Janet Thoren, Director of Regulatory Affairs, spoke to the North Carolina Association of REALTORS® in Pinehurst.
Frederick A. Moreno, Chief Deputy Legal Counsel, spoke to United Real Estate East Carolina in Greenville and to the Property Management Division of the North Carolina Association of REALTORS ® in Pinehurst.
Nicholas T. Smith, Consumer Protection Officer, spoke to the Asheville Commercial Investment Realty Association, to Keller Williams Realty in Fayetteville, and to REMAX One Hundred in Durham.
Peter B. Myers, Information Officer, spoke to the Asheboro REALTOR® Council of the Greensboro Regional REALTORS® Association.
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.
One of the most important documents in a residential real estate sales transaction is the sales contract between the buyer and the seller. The sales contract details the parties’ agreement, including terms such as price, closing date, warranties, etc. The North Carolina Statute of Frauds requires real estate sales contracts to be in writing and signed by the parties in order to be enforceable between the parties. The Standard Form 2-T, Offer to Purchase and Contract, jointly approved by the NC Bar Association and NC Association of REALTORS®, Inc., is a commonly-used sales contract form in residential transactions involving real estate brokers.
Standard Form 2-T includes a provision for a “Due Diligence Fee,” which is defined as follows:
“A negotiated amount, if any, paid by Buyer to Seller with this Contract for Buyer’s right to terminate the Contract for any reason or no reason during the Due Diligence Period. It shall be the property of Seller upon the Effective Date and shall be a credit to Buyer at Closing. The Due Diligence Fee shall be non-refundable except in the event of a material breach of this Contract by Seller, or if this Contract is terminated under Paragraph 8(n) or as otherwise provided in any addendum hereto.”
In other words, this fee is intended to compensate the seller for the Due Diligence period, during which the buyer may decide whether to proceed with the transaction. The buyer will receive a credit for the fee at closing. However, if the contract terminates prior to closing, the buyer forfeits the fee, unless the seller has breached the contract.
When must the fee be delivered? Provision 1(d) of Standard Form 2-T dictates that the Due Diligence Fee must be “made payable and delivered to the Seller by Effective Date” of the contract. In other words, the buyer must pay the Due Diligence Fee directly to the seller at the time of contract acceptance.
How may a buyer transmit the Due Diligence Fee to the seller? Provision 1(d) of Standard Form 2-T allows a fee to be paid by cash, official bank check, wire transfer, or electronic transfer. Thus, it is ideal for the buyer to send the fee directly to the seller via personal delivery, postal mail, wire transmission, or other electronic means.
What if the buyer delivers the Due Diligence Fee to a broker, rather than directly to the seller? Commission Rule 58A .0116(b)(4) dictates:
“A broker may accept custody of a check or other negotiable instrument made payable to the seller of real property as payment for an option or due diligence fee, or to the designated escrow agent in a sales transaction, but only for the purpose of delivering the instrument to the seller or designated escrow agent. While the instrument is in the custody of the broker, the broker shall, according to the instructions of the buyer, either deliver it to the named payee or return it to the buyer. The broker shall safeguard the instrument and be responsible to the parties on the instrument for its safe delivery as required by this Rule. A broker shall not retain an instrument for more than three business days after the acceptance of the option or other sales contract.”
In short, if a buyer delivers the Due Diligence Fee to a broker, the broker must safeguard the fee and ensure that it is safely and promptly delivered to the seller. The broker must deliver the fee no later than three business days after contract acceptance.
Standard Form 2T includes two acknowledgements related to delivery of the Due Diligence Fee. The listing broker acknowledges receipt of the Due Diligence Fee using the Listing Agent Acknowledgement of Receipt of Due Diligence Fee. The listing broker should not sign an acknowledgement of receipt of funds when the buyer has submitted the fee directly to the seller. The seller may acknowledge receipt of the fee using the Seller Acknowledgement of Receipt of Due Diligence Fee.
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, including options for either a live classroom environment in Raleigh or a “live online” environment. Following registration, a broker will be sent a link to the 8-hour segment.
The 8-hour online segment is a self-paced course, but it must be completed within 30 days of registration. 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.
By Nicholas T. Smith, Consumer Protection Officer
Seller clients entrust their listing agent to effectively market and expose their property to many prospective buyers. Holding an open house can be an effective marketing tool to gain exposure for a client’s property and can be a great way to find potential buyers. While this additional exposure can be advantageous for selling a home, conducting an open house poses additional risks to a broker and the seller and it is important that brokers take precautions to protect themselves and their client’s property when holding an open house.
Recently, a man and a woman posing as potential buyers were arrested in connection with multiple thefts occurring during open houses in Southern California. The male suspect distracted the agent conducting the open house while the female suspect went from room to room stealing desired items. Although more rare, brokers also have been victims of violent crimes during open houses, more often when they are alone.
A broker should be sure to discuss with their clients the safety risks of holding an open house and describe the precautions that should be taken to protect the property. When discussing preparations for the open house, a broker should remind their clients to take valuables and prescription drugs with them, or secure them in a safe place. While there is always a possibility of theft from a burglar entering the home under the guise of a potential buyer, the seller stands to lose less when valuables are removed or secured. Additionally, potential burglars who may be “casing” the property to determine if there is anything of value may be less inclined to return later.
Consider taking the following steps to better protect you and your client’s property and ensure a safe open house:
Preparing for a safe open house:
During the open house:
After the open house:
Editors Note: Credit is also attributed to the authors and contributors to the NC Safety Guide including the North Carolina Association of REALTORS ® and the Washington Real Estate Safety Council.
This is the first 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 October 1, 2019, there are 56 Commission staff members, divided between three divisions, Executive & Administrative, Education & Licensing, and Regulatory Affairs. Miriam Baer is the Executive Director.
This month’s Commission Spotlight is on the Executive and Administrative Division.
The Executive and Administrative Division works to effectively and efficiently administer Commission programs and operations. As Executive Director, Miriam Baer is tasked with management responsibilities as Chief of Staff, and oversight of the Commission’s licensing, education, and regulatory functions.
The Division is supported by eleven full-time staff members.
Primary responsibilities of the Executive and Administrative Division include:
To learn more about the North Carolina Real Estate Commission, go to ncrec.gov or contact us at 919.875.3700.
JACQUETTE DIAMOND LAND GINYARD (Charlotte) – By Consent, the Commission suspended the broker license of Ms. Land Ginyard for a period of six months effective September 17, 2019. The Commission then stayed the suspension for a probationary period from September 17, 2019 through March 17, 2020. The Commission found that Ms. Land Ginyard, a buyer agent in a residential transaction, failed to maintain records of all the subject transaction documents and failed to make them available for inspection by the Commission. Ms. Land Ginyard was the qualifying broker and broker-in-charge of a licensed firm and failed to notify the Commission within 10 days of its dissolution by the North Carolina Office of the Secretary of State.
KATRINA LAMURIEL KEOGH (Charlotte) – By Consent, the Commission suspended the broker license of Ms. Keogh for a period of 18 months effective September 17, 2019. The Commission then stayed the suspension for a probationary period from September 17, 2019 through March 16, 2021. The Commission found that Ms. Keogh, a buyer agent in a residential transaction, submitted an Offer To Purchase and Contract on behalf of her buyer clients which stated that they would be obtaining a conventional loan. The subject property went under contract but failed to close as the buyer could not close on two separate occasions. Ms. Keogh failed to timely inform the seller that her buyer client could no longer obtain a conventional loan and must now pursue a VA loan and that the buyer’s funds to close would not be available until they sold their current home. Ms. Keogh told the Listing Agent that an appraisal had been performed on the subject property when, in fact, it had not yet been scheduled. Ms. Keogh failed to forward her buyer client’s signed Due Diligence extension request to the Listing Agent. Ms. Keogh failed to respond to the Commission’s Letter of Inquiry within 14 days.
PIERRE MAREE (Charlotte) – By Consent, the Commission reprimanded Mr. Maree effective September 25, 2019. The Commission found that Mr. Maree, also licensed as a real estate broker in South Carolina, acted as listing agent in a transaction. Mr. Maree was aware of a dispute between buyer and seller regarding earnest money disbursement upon termination of a contract and failed to disclose the dispute when he delivered to the escrow agent an earnest money release agreement that had been altered by his seller-client but not initialed by the buyer. The escrow agent disbursed the $2,000 earnest money deposit to the seller before being informed about the dispute. Mr. Maree has paid the buyer $2,000 from his own funds.
SUSAN A. RICHTER (Durham) – By Consent, the Commission reprimanded Ms. Richter effective December 15, 2019. The Commission found that Ms. Richter, acting as a listing agent, misrepresented in her advertising that the subject property had a slate roof and a complete central vacuum system. The buyers discovered the misrepresentation regarding the roof during the due diligence period. The buyers discovered that the central vacuum system did not have a motor or other necessary components after closing. Ms. Richter has paid $1,100 out of her own funds for the central vacuum system.