Real estate bulletin

              REAL ESTATE BULLETIN
N o r t h C a r o l i n a R e a l E s t a t e C o m m i s s i o n
V o l u m e 4 3 • F e b r u a r y 2 0 1 3 • N u m b e r 3
NORTRTH CACARAROROLINANA REREREALAL ESTATATATATE COMMISSION
ESSE QUAUAMAM  I ERI
Laura B. Bromhal of Raleigh and Walter (Walt) F. Crayton, Jr. of New
Bern have been appointed to the Commission by former Governor Beverly E.
Perdue, it was announced by Miriam J. Baer, Executive Director.
Benjamin Cone III,
Commission Chair-man
and a Commis-sion
member since
2007, has been reap-pointed
by Perdue for
the term ending July
31, 2013.
Bromhal is a list-ing
and sales REAL-TOR
® with Prudential
York Simpson Under-wood
Realty in Ra-leigh,
with whom she
has been associated
for more than twenty
years. She succeeds M.
Rick Watts of Fayette-ville
for the term end-ing
July 31, 2013.
Crayton succeeds
former Vice Chairman Alice L. Mostell-er
of Waynesville for a three-year term
ending July 31, 2015.
Two recently issued documents from
the North Carolina Department of Jus-tice
(DOJ) relating to oil and gas leases
merit the attention of real estate brokers
as they conduct business at a time of
substantially increasing interest in oil
and gas leasing in the state.
The documents are available on the
Home page of the Commission’s Web
site, www.ncrec.gov, and inform land-owners
of their rights and summarize
public protections in the Law.
Last year, the General Assembly
The 2013-2014 North Carolina
Real Estate Manual is now available for
purchase. It is the definitive work on
the legal aspects of real estate brokerage
in North Carolina and essential for any
practicing real estate broker.
Published in late December, the vol-ume
serves as the mandatory textbook
for the three 30-hour postlicensing
courses. It is widely used as a reference
book for attorneys, instructors and any-one
interested in real estate law and bro-kerage
practice.
Bromhal, a native of Roanoke Rap-ids,
is a graduate of Meredith College
and, as an alumnus, has served on the
Meredith College Advisory Commit-tee.
She is a past president of the Wake
County Bar Auxiliary and is a sustain-ing
member and past director of the Ju-nior
League of Raleigh.
Bromhal is active in the arts and
civic affairs and has participated in the
work of numerous area organizations
including the North Carolina Museum
of History, North Carolina Arts Muse-um,
Mordecai Historic Society, Execu-tive
Mansion, The Opera Company of
North Carolina, North Carolina Sym-phony,
Raleigh Chamber of Commerce,
YWCA, United Way and the SPCA.
As a member of a family with a long
heritage in North Carolina, she is ac-tively
involved with the Colonial Dames
of Raleigh, First Families of North
Carolina, Daughters of Colonial Wars,
(See Commission, page 3)
(See Manual, page 6)
(See DOJ, page 8)
passed the Clean Energy and Economic
Security Act which legalizes fracking
and horizontal drilling (see “Fracking:
What Every Agent Needs to Know” in
the Real Estate Bulletin, October 2012)
and establishes the North Carolina
Mining and Energy Commission. The
Act prohibits drilling until the Commis-sion
establishes rules for fracking (to be
in place by October 1, 2014), requires
companies to obtain drilling permits
from the NC Department of Environ-
Bromhal
Cone
Crayton
2 Real Estate Bulletin February 2013
To request a speaker from the
Commission, please submit the
“Request for Program Presenter”
form available on the Commission’s
Web site, www.ncrec.gov.
taff
pdate
S
U
REAL ESTATE BULLETIN
Published as a service to real estate licensees to promote
a better understanding of the Real Estate License Law and
Commission rules, and proficiency in real estate practice.
The articles published herein shall not be reprinted or
reproduced in any other publication without specific refer-ence
being made to their original publication in the Com-mission’s
Real Estate Bulletin.
NORTH CAROLINA REAL ESTATE COMMISSION
1313 Navaho Drive
P. O. Box 17100
Raleigh, North Carolina 27619-7100
Phone (919) 875-3700
www.ncrec.gov
Patrick McCrory, Governor
COMMISSION MEMBERS
Benjamin Cone III, Chairman Raleigh
Everett “Vic” Knight, Vice Chairman Raleigh
Laura B. Bromhal Raleigh
L. S. “Cindy” Chandler Charlotte
Walter “Walt” F. Crayton, Jr. New Bern
Thomas R. Lawing, Jr. Charlotte
Jeffery J. Malarney Manteo
S. R. Rudd, Jr. Oak Island
Miriam J. Baer
Executive Director
ADMINISTRATION
Mary Frances Whitley Director
Paula L. Ricard Financial Officer
Vickie R. Crouse Technology Administrator
Wendy C. Harper Administrative Officer
Jake A. Gore Network Administrator
Robert L. Forshaw Publications Officer
Brenda Hollings Information Services Officer
EDUCATION AND LICENSING
Larry A. Outlaw Director
Anita R. Burt Education/Examination Officer
Pamela R. Rorie Continuing Education Officer
Patricia A. Moylan Legal Education Officer
Matthew A. Wentz License Application Analyst
REGULATORY AFFAIRS
Janet B. Thoren Director, Legal Counsel
Charlene D. Moody Assistant Director, Legal Counsel
Emmet R. Wood Chief Auditor
S. Adam Stallings Chief Deputy Legal Counsel
Curtis E. Aldendifer Associate Legal Counsel
Michael B. Gray Chief Financial Fraud
Investigator
D. Scott Schiller Financial Fraud Investigator
Bart H. Allen Sr. Auditor/Investigator
Jennifer K. Boger Sr. Auditor/Investigator
William F. Dowd Sr. Auditor/Investigator
Pamela M. Vesper Sr. Auditor/Investigator
Andrew Baker Auditor/Investigator
Amanda H. Hohl Auditor/Investigator
M. Spier Holloman Sr. Legal Auditor/Investigator
Stephen L. Fussell Sr. Consumer Protection Officer
Joan H. Floyd Sr. Consumer Protection Officer
Jean A. Wolinski-Hobbs Consumer Protection Officer
Peter B. Myers Information Officer
Elizabeth W. Penney Information Officer
Glenn M. Wylie Information Officer
Editor-In-Chief
Miriam J. Baer
Editor
Robert L. Forshaw
Miriam J. Baer, Executive Direc-tor,
spoke to the Fayetteville Regional
Association of REALTORS® and to
its Property Management Division on
landlord/tenant issues. She also spoke to
the North and South Carolina Associa-tions
of REALTORS® at their joint con-vention,
and to the Charlotte Regional
REALTORS® Association on current
issues.
Janet B. Thoren, Regulatory Affairs
Director and Legal Counsel, spoke to
the High Point Regional Association of
REALTORS® and to the Durham Re-gional
Association of REALTORS® on
the top issues in real estate regulation.
Charlene D. Moody, Assistant Di-rector,
Regulatory Affairs, and Legal
Counsel, spoke to the Wilson Board
of REALTORS® on recent legislative
changes.
S. Adam Stallings, Chief Deputy
Legal Counsel, spoke to the Burke
County Board of REALTORS® on
“fracking” and mineral rights and new
Commission rules and to the Asheville
Board of REALTORS® on broker price
opinions, underground storage tanks,
and permitting concerns.
Pamela M. Vesper, Senior Audi-tor/
Investigator, spoke to the National
Association of REALTORS® Property
Management chapter meeting in Char-lotte.
Stephen L. Fussell, Senior Con-sumer
Protection Officer, spoke to the
Johnston County Top Producers about
the Commission and the services it pro-vides
to licensees.
Glenn M. Wylie, Information Of-ficer,
spoke to the Cleveland County
Board of REALTORS® and the Golds-boro
Board of REALTORS®.
Commission
Speakers Available
Real Estate Commission staff
members are available to speak to
your local board, office, or special
group. You can request a presen-tation
relating to a specific subject
or a general discussion on topics of
interest to those attending.
To schedule a speaker, call Janet
Thoren at (919) 875-3700, Ext. 136.
Please allow at least four weeks
prior to your group’s meeting.
Amy E. Preddy has been employed
as a Licensing Specialist with the Li-censing
and Educa-tion
Division. Prior
to joining the Com-mission,
she worked
in Human Resources
and Accounts Payable
at GCA Services Group, Inc., a facility
management company in Research Tri-angle
Park. She is currently completing
a bachelor’s degree in Digital Cinema-tography
and Film at Full Sail Univer-sity.
Real Estate Bulletin February 2013 3
November 14
December 12
January 9
February 6
March 6
All meetings, unless otherwise noted, begin at 9
a.m. and are held in Raleigh in the Commission’s
Conference Room at 1313 Navaho Drive
(27609). Occasionally, circumstances necessitate
C alendar changes in meeting times and locations.
C ommission
COURSE SCHEDULES
Broker-in-Charge and
Basic Trust Account Procedures Courses
Please see the Commission Web site, www.ncrec.gov, under Course Registration,
for locations, dates, and times from February thru June, 2013.
Broker-in-Charge Course
Two-days. Day one, 1-5 p.m.; Day two, 8:30-5:30 p.m.
Basic Trust Account Procedures Course
See Commission Web site to confirm courses.
Jamestown Society, Daughters of the
American Revolution, the Crepe Myrtle
Society, and the Sovereign Colonial So-ciety
Americans of Royal Descent.
Crayton is the president and owner
of Crayton Commercial, LLC, which
specializes in retail shopping center de-velopment,
re-development, leasing and
management throughout the southeast-ern
United States. He also is a licensed
real estate broker in both North and
South Carolina and broker-in-charge of
his company.
Prior to establishing Crayton Com-mercial,
Crayton worked in the retail
leasing and shopping center develop-ment
field in Charlotte, and is an Offi-cial
Member of the International Coun-cil
of Shopping Centers.
Crayton is a 2004 graduate of the
Kenan-Flagler Business School at the
University of North Carolina at Chapel
Hill with a BS in Business Administra-tion
and a Life Member of the UNC
Alumni Association. He is an Eagle
Scout, Life Member of the National Ea-gle
Scout Association, a member of the
New Bern Noon Rotary, and a member
of Centenary United Methodist Church
and its finance committee.
Asheville February 20-21
May 13-14 Holiday Inn East/Blue Ridge Parkway
Banner Elk April 10-11 Best Western Mountain Lodge
Concord
February 25-26
April 15-16
June 5-6
Hilton Garden Inn, Concord
Greensboro March 26-27
May 22-23 Deep River Event Center
Nags Head/Kill Devil
Hills March 12-13 Sea Ranch Resort
Raleigh
March 18-19
April 24-25
June 3-4
McKimmon Center
Wilmington May 6-7 Coastline Convention Center
Raleigh March 5, 1-5 p.m.
June 5, 1-5 p.m. McKimmon Center
Greensboro May 23, 9 a.m. - 1 p.m. Deep River Event Center
(Continued from page 1)
4 Real Estate Bulletin February 2013
The following article is copyrighted by
and reprinted with the permission of the
National Association of REALTORS®.
he crime of money laundering
continues to be a growing area
of concern in the United States. There-fore,
law enforcement agencies and the
financial sector devote considerable
time and resources to combatting these
illegal financial activities. However,
many non-financial businesses and pro-fessions
are also vulnerable to potential
money laundering schemes.
Real estate professionals are a cat-egory
of the non-financial business sec-tor
that may encounter persons engag-ing
in money laundering activities. The
purpose of this fact sheet and suggested
voluntary guidelines is to increase real
estate professionals’ awareness, knowl-edge,
and understanding of the poten-tial
money laundering risks surrounding
real estate and enable them to identify
practical measures to mitigate the risks.
Money laundering is the process
criminals use to disguise the illegal
origin of their funds. Certain criminal
activities generate substantial proceeds.
Legitimizing, or “laundering” this mon-ey
through the financial system, is a
critical component for criminals to hide
their activities and not draw attention
to their illegally derived proceeds.
The actual process of money laun-dering
is a three step process that is
initiated by introducing the illegal pro-ceeds
into the financial system, e.g.,
breaking up large amounts into small
deposits or by purchasing financial in-struments,
such as money orders, which
is referred to as placement. This is typi-cally
followed by distancing the illegal
proceeds from the source of the funds
through layers of financial transactions,
referred to as layering, and finally by re-turning
the illegally derived proceeds to
the criminal from what appears to be a
legitimate source, known as integration.
A real estate transaction can be used
in any one of the three stages of money
laundering. For example, if an individ-ual
purchases a home and uses illegal
funds as part of the down payment, this
would be considered integration.
Generally speaking, most money
laundering activities are concentrat-ed
in the financial sectors. Therefore,
banks and other financial institutions
are subject to anti-money laundering/
counter-terrorist financing (AML) laws
and regulations, primarily the Bank Se-crecy
Act (BSA), and have safeguards in
place to help detect and mitigate money
laundering activity. But other indus-tries,
such as real estate, can also be ex-posed
to questionable business practices
and be utilized as a vehicle for money
laundering activities.
As a general matter, the real estate
agent’s AML risk is substantially miti-gated
by the fact that the great major-ity
of real estate transactions involve
regulated entities such as banks and
non-bank mortgage companies, which
have BSA obligations. However, when a
transaction steps outside the norm or in
cases where certain risk factors are pres-ent,
as detailed below, a real estate agent
faces an elevated chance of encountering
a possible money-laundering scheme
and should consider taking measures to
address the risk.
As a real estate professional, knowl-edge
of how real estate transactions nor-mally
progress and the resulting ability
to recognize and evaluate whether vari-ances
from the norm may signify an en-hanced
AML risk is an important way
real estate agents can help to mitigate
AML risk in real estate transactions.
This requires brokers and agents to be
aware of how real estate transactions
may be used in illegal financing schemes
and what steps should be taken to de-tect
and deter those activities.
Being familiar with the signs of mon-ey
laundering activity in the real estate
market will help real estate agents to:
1. Identify potential money laun-dering
activities;
2. Take appropriate steps to miti-gate
the money laundering risk; and
3. If necessary, alert the proper au-thorities
to help deter and mitigate the
use of real estate in money laundering
schemes.
Law enforcement and financial ex-perts
have identified some of the warn-ing
signs of money laundering activity
in connection with real estate. By fa-miliarizing
oneself with these voluntary
guidelines, real estate agents can assist
and help minimize the risk of real estate
becoming a vehicle for money launder-ing
activities.
Every broker and agent should be
aware of certain characteristics of a real
estate transaction that may be indica-tive
of illegal financing activities. A real
estate agent’s familiarity with the nor-mal
course of business will help them
to identify any unusual or suspicious
patterns. Law enforcement, regulators
and the international community have
identified multiple money laundering
risk factors. In general, these risk factors
(red flags) can be grouped in the three
categories: country/geographic, cus-tomer,
and transaction risk.
(Continued)
Real Estate Bulletin February 2013 5
:
Geographic risk may arise because
the customer and/or the source of the
customer’s funds are located in a jurisdic-tion
that has a weak AML regime, sup-ports
or funds terrorism, or has a high
degree of political corruption. Although
there is no definitive list of such jurisdic-tions,
one good source is the list of juris-dictions
subject to sanctions of the Of-fice
of Foreign Assets Control (OFAC)
of the U.S. Treasury Department. OFAC
administers and enforces economic and
trade sanctions based on U.S. foreign
policy and national security goals.
OFAC-administered sanctions can
be either comprehensive or selective, and
generally restrict or prohibit dealings (in-cluding
business and financial activities)
by U.S. persons or in the United States
that involve countries (or persons) subject
to OFAC sanctions. Countries subject to
comprehensive OFAC sanctions include
Iran, Cuba, and Syria. The names of in-dividuals,
groups, and entities subject to
OFAC sanctions are generally listed on
OFAC’s List of Specially Designated Na-tionals
and Blocked Persons.
• Location of property in relation to
the buyer.
• Is there a large unexplained geo-graphic
distance between the
two?
• Unusual involvement of third par-ties.
• Titling a residential property in the
name of third party; for example,
a friend, relative, business associ-ate,
or lawyer. Use of legal entities
(corporations, LLCs or partner-ships)
that obscure the identity of
the person who owns or controls
them without a legitimate business
explanation.
• High-ranking foreign political offi-cials
or their family members.
• Under or over-valued properties.
• For example, is the property
owner selling the property for sig-nificantly
less than the purchase
price?
• Does the seller seem disinterested
in obtaining a better price?
• Use of large amounts of cash.
• Buyer brings actual cash to the
closing.
• The purchase of a property with-out
a mortgage, where it does not
match the characteristics of the
buyer.
• While rules and regulations gov-erning
the financial sector are de-signed
to detect situations where
large amounts of cash are being
introduced, real estate agents
should keep this factor in mind
when evaluating whether a trans-action
seems suspicious.
• Property purchases inconsistent
with the individual’s occupation or
income.
• Is the property being purchased
significantly beyond the purchas-er’s
means?
• Immediate resale of the property.
• Especially if the sale entails a sig-nificant
increase or decrease in
the price compared to the prior
purchase price, without a reason-able
explanation.
• Speed of transaction (without rea-sonable
explanation).
• Unusual source of funding.
• Example: use of third-party funds
to purchase a property where
it doesn’t make sense, i.e. third-party
is not a parent, sibling, etc.,
use [of ] several different sources
of funds without logical expla-nation,
funding coming from a
business but property not being
held in business’ name, or pur-chase
of property doesn’t match
the business’ purpose.
• Purchases being made without
viewing the property, no interest in
the characteristics of the property.
• Any other activities which demon-strate
suspicious behavior and do
not make professional or commer-cial
sense based on the agent’s famil-iarity
with the real estate industry
and the normal course of business.
The presence of a single risk factor, or
even multiple factors, does not necessar-ily
mean the purchaser or seller is engag-ing
in money laundering activities. The
role of real estate agents is to be familiar
with these risk factors, and exercise sound
judgment based on their knowledge of
the real estate industry, and when a com-bination
of these factors truly raises a red
flag, know the proper action to take.
This is a critical component of the
role real estate professionals can play in
helping to identify and combat money
laundering. Knowing an agent’s true
customer and understanding their inter-est
and planned use for a property will
help agents evaluate a situation where
one or more red flags are raised.
The process by which the real estate
agent forms a reasonable belief that he/
she knows the true identity customer
and is then able to assess AML risk, is
commonly referred to as know-your-customer
or customer due diligence
(CDD). In cases where red flags are
present, the agent should apply in-creased
levels of CDD, which could in-clude
the following:
1. Obtain additional information, a
driver’s license, passport or other
reliable identification document,
to confirm the true identity of
the customer.
2. If a legal entity is involved, such
as a corporation or LLC, take
additional measures to identify
who actually controls or owns
the entity and take risk based
measures to verify the identity of
the owner. This is commonly re-ferred
to as beneficial ownership
information.
3. Obtain other appropriate infor-mation
based on the agent’s ex-perience
and knowledge to un-derstand
the customer’s circum-stances
and business.
(Continued)
6 Real Estate Bulletin February 2013
In addition, depending on the size of
the firm, it may be appropriate for the
agent to notify and discuss with senior
management the higher risk customer
or a particular situation that raises red
flags, and to monitor the relationship if
there are a series of transactions with the
customer.
When confronted with suspicious
activity, real estate agents always have
the option of reporting the information
to local law enforcement or the FBI.
In addition, agents may also con-sider
filing a suspicious activity report,
or SAR, which is reported to the U.S.
Treasury’s Financial Crimes Enforce-ment
Network (FinCEN). SARs are
primarily designed for use by financial
institutions and are a significant tool for
enforcement agencies to combat money
laundering. Real estate professionals are
not required to file a SAR, but should
be aware of the availability of this tool
to the extent that they have reasonable
suspicion that a transaction may be a ve-hicle
for illegal financing activity.
The electronic SAR form is available
at: http://bsaefiling.fincen.treas.gov/main.
html.
For further information or assistance
regarding how to file a SAR, real estate
professionals may call FinCEN’s Regu-latory
Helpline 1-800-949-2732.
It is important to note that while the
Bank Secrecy Act contains a safe harbor
shielding financial institutions from civil
liability in connection with the filing of
a SAR, there is no precedent to suggest
that the safe harbor would extend beyond
financial institutions to real estate pro-fessionals.
Therefore, a real estate agent
should be prudent and file a suspicious
activity report only after thoroughly eval-uating
the circumstances surrounding
the suspicious activity, and additionally
should consider consulting an attorney
on the matter prior to filing a SAR. Oth-erwise,
a real estate agent could subject
themselves to civil liability as a result.
A Form 8300 must be filed by a busi-ness
that receives more than $10,000 in
cash in the course of a single transaction
or two or more related transactions. It
is not a SAR and is not used to report
suspicious activity. Form 8300 is an in-formation
report that is required to be
filed by any trade or business (such as a
car or boat dealer) that receives in excess
of $10,000 in cash in a single transac-tion.
Therefore, if for any reason a real
estate agent or broker receives more
than $10,000 in cash from a buyer or
seller in the course of a real estate trans-action,
the form must be filled out and
filed, and can be found at http://www.
irs.gov/pub/irs-pdf/f8300.pdf.
Cash, for purposes of this require-ment,
includes cash equivalents such
as cashier’s checks, bank drafts, money
orders. If the cash equivalent instru-ment
is for more than $10,000, the
transaction will be reported by the issu-ing
bank, and the agent does not need
to also file a Form 8300. If, however, an
agent receives a cashier’s check or other
cash equivalent of less than $10,000, but
which in combination with other cash
or cash equivalents totals more than
$10,000, a Form 8300 must be filed.
While the illicit finance risk for real
estate agents is often mitigated by the
involvement of financial institutions
already subject to strict AML laws, the
use of real estate in money launder-ing
schemes continues to be an area
of concern to the government. Adher-ence
to these voluntary guidelines will
help the real estate agent identify po-tential
money laundering risks. These
voluntary guidelines will also help real
estate agents be effective partners with
enforcement agencies in detecting and
addressing the use of real estate in illegal
financing activities.
The 1,021-page Manual is available
as a printed book, on CD-ROM disks,
and as a subscription to the files on the
Commission’s Web site, www.ncrec.gov.
The link to order a subscription can be
found on the Home page of the Web
site.
Orders for books and CD’s should
be made through the online or mail-in
order forms on the Web site publica-tions
page. An order form for mailing
or faxing is available in every issue of the
Real Estate Bulletin.
The printed Manual is priced at $49
for a single copy and $44 for addition-al
copies on the same order. The CD-ROM
and subscription are $20 each.
Prices include shipping, handling and
sales tax where applicable.
In the updated Manual, the most
significant revisions relate to the new
state law and Commission rules that
permit brokers other than provision-al
brokers to perform a broker price
opinion (BPO) or comparative market
analysis (CMA) for a fee. Other revi-sions
address significant changes to the
standard offer to purchase and contract
form, the Residential Property and
Owners’ Association Disclosure State-ment,
the Dodd-Frank Wall Street and
Consumer Protection Act and various
other laws and rules, as well as the gen-eral
updating of information and forms.
(Continued from page 5) (Continued from page 1)
Real Estate Bulletin February 2013 7
ew processes in the practice of
real estate brokerage are more
important for a broker to understand
than those relating to negotiating con-tract
offer and acceptance. While many
considerations arise between buyers and
sellers during negotiations, three de-serve
special attention:
• Knowing when a legally binding
contract between a buyer and a
seller has been formed;
• Clear communication by each par-ty
to the contract throughout the
period of negotiation;
• Timely and complete notice of ac-ceptance
when all parties have
reached agreement.
Buyers and sellers rely upon brokers
to guide them through offers and coun-ter-
offers of price and terms, to know
the difference between potentially bind-ing
and non-binding proposals, and to
inform them when a contractual rela-tionship
has been established.
Consider this example illustrating
the difference between a non-binding
proposal and a potentially binding offer
or counter-offer:
The listing agent, having received
and presented an offer to the sellers,
sends an email to the buyer agent stat-ing,
“My clients have reviewed your
buyers’ offer and they are un-able
to accept it. However,
they would accept an offer of
$225,000 with the same terms
in your clients’ original offer.”
A few hours later the buyer
agent sends an email back stat-ing,
“I spoke with my buyers
and they will pay the $225,000
your clients are looking for;
we have a deal. I will have the
amended paperwork to you
first thing tomorrow.”
The buyer agent tells the cli-ents
that they “have a deal” and
the next morning emails the amended
offer signed by the buyers to the listing
agent. Later that day, another email ar-rives
from the listing agent:
“My sellers have received a second
offer, so we are now in a multiple-offer
situation. My clients are asking the
buyers to submit their highest-and-best
offer.”
The buyer agent emails the listing
agent stating the belief the buyers are
“under contract” (they are not) and the
buyers expect the sellers to honor the
deal. The listing agent advises the sellers
that they are free to consider another of-fer
(which they are) and the sellers sub-sequently
accept the offer of the second
buyer.
Here the buyer agent mistakenly be-lieves
that because the necessary terms
for a contract were in writing between
the brokers, a binding contract was
formed. It is important to understand
that “negotiations” between the bro-kers,
even those in writing, will gener-ally
not bind their clients to a contract
since brokers do not generally possess
the necessary power or authority. (This
may not be the case when the buyer and
seller negotiate in writing, as a binding
contract can then be formed).
Also, in this example, clarity in both
oral and written communications is
vitally important for a broker. When
you as a broker propose possible terms
on your client’s behalf, use language
to signal that it is a non-binding pro-posal:
“The seller will consider an offer
of $225,000 upon the same terms,” or
simply “This is a non-binding proposal.”
Although emails between brokers re-garding
contract terms should never be
interpreted as a binding agreement be-tween
the principals, avoiding ambigu-ity
is in everyone’s best interest. Brokers
should always advise clients that con-tracts
are not binding unless accepted
and signed by all the parties, with any
changes initialed and approved by all
parties.
Finally, in the example, there was no
clear notice of acceptance. This is the fi-nal
step in forming a binding contract,
and can be made orally or in writing.
It is the notice given to the offeror that
the offeree has signed and accepted the
offer, and a binding contract has been
formed. It does not mean that a broker
is accepting on their client’s behalf.
When a broker gives notice of accep-tance,
he or she is communicating that
the seller has signed and accepted the
buyer’s last offer as written (without any
changes to the terms) and the parties are
under contract. A broker simply stating
“we have a deal” does not, by itself, cre-ate
a contract. The broker giving notice
of acceptance should always be clear as
to whether or not the contract in the
possession of the seller is signed
and the broker receiving notice
of acceptance should always ask.
Brokers often raise the issue
of whether it is ethical for a seller
(or buyer) to consider other offers
when they have made a “com-mitment”
to a buyer (or seller).
Until a binding, written contract
is formed, the parties are free to
consider other options.
By Glenn M. Wylie, Information Officer
8 Real Estate Bulletin February 2013
ment and Natural Resources (DENR),
and requires General Assembly approval
before DENR can issue permits.
In the meantime, landowners with
property in locations deemed more like-ly
to contain oil and gas deposits will
be confronted with solicitations to lease
rights to companies to extract these de-posits
from the properties. These leases
are complex legal documents and DOJ
advises contacting an attorney with ex-pertise
in real estate law.
Brokers should read the DOJ docu-ments
to understand the issues facing
owners and, when representing buyers
or sellers, to be better able to fully dis-close
any material facts affecting value
and title and to advise customers and
clients about obtaining advice from at-torneys
who specialize in real estate law.
In “Landowners’ Rights”, DOJ of-fers
tips when considering leasing for oil
or gas exploration. These include:
• contacting the mortgage lender,
conservation easement holder, or
Farm Service Agency office
• checking out the salesman (land-man)
soliciting a lease
• researching the salesman’s com-pany
• knowing the risks to your land
and water supply
• making sure your payment is rea-sonable
and it covers damages
and costs
• talking with your neighbors, get
all promises in writing, get a copy
of your lease and your legal pro-tections
• not being pressured to sign and
know your right to cancel
• knowing where to turn for help
In “Summary of Landowner and
Public Protections Under the Law”,
DOJ provides discussion of the follow-ing
nine key points:
• Notice and entry to property
• Water supply and water contami-nation
• Surface activities and compensa-tion
for damages
• Indemnification
• Reclamation
• Actions for damages
• Landman registry
• Required lease terms
Additional provisions include re-cording,
assignment, and, very impor-tant
for brokers to know, mandatory
disclosure of mineral rights with real
estate sales.
(Continued from page one)
Two new videos are available on the Commission’s Web site: License Rein-statement
and How to File a Complaint.
License Reinstatement - the process of reinstating an inactive or expired
license is explained including any continuing education which may be neces-sary.
How to File a Complaint - primarily directed toward consumers, this video
describes the procedure for filing a complaint and explains how the Commis-sion
responds.
To view these videos, click on Video Library on the Home page.
License Reinstatement How to File a Complaint
The Residential Property and Own-ers’
Association Disclosure Statement
underwent revision in 2012 to become
effective January 1, 2013.
Be certain you are using the correct
form which bears the text “REV 1/13”
in small type in the lower left corner of
the first of four pages.
You will find the document on the
Commission Web site under “Forms”.
It is an interactive PDF - enabling it be
filled out online and then printed.
You may download the form to your
computer by right clicking on it and
choosing “Save target as”. It may then
be emailed to clients for them to fill out
and print.
The form underwent revision pri-marily
to make it easier to use. The pri-or
form’s use of lead-in and subordinate
questions has been replaced with 37 in-dependent
questions.
The Broker-in-Charge Guide is be-ing
revised and updated and a new edi-tion
will be published this spring.
The BIC Guide was first issued in
November 2004 to serve as a reference
publication for brokers-in-charge of real
estate offices. It is used as the text for the
12-hour Broker-in-Charge Course.
A reference publication of the North Carolina Real Estate Commission
for Brokers-in-Charge of real estate offices.
Broker-in-Charge Guide
North Carolina Real Estate Commission
P.O. Box 17100
Raleigh, NC 27619
919-875-3700
www.ncrec.state.nc.us
Broker-in-Charge Guide North Carolina Real Estate Commission
Real Estate Bulletin February 2013 9
re you carrying old escrow funds
in your trust accounts? Perhaps
turning over these monies to the clerk
of court might be the remedy for you.
This method is best used when the par-ties
refuse to come to an agreement yet
fail to initiate legal action to determine
rightful ownership.
Under N.C.G.S. 93A-12, a real es-tate
broker or attorney holding disputed
monies may deposit these funds with
the clerk of court in the county where
the property is located after properly
notifying the persons claiming owner-ship
of the funds. (Residential security
deposits are specifically not allowed to
be disposed of in this manner.)
Notification is satisfied by provid-ing
written notice directly to the person
claiming ownership or by mailing the
notice by first-class mail to the person
hen a broker
sells his or
her own home, the
Commission recom-mends,
but does not re-quire
the broker to disclose that
he or she has a real estate license. The
Commission recommends this disclo-sure,
because having a license may give
the broker an advantage when negotiat-ing
with an unlicensed buyer. If a bro-ker
chooses to disclose that he or she
is licensed, the disclosure can be made
orally or by incorporating a statement
into the offer to purchase notifying the
buyer that the seller has a license.
Every seller of a residential dwelling
of four or fewer units must give the pro-spective
buyer a Residential Property
Disclosure Statement (“RPDS”). Every
seller, including real estate brokers, may
answer, “Yes,” “No” or “No Representa-tion”
to any or all of the questions on
the RPDS. However, real estate brokers
are held to a higher standard than un-licensed
persons when buying, selling
or leasing their own properties. A bro-ker
must still disclose all material facts
in transactions where the broker is a
party to the transaction. A material fact
is any information that would affect a
reasonable buyer’s decision to purchase.
Therefore, if a broker knows or reason-ably
should know a material fact about
a home he or she is selling and chooses
to answer “No Respresentation” to all
of the questions on the RPDS, then the
broker must still disclose the material
fact to prospective buyers no later than
the point at which a buyer makes an of-fer.
The Commission has the authority
to discipline a broker who fails to dis-close
a material fact when selling his or
her own property.
Brokers who sell their own homes
have a duty to discover and disclose ma-terial
facts. The duty to discover means
that brokers must exert reasonable ef-fort
to learn about any material fact that
may affect a reasonable buyer’s decision
to purchase and disclose such informa-tion
to prospective buyers no later than
the point at which the buyer makes an
offer.
A broker selling his or her own
home should not represent or offer to
represent a buyer. This would create
an obvious conflict of interest and is
strongly discouraged. If a buyer desires
representation, then the seller/broker
should advise the buyer to seek repre-sentation
from another broker. If the
seller/broker has listed his or her own
property with his or her own real estate
firm and the firm offers designated dual
agency, then another broker in the firm
may represent the buyer. The best way
to avoid a conflict of interest is always to
encourage the buyer to seek representa-tion
from another firm.
at his or her last known address. This
allows the parties claiming ownership to
renew their interest in the dispute and
possibly resolve the claim.
The broker must wait 90 days fol-lowing
notification to the parties before
attempting to deposit the funds with
the clerk and must certify that the 90-
day time period has passed. Once the
broker deposits the monies with the
clerk, his responsibility over the disput-ed
funds is over.
Thereafter, either party may file a
special proceeding with the clerk to re-cover
the funds. The clerk of court is
responsible for determining the rightful
ownership of the monies and disbursing
accordingly. If no such proceedings are
filed within one year of the deposit, the
funds shall be deemed unclaimed and
will be turned over to the Escheat Fund
of the State Treasurer.
The “Certificate of Notice & De-posit
of Disputed Funds” form is avail-able
at the Commission’s website: www.
ncrec.gov/forms-html/forms.html.
By Stephen L. Fussell, Senior Consumer Protection Officer
By Elizabeth W. Penney, Information Officer
10 Real Estate Bulletin February 2013
[Note: This article is not intended to
cover every possible issue that a broker will
or should consider when starting a firm.
It does provide guidance for many of the
basic issues that will commonly arise.]
ou are an active broker and have
your broker-in-charge designa-tion
and have thought about starting
your own firm for a long time and have
decided that now is the time to do it.
Here are some things to consider when
doing so.
Sole Proprietorship: If your firm will
be a sole proprietorship, then no addi-tional
real estate license will be required.
If the name of your firm will not include
your last name, then you must register the
name of your firm with the Register of
Deeds in each county where you intend
to do business and retain the Assumed
Name Certificate(s) in your records. For
example, if your name is Jordan Green-tree
and your firm name will be Green-tree
Properties, then you will not have to
register your firm name with the Register
of Deeds because the name of your firm
includes your last name. However, if you
desire to call your firm Awesome Real
Estate Consultants, then you must reg-ister
this assumed name at the Register
of Deeds in the counties where you will
engage in real estate brokerage services.
Corporation, Subchapter S-Corp,
LLC, Partnership: If your firm will be
a corporation, subchapter S-corp, or
LLC, then you will need to contact the
Corporations Division of the Secretary
of State’s office and set up the company.
(See Firm License Application form for
instructions on licensing a partnership.)
After establishing the company with the
Secretary of State (for which you may
call upon the assistance of a lawyer), you
must obtain a real estate broker license
for the firm by submitting a firm license
application to the Commission. Firm li-cense
application forms are available on
the Commission’s website. If you are
setting up a firm for the sole purpose
of receiving sales commissions, you
must still obtain a license for the firm
before receiving any such sales com-missions.
If you intend to collect trust monies
(i.e. earnest money, rents, security de-posits,
etc.), you must set up a trust or
escrow account designated as such. This
means that you must visit a federally
insured depository institution lawfully
doing business in North Carolina and
set up a basic checking account in the
name of your firm. The title or subtitle
of the account must include the words,
“Trust Account” or “Escrow Account”,
and these words must appear on the sig-nature
cards, checks and deposit tickets.
The broker-in-charge of the firm must
account for all trust account monies in
accordance with Commission rules. This
includes performing a complete trust ac-count
reconciliation on a monthly basis.
If you have not taken the Commission’s
Basic Trust Account Course, we recom-mend
that you do so before handling
trust monies. You are not required to
have a trust or escrow account unless
you are holding trust monies.
If you choose to operate your firm
from your home or any other non-com-mercial
setting, make sure that there
are no zoning regulations or restrictive
covenants which prohibit you from op-erating
a real estate business from that
location.
The Commission has no specifica-tions
for the size or shape of signs for a
real estate office. For Sale and For Rent
signs should clearly indicate the name
of the firm so that prospective buyers
and tenants will know that the sign and
the telephone number on the sign be-longs
to a real estate broker.
If you actively engage in real estate
brokerage activities, hold trust monies
or have at least one associate, you must
declare yourself Broker-In-Charge. You
must have at least two years of real es-tate
brokerage experience within the
previous five years to be eligible to de-clare
yourself broker-in-charge. You
may do this by completing and submit-ting
a Broker-In-Charge Declaration
form available on the Commission’s
website (www.ncrec.gov). If you have
set up your firm for the sole purpose of
receiving sales commissions and have no
associates or trust monies, then you are
not required to declare yourself broker-in-
charge.
If you hire a provisional broker to
work at your firm, you must actively
supervise him or her. Therefore, you
must provide a work space from which
the provisional broker can conduct his
or her business under your supervision.
If you hire a full broker to work at your
firm, the full broker may conduct his or
her business from any location provid-ed,
however, make sure that they deliver
to you all agency agreements, transac-tion
documents and trust monies in a
timely manner. Full brokers must visit
or at least communicate with their cor-porate
offices on a regular basis to in-quire
about mail, because the Commis-sion
corresponds with active licensees at
their business addresses. Make sure that
any broker you hire has a current, active
license.
As a broker-in-charge, you will be
responsible for assuring that every bro-ker
associated with your firm completes
eight (8) hours of continuing education
by June 10 of each year and renews his or
her license by June 30 of each year. Bro-kers
who allow their licenses to expire or
become inactive must cease all real estate
brokerage activities immediately.
The only trade or business forms pro-vided
by the Real Estate Commission
are the Residential Property Disclosure
Statement and the Working With Real
Estate Agents brochure. All other forms
are available through the North Caro-lina
Association of REALTORS®. If you
are not a member of NCAR, you may
contact the North Carolina Bar Asso-ciation
for any forms they have jointly-created
or consult an attorney to draft
any documents that you need.
By Stephen L. Fussell, Senior Consumer Protection Officer
Real Estate Bulletin February 2013 11
How To Order:
Online: www.ncrec.gov
Mail: NC Real Estate Commission, ATTN: Publications,
P. O. Box 17100, Raleigh, NC 27619-7100
Fax: 1-919-877-4227
This form for free
publications only.
Free Publications Quantity
Questions and Answers on:
Fair Housing
Tenant Security Deposits
Condos and Townhouses
Residential Subdivisions and Planned
Communities
Purchasing Coastal Real Estate
in North Carolina
Renting Residential Real Estate
Trato Con Agentes de Bienes Raíces
(Working With Real Estate Agents)
Preguntas y Respuestas sobre:
(Questions and Answers On:)
Vivienda Justa (Fair Housing)
El Depósito de Seguridad del
Inquilino (Tenant Security Deposits)
Alquiler de Inmuebles para
Viviendo (Renting Residential Real Estate)
Real Estate Licensing in North Carolina
(Contains license application)
Residential Property Disclosure
Statement (Available online)
NAME _____________________________________
ADDRESS __________________________________
CITY/STATE/ZIP _____________________________
Telephone______________Email_______________
Please allow 7 days from
receipt of order for delivery.
How To Order:
Mail or fax this form. Credit card: MasterCard or Visa only. Please
do not remit cash.
Online: www.ncrec.gov
Select Publications on the Home page.
Fax: 1-866-833-5785
Mail to: Commission Publications, P. O. Box 28151,
Raleigh, NC 27611
This form for purchasing
publications only.
NAME_________________________________________________
ADDRESS______________________________________________
CITY/STATE/ZIP_________________________________________
NAME_________________________________________________
ADDRESS______________________________________________
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Credit card orders must be a minimum of $1.00.
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Please allow 7 days from receipt of payment for delivery.
MasterCard Visa
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Purchase Publications Quantity Totals
Residential Square Footage
Guidelines
($.65 per copy) $
Working With Real Estate Agents
($.25 per copy) $
Questions and Answers on:
Home Inspections
($.25 per copy) $
Earnest Money Deposts
($.25 per copy) $
Real Estate Closings
($.25 per copy) $
Offer and Acceptance
($.25 per copy) $
Owning Vacation Rental
Property
($.25 per copy) $
Broker-in-Charge Guide
($10 per copy) $
North Carolina Real Estate
License Law and Commission
Rules (Being updated; see book on
Commission’s Web site.) $
Real Estate Agent Safety Guide
($.25 per copy) $
Amount Enclosed $
Billing address if different from shipping address
Security Code
3-digit code on card back
12 Real Estate Bulletin February 2013
2013-2014 Edition
NORTH CAROLINA REAL ESTATE MANUAL
The North Carolina Real Estate Manual, published by the Real Estate Commission, is a
comprehensive reference addressing real estate law and brokerage practice, the North Carolina
Real Estate License Law and Commission rules. It serves as the authorized textbook for the
real estate broker postlicensing courses and is highly recommended for licensees, attorneys,
instructors and anyone else engaged or interested in real estate law and brokerage practice.
The 1,021-page, 2013-2014 edition includes coverage of new laws and rules on broker
price opinions and comparative market analyses, mechanics’ liens and commercial real estate
broker liens, as well as coverage of significant revisions to standard forms.
The files on the Web site and on disk are “READ ONLY” and may not be printed or changed.
Mailing address:
North Carolina Real Estate Manual
P. O. BOx 28151
Raleigh, NC 27611
eMail:
manual@cesmail.com
Fax:
1-866-867-3746
CustoMer serviCe:
1-866-833-5785
Order Form
NORTH CAROLINA REAL ESTATE MANUAL
NAME
ADDRESS
CITY/STATE/ZIP
Telephone Email
NAME
ADDRESS
CITY/STATE/ZIP
Signature:
MasterCard Visa
QUANTITY ITEM PRICE* TOTAL
Single Manual $49.00* $___________
Additional Manuals (on same order) $44.00* $___________
Manual on CD-ROM $20.00* $___________
Manual-on-Web Subscription
(Access free up to 5x; register on Web site) $20.00* $___________
*All prices include taxes, shipping and handling.
Also
available in
digital form:
The Real Estate Manual on
CD-ROM provides digital,
searchable files in Portable Doc-ument
File format (PDF) which can be read
by free Acrobat Readers across all platforms.
Online subscriptions
permit online access to
the Manual and expire
upon publication of a new edition projected
for late 2014. (Users of older computers may
prefer the CD-ROM for faster load times).
CD-ROM ONLINE
SUBSCRIPTION
TO ORDER: Online at the Commision’s Web site, by mail, or fax. Credit cards accepted are MasterCard and Visa.
Shipping Address (NOT P.O. BOX)
Free access to Manual on Web site up to 5X. Register on Web site.
Please allow 7 days from receipt of payment for delivery.
Exp Date Security Code
(3-digit code on
reverse side of card)
MasterCard/Visa Billing Address (if different from Shipping Address)
NORTH CAROLINA
REAL ESTATE MANUAL
2013-2014 Edition
Patrick K. Hetrick Larry A. Outlaw Patricia A. Moylan
Published By The North Carolina Real Estate Commission
Hetrick
Outlaw
Moylan
2013-2014
Edition
ISBN 978-0-9704907-7-3
North Carolina
Real Estate Manual
North Carolina
Real Estate Manual
2013-2014 Edition
©2013 North
Carolina Real Estate
Commission
ISBN 978-0-9704907-8-0
North Carolina
Real Estate Commission
P. O. Box 17100
Raleigh, NC 27619-7100
www.ncrec.gov
Real Estate Bulletin February 2013 13
Penalties for violations of the Real Estate License Law and Commission
rules vary depending upon the particular facts and circumstances
present in each case. Due to space limitations in the Bulletin, a complete
description of such facts cannot be reported in the following Disciplinary
Action summaries.
D isciplinary
A ction
Write
License
Your
Number
On All
Contracts
Disclosures
and
(Continued)
TONY J. ALEXANDER (Char-lotte)
– By Consent, the Commission
revoked the broker license of Mr. Al-exander
effective February 1, 2013.
The Commission found that Mr. Al-exander,
as qualifying broker and bro-ker-
in-charge of a real estate broker-age
firm, failed to maintain the firm’s
trust account records in compliance
with Commission rules, failed to per-form
reconciliations and had a nega-tive
bank balance in the firm’s trust
account. The Commission also found
that Mr. Alexander failed to remit
owner proceeds and tenant security
deposits, sent multiple NSF checks to
parties, and allowed unlicensed indi-viduals
to perform property manage-ment
without supervision.
DENNIS L. BEAN (Camden)
– The Commission accepted the vol-untary
surrender of the broker license
of Mr. Bean for a period of one year
effective January 10, 2013. The Com-mission
dismissed without prejudice
allegations that Mr. Bean violated pro-visions
of the Real Estate License Law
and Commission rules. Mr. Bean nei-ther
admitted nor denied misconduct.
JEFFREY M. BUCHANAN
(Charlotte) – By Consent, the Com-mission
revoked the broker license
of Mr. Buchanan effective January
10, 2013. The Commission found
that Mr. Buchanan, acting as qualify-ing
broker and broker-in-charge of a
real estate brokerage firm, engaged in
property management and failed to
make timely accountings or forward
rental proceeds to their landlord cli-ent.
The Commission also found that
Mr. Buchanan, after the landlord cli-ent
terminated his property manage-ment
agreement, failed to return ten-ant
security deposits or forward the
funds to the new property manage-ment
company, issued rental proceeds
checks to clients from an account not
designated as trust or escrow, and re-fused
to produce trust account and
transaction records upon the request
of a Commission representative.
LILLIE F. BYRD (Clinton) – By
Consent, the Commission suspended
the broker license of Ms. Byrd for a
period of six months effective De-cember
1, 2012. One month of the
suspension was active, ending De-cember
31, 2012. The Commission
found that Ms. Byrd owns a residen-tial
property which she advertised
for rent; that a potential tenant, an
African-American woman, inquired
about renting the property for a short
time and was informed that the prop-erty
was already rented and unavail-able;
that immediately thereafter an
individual of Caucasian race inquired
about the status of the property, and
Ms. Byrd advised the individual that
it was available for rent and arranged
to show the individual the home. The
Commission also found that the Af-rican-
American woman believed that
she was discriminated against because
of race, that Ms. Byrd contended that
her decision to deny the rental to the
African-American woman was due to
the undesirable, short term of the re-quested
tenancy, and that Ms. Byrd
and the African-American woman
reached a conciliatory agreement
through the North Carolina Human
Relations Commission, without either
party admitting any wrongdoing.
CAROLINA COUNTRY RE-ALTY,
INC. (Fairview) – By Consent,
the Commission revoked the firm li-cense
of Carolina Country effective
November 14, 2012. The Commis-sion
found that Carolina Country’s
trust accounts were in substantial
noncompliance with Commission
rules and that client funds from the
trust accounts were misappropriated
for the personal benefit of a principal
of the firm.
ROBIN M. CRABEL (Littleton) –
By Consent, the Commission revoked
the broker license of Ms. Crabel effec-tive
January 1, 2013. The Commis-sion
found that Ms. Crabel, acting
as broker-in-charge of a real estate
brokerage firm, used trust monies for
personal expenses and collected insur-ance
premiums from vacation tenants
without actually purchasing the insur-ance
as represented.
CROWN REALTY GROUP, LLC
(Charlotte) - By Consent, the Com-mission
revoked the firm license of
Crown Realty Group effective Janu-ary
10, 2013. The Commission found
14 Real Estate Bulletin February 2013
Licensees Must
Report Convictions
Commission Rule A.0113
requires any licensee who is
convicted of a misdemeanor or
felony or who has disciplinary
action taken against him or her
by any occupational licensing
board to file a report with the
Real Estate Commission.
The reporting requirement
includes convictions for driving
while impaired (“DWI”). The
report must be filed within sixty
(60) days of the final judgment
or board action.
If you have questions about
this rule, please call the Commis-sion’s
Legal Division at 919-875-
3700 for more information.
(Continued)
that Crown Realty Group, a real estate
brokerage firm engaged in property
management, failed to make timely
accountings or forward rental pro-ceeds
to its landlord client. The Com-mission
also found that Crown Realty
Group, after the landlord client ter-minated
their property management
agreement, failed to return tenant se-curity
deposits or forward the funds to
the new property management com-pany,
issued rental proceeds checks to
clients from an account not designat-ed
as trust or escrow, and refused to
produce trust account and transaction
records upon the request of a Com-mission
representative.
GREENPOINT REALTY, LLC
(Charlotte) - By Consent, the Com-mission
revoked the firm license of
Greenpoint Realty effective February
1, 2013. The Commission found that
Greenpoint Realty failed to maintain
the firm’s trust account records in
compliance with Commission rules,
failed to perform reconciliation and
had a negative bank balance in the
firm’s trust account. The Commission
also found that Greenpoint Realty
failed to remit owner proceeds and
tenant security deposits, sent multiple
NSF checks to parties, and allowed
unlicensed individuals to perform
property management without super-vision.
SANDI MICHELLE KEHOE
(Jacksonville) – By Consent, the Com-mission
revoked the broker license of
Ms. Kehoe effective December 12,
2012. The Commission found that
Ms. Kehoe, while representing various
clients as a listing agent, forged the
signatures on at least two listing agree-ment
extensions without the knowl-edge
or consent of her seller-clients
and continued to market the proper-ties
following the actual expiration of
the listings. The Commission noted
that no monetary damage was caused
by Ms. Kehoe’s conduct.
JO ANNE RILEY LOMBAR-DO
(Greensboro) – By Consent, the
Commission suspended the broker li-cense
of Ms. Lombardo for a period
of nine months effective December
1, 2012. Three months of the suspen-sion
were active with the remainder
stayed for a probationary period of six
months. The Commission found that
Ms. Lombardo, acting as listing agent
for the sale of a condominium unit,
failed to discover and disclose that the
North Carolina Department of Trans-portation
planned to build a freeway
within several feet of the property
with no plans for a buffer wall and
that the property would lose trees and
overflow parking to the freeway proj-ect.
The Commission also found that
the buyer, after closing, learned that
the property would soon be affected
by the construction of the six-lane
“Urban Loop” Freeway.
DONALD MORROW (Kure
Beach) – By Consent, the Commis-sion
suspended the broker license of
Mr. Morrow for a period of one year
effective August 1, 2012. The Com-mission
found that Mr. Morrow en-gaged
in real estate investment with
an unlicensed individual through
entering into contracts for the sale of
property with no earnest money de-posits,
then assigning the contracts to
purchasers for a fee. The Commission
also found that Mr. Morrow identified
his unlicensed LLC as listing agent on
a contract even though he had never
entered into a listing agreement with
the seller and listed himself as selling
agent on another form although he
had no buyer agency agreement with
the buyer. The Commission finally
found Mr. Morrow is not a licensed
attorney but prepared legal filings for
sellers including letters of administra-tion
and a surety bond.
ON LAKE GASTON ASSOCI-ATES,
INC. (Littleton) - By Consent,
the Commission revoked the firm
license of On Lake Gaston Associ-ates
effective February 1, 2013. The
Commission found that the broker-in-
charge of On Lake Gaston Asso-ciates
used trust monies for personal
expenses and collected insurance pre-miums
from vacation tenants without
actually purchasing the insurance as
represented.
JOHN DUNCAN POWERS, JR.
(Fayetteville) – The Commission ac-cepted
the voluntary surrender of the
broker license of Mr. Powers for a pe-riod
of two years effective December
13, 2012. The Commission dismissed
without prejudice allegations that Mr.
Powers violated provisions of the Real
Estate License Law and Commission
rules. Mr. Powers neither admitted
nor denied misconduct.
DONNA BEAVER PRICE (Fay-etteville)
– By Consent, the Commis-sion
suspended the broker license of
Ms. Price for a period of two months
effective January 1, 2013. The Com-mission
found that Ms. Price main-tained
trust accounts she assumed af-ter
purchasing another firm and that
a Commission audit of the trust ac-counts
revealed a shortage in the rent-al
account, an overage in the security
deposit account, and a failure by Ms.
Price to reconcile monthly the bank
statements to the ledger or journal of
Real Estate Bulletin February 2013 15
(Continued)
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the rental account. The Commission
also found that Ms. Price was manag-ing
rental properties without written
agreements with the owners and was
managing a homeowners’ association
without a written agreement, instead
using the authority to manage the
properties and the homeowners’ asso-ciation
granted to the former firm that
she acquired.
ALFRED SAMUELS (Hunters-ville)
– By Consent, the Commis-sion
permanently revoked the broker
license of Mr. Samuels effective De-cember
12, 2012. The Commission
found that Mr. Samuels, who was
also licensed as a mortgage broker by
the North Carolina Commissioner
of Banks, participated in a series of
transactions between 2005 and 2008
in which he acted as a promoter and
mortgage broker in a scheme with a
builder to sell houses by offering hid-den
kickbacks to buyers and promot-ers
who recruited buyers. The Com-mission
further found that Mr. Samu-els,
in February 2012, pled guilty to
a Bill of Information in the United
States District Court to conspiracy to
commit mortgage fraud and money
laundering conspiracy.
CAROL A. SCHAUBERT (Hick-ory)
– By Consent, the Commis-sion
suspended the broker license of
Ms. Schaubert for a period of three
years effective October 1, 2012. One
month of the suspension was active
with the remainder stayed for a pro-bationary
period ending October 31,
2017. The Commission found that
Ms. Schaubert, when visiting a client
at the client’s home, removed medica-tion
prescribed for the client by the
client’s doctor and consumed some of
the medication. The Commission also
found that Ms. Schaubert was charged
in district court with and pled guilty
to one count of misdemeanor larceny;
that Ms. Schaubert was ordered to
complete 16 hours of drug and alco-hol
education courses of the NC Sub-stance
Abuse Services; and that Ms.
Schaubert received a deferred prosecu-tion
with the criminal charges to be
dismissed with the completion of the
required terms.
SUSAN D. SEAY (Kitty Hawk) –
The Commission accepted the volun-tary
surrender of the broker license of
Ms. Seay for a period of two years ef-fective
November 1, 2012. The Com-mission
dismissed without prejudice
allegations that Ms. Seay violated pro-visions
of the Real Estate License Law
and Commission rules. Ms. Seay nei-ther
admitted nor denied misconduct.
STEPHEN M. SERVAIS (Fair-view)
– By Consent, the Commis-sion
revoked the broker license of Mr.
Servais effective November 14, 2012.
The Commission found that Mr. Ser-vais’s
trust accounts were in substan-tial
noncompliance with Commission
rules and that Mr. Servais paid various
personal expenses and otherwise mis-appropriated
trust funds for his per-sonal
benefit.
SHANTA SETTY (Clemmons)
– By Consent, the Commission sus-pended
the broker license of Ms. Setty
for a period of three months effec-tive
January 1, 2013. The Commis-sion
then stayed the suspension upon
certain conditions. The Commission
found that Ms. Setty listed and sold
lots in a subdivision and failed to pro-vide
purchasers with the subdivision
street disclosure statement required by
law, which would have disclosed that
the streets had not been accepted to
be maintained by the North Carolina
Department of Transportation (NC-DOT).
The Commission noted that a
Home Owners Association of the sub-division
now has responsibility for the
subdivision roads, but has applied to
the NCDOT to dedicate the roads to
the state and have the state maintain
said roads.
ARTHUR SKILLMAN, III (Fay-etteville)
– The Commission suspend-ed
the broker license of Mr. Skillman
for 24 months effective December 1,
2011. The Commission found that
Mr. Skillman told a prospective buyer
that Mr. Skillman would use the buy-er’s
money to acquire real property for
the buyer, but did not use the money
to acquire real property; that Mr. Skill-man
failed to account to the buyer for
the money; that Mr. Skillman failed to
account to the buyer in two real estate
transactions for the money received
from the buyer to purchase real prop-erty
and failed to communicate with
the buyer about the progress and out-comes
of the transactions Mr. Skill-man
undertook in the buyer’s behalf;
and that Mr. Skillman failed to make
his trust account records available for
inspection by the Commission and
failed to respond to Commission cor-respondence.
SOUTHEASTERN PROPERTY
MANGEMENT, INC. (Reidsville)
– By Consent, the Commission rep-rimanded
Southeastern Property
Management effective September 1,
2012. The Commission found that
the Southeastern Property Manage-ment
engaged in deficit spending in
the amount of $14,600 out of liabili-ties
of $35,000. The Commission also
found that the firm’d checks failed
to consistently identify the purpose
of the disbursements or reference to
property/owner ledgers and in their
journals. The Commission noted that
16 Real Estate Bulletin February 2013
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North Carolina Real
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P. O. Box 17100
Raleigh, NC 27619-7100
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Southeastern Property Management
has refunded the accounts and has
instituted procedures to bar deficit
spending.
BENJAMIN JOHN VILOSKI
(Oak Island) – The Commission per-manently
revoked the broker license
of Mr. Viloski effective December
13, 2012. The Commission found
that Mr. Viloski, who was also a li-censed
North Carolina attorney, was
convicted in a U.S. District Court of
New York of nine out of 20 criminal
charges and was later sentenced and
ordered committed to federal prison
to serve 60 months of imprisonment
per guilty count, to be served concur-rently.
The Commission also found
that the North Carolina State Bar en-tered
an Order of Disbarment against
Mr. Viloski after Mr. Viloski admit-ted
in writing to allegations made in
a Civil Complaint against him by the
North Carolina State Bar.
JACQUELINE W. WORSHAM
(Greensboro) – By Consent, the
Commission reprimanded Ms. Wor-sham
effective November 14, 2012.
The Commission found that Ms.
Worsham, acting as broker-in-charge
of a property management firm, failed
to supervise agents and maintain trust
accounts in compliance with Com-mission
rules. The Commission also
found that the firm, without Ms. Wor-sham’s
knowledge, charged numerous
clients inflated fees by altering or in-creasing
the amount billed on mainte-nance
invoices for work performed on
client rental properties, and that the
inflated or altered invoices were billed
to clients without their knowledge or
permission.