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Commission Spotlight: Regulatory Affairs

This is the second of three articles highlighting the North Carolina Real Estate Commission’s staff and structure. 

The principal purpose of the Real Estate Commission is to protect the interests of members of the general public in their dealings with real estate brokers throughout the state. This is accomplished through:

  1. Licensing real estate brokers and brokerage firms, and registering time share projects:
  2. Establishing and administering prelicensing education programs for prospective licensees and postlicensing and continuing education programs for licensees;
  3. Providing education and information relating to the North Carolina Real Estate License Law and Commission Rules, and
  4. Regulating the business activities of brokers and brokerage firms, including disciplining licensees who violate the License Law or Commission rules.

As dictated by N.C.G.S. § 93A-3(a), the Real Estate Commission consists of nine members who serve three-year terms. Seven members are appointed by the Governor and two are appointed by the General Assembly. 

The Commission’s staff is tasked with implementing rules and policy set forth by the Commission. 

As of November 1, 2019, there are 56 Commission staff members, divided between three divisions, Executive & Administrative, Education & Licensing, and Regulatory Affairs.

This month’s Commission Spotlight is on the Regulatory Affairs Division.

The Division is supported by twenty-six staff members consisting of five attorneys, nine auditor/investigators, four consumer protection officers, two information officers, two paralegals, and four legal assistants. Several of our auditor/investigators are certified public accountants, and several of the investigators have significant investigative experience in interagency law enforcement.

Janet Thoren, as Director of the division and Legal Counsel, supervises the Commission’s legal staff and all functions of the division. Additionally, the Real Estate Commission can use the services of an attorney from the Department of Justice for legal advice during hearings or on other matters.

Under the provisions of G.S. § 93A-6(a), the Real Estate Commission has the power to investigate the conduct of real estate licensees and those who presume to act as licensees. Investigations may be undertaken as the result of a complaint filed with the Commission or upon the Commission’s own motion. If the Commission finds there is probable cause to believe that a licensee has violated Real Estate License Law, the Commission may commence a disciplinary proceeding. Such proceedings are governed by Article 3A of Chapter 150B of the General Statutes.  The Commission may also investigate the character and background of any applicant for licensure. G.S. § 93A-4(b).

The Commission Regulatory Affairs staff opens approximately 1,500 files each year.  Most of these are based upon specific complaints against licensees filed by members of the public.

The Real Estate Commission also has authority to adopt rules. The rulemaking process is conducted by the division under the supervision of the Commission’s Rule-making Coordinator. The Commission’s rules deal primarily with matters relating to agency procedures for applying for and renewing licenses, the conduct of real estate brokerage, and the handling and accounting of trust funds.

Primary responsibilities of the Regulatory Affairs Division include:

To learn more about the North Carolina Real Estate Commission, go to ncrec.gov.

Postlicensing Education Deadline

This article from the October eBulletin is republished here to remind brokers of the new Postlicensing Education requirement effective July 1, 2020.

Beginning July 1, 2020, Rule 58A .1902 will require a provisional broker to complete all three 30-hour Postlicensing courses within 18 months of initial licensure in order to maintain active license status. If you were licensed anytime during 2018, you must complete all your postlicensing courses by July 1, 2020. If you have been licensed in 2019, you will have at least 18 months from your date of licensure to complete the courses.

Example #1: Licensed on February 1, 2018

Example #2: Licensed on March 17, 2019

Additional information about this important change is provided in the General Update (GENUP) and Broker-in-Charge (BICUP) courses throughout the year. Also, if you are a provisional broker, be on the lookout for email communications from the Commission about the changing education deadlines. 

If you have further questions regarding this rule change, please contact the Education and Licensing Division at 919.875.3700.

Tax Prorations Brochure Now Available

QUESTION: Have you ever had a client (usually a seller) argue with you or the closing attorney about the tax prorations on their closing disclosure? Sometimes, sellers decide that the prorations calculated by the closing attorney are wrong and should not be determined on a calendar year basis. Is this because they called the tax office or looked at a website which reflected that property taxes are assessed on the fiscal year? Clients often argue about this even when directed to N.C.G.S. 39-60.

ANSWER: Of course you have!!

WHAT DO YOU DO? Well, now¸ thanks to collaboration of a multitude of groups, spearheaded by the Real Estate Lawyers Association of North Carolina (or RELANC), and including the NC Bar Association Real Property Section, the NC Land Title Association, the North Carolina Association of Assessing Officers, and the North Carolina Tax Collectors Association, Inc., you can print, email or even purchase glossy tri-fold brochures that outline at a very basic level the tax prorations as historically contracted in this state. Go to https://relanc.com/newsletters/ (link and order form) and https://relanc.com/wp-content/uploads/2019/07/Tax-Proration-Brochure-2019.pdf (the brochure).

Of course, a working familiarity with North Carolina General Statutes Chapter 105, Subchapter II, is crucial for the closing attorney and his or her staff. North Carolina has a lot of special circumstances — deferrals, exemptions, exclusions and special use valuations. All require special attention by the closing attorney in coordination with the local tax offices to assure the correct listing, valuation and recaptures are applied. And all are often misunderstood by sellers and buyers, both in how they apply and in the requisite process for compliance!

Clients should discuss tax proration with their attorney but sometimes they complain that the real estate broker should have explained it better.  The tax proration brochure now provides a handy tool for brokers wanting to deliver accurate information to sellers and buyers.

How to Register for the 12-hour Broker-in-Charge (BIC) Course

This article from the October eBulletin is republished here to remind brokers of the new format of the BIC course and the registration process.

Effective October 2019, the 12-hour BIC course is comprised of two segments, an 8-hour online prerequisite segment and a 4-hour live segment taught by Commission staff.

Brokers will register for both segments of the 12-hour BIC course at the same time, and the registration fee will be $110.   During registration, brokers will choose from a list of available 4-hour sessions.  The 4-hour sessions will be offered as either a live classroom environment in Raleigh or a “live online” environment.   Brokers will select their preferred learning environment. Following registration, a broker will be sent a link to the 8-hour segment.

The 8-hour online segment is a self-paced, online course, but it must be completed within 30 days of registration.  During the course, brokers will have to pass a quiz at the conclusion of each module. The broker may not advance to the next module without passing the quiz. In addition, brokers must pass a final examination to successfully complete the 8-hour online segment.

A broker who has not completed the 8-hour online prerequisite segment will not be permitted entry into the 4-hour live segment.  Both segments of the course must be completed within 120 days of registration.

Brokers who fail to complete both segments of the 12-hour course within a 120-day period will be required to register, pay, and restart the course.

The course will no longer be offered in the traditional 12-hour live classroom format.

For more information about the 12-hour BIC course, go to ncrec.gov, click on the Education menu, and select Course Registration.

Disciplinary Actions

RONNIE LAJUAN BROWN-WALTERS (Charlotte) – By Consent, the Commission revoked the broker license of Mr. Brown-Walters effective October 31, 2019. Mr. Brown-Walters agreed that he shall not apply for licensure in North Carolina for a period of three years from the effective date. The Commission found that Mr. Brown-Walters, qualifying broker and broker-in-charge of a real estate brokerage and property management firm, passed the management fees it collected for brokerage services onto an unlicensed company and allowed the unlicensed owner of the unlicensed company to have dominion and control over his firm’s trust accounts. Mr. Brown-Walters allowed an unlicensed company to manage properties for which he signed management agreements and allowed the unlicensed company to advertise properties for rent, which it did not own, for compensation. Mr. Brown-Walters could not produce a management agreement for a property in which his firm held money in trust. A review of the firm’s trust accounts found that the payees listed on ledgers did not always match those listed on the cancelled checks and at numerous times, the journal showed refunds being paid when in fact those checks were being sent to an unlicensed company. 

MENTALLA EFFAT (Charlotte) – By Consent, the Commission suspended the provisional broker license of Ms. Effat for a period from October 3, 2019 through October 31, 2019. The Commission required that Ms. Effat’s license status remain as provisional broker for a period of five years from the effective date and required completion of all postlicensing courses within 18 months. In addition, Ms. Effat must inform current and future BIC’s of this Consent Order, who must agree to her supervision, and provide her BIC with all executed transactional documents within 24 hours of execution so long as she is a provisional broker. The Commission found that Ms. Effat left one firm to join another and believed that she could take two buyer clients of the former firm with her to the new firm. Ms. Effat created and provided termination agreements to the two buyer clients after her employment by the former firm had ended. Both buyers signed agency agreements with Ms. Effat and her new firm prior to signing the termination agreements with the former firm.  Furthermore, the former firm did not sign the termination agreements releasing the buyers from their contract. Once Ms. Effat was advised by her new BIC that she could not bring these clients to the new firm without permission, Ms. Effat ceased communicating with those buyers. While at the new firm, Ms. Effat executed agency agreements with buyers, who also went under contract to purchase properties, without informing her BIC or providing the firm with copies of transaction documents. Ms. Effat attended a continuing education course as part of her settlement but disputed payment for the course. Ms. Effat has repaid the course fee and chargeback fees to the Commission.

JOSE R MALDONADO (Charlotte) – By Consent, the Commission reprimanded Mr. Maldonado effective December 15, 2019. The Commission found that Mr. Maldonado co-listed five properties with another real estate agent without verifying the seller’s representations that she had the right to sell the properties. Mr. Maldonado and the other agent proceeded to list the properties based on the word of the seller that a divorce settlement authorized her to convey the properties. After the properties went under contract, the seller disclosed she did not have the right to convey the properties.

BOOKIN PAIGE MCLAURIN LLC – The Commission accepted the voluntary surrender for one year of the firm license of Bookin Paige McLaurin effective October 16, 2019. The Commission dismissed without prejudice allegations that the firm violated provisions of the Real Estate License Law and Commission rules. Bookin Paige McLaurin neither admitted nor denied misconduct.

PAIGE MCLAURIN – The Commission accepted the voluntary surrender for one year of the broker license of Ms. McLaurin effective October 16, 2019. The Commission dismissed without prejudice allegations that Ms. McLaurin violated provisions of the Real Estate License Law and Commission rules. Ms. McLaurin neither admitted nor denied misconduct.

VICTOR HUGO MONROY (Charlotte) – The Commission accepted the voluntary surrender for two years of the broker license of Mr. Monroy effective October 16, 2019. The Commission dismissed without prejudice allegations that Mr. Monroy violated provisions of the Real Estate License Law and Commission rules. Mr. Monroy neither admitted nor denied misconduct.

KEVIN DESHAWN MORGAN (Durham) – By Consent, the Commission suspended the broker license of Mr. Morgan for a period of two years effective August 1, 2019. One year of the suspension is active with the remainder stayed. Mr. Morgan agreed that he shall be permanently prohibited from ever acting as or becoming a Broker-in-Charge. The Commission found that Mr. Morgan, acting as a buyer agent, falsified the signatures and initials of the buyers he represented on an “Exclusive Buyer Agency Agreement”, “Working with Real Estate Agents” brochure, and an “Offer To Purchase and Contract” in a residential sales transaction. Mr. Morgan conducted this real estate transaction with an inactive license after receiving notice from the Commission and a warning from his broker-in-charge. Mr. Morgan failed to provide the transaction documents to his firm.

MW PROPERTIES REALTY GROUP LLC (Charlotte) – By Consent, the Commission permanently revoked the firm license of MW Properties Realty Group effective October 31, 2019. The Commission found that the firm engaged in real estate brokerage and property management, and passed the management fees it collected for brokerage services onto an unlicensed company. MW Properties Realty Group allowed the unlicensed owner of the unlicensed company to have dominion and control over its trust accounts, allowed an unlicensed company to manage properties for which it had signed management agreements, and allowed the unlicensed company to advertise properties for rent, which it did not own, for compensation. MW Properties Realty Group could not produce a management agreement for a property in which it held money in trust.  A review of MW Properties Realty Group’s trust accounts found that the payees listed on ledgers did not always match those listed on the cancelled checks and at numerous times, the journal showed refunds being paid when in fact those checks were being sent to an unlicensed company. 

BRANDON CARL NARRON  (Wilson) –  By Consent, the Commission suspended the broker license of Mr. Narron for a period of one year effective September 1, 2019. One month of the suspension is active with the remainder stayed. The Commission found that in and around November 2016, Mr. Narron, a provisional broker, misrepresented the extent of a property’s foundation issues as reported in the buyer’s inspection report to his buyer-client. Mr. Narron then hired an unlicensed repairman to address said issues. In and around June 2017, Mr. Narron, acting as a provisional broker and a dual agent, failed to disclose in writing he represented both parties and failed to advise his buyer-client to order a home inspection. Mr. Narron was also in possession of his seller-client’s prior inspection report and failed to disclose numerous material facts contained in the report to his buyer-client.

TEAM NADINE LLC (Cornelius) – By Consent, the Commission reprimanded Team Nadine effective October 1, 2019. The Commission found that Team Nadine, acting as listing agent, possessed a previous MLS listing accurately disclosing that only one-half of a boathouse was included with the property and that a GIS survey did not accurately show the divided ownership. Team Nadine failed to disclose accurately the shared ownership of the boathouse. A buyer entered into a contract and later terminated upon discovery of the boathouse issue. Team Nadine has entered into a settlement agreement with the buyer.

NADINE LEE WYNN (Cornelius) – By Consent, the Commission reprimanded Ms. Wynn effective October 1, 2019. The Commission found that Ms. Wynn, acting as listing agent, possessed a previous MLS listing accurately disclosing that only one-half of a boathouse was included with the property and that a GIS survey did not accurately show the divided ownership. Ms. Wynn failed to disclose accurately the shared ownership of the boathouse. A buyer entered into a contract and later terminated upon discovery of the boathouse issue. Ms. Wynn has entered into a settlement agreement with the buyer.

Appearances

Stephen L. Fussell, Senior Consumer Protection Officer, spoke to Fonville Morisey Realty in Chapel Hill and to the Charlotte chapter of the National Association of Residential Property Managers.

Shanna L. Hardy, Consumer Protection Officer, spoke to Realty Executives of Hickory.

Sheryl B. Graham, Consumer Protection Officer, spoke to the Hendersonville Board of REALTORS® and at the Jacksonville Board of REALTORS® Education Expo.