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 7 • F e b r u a r y 2 0 1 7 • N u m b e r 3
NORTRTH CACARAROROLINANA REREREALAL ESTATATATATE COMMISSION
ESSE QUAUAMAM VIDERI
In This Issue
Education Rules................................1
Patrice Willetts Appointed..............1
Corean Hamlin E&L Director............1
Check Occupancy Limits.............. 4
Reconcile Accounts Monthly......... 5
Criminal Background Checks....... 6
RESPA, Referrals, You.......................7
Education Rule Diagrams............ 8
Carolinas’ Border Re-Survey........... 9
Disciplinary Actions......................12
Patrice Willetts
Appointed
To Commission
Patrice Willetts of Wilmington was
appointed to the North Carolina Real
Estate Commission
on October 12, 2016
by then Governor
Pat McCrory for a
term ending July 31,
2018.
Willetts succeeds Everett “Vic”
Knight of Raleigh.
A broker with The Property Shop of
the Carolinas in Wilmington, Willetts,
formerly from New York and with 30
years of experience as a REALTOR®, is
Commission Members
Reappointed
In October 2016, then Governor
Pat McCrory reappointed three mem-bers
of the Commision for terms end-ing
July 31, 2019: George Bell, Chair,
of Winston-Salem; Leonard H. “Tony”
Craver, Jr., of Durham; and Anna Greg-ory
Wagoner of Winston-Salem.
At its January 2017 meeting, the Commission adopted the proposed edu-cation
reform rules. Under this rulemaking action, the 94 education rules
found in Subchapters C and E will be repealed and replaced by 36 newly ad-opted
rules located in the new Subchapter H - Real Estate Education. Subject
to the Rules Review Commission’s approval, this rulemaking action will be
effective July 1, 2017.
Corean Hamlin Named
Education and Licensing Director
Commission Education Rules Simplified;
New Subchapter H Effective July 1
By Melissa A. Vuotto, Rulemaking Coordinator
The Commission’s primary intent of
this rulemaking action is to eliminate re-dundant
rules, create a unified subchap-ter
for all educators, and incorporate
many of the Commission’s Instructor
Development and Improvement Task
Force recommendations.
The new rules are grouped into four
sections within Subchapter H:
• Section .0100 – General/ Defini-tions
rule;
• Section .0200 – Real Estate Schools;
• Section .0300 – Approved Instruc-tors;
and
• Section .0400 – Continuing Educa-tion.
By streamlining the education rules,
it is the Commission’s goal to improve
the understanding each rule, ease the
process of searching for a particular
rule, and increase the quality of real es-tate
education in North Carolina.
Thank you to all who attended the
public hearing on December 13, 2016,
The proposed education re-form
rules may be reviewed on the
Commission’s website: https://www.
ncrec.gov/Pdfs/Rules/Education_
Reform_Rulemaking_Post.pdf.
Diagrams of the organization of
the current and reformed rules ap-pear
on page 8 of this Bulletin.
Corean E. Hamlin has been named
Director of Education and Licensing for
the Commission, ef-fective
December 14,
2016.
Hamlin joined the
Commission as Edu-cation
and Licensing
Officer in 2014.
Hamlin holds a Master’s Degree
from UNC-Greensboro and the Distin-guished
Real Estate Instructor (DREI)
designation from the Real Estate Educa-tors
Association.
After a decade as a professional edu-cator
in other industries, Hamlin en-tered
the real estate business, joining her
family’s Asheville-based real estate firm
as a residential sales broker in 2003.
From 2007-2014, Hamlin served as
Instructor, Education Director, and
Communication Director for the Ashe-ville
Board of Realtors®. She taught real
estate prelicensing, postlicensing, and
continuing education courses at Cumb-ie
and Trull School of Real Estate from
2010-2014.
The primary responsibility of the
Director of Education and Licensing
is to plan and direct the Commission’s
education, examination, and licensing
programs and operations statewide.
(See Education, page 3)
(See Willetts, page 3)
2 Real Estate Bulletin February 2017
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
Roy Cooper, Governor
COMMISSION MEMBERS
George Bell, Chairman Winston-Salem
Robert J. Ramseur, Jr., Vice Chairman Raleigh
Cindy S. Chandler Charlotte
Leonard H. “Tony” Craver, Jr. Durham
Judy F. Greenhill Hickory
Thomas R. Lawing, Jr. Charlotte
James Sherrill Fayetteville
Anna Gregory Wagoner Winston-Salem
Patrice Willetts Wilmington
EXECUTIVE
Miriam J. Baer Executive Director
Paula L. Ricard Chief Financial Officer
ADMINISTRATION
Wendy C. Harper Human Resource/Office Manager
Jake A. Gore Chief Technology Officer
Robert L. Forshaw Publications Officer
EDUCATION AND LICENSING
Corean E. Hamlin Director
Deborah B. Carpenter Education/Examination Officer
Brenda Hollings Information Services Officer
Patricia A. Moylan Legal Education Officer
Pamela R. Rorie Continuing Education Officer
Matthew A. Wentz License Application Analyst
REGULATORY AFFAIRS
Janet B. Thoren Director, Legal Counsel
Charlene D. Moody Assistant Director, Legal Counsel
Frederick A. Moreno Deputy Legal Counsel
Robert A. Patchett Associate Legal Counsel I
Michael B. Gray Chief Auditor/Investigator
D. Scott Schiller Financial Fraud Investigator
Bart H. Allen Sr. Auditor/Investigator
M. Spier Holloman Sr. Auditor/Investigator
Marcia M. Waldron Auditor/Investigator
Jamila G. Wilson-Davis Auditor/Investigator
Jean A. Wolinski-Hobbs Auditor/Investigator
Stephen L. Fussell Sr. Consumer Protection Officer
Sarah E. Herman Consumer Protection Officer
Glenn M. Wylie Consumer Protection Officer
Peter B. Myers Information Officer
Elizabeth W. Penney Information Officer
Melissa A. Vuotto Rulemaking Coordinator
Editor-In-Chief
Miriam J. Baer
Editor
Robert L. Forshaw
S taff U pdate
Appearances
People
Miriam J. Baer, Executive Director,
spoke to the Triangle Chapter of the Na-tional
Association of Residential Proper-ty
Managers and the Risk Management
Committee of NC REALTORS®.
Janet B. Thoren, Director, Regulatory
Affairs Division and Legal Counsel, spoke
to the Annual Business and and General
Membership Meeting of the Outer Banks
Association of REALTORS®.
Frederick A. Moreno, Deputy Le-gal
Counsel, spoke to the Greenville-
Pitt Association of REALTORS®.
Sarah E. Herman, Consumer Pro-tection
Officer, spoke to the Allen Tate
Company in Charlotte.
Glenn W. Wylie, Consumer Pro-tection
Officer, spoke at the Property
Management Seminar and to the gen-eral
membership of the Fayetteville Re-gional
Association of REALTORS®.
Peter B. Myers, Information Of-ficer,
spoke to the Albemarle Area As-sociation
of REALTORS®, Century 21
Patriot in Fayettetille, the Cleveland
County Association of REALTORS®,
the Greensboro Regional REALTOR®
Association, the Harnett Council of
REALTORS®, Trademark Residential in
Raleigh, and Weichert REALTORS® -
Team Metro in Hickory.
Elizabeth W. Penney, Information
Officer, spoke to the Central Carolina
Association of REALTORS®.
Miriam Baer Elected ARELLO® President
Miriam J. Baer, Executive Director of the Commission, has been
elected President of the Association of Real Estate License Law Officials
(ARELLO® for a one-year term beginning in January
2017.
ARELLO® is an international organization dedicated
to promoting better administration and enforcement of
real estate license and regulatory laws by its members.
During her 29 years with the Commission, Baer held
numerous positions with ARELLO®, including Senior District Vice Presi-dent,
member of the Board of Directors, and Chair of various committees.
ARELLO® membership is organized into five districts with four com-prised
of the 50 states, U.S. territories, Bahamas and Bermuda, and
Canadian provinces and one of members from Europe, Africa, Asia, Aus-tralia,
and the Far East.
Working committees, the Board of Directors, and the Executive Com-mittee
carry out the organization’s mission to support jurisdictions in the
administration and enforcement of real estate license laws and to pro-mote
excellence in real estate regulation.
Baer is the fifth person affiliated with the Commission to serve as
President of ARELLO®. Mary Frances Whitley, former Director of Admin-istration,
served as President in 2007; Phillip T. Fisher, former Executive
Director, in 1991; A. P. “Red” Carlton, former Commission member and
Chair, in 1985; and Joseph Schweidler, Commission Secretary-Trea-surer,
in 1972.
Real Estate Bulletin February 2017 3
February 15-16
March 15-16
April 12-13
May 10-11
June 14-15
All meetings, unless otherwise noted, begin
at 9:00 a.m. and are held in Raleigh in the
Commission’s Conference Room at 1313 Navaho
Drive (27609). Occasionally, circumstances
necessitate changes in meeting times and
locations. C alendar
C ommission
Broker-in-Charge and
Basic Trust Account Procedures Courses
Register online at the Commission Web site, www.ncrec.gov,
under Education/Course Registration.
Broker-in-Charge Course
(Two days) Day 1: 1 - 5 p.m.; Day 2: 8:30 a.m. - 5:30 p.m.
Asheville Western Carolina University
Biltmore Park
February 21-22
May 16-17
Kannapolis NC Research Campus, Kannapolis
March 1-2
April 18-19
May 22-23
Greensboro Deep River Event Center April 5-6
Raleigh McKimmon Center
February 13-14
March 21-22
May 3-4
June 5-6
Wilmington Best Western Coastline Center May 8-9
Basic Trust Account Procedures
(Commission Offices, Raleigh)
(All classes 1 - 5 p.m.)
Raleigh
Commission Offices
1313 Navaho Drive, Raleigh
February 13
April 10
June 7
See Commission Web site to confirm course dates.
a former president of the Wilmington
Regional Association of REALTORS®
and the North Carolina Association of
REALTORS®.
She has been a member of the
Wilmington Board of Adjustment and
currently serves on the City of Wilm-ington/
UNCW Community Relations
Task Force.
Willetts is an approved instruc-tor
for the North Carolina Real Estate
Commission and for the National As-sociation
of REALTORS®.
A past president of the Wilming-ton
Rotary Club, she was active with
the Honor Flight program that works
to take WWII Veterans to Washing-ton,
DC, to visit their memorial and
Paws4people, which provides service
dogs to veterans and children with med-ical
needs.
The North Carolina Real Estate
Commission is responsible for the regu-lation
of approximately 100,000 real
estate brokers and and firms in the state.
and submitted written comments. The
Commission considered comments and
rule revisions at its meeting on January
18, 2017. Revisions are indicated at
www.ncrec.gov under ‘Licensing Law
and Rule Changes.’ If you would like to
receive notifications of any rulemaking
proceeding, you can sign up at www.
ncrec.gov/Home/Subscribe or by con-tacting
Melissa A. Vuotto, Commission
Rulemaking Coordinator.
Willetts
(Continued from page 1)
Education
(Continued from page 1)
Follow us on
4 Real Estate Bulletin February 2017
Each year, the Commission
receives numerous com-plaints
related to various
types of misrepresentation
by brokers. One common type of mis-representation
involves overstating the
number of bedrooms or allowed occu-pancy
limits of properties, whether they
are being advertised for sale or for rent.
Either way, a broker’s advertisement
must NOT overstate or exceed
the allowed limits and design
parameters of the property’s
sewage disposal system or oc-cupancy
permitted by the local
municipality. In other words, be
sure to check the limits imposed by
the septic permit, specifically the num-ber
of bedrooms the septic permit al-lows,
and occupancy limits of the local
municipality.
When residential properties are built
and served by on-site septic systems, the
local permit department typically evalu-ates
the site and determines the maxi-mum
number of bedrooms allowed
based on the design of the system and
the land’s ability to percolate waste-water
into the ground. That’s why the
evaluation was historically referred to as
a “perc” test. The results of the test de-termine
the maximum number of bed-rooms
allowed on the site.
Brokers must be aware of both bed-room
and occupancy limitations in the
sale, resale, and rental of properties
with on-site sewage disposal systems.
The Real Estate Commission expects all
brokers to possess the skills and knowl-edge
to accurately represent facts about
such properties regarding the number of
bedrooms and/or maximum occupan-cy.
The septic permit generally can be
checked by making a phone call to the
local permit department or by check-ing
the department’s website. Checking
the permit is especially important when
there has been an addition or remodel
to the property to increase the original
number of bedrooms. A broker should
not assume permits were issued for
the construction.
If the actual
n u m b e r
of bed-rooms
in the property exceeds the num-ber
of bedrooms allowed on the septic
permit, the listing broker may NOT
represent the dwelling as having any
more bedrooms than are indicated on
the septic permit, even if there is a dis-claimer
made.
Many municipalities have occupan-cy
limits for residential dwellings. For
properties being advertised for rent, the
occupancy level is generally calculated
by multiplying the number of bedrooms
on the septic permit by two, based on
a maximum of two occupants per bed-room.
The maximum is, of course, cal-culated
regardless of the actual number
of beds the landlord might have set up
inside the dwelling. Therefore, claiming
a three-bedroom property “sleeps 12”
because it has six sets of bunk beds is a
misrepresentation if the local municipal-ity
limits occupancy to two persons per
bedroom. If the licensee overstates the
maximum occupancy in a rental home,
the tenants might over-occupy the dwell-ing
and overload the septic system, caus-ing
the system to fail. Such system fail-ure
could result in not only the contami-nation
of surrounding groundwater but
also the potential condemnation of the
property, not to mention costly repairs
that would have to be made
by the property owner.
Brokers must take rea-sonable
steps to discover and
disclose material facts and to
ensure everything being adver-tised
is correct, including the sep-tic
information. That means check-ing
the number of bedrooms on the
permit and calculating the maximum
occupancy based municipality require-ments.
Buyer’s agents should also be
alert to problems and red flags related
to the septic system and septic permit,
and whether the imposed limits match
the actual number of bedrooms in the
dwelling. It might be necessary for the
buyer’s agent to verify the information
advertised by the listing agent, and to
therefore potentially alert the buyer cli-ent
of problems.
In some cases, the permit depart-ment
might not keep records perma-nently
or the records might not be
available for other reasons. In that case,
it is reasonable to advertise based on the
existing number of bedrooms but with
the disclosure that the permit records
are not available and therefore certain
assumptions have been made by the
listing agent. Both listing and buyer
agents should be able to explain to their
clients the value of obtaining a septic
permit and what information such per-mits
provide. Disclosures must always
be made so that the potential buyer is
made aware of material facts before the
potential buyer makes an offer.
CAVEAT: Real Estate License Law
prohibits misrepresentation, omission,
or concealment of material facts; a course
of misrepresentation through false ad-vertising;
and improper, dishonest, or
fraudulent conduct. Willful or negligent
misrepresentation of the occupancy de-sign
limits of a property’s on-site sewage
disposal system violates the Real Estate
License Law and may result in disciplin-ary
action by the Commission.
Check Allowed Occupancy Limits
Before Advertising Property
By Peter B. Myers, Information Officer
Real Estate Bulletin February 2017 5
I f you keep any funds related
to a real estate transaction, an
easy way to make some peace
in your life is to reconcile your trust ac-count
records on a monthly basis.
While many see this as a daunting
task, once the process is set up and com-pleted
properly, it does not need to be
difficult or time consuming. However,
reconciling does need to be a priority.
There are so many seemingly mundane
tasks in our life that, if ignored, lead to
large and costly
problems. If
you don’t brush
your teeth, you
have pain and
costly dental
bills (or worse);
if you don’t ser-vice
your car,
the repairs can
be astronomi-cal;
if you don’t
balance (recon-cile)
your Trust
Account on a regular basis, the result
can be missing client/tenant funds, the
loss of your real estate license, and even
criminal charges.
So begin with the basics: Step 1 is
to reconcile your bank statement to
your Trust Account or your ‘Books’;
this might be your general ledger cash
account, your trust account journal, a
check register, or even your checkbook
for your trust account. Stated simply,
you are resolving differences between
the bank and your Books: errors (yours
or the bank’s), bank charges or inter-est
earned, and timing differences. To
minimize timing differences, always use
the bank statement ending date, ide-ally,
the last day of the month, as your
cut-off date for your Books. This is the
same process used to balance a personal
checkbook.
Always begin the process by marking
(or ‘ticking’) each cleared item either by
hand or using software. You can’t skip
this first step of checking each matching
item on your Books and each matching
item on your bank statement. All un-ticked
entries are your adjustments (i.e.,
your reconciling items). Post interest
as a monthly report card on the state of
your accounting records. With the pos-sible
exception of credit card processing
fee issues or large high volume firms, if
your bank reconciliation process is dif-ficult,
chances are good that improve-ments
are needed in your accounting.
Key Points
• The only way to ensure that a suffi-cient
balance of funds is on hand to
cover your client liability is to rec-oncile
on a monthly basis. Retain a
worksheet for
each monthly
r e c o n c i l i a -
tion showing
the balancing
of the Bank
Statement, the
Books (the cash
account), and
the Property
Trial Balance.
• While not an
NCREC re-quirement,
an
important best practice is to perform
this three way reconciliation within 48
hours of the receipt of your bank state-ment.
There will be fewer reconciling
items; errors and/or missing monies, if
any, will be identified quickly.
• For property management companies
handling vacation rentals, there is a
fourth step of reconciling the subsid-iary
ledgers to the property (or own-er)
ledgers.
• If you aren’t already performing this
reconciliation, start today. If you need
an extra incentive, just read ‘the back
of the Bulletin.’
• The broker in charge is responsible
for the safeguarding of trust monies.
While the reconciliation and book-keeping
can be delegated, the fidu-ciary
responsibility remains with the
BIC: remember, ‘The Buck Stops with
the BIC.’
• The Commission offers a Basic Trust
Account Procedures Course mul-tiple
times throughout the year; go
to www.ncrec.gov to view the class
schedule and register online.
earned, bank charges, and other recon-ciling
items to your Books, then adjust
the bank statement balance for bank
errors (if any). If all reconciling items
haves been addressed (and your begin-ning
bank balance was reconciled to the
Books), this formula will be correct:
Ending Bank Balance + Deposits
in Transit – Outstanding Checks =
Your Book Balance.
Once the bank statement has been
reconciled to the Books, you are ready for
step 2, which is balancing the reconciled
figures from Step 1 to the Property Trial
Balance (this is your client liability bal-ance).
The Property Trial Balance item-izes
whose funds you are holding; that is,
the monies being held in trust belonging
to other people. It is an accounting of
every dollar in the Trust Account by the
tenant or client; this is a critical report
since every dollar held in a Trust Account
needs to be identifiable by owner. The
Property Trial Balance is created by list-ing
of each of your property (or owner)
ledgers and their month-end balance (as-suming
month-end is the cut-off).
As long as reconciliations are being
performed monthly, it will be only the
current month’s transactions (or prior
period adjustments, if any) that need
to be reviewed to locate discrepancies.
If reconciliations have not been per-formed
in the past, the first reconcili-ation
could be a long process, but it is
essential to have this reconciliation on
file (as required by Real Estate Commis-sion
Rule A.0117 (e)).
If you want an easier – or even seam-less
– reconciliation, improve the record
keeping. Think of bank reconciliation
rec·on·cile: to make peace, adjust
Reconcile Trust Accounts
Mo n t h ly
By Marcia M. Waldron, Auditor/Investigator
6 Real Estate Bulletin February 2017
Diligent property managers of-ten
run criminal background
checks on prospective ten-ants
before allowing them to lease a
landlord’s property. In April 2016,
HUD issued guidance on how the Fair
Housing Act (“the Act”) impacts the use
of such a background check by all pro-viders
of housing, including property
managers. When designing a process
for screening tenants, it is important for
brokers to consider this guidance and
how the use of such background checks
might violate fair housing laws.
Before getting into the HUD guide-lines,
there are a few terms brokers
should recognize and understand. The
Act includes the following seven pro-tected
classes: race, color, religion, na-tional
origin, sex, disability, and familial
status. A landlord or property manager
may not discriminate against anyone
in one or more of the protected classes.
Another term, “disparate impact”, is of-ten
used in housing discrimination cas-es
and refers to a policy or practice that
is neutral on its face, but its application
actually has a discriminatory impact on
a protected class.
The use of a criminal background
check as part of a tenant screening
process seems to be a neutral process
as long as it is required of all potential
tenants, not just certain ones selected
by the landlord or property manager.
However, HUD has determined that
due to higher than average incarcera-tion
rates among certain races relative
to their percentage of the total popu-lation,
and when compared to incar-ceration
rates of other races, the use of
criminal background checks to deny
housing may actually cause a disparate
impact on certain races and therefore be
discriminatory.
What does all of this mean for a
landlord or property manager? First,
criminal background checks should
only be used for a non-discriminatory
business objective, and there cannot be
an alternative to the background check
that is less discriminatory. There should
be some evidence that the background
checks actually accomplish the goal.
Does a refusal to rent to individuals
with criminal convictions actually mean
fewer criminal acts or property destruc-tion
in the properties being managed? A
blanket prohibition against anyone with
any type criminal record likely would
not survive a charge of discrimination.
There are a couple of exceptions. The
Fair Housing Act specifically states that
landlords do not have to make housing
available to persons with convictions
for the manufacture or distribution of
controlled substances. Just remember,
though, other drug-related convictions
are not specifically exempt from fair
housing requirements. In addition,
project-based HUD subsidized proper-ties
must prohibit anyone subject to a
lifetime registration requirement under
a state government sex offender registra-tion
program.
For anything outside the excep-tions,
HUD suggests that landlords and
property managers should consider the
following factors when using criminal
background checks for prospective ten-ants:
• Do not consider charges or arrests that
did not result in conviction. Arrest
records should not be used as a basis
for denying an applicant for housing.
Such a record does not indicate that
the applicant actually engaged in any
criminal activity. Remember - inno-cent
until proven guilty.
• Do not have a blanket policy against
renting to anyone with any type
of criminal conviction. Explain to
landlord-clients the dangers of such a
policy and advise them to use a more
tailored approach.
• Consider the type of conviction.
Look at the nature and severity of each
conviction. A shoplifting conviction
should not carry the same weight in
a housing decision as a conviction
for distributing cocaine. While fish-ing
without a license is not good, an
applicant participating in that type
of activity will likely be a lesser risk
to residents and property than some-one
selling drugs, which often brings
more dangerous people and illegal
drugs into the neighborhood.
• Consider the timing of the convic-tion.
How long ago did the event
happen and how long ago was the
conviction? Research tends to show
that the likelihood that a person with
a prior criminal conviction will com-mit
another offense decreases over
time. HUD offers no insight into
how long might be a reasonable pe-riod
to consider, so consider a reason-able
amount of time that you feel you
can defend if challenged.
• Consider each offense individually.
Create an assessment plan that is fair
and takes into account mitigating fac-tors
such as the surrounding events,
the age of the individual at the time,
rehabilitation efforts, and the rental
history of the individual. In other
words, each instance should be re-viewed
on a case-by-case basis and
narrowly tailor any refusals.
As a property manager, you have a
duty to discuss these issues with your
landlord clients and create a program
that will help keep you and your clients
out of trouble and will allow all housing
applicants fair access to available hous-ing.
To see the HUD guidelines in full,
use the link below.
https://portal.hud.gov/hudportal/
documents/huddoc?id=HUD_OGC-GuidAppFHAStandCR.
pdf
HUD Issues Guidance on Use of Criminal Background Checks
By Janet B. Thoren, Legal Counsel
Real Estate Bulletin February 2017 7
A pest control company so-licits
real estate brokers to
join what they refer to as
a “Preferred Broker Pro-gram.”
Among other listed benefits of
becoming a Preferred Broker, the com-pany
offers all broker participants quar-terly
pest control services at their per-sonal
homes at no charge. In order to
receive the free pest control, the broker
must refer their buyer clients to the pest
control company for the completion of
lender-required pest inspections.
The question posed to the Commis-sion’s
legal staff was whether this type
of program is in violation of the Real
Estate Settlement Procedures Act (RE-SPA).
RESPA prohibits kickbacks and
unearned fees in any real estate transac-tion
involving a federally related mort-gage
loan. The kickback provision is
generally referred to as RESPA’s “Sec-tion
8.”
Section 8 prohibits anyone, in-cluding
real estate brokers, from “…
accept[ing] any fee, kickback, or thing
of value…” as “…part of, a real estate
settlement service involving a federally
related mortgage loan…” 12 U.S. Code
Chapter 27 § 2607(a).
A “thing of value” is any payment,
advance, funds, loan, service, or other
consideration with more than nominal
value.
“RESPA also defines the term “Set-tlement
service” as any service provided
in connection with a real estate settle-ment
for which the buyer or seller will
pay. These services include, but are not
limited to, the following:
• title searches,
• title examinations,
• the provision of title certificates,
• title insurance,
• services rendered by an attorney,
• the preparation of documents,
• property surveys,
• the rendering of credit reports or
appraisals,
• pest and fungus inspections,
• services rendered by a real estate
agent or broker,
• the origination of a federally relat-ed
mortgage loan (including, but
not limited to, the taking of loan
applications, loan processing, and
the underwriting and funding of
loans), and
• the handling of the processing,
and closing or settlement.
When a lender requires a buyer to
have a pest inspection as part of the loan
qualification process, the inspection is
considered a settlement service. On the
other hand, if a seller independently
chooses to have a pest inspection as part
of the listing process, and pays for that
service separately from the settlement
process, it is not related to the real es-tate
settlement and is not considered a
settlement service.
If a broker receives a quarterly pest
control from the pest control company
at no cost, a service that would typi-cally
have an associated cost, they have
received a “thing of value.” And if that
broker receives that thing of value for
referring a client to the pest control
company to do a lender-required pest
inspection, there is very likely a RESPA
violation.
Even if the broker is referring a cli-ent
to the pest control company for ser-vices
unrelated to a closing and there is
no apparent problem with RESPA, the
broker must fully disclose their arrange-ment
with the pest control company
to their client per Commission Rule A
.0109.
As you can see from the example
above, whether a referral is prohibited
under RESPA depends greatly on the
specific transaction. If you are con-fronted
with a business referral pro-gram,
use the following fill-in-the-blank
sentence as a test to determine whether
the program may be in violation of
RESPA: As part of this program, I will
receive _________, which will enrich or
benefit me or my firm, in exchange for re-ferring
clients to _________ for services
related to a real estate settlement. If you
can fill in these blanks, the safest course
is to consider the program a no-go.
RESPA
Referrals
You
By Sarah E. Herman
Consumer Protection Officer
...whether a referral is
prohibited under RESPA
depends greatly on the
specific transaction.
8 Real Estate Bulletin February 2017
Subchapter 58C
Prelicensing Education
C .0100
Schools
7 Rules
C .0200
Private Schools
20 Rules
C .0300
Pre/Post Courses
12 Rules
C .0600
Pre/Post Instructors
8 Rules
Current Education Rules
Subchapter 58E
Continuing Education
E .0100
Update Course
5 Rules
E .0200
Update Course
Instructors
6 Rules
E .0300
Elective
Courses
10 Rules
E .0400
General Sponsor
Requirements
11 Rules
E .0500
Course Operational
Requirements
15 Rules
Subchapter 58H
Real Estate Education
H .0100
General
1 Rule
Definitions
H .0200
Schools
15 Rules
Private Schools
Public Schools
Prelicensing
Courses
Postlicensing
Courses
H .0300
Instructors
6 Rules
Prelicensing
Instructors
Postlicensing
Instructors
Update Course
Instructors
H .0400
Continuing Education
14 Rules
Sponsors
Elective CE
Instructors
Elective CE
Courses
Update
Courses
Proposed Education Rules
Reorganization of Education Reform Rules
The 94 Commission rules relating to education in Subschapters C and E of
the Administrative Code are being replaced by 36 rules in a new Subchapter
H adopted by the Commission at its January meeting. The reform and reorga-nization
are subject to Rules Commission Review approval and, if approved,
take effect July 1, 2017. As shown in the lower diagram, the rules are grouped
under four sections: General, Schools, Instructors, and Continuing Education.
GENUP, BICUP Topics
Include Radon,
Property Management
Property management, radon,
and protecting confidential con-sumer
information are among
the topics for the General Update
Course (GENUP) and the Broker-in-
Charge Update Course (BI-CUP)
for the 2017-2018 license
year beginning July 1.
GENUP
Property Management –
changes in the Vacation Rental
Act and the Landlord/Tenant
statutes; HUD guidelines con-cerning
use of criminal records
in leasing; duties of a broker/
owner (“unintended property
manager”); and surcharges paid
to brokers on service/repairs.
Radon – in conjunction with
the North Carolina Radon Pro-gram
of the Department of Health
and Human Services (DHHS).
Protecting Confidential Con-sumer
Information – broker’s duty
to protect client/consumer confi-dential
information; identity theft;
scam alerts; use of email; Craig’s
List; etc.
License Law and Rule Updates
- application and reinstatement
fee increases and rules relating
to registering assumed names
and delivery of instruments, and
Consumer Finance Protection
Bureau updates including the
release of closing disclosures to
brokers.
BICUP
All GENUP topics plus three-way
trust account reconcilia-tion,
BIC duty to supervise, and
breaking issues and updates.
Real Estate Bulletin February 2017 9
NOTE: Much of the following in-formation
has been taken from a memo
from the Real Property Section of the NC
Bar Association and the NC Land Title
Association. The full memo is available
on the Bar Association’s website and may
be viewed at http://www.ncbar.org/me-dia/
727134/nc_sc_boundarymemono-vember2016.
pdf. In 1995, North and South Caro-lina
created a Joint Boundary
Commission to research and
tweak the 334-mile border between
them. The original border was estab-lished
in the 1700s, but over many de-cades,
the landmarks for the original
boundary have disappeared or become
corrupted. What people thought was
the state line in some counties wasn’t
the actual state line. People have devel-oped,
conveyed and improved proper-ties
based on an erroneous assumption
of the location of the legal boundary.
After 20 years of negotiations, sur-veys,
and research, the governments of the
two states reached an agreement about
where the state border lies. The bound-ary
has been re-surveyed based on histori-cal
monumentation and research back to
original colonial records. Effective Janu-ary
1, 2017, some parcels (or portions of
larger tracts) previously believed to be in
South Carolina are now confirmed to be
in North Carolina, and vice versa.
The re-survey could affect properties
in any of the counties along the NC/
SC boundary from Polk County east
(including a portion of Polk County).
Although some counties may not have
very many properties that show the line
incorrectly, a case-by-case determina-tion
will need to be made by an attorney
reviewing a property’s title.
A “Notice of Affected Parcel” based
on taxpayer listings has or will be record-ed
in the office of the Register of Deeds
of each county, along with the re-survey
maps. The Notice should contain certain
information concerning each parcel po-tentially
affected by the boundary certifi-cation,
including the following:
• The recording reference for the final
survey of the confirmed boundary.
• The names of the record owners of
the affected parcel.
• The property address of the affected
parcel.
• A tax parcel identification number
or other applicable identifier for the
affected parcel used by a county tax
office, if available.
• A brief description of the affected
parcel, if available.
The Notice should be indexed in the
names of all record owners of the af-fected
parcels (or at least the names of
the taxpayers identified in the county’s
property tax rolls).
Information regarding the sur-veys
is available on-line at the office
of the North Carolina Geodetic Sur-
North Carolina/South Carolina Boundary
Re-Surveyed Effective January 1, 2017
By Will Martin, NC REALTORS® Legal Counsel
vey at http://www.ncgs.state.nc.us/Pages/
County-and-State-Boundaries.aspx.
These surveys do not indicate owners
or tracts. They only show the location
of the monuments of the border found.
Surveyors will have access to these sur-veys
to be able to identify them on the
ground when they do a survey.
Broker Numbers
As of January 1, 2017, there are
98,681 brokers and firms licensed
by the Real Estate Commission in
the following categories:
Active Brokers 61,352
(Active Provisional Brokers 6,859)
Inactive Brokers 26,061
(Inactive Provisional Brokers 5,850)
Firms 11,268
Brokers-in-Charge 16,218
Heed this Advice About Surveys,
Titles, and Transaction Planning
Real estate brokers involved in the purchase or sale of property near the
NC/SC state line should advise
their clients to get a survey, or at
least some professional location
of their property in relation to the
state line, if there is any question
at all about whether the property
has been affected by the re-sur-vey.
Anyone involved with prop-erties
affected by the re-survey
should be sure to discuss title issues and the necessary certifications of title
in detail with professionals who are knowledgeable about the many legal is-sues
involved in these titles, whether the property is now all in North Carolina
or is still partially in South Carolina, or vice versa.
Planning for transactions involving affected properties should take place
much farther in advance than usual, as such transactions may require dual
title examinations, dual recordings, potential delays and very importantly may
affect TRID disclosures.
10 Real Estate Bulletin February 2017
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
N.C. Military Personnel Residential
Lease Termination
C o m m i s s i o n P u b l i c a t i o n s
How to Order:
ONLINE: www.ncrec.gov (Publications page)
FAX: 919-877-4227
MAIL: NC Real Estate Commission, ATTN: Publications,
P. O. Box 17100, Raleigh NC 27619-7100
NAME ______________________________________
ADDRESS ____________________________________
CITY/STATE/ZIP _______________________________
TELEPHONE_______________EMAIL_____________
Please allow 7 days from receipt of order for delivery.
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) $
Order form to PURCHASE Publications
Order form for FREE Publications
Purchase Publications Quantity Totals
Owning Vacation Rental Property
($.25 per copy) $
Broker-in-Charge Guide
($10 per copy) $
North Carolina Real Estate
License Law and Commission
Rules ($4 per copy) $
Real Estate Agent Safety Guide
($.25 per copy) $
Issues and Answers
($10 per copy) $
Amount Enclosed $
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.
Phone: 1-866-833-5785; Fax 1-919-833-4649
Mail to: Commission Publications, P. O. Box 28151,
Raleigh, NC 27611
NAME________________________________________________
ADDRESS_____________________________________________
CITY/STATE/ZIP________________________________________
TELEPHONE___________________EMAIL__________________
NAME_________________________________________________
ADDRESS______________________________________________
CITY/STATE/ZIP_________________________________________
TELEPHONE________________EMAIL_____________________
Billing address if different from shipping address
Credit card orders must be a minimum of $1.00.
Signature: __________________________________________
Please allow 7 days from receipt of payment for delivery.
MasterCard Visa
Security Code
3-digit code on card back
Exp Date
Free Publications Quantity
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 Vivienda
(Renting Residential Real Estate)
Real Estate Licensing in North Carolina
Residential Property
Disclosure Statement
Mineral and Oil and Gas Rights
Mandatory Disclosure Statement
Available
Online {
Real Estate Bulletin February 2017 11
2015-2016 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 2015-2016 edition covers a wide variety of topics including the new Mineral and Oil
and Gas form and portions of the new federal Loan Estimate and Closing Disclosure docu-ments
to replace the HUD-1 and GFE as well as coverage of 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 Discover
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. (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/Discover Billing Address (if different from Shipping Address)
NORTH CAROLINA
REAL ESTATE MANUAL
2015-2016 Edition
Patrick K. Hetrick Patricia A. Moylan Larry A. Outlaw
Published By The North Carolina Real Estate Commission
Hetrick
Moylan
Outlaw
2015-2016
Edition
ISBN 978-0-9704907-9-7
North Carolina
Real Estate Manual
North Carolina
Real Estate Manual
2015-2016 Edition
©2015 North Carolina
Real Estate Commission
ISBN 978-0-9864465-0-4
North Carolina
Real Estate Commission
P. O. Box 17100
Raleigh, NC 27619-7100
www.ncrec.gov
12 Real Estate Bulletin February 2017
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
Don’t Forget!
Write your real
estate broker
license number
on all agency
agreements.
Continued
JAMES MICHAEL BANKS (Raleigh)
– By Consent, the Commission reprimand-ed
Mr. Banks effective January 1, 2017. The
Commission found that Mr. Banks, acting
as the listing agent for the sale of a single-family
residence, represented to his buyer
that repairs were complete when the poten-tial
buyer discovered that repairs had not, in
fact, been made prior to closing.
WANDA T. CANADY (Wallace) – By
Consent, the Commission permanently
revoked the broker license of Ms. Canady
effective December 14, 2016. The Com-mission
found that Ms. Canady, acting as
the qualifying broker and broker-in-charge
of a licensed real estate firm engaged in
property management, failed to provide all
of the requested trust account documenta-tion
requested by the Commission, failed to
perform trust account reconciliations, failed
to maintain a general ledger, and failed to
maintain a trust account journal; that Ms.
Canady could not account for all rents and
security deposits received by the firm and
failed to deposit all rent payments and secu-rity
deposits received in cash into the trust
account; and that Ms. Canady admitted to
spending entrusted funds on expenses, oth-er
than for which the funds were intended,
which led to deficit spending and a shortage
in excess of $80,000 in the trust account
JOSEPH TREVOR CHERRY (Char-lotte)
– By Consent, the Commission sus-pended
the broker license of Mr. Cherry for
a period of 24 months effective September
1, 2016. The Commission found that Mr.
Cherry, acting as the broker-in-charge and
qualifying broker of a licensed real estate
brokerage firm, managed a property (“prop-erty
A”) from which he collected from the
tenant $295 extra each month in rent and
$100 each month for use of the washer and
dryer from the tenant without the knowl-edge
of the owner landlord; that Mr. Cherry
charged the owner landlord for repairs made
to the dryer and did not receive approval
from owner landlord for repairs exceed-ing
$150, in violation of the management
agreement; that Mr. Cherry also managed
four properties for another landlord owner
(“property B”) and spent in excess of $250
on repairs without receiving approval from
landlord owner, in violation of the manage-ment
agreement; that Mr. Cherry was paid
twice for some repairs that were already
paid; and failed to give an accounting to the
landlord owner within the time required by
the management agreement; that an audit
discovered that Mr. Cherry failed to main-tain
all records as required by Commission
rules and evidence of deficit spending and
comingling of funds in his firm’s trust ac-counts;
and that Mr. Cherry failed to de-posit
cash into a trust account within three
banking days of receipt. The Commission
notes that Mr. Cherry’s trust accounts are
now fully funded.
DOROTHY M. COLESTOCK (Mur-phy)
– By Consent, the Commission sus-pended
the broker license of Ms. Colestock
for a period of 12 months effective Novem-ber
1, 2016. The Commission then stayed
the suspension for a probation period from
November 1, 2016 through October 31,
2017. The Commission found that Ms.
Colestock, acting as the qualifying broker
and broker-in-charge of a licensed real es-tate
brokerage firm, had posting errors in
the firm’s trust account software accounting
system going as far back as 2006 that were
never corrected; that this caused an inaccu-rate
set of books which led to deficit spend-ing
on at least two occasions; that Ms. Cole-stock’s
firm managed both long term rentals
as well as vacation rentals, yet did not main-tain
a subsidiary ledger for those accounts;
that no personal funds ledger was used to
account for funds used to cover bank service
charges; and that Ms. Colestock acted as a
dual agent in one transaction, but was un-able
to provide a copy of the buyer agency
agreement to Commission staff. The Com-mission
notes that no evidence of a shortage
was found in the accounts and Ms. Cole-stock’s
firm has transferred all of its remain-ing
rentals to another licensed firm and that
Ms. Colestock has affiliated with another
licensed firm to engage solely in sales trans-actions.
JONATHAN H. ELLIOT (Fayetteville)
– Following a hearing, the Commission
permanently revoked the broker license of
Mr. Elliot effective December 1, 2016. The
Commission found that Mr. Elliot, acting
as broker-in-charge of a sole proprietorship,
failed to respond to Letters of Inquiry sent
by the Commission; that Mr. Elliot failed to
provide owner ledgers for the properties he
was managing, copies of cancelled checks,
or a trial balance; that Mr. Elliot paid “bo-nus”
checks based on 25% of the total rent
payments mandated in leases to an unli-censed
company as compensation for get-ting
leases signed by tenants; that Mr. Elliot
failed to list a property for sale for the own-er
as required under the listing agreement
and placed a tenant in the subject proper-ty
without the knowledge of the property
owner; that Mr. Elliot collected rent from
the tenant monthly for over two years and
placed this money in his trust account; that
Mr. Elliot never disbursed this money to
the property owner and the balance owed
to the owners in this account ballooned to
over $20,000; that Mr. Elliot did not have
a property management agreement with the
owner; that the owner was unaware of a ten-ant
being in the property because Mr. Elliot
failed to provide owner statements during
the tenancy and failed to provide the owner
with a copy of the lease; that checks written
Real Estate Bulletin February 2017 13
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
Regulatory Affairs Division
at 919-875-3700 for more infor-mation.
Your Pocket License Card
is your ticket for admission
to Continuing Education classes.
Allow at least 10 days to
process a replacement request
or
purchase and download
a replacement immediately
from the Commission’s Web site.
Continued
on the trust account failed to identify the
subject property, property owner, and the
purpose for the disbursement; that Mr. El-liot
failed to maintain copies of the canceled
checks and the deposit slips failed to identify
the purpose for the deposit; that Mr. Elliot
failed to maintain a personal funds ledger
and the account lacked an audit trail; that
Mr. Elliot’s previously licensed firm was ad-ministratively
dissolved by the North Caro-lina
Secretary of State on July 21, 2011 and
that Mr. Elliot failed to notify the Commis-sion
of this and the firm continued to oper-ate
until October 1, 2015, when the firm’s
license was cancelled by the Commission;
and that Mr. Elliot declared himself broker-in-
charge of a sole proprietorship under the
same name as the formerly licensed firm.
MITCHELL LEE EUDY (Charlotte)
– By Consent, the Commission suspended
the broker license of Mr. Eudy for a period
of five months effective November 1, 2016.
The Commission then stayed the suspen-sion
for a probationary period until March
31, 2017. The Commission found that Mr.
Eudy, on May 27, 2015, entered into an Ex-clusive
Right to Sell listing agreement for a
property; that the listed property contained
a small cemetery and Mr. Eudy was aware at
the time of the listing agreement that there
was a cemetery located on the property; that
Mr. Eudy failed to disclose the cemetery to
potential buyers of the property; that Mr.
Eudy asserts that he directed the sellers to
inform the buyers of the existence of the
cemetery; and, the buyers assert that they
were not made aware of the cemetery prior
to closing.
FREEDOM REALTY INC. (Murphy)
– By Consent, the Commission suspended
the firm license of Freedom Realty for a
period of 12 months effective November
1, 2016. The Commission then stayed the
suspension for a probationary period from
November 1, 2016 through October 31,
2017. The Commission found that Free-dom
Realty had posting errors in the trust
account software accounting system going
as far back as 2006 that were never cor-rected;
that this caused an inaccurate set of
books which led to deficit spending on at
least two occasions; that Freedom Realty
managed both long term rentals as well as
vacation rentals, yet a subsidiary ledger for
those accounts was not maintained; that
no personal funds ledger was used to ac-count
for funds used to cover bank service
charges; and that Freedom Realty acted as a
dual agent in one transaction, but was un-able
to provide a copy of the buyer agency
agreement to Commission staff. The Com-mission
notes that no evidence of a shortage
was found in the accounts and that the firm
has transferred all of its remaining rentals to
another licensed firm and that Broker has
affiliated with another licensed firm to en-gage
solely in sales transactions.
CHARLES LESLIE GIEZENTANNER
III (Asheville) – By Consent, the Commis-sion
suspended the broker license of Mr.
Giezentanner for a period of one month ef-fective
January 1, 2017. The Commission
found that, on June 29, 2016, Mr. Giezen-tanner
was convicted of a Level 2 DWI and
DWLR After Impaired Revocation Notice;
that Mr. Giezentanner failed to report the
conviction; and that Mr. Giezentanner failed
to respond to three Letters of Inquiry.
GOLDEN KEY REALTY INC d/b/a
RCA REALTY (Wallace) – By Consent,
the Commission permanently revoked the
firm license of Golden Key Realty effec-tive
December 14, 2016. The Commission
found that Golden Key Realty, engaged in
property management, failed to provide all
of the requested trust account documenta-tion
requested by the Commission, failed
to perform trust account reconciliations,
failed to maintain a general ledger, and
failed to maintain a trust account journal;
that Golden Key Realty could not account
for all rents and security deposits it received
and failed to deposit all rent payments and
security deposits received in cash into the
trust account; and that Golden Key Realty’s
broker-in-charge admitted to spending en-trusted
funds on expenses, other than for
which the funds were intended, which led
to deficit spending and a shortage in excess
$80,000 in the firm’s trust account.
PATRICIA OLIVIA GONZALEZ
(Fayetteville) – By Consent, the Commis-sion
suspended the broker license of Ms.
Gonzalez for a period of 18 months effec-tive
September 1, 2016. The Commission
found that Ms. Gonzalez, acting as broker-in-
charge and qualifying broker of her firm,
failed to perform monthly reconciliations of
her firm’s trust accounts and that one trust
account was overdrawn twice in 2014, in-dicating
a shortage; that Ms. Gonzalez was
unable to produce the ledgers for individual
properties and/or property owners, despite
multiple requests; and that Ms. Gonzalez’
firm was administratively dissolved by the
North Carolina Department of the Secre-tary
of State in September 2015 and Ms.
Gonzalez failed to notify the Commission.
KEVIN J. MCVICKER (Durham) –
By Consent, the Commission reprimanded
Mr. McVicker effective December 1, 2016.
The Commission found that Mr. McVicker,
in 2015, was affiliated with a licensed firm
for which his wife was broker-in-charge/
qualifying broker; that in August 2015, the
firm and Mr. McVicker’s wife were revoked
by Consent by the Commission for, among
14 Real Estate Bulletin February 2017
Commission
Speakers Available
Real Estate Commission staff members are available to
speak to your local board, office or special group. You can re-quest
a presentation relating to a specific subject or a general
discussion on topics of interest to those attending.
To schedule a speaker, submit the “Request for Program
Presenter” form available on the Commission’s website, www.
ncrec.gov. Please allow at least four weeks prior to your group’s
meeting.
Continued
other things, failure to maintain funds in a
trust account, conversion of trust monies,
and failure to provide transaction records to
a Commission representative; that during
the investigation bank records obtained by
a subpoena showed trust monies and rents
were deposited into a personal account held
by Mr. McVicker and his wife and that Mr.
McVicker wrote checks for personal expens-es
from the same account; that Mr. McVick-er
submitted a new firm application, desig-nating
himself as a broker-in-charge on the
same day that his firm’s broker license was
revoked; and that Mr. McVicker agreed to
supply transaction and account records but
failed to do so in a timely manner.
PATRICK KEVIN MONAGHAN
(Charlotte) – By Consent, the Commis-sion
suspended the broker license of Mr.
Monaghan for a period of four months ef-fective
November 1, 2016. The Commis-sion
then stayed the suspension for a proba-tionary
period ending March 1, 2017. The
Commission found that in May 2015 Mr.
Monaghan, acting as the broker-in-charge
of Northpoint Asset Management, entered
into a residential property management
agreement for property; that according to
the agreement, the monthly rent was to be
$1000; that in July 2015, Mr. Monaghan
procured tenants who agreed to rent the
property for $140/month and, in exchange
for the low rent, perform renovations, a
violation of North Carolina Landlord and
Tenant Law; that the lease contained no de-scription
of the work tenants were to com-plete
in exchange for the lower rent; that the
lease provided by Mr. Monaghan included a
late fee beyond the statutory limit; that Mr.
Monaghan collected a security deposit in
excess of the statutory limit; that an adden-dum
to the lease permitted Mr. Monaghan
to use tenants’ security deposit for costs not
permitted and allowed the tenant security
deposit to be disbursed during the tenancy
in violation of Landlord and Tenant Law;
and that Mr. Monaghan failed to inform
the tenants and property owner which bank
held the security deposit.
NORTHPOINT ASSET MANAGE-MENT
LLC (Charlotte) – By Consent, the
Commission suspended the firm license of
Northpoint Asset Management for a pe-riod
of four months effective November
1, 2016. The Commission then stayed the
suspension for a probationary period end-ing
March 1, 2017. The Commission found
that Northpoint Asset Management in
May 2015, entered into a residential prop-erty
management agreement for property
located in Charlotte, NC; that according
to the agreement, the monthly rent was
to be $1000; that in July 2015, North-point
Asset Management procured tenants
who agreed to rent the property for $140/
month and, in exchange for the low rent,
perform renovations, a violation of North
Carolina Landlord and Tenant Law; that
the lease contained no description of the
work tenants were to complete in exchange
for the lower rent; that the lease provided
by Northpoint Asset Management included
a late fee beyond the statutory limit; that
Northpoint Asset Management collected a
security deposit in excess of the statutory
limit; that an addendum to the lease per-mitted
Northpoint Asset Management to
use tenants’ security deposit for costs and
allowed the tenant security deposit to be
disbursed during the tenancy in violation of
Landlord and Tenant Law; that Northpoint
Asset Management failed to inform the ten-ants
and property owner which bank held
the security deposit.
CHRISTINA L. PITZ (Surf City) – By
Consent, the Commission reprimanded
Ms. Pitz effective January 2, 2017. The
Commission found that Ms. Pitz, acting as
a listing agent, failed to obtain a copy of a
septic permit to verify the number or bed-rooms
allowed by the septic system despite
being informed that her seller-clients did
not know whether the septic system was
permitted as a four-bedroom house; that the
buyers closed on the house under the im-pression
it was permitted as a four-bedroom
house instead of a three-bedroom house;
and that the buyers discovered the discrep-ancy
while performing remodeling work on
the house and had to purchase a septic sys-tem
to accommodate four-bedroom house.
The Commission noted that Ms. Pitz has
reached a settlement with the buyers for an
undisclosed sum.
PROPERTY ADMINISTRATORS,
INC. (Greensboro) – By Consent, the
Real Estate Education
and Recovery Fund
Reimburses Victims
At its December 14, 2016 meet-ing,
the Commission approved a pay-ment
totaling $3,100 out of the Real
Estate Education and Recovery Fund
to one applicant who suffered finan-cial
loss due to the misconduct of Ali-cia
A. Christian.
By Consent, the Commission or-dered
permanent revocation of the
real estate license of Ms. Christian ef-fective
October 15, 2014.
At its October 13, 2016 meeting,
the Commission approved payments
of $46,006.89 to six applicants who
suffered financial losses due to the
misconduct of Rebecca L. Niemchak.
The Commission, following a
hearing, ordered the permanent re-vocation
of the broker license of Re-becca
L. Niemchak effective October
24, 2014.
At its May 5, 2016 meeting, the
Commission approved payments of
$75,000 to 17 applicants who suf-fered
financial losses due to the mis-conduct
of Cheryl B. Wilkins.
By Consent, the Commission
ordered the permanent revocation
of the broker license of Cheryl B.
Wilkins effective November 12,
2014.
Real Estate Bulletin February 2017 15
January 1, 2017. The Commission found
that Mr. Tarbutton, acting as the qualifying
broker and broker-in-charge of a licensed
real estate brokerage firm, changed the le-gal
name of the firm, but failed to notify
the Commission; that from 1999 to 2016,
the firm operated under a name other than
the name on its license; that Mr. Tarbutton
acted as the broker-in-charge of two offices,
his sales office and rental management of-fice,
that were not in the same physical loca-tion;
that Mr. Tarbutton regularly deposited
trust money belonging to others into his
firm’s operating account; that Mr. Tarbut-ton
did not enter or maintain proper agency
agreements in both sales and property man-agement
transactions; that Mr. Tarbutton
failed to provide vacation rental agreements
to tenants; and failed to maintain his firm’s
trust account records in compliance with
the Real Estate License Law and Commis-sion
Rules.
ROBERT CRAIG THRIFT, JR. (New
Bern) – The Commission accepted the vol-untary
surrender of the broker license of
Mr. Thrift for a period of 10 years effective
November 9, 2016. The Commission dis-missed
without prejudice allegations that
Mr. Thrift violated the Real Estate License
Law and Commission rules. Mr. Thrift nei-ther
admitted nor denied misconduct.
RICHARD TOCADO (Charlotte) –
By Consent, the Commission suspended
the broker license of Mr. Tocado for a peri-od
of one month effective October 1, 2016.
The Commission found that Mr. Tocado, in
and around 2014, acted as a buyer agent in a
new construction real
estate transaction;
that Mr. Tocado, in
order to secure the
transaction, offered
to rebate $3,000 of
his commission to
the buyer-client; that
Mr. Tocado disclosed
the rebate to the
original lender, but
failed to disclose it
to the second lender
until the day of clos-
KARYN B. SPREEMAN (Hender-sonville)
– By Consent, the Commission
suspended the broker license of Ms. Spree-man
for the period of 18 months effective
December 1, 2016. Two months of the
suspension shall be active with the remain-der
stayed for a probationary period from
February 1, 2017 through June 1, 2018.
The Commission found that Ms. Spreeman
listed a vacant lot for sale under a listing
agreement which expired on July 31, 2015;
that on September 9, 2015, Ms. Spreeman
submitted an offer to purchase the lot, on
behalf of a prospective buyer, to the seller;
that Ms. Spreeman told her buyer client
that the seller verbally accepted the offer
and sent the offer in the mail to the seller
for signature; that the seller claims she never
verbally accepted the offer; that on Sep-tember
8, 2015, Ms. Spreeman signed the
seller’s name on a document which gave the
buyer authorization to obtain septic and/or
well permits on behalf of the seller; that Ms.
Spreeman did not have written authoriza-tion
from the seller or a power of attorney
document allowing her to sign on the seller’s
behalf; that the seller’s land was then clear
cut and permits were pulled by the buyers;
and that the seller later rejected the buyer’s
offer and the company that performed the
work, on the buyer’s behalf, filed a lien
against seller for over $7,000. The Commis-sion
notes that Ms. Spreeman has paid the
lien which has now been released.
KENNETH L. TARBUTTON (Blow-ing
Rock) – By Consent, the Commission
suspended the broker license of Mr. Tar-button
for a period of 36 months effective
If you are a BIC or BIC eligible, to maintain your BIC status you must take the
Broker-in-Charge Update Course (BICUP) + an Elective.
Do not take the General Update Course - it will not satisfy your BIC CE requirements.
Continued
Brokers Should Ask Closing Attorneys to Not Disburse Proceeds
Without Confirming Disbursement Instructions
Brokers are urged to encourage closing lawyers in each transaction not to
disburse proceeds other than as specifically authorized in a written document
signed by the seller. There have been instances of hackers diverting funds from
real estate transactions, i.e., criminals hacked into a real estate broker’s com-puter
database and monitored email traffic to learn about an impending clos-ing.
They send an email to the lawyer instructing the lawyer to wire the seller’s
proceeds to a bank account other than the one originally identified. That email
comes from an address that looked like the broker’s. The lawyer wires the seller’s
proceeds to the criminals’ account. By the time the lawyer learns of this crime, the
criminals have wired the funds to a foreign bank account.
Commission suspended the firm license of
Property Administrators for a period of 18
months effective September 30, 2016. The
Commission found that Property Adminis-trators
failed to prepare monthly reconcilia-tions
and failed to maintain ledgers and de-posits
in full compliance with Commission
rules such that a clear audit trail could not
be determined; and, that an audit of both
trust accounts was performed and showed
overages in both accounts.
RSK MOUNTAIN RESORT LLC
(Blowing Rock) – By Consent, the Com-mission
suspended the firm license of RSK
Mountain Resort for a period of 36 months
effective January 1, 2017. The Commis-sion
found that RSK Mountain Resort
changed its legal name, but failed to notify
the Commission; that from 1999 to 2016,
RSK Mountain Resort operated under a
name other than the name on its license;
that RSK Mountain Resort regularly depos-ited
trust money belonging to others into
its operating account; that RSK Mountain
Resort did not enter or maintain proper
agency agreements in both sales and prop-erty
management transactions; that RSK
Mountain Resort failed to provide vacation
rental agreements to tenants; and failed to
maintain its trust account records in com-pliance
with the Real Estate License Law
and Commission Rules.
KATIE ELIZABETH SINGLETON
(Surf City) – By Consent, the Commis-sion
reprimanded Ms. Singleton effective
October 13, 2016. The Commission found
that Ms. Singleton was convicted in dis-trict
court of Level
III DWI on June 30,
2016, and was sen-tenced
to 12 months
of supervised proba-tion
and required to
complete 72 hours
of community ser-vice.
The Commission
noted that Ms. Single-ton
timely reported
the conviction to the
Commission and is in
compliance with the
court’s order.
16 Real Estate Bulletin February 2017
43,000 copies of this public document were printed at a cost of .219 per copy
North Carolina Real Estate Commission
P. O. Box 17100
Raleigh, NC 27619-7100
PRSRT STD
U.S. POSTAGE
PAID
HICKORY, NC
PERMIT NO. 104
U.PERMIT PRSRT STD
U.S. POSTAGE
PAID
HICKORY, NC
PERMIT NO. 104
U.PERMIT Scan the code below to access the Commission
website from your mobile devices.
**Attention**
BIC’s and BIC
eligible brokers!
Please update your re-cord
to include your cur-rent
phone number. You
can designate your phone
number as “public” or “pri-vate.”
Log on to your record
at www.ncrec.gov and pro-vide
your phone numbers!
Broker Login
ing, which would delay the closing by three
days; that rather than delay closing, Mr. To-cado
and the buyer-client agreed that Mr.
Tocado would donate the $3,000 to the
buyer-client’s favorite charity; and that af-ter
closing, Mr. Tocado failed to make the
agreed donation.
TREVOR CHERRY REAL ESTATE
LLC (Charlotte) – By Consent, the Com-mission
suspended the firm license of Trevor
Cherry Real Estate for a period of 24 months
effective September 1, 2016. The Commis-sion
then stayed the suspension for a pro-bationary
period from September 1, 2016
through August 31, 2018. The Commission
found that Trevor Cherry Real Estate man-aged
a property (“property A”) from which
it collected from the tenant $295 extra each
month in rent and $100 each month for use
of the washer and dryer from the tenant with-out
the knowledge of the owner landlord; that
Trevor Cherry Real Estate charged the owner
landlord for repairs made to the dryer and did
not receive approval from owner landlord for
repairs exceeding $150, in violation of the
management agreement; that Trevor Cherry
Real Estate also managed four properties for
another landlord owner (“property B”) and
spent in excess of $250 on repairs without
receiving approval from landlord owner, in
violation of the management agreement; that
Trevor Cherry Real Estate was paid twice for
some repairs that were already paid; and failed
to give an accounting to the landlord owner
within the time required by the management
agreement; that an audit discovered that Trev-or
Cherry Real Estate failed to maintain all
records as required by Commission rules and
evidence of deficit spending and comingling
of funds in its trust accounts; and that Trevor
Cherry Real Estate failed to deposit cash into
a trust account within three banking days of
receipt. The Commission notes that Trevor
Cherry Real Estate’s trust accounts are now
fully funded.
DAVID J. WELSH (Boone) – The
Commission accepted the voluntary sur-render
of the broker license of Mr. Welsh
for a period one year effective December 14,
2016. The Commission dismissed without
prejudice allegations that Mr. Welsh vio-lated
Commission rules and the Real Estate
License Law. Mr. Welsh neither admitted
nor denied misconduct.
MARY S. WILSON (Greensboro) – By
Consent, the Commission suspended the
broker license of Ms. Wilson for a period
of 18 months effective September 30, 2016.
The Commission then stayed the suspension
on certain conditions. The Commission
found that Ms. Wilson, acting as broker-in-
charge of a licensed real estate brokerage
firm, failed to prepare monthly reconcilia-tions
and failed to maintain ledgers and de-posits
in full compliance with Commission
rules such that a clear audit trail could not
be determined; and that an audit of both
trust accounts was performed and showed
overages in both accounts.