’ Association Disclosure Statement (RPOADS) to all buyers before an offer is made. That includes brokers selling their own properties. Brokers may choose to select “No Representation” on the RPOADS, but this does not relieve them of the obligation to disclose all material facts.
General Statute 93A-6(1) states “The Commission has power to suspend or revoke at any time a license… or to reprimand or censure any licensee, if, following a hearing, the Commission adjudges the licensee to be guilty of: (1) Making any willful or negligent misrepresentation or any willful or negligent omission of material fact.” General Statute 93A-6(b)(3) adds that, “The Commission may suspend or revoke any license … or reprimand or censure any licensee when… (3) The licensee has violated any of the provisions of G.S. 93A‑6(a) when selling, leasing, or buying the licensee’s own property.
In addition to disclosure of material facts, a broker selling their own residential property may not represent the buyer in the transaction, according to Commission Rule 58A .0104(o). This Rule allows a broker selling their own commercial property to represent the buyer, but only if the broker’s ownership interest is less than 25%, and the buyer consents to the representation after full written disclosure of the broker’s ownership interest.
In any transaction where a broker is the buyer, seller, tenant, or landlord, the broker is encouraged to disclose to the other party in the transaction that the broker is a licensed real estate broker. The Commission recommends this disclosure because having a license may give the broker an advantage during negotiations. The disclosure can be made orally or in writing.
North Carolina Real Estate Commission wins Education Award at ARELLO®!
The Commission won an award for its Pre-Licensing Item Writing Workshops designed by the Education and Licensing Division.
The Commission sought to improve test item creation by developing tools, training, and processes to ensure quality license exam questions.
Members of the Education and Licensing Division started by outlining the subject matter defining minimal competence and, with educational experts, created a detailed content guide.
They then launched a 3-hour Instructor Development Workshop on item writing, accessible through the Commission’s learning management system, (LMS), in partnership with over 150 instructors.
Eight 1-day workshops were held across the state, where participants applied psychometric tools to develop over 400 test items, all of which were validated by professional psychometricians. Watch the acceptance video.
ARELLO® 2024 Fair Housing Awards
The following individuals/jurisdictions won ARELLO® awards for their contributions to Fair Housing.
Prelicensing Category: The CE Shop for their course teaching implicit bias and fair housing.
-The course was created in response to a California law on teaching implicit bias and fair housing. It covers the impact of biases, fair housing laws, and includes interactive role-play as both a consumer and real estate professional. Students learn U.S. fair housing history and tools to identify and address their own biases through role-play scenarios with instant feedback.
Continuing Education Category: Neil Garfinkel and Real Estate Center 4 Success for their class ensuring compliance with fair housing laws.
-The continuing education Fair Housing class, created by real estate attorney Neil Garfinkel, is offered by Real Estate Center 4 Success, REBNY, and the Long Island Board of REALTORS®. Based on Garfinkel’s 15 years of teaching and daily experience counseling licensees, the class raises awareness of Fair Housing laws and compliance strategies. Offered for free, it provides a unique, practical perspective on fair housing.
Consumer Education Category: Nea Maloo for her course shifting the status quo in affordable housing.
-Nea Maloo, Assistant Professor at Howard University and member of the Maryland Real Estate Commission, developed a course where students designed affordable, decarbonized housing by retrofitting a historic African American church in Ledroit Park, D.C. The course covers high-performance buildings, energy reduction, equity, health, and policy challenges, aiming to shift affordable housing towards sustainability and efficiency.
Miscellaneous Category: Texas Real Estate Commission – Texas Appraiser Licensing and Certification Board for their partnership addressing bias in property valuations.
-The Texas Real Estate Commission and the Texas Appraiser Licensing & Certification Board (TALCB) partnered to address bias in property valuations. Complaints are investigated by the Texas Workforce Commission Civil Rights Division and TALCB, ensuring compliance with appraisal standards. Joint investigations take about six months and aim to prevent housing discrimination through monitoring, education, and outreach. TALCB Director Melissa Tran emphasized the importance of proactively handling these complaints fairly for both consumers and appraisers.
Reminder: NAR® Ethics Requirement is Not an NCREC Requirement
The Commission is aware that National Association of REALTORS® (NAR®) members are required to complete at least 2 hours and 30 minutes of ethics training every three years. The current cycle ends on December 31, 2024.
As the deadline approaches, please keep the following in mind:
- Do not send your Ethics course certificates to the NC Real Estate Commission. If your Ethics course was an approved elective in North Carolina, the Education Provider will submit your completion to us. Once reported, it will appear on your Continuing Education record.
- Not all ethics courses qualify for elective credit in NC. If the course you completed was not an approved elective, it will not appear on your Continuing Education record.
- For questions regarding your NAR® ethics requirements, please contact your local REALTOR® association. The Commission cannot assist with inquiries about your NAR® ethics training.
Reminder: Are you licensed in multiple jurisdictions?
Are you licensed in multiple jurisdictions or have questions about your licensing requirements outside of North Carolina? While it’s commendable that many licensees hold licenses in different areas, the North Carolina Real Estate Commission cannot offer guidance on the following:
- maintaining active licensure in another jurisdiction,
- completing another jurisdiction’s continuing education requirements, and/or
- reporting disciplinary actions from other jurisdictions.
For questions regarding your real estate license in another jurisdiction, please contact the regulatory agency in that jurisdiction for accurate information.