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Author Archive
Let WRAR help you transition to the new agency agreements, termination of OTP&C and 13 addenda.
Date: Friday, October 8th
Location: Holiday Inn Resort at Wrightsville Beach
Cost: $20 for Members / $60 for Non-Members
Instructor: George Bell
Register for Session #1 – 8AM to 12PM
Register for Session #2 – 1PM to 5PM
*Each session is limited to only 250 people per session, so grab your seat today!
Article by Will Martin & Bill Gifford
If it is not your worst nightmare, it is probably near the top of the list: on your desk when you arrive in the office is a brown envelope from the North Carolina Real Estate Commission. You know it is not time to renew your license and when you open the envelope, your fears are confirmed; at the top, in bold black letters: “letter of inquiry.” What do you do?
The first thing you should do is take a deep breath and resist the impulse to panic. Just because the Commission has opened a file does not mean that disciplinary action is inevitable. It only means the Commission is doing its job; it is investigating the potential of wrongdoing. North Carolina law gives you the opportunity to present your side of the story before the Commission staff decides whether to proceed with a formal hearing.
If you are affiliated with a firm, you should immediately bring the matter to the attention of your broker-in-charge. Many agents and firms have errors and omissions coverage which pays for the defense of regulatory proceedings. While this coverage may be limited (perhaps to $2500), it is often not subject to any deductible. Such coverage would allow the immediate involvement of an attorney at no additional cost to you.
The Commission’s Letter of Inquiry will give you 14 calendar days to submit a response. Extensions of this deadline can be obtained. The letter will ask you to provide a written statement describing your involvement in the subject transaction. You may also be asked to provide copies of specified documents.
Responding to the Letter of Inquiry is a critical stage, and extreme care should be given to provide accurate information to the Commission. If mistakes were made in your transaction, this is the time to admit them. The Real Estate License Law demands honesty; it does not demand perfection. If the complainant has misrepresented something in the complaint, be sure to bring that to the Commission’s attention. The Commission may be reluctant to proceed to a contested hearing if the credibility of its witness is in doubt. Keep in mind that your response will be shared with the complainant. You should be prepared to back up, with testimony or documents, all of the statements in your response.
After reviewing your response, the Commission’s legal staff has several options. One is to close the file because of insufficient evidence of wrongdoing. The staff can also “Close and Warn”. This means that the file will be closed without disciplinary action but you will receive a letter advising you to exercise greater caution in the future. A third option is for the matter to be referred to the full Commission for a “probable cause” determination.
Should legal staff elect the third option, it will present a brief summary of the facts to the Commission. The Commission must decide, based solely on the presentation of its legal staff, whether probable cause exists to believe that you have violated either the Real Estate License Law or the Commission’s Rules. If the Commission finds probable cause, the case will be assigned to a Commission attorney for prosecution.
The next step in the process is the settlement phase. The Commission attorney will submit a settlement proposal to you, generally within 30 days of the probable cause determination. You will have an opportunity to accept or reject that proposal, or submit your own proposal. At this point, the assistance of an attorney is advisable. We often suggest that our clients meet face-to-face with the Commission’s lawyer to discuss possible settlement, and we have had good success in negotiating acceptable outcomes.
There are several levels of discipline that can be agreed upon, including a so-called “conditional dismissal” of the case, a reprimand, and a license suspension with all or some part of the suspension “stayed” (not active). If the settlement involves any disciplinary action, the Commission will publish a summary of that action in its Real Estate Bulletin. If the discipline involves a license suspension or revocation, the Commission will also issue a press release to newspapers in the county where the agent does business.
If the parties are unable to negotiate a resolution of the case, a contested hearing will be scheduled. The hearing will be conducted much like a trial. You or your attorney will be given the opportunity to make an opening statement, to present evidence, and then to make a closing argument. Typically, a disciplinary hearing lasts no more than one day, and decisions are issued that same day. If you are not satisfied with the decision, you will have the right to appeal to the Superior Court in your home County.
The bottom line is that a consumer complaint is just the beginning of a multi-staged process. Each stage of this process provides an opportunity for you to present your side of the story. In a significant percentage of cases, if the true facts are presented to the Commission in a clear and organized fashion, the end result of the process is no discipline whatsoever.
■ Will Martin and Bill Gifford are managers in the law firm of Martin & Gifford, PLLC, which practices primarily in the area of real estate brokerage law. For more information about the firm, go to www.martingiffordlaw.com. Copyright © 2010, Martin & Gifford, PLLC.
Article by Will Martin & Bill Gifford
A broker-in-charge recently called with concerns about whether his firm had handled a multiple offer situation properly. An offer had come in on one of the firm’s listings from a buyer represented by an agent with another firm (we’ll call the buyer agent “Frank”). The property was priced to sell. The buyer’s initial offer was for full price but was contingent on the sale and closing of the buyer’s existing home. Following oral negotiations, Frank submitted a second offer from his client for full price but without the contingency. The listing agent (who we’ll refer to as “Jane”) contacted Frank and told him that his buyer’s second offer was acceptable and that she had set up an appointment for the sellers to come in and sign it the next afternoon.
Shortly after her conversation with Frank, a buyer client of Jane’s (who we’ll call “John”) called to ask about the property. Jane had been working with John, but hadn’t bothered contacting him about this particular property because it was well outside the parameters he and Jane had established regarding the type of property he was looking for. John had seen Jane’s sign in the yard when he had driven by the property and had instantly taken a liking to it. Jane told John the sellers had verbally agreed to sell the property to another buyer. John asked whether the sellers could consider another offer if they hadn’t signed a contract and Jane told him that they could if they wanted to. She contacted the sellers and they indicated they would consider another offer. Jane showed John the property later that day. She did not disclose any terms of the first buyer’s offer to John. John loved the property and, without advice from Jane, asked Jane to prepare an offer on the property for five thousand dollars above the list price.
Jane called Frank to tell him another buyer had just made an offer on the property, and asked Frank whether his client would like to make another offer. After speaking with his client, Frank called Jane back to say that his client was not interested in making another offer. Frank did not ask whether or by whom the other buyer was represented and Jane did not volunteer that information.
Jane presented both offers to the sellers when they came in the next afternoon at the appointed time. The sellers decided to accept the offer from Jane’s client, John. Jane promptly communicated the sellers’ acceptance of John’s offer to Frank. In response to Frank’s question, Jane confirmed that she represented John. Frank became very angry and hung up on Jane. He called her back later to say that his buyer was extremely upset and was going to see a lawyer. Frank said that Jane should have told John the property had already been sold, and that she should have told Frank up front that she represented John.
The broker-in-charge asked us what Jane should have told Bill under these circumstances. Should she have said that the property was not yet under contract? Or should she have said that it was already sold, as Frank had suggested?
The answer is that Jane did the correct thing when she said that there was merely a verbal agreement to sell the property. A statement that the property had been sold would have been a false statement that may have violated duties Jane owed to her seller clients and to Bill. Furthermore, because Frank had not asked, Jane had not been under any ethical duty to disclose that the other offer had been submitted by her client, according to Standard of Practice 1-15 of the Code of Ethics.
While Jane handled the situation correctly, there are a few additional things that agents facing a multiple offer situation should consider doing to best manage the situation. Agents should consider going over the Real Estate Commission’s Q & A on Offer and Acceptance (available on the Commission’s website at www.ncrec.gov) with their clients before offers are submitted or considered to educate them about the contract-formation process. When Jane called Frank to tell him that the sellers would be coming to her office the next day to sign the offer, it would have been helpful for her to remind him that the oral agreement would not become a binding contract until it had been signed by her clients and their acceptance communicated to Frank. Until those things had occurred, Frank’s client could have revoked the offer or Jane’s clients could have accepted an offer from someone else or even decided not to sell. Also, unless the sellers objected, it would have been helpful for Jane to have suggested that Frank present his client’s offer to the sellers directly, with Jane in attendance, as permitted under mls rules, and for a different agent in Jane’s firm to have presented the offer from Jane’s client to the sellers. While such measures may well not eliminate suspicions of unfair treatment by a buyer who loses out to an “in-house” offer, they should help establish that the firm handled the situation fairly.
■ Will Martin and Bill Gifford are managers in the law firm of Martin & Gifford, PLLC, which practices primarily in the area of real estate brokerage law. For more information about the firm, go to www.martingiffordlaw.com. Copyright © 2010, Martin & Gifford, PLLC.
