From time to time Blair Cato likes to alert you of certain cases that have gone before the Real Estate Commission either as a warning against certain behavior or as a teaching tool. Today, we present you a case that has frankly left us all baffled. The Consent Order issued by the Commission last month in Case #REL 40261 is a case that has a teaching component as well as a warning for the licensee against egregious behavior but more than that it leaves us asking, what do you have to do to lose your real estate license in South Carolina?
In the Consent Order, the Licensee, who is a Broker, was facing discipline on six separate grievances that had been filed by consumers and real estate agents over a three year period. The Order addressed the following six cases: 2016-145, 2016-155, 2016-221, 2017-260, 2017-478 and 2018-57.
In all my years of defending real estate licensees before the Real Estate Commission I have rarely seen a licensee with six separate cases pending at one time. The cases against the Licensee included the following acts:
- Licensee received $12,000 in earnest money but only released $10,000 to buyer when the offer was rejected. The Licensee even wrote “Paid in Full” on the refund check. Licensee only released the remaining $2,000 after a complaint was filed with LLR.
- Licensee accepted $3,000 earnest money check but in account records noted only $2,000 and then refused to return or credit buyer for the remaining $1,000. When the money was eventually returned the money was issued in a cashier’s check instead of Licensee’s escrow account.
- Licensee required a non-refundable one percent commission paid upfront in the amount of $1,335 for a real estate transaction that never occurred.
- Licensee accepted a $25,000 earnest money check. Licensee deposited the earnest money check in his operating account and then subsequently deposited only $21,000 of the earnest money into the trust account. Licensee never had a contract, agency or other paperwork completed before accepting the check. The Order fails to address what Licensee did with the other $4,000 other than the earnest money was subsequently returned as part of a settlement of a civil action.
- Licensee’s client made an offer that was declined. Licensee contacted seller and seller’s agent in a “harassing and disparaging manner, with one email stating ‘what goes around comes around.’”
- Licensee marketed property as having public water and sewer when it in fact did not. When buyer questioned the lack of utilities Licensee made “abusive and disparaging written comments toward buyer’s agent and buyer agent’s broker in charge.”
In the Consent Order the Commission found that the Licensee committed fourteen statutory violations including, but not limited to, the following:
- failing to deposit money in a real estate trust account;
- failing to have a journal or accounting system that records funds received and disbursed;
- failing to account for monies in possession;
- bad faith, dishonesty, untrustworthiness, or incompetency;
- dishonorable, unethical or unprofessional act that is likely to deceive (four findings of this!);
- defraud or harm the public; and
- failed to perform a monthly reconciliation and other findings.
So why are we baffled? Well, despite finding that the Licensee committed all of these unscrupulous acts over a three year period his punishment seems rather minimal. The Licensee was publicly reprimanded and his license was suspended for 2 years but the suspension was stayed and he was placed on probation for two years. The Licensee was also fined $8,500 and was required to attend a four hour Broker class. The Licensee is allowed to continue to practice real estate in South Carolina including representing consumers and handle their money in escrow.
We know that the Real Estate Commission’s overriding responsibility is to protect the public. Is allowing a Licensee, who over a three year period consistently demonstrated a complete and total disregard for the law, the right to continue practicing real estate protecting the public? The Commission has held that this Licensee ignored escrow accounting rules and the violated the responsibility of safe-keeping a client’s money. The Licensee has on at least four separate occasions acted in “bad faith, dishonesty, untrustworthiness or incompetency.” His actions have been found by the Commission to be “dishonorable, unethical or unprofessional.”
We are concerned about the lack of protection a consumer has if the Licensee can continue to represent clients and hold escrow money. Does placing the Licensee on probation really protect the public for possible harm? While we are all for giving a Licensee a second chance as this firm defends licensees before the Commission, it seems the Commission missed the mark on this case. What do you think?
On a separate note we loudly applaud the Real Estate Commission for recently deciding to issue the very informative bulletin that covers many matters relevant to licensees such as the “pay at close” issue. This fantastic bulletin can be found here https://llr.sc.gov/POL/REC/RECPDF/RECNewsletterJune2018.pdf. We hope that the Commission will send these out regularly and that licensees will take the time to read it.
BLAIR CATO loves being in the Midlands of South Carolina. We believe Columbia is a melting pot of people from all over our great country. Everyday we welcome new homeowners from Michigan, Ohio, Pennsylvania, New York, California and other states. For the months of July, August and September we are asking our new South Carolinians to place a pin on our large USA map in our office showing from where they are moving. I hope we can get every state represented. We will post pictures along the way so help us fill up the map!