Broker breaks: What the N.C. Real Estate Commission allows you to get away with

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In 1993, real estate agent Jim Beaty was slapped with a DWI charge. The North Carolina Real Estate Commission put him on probation.

Fourteen years later, in 2007, he was charged with another DWI.

Once again, the commission put him on probation.

In March, Beaty, a broker with Charlotte-based Century 21 Murphy & Rudolph, pleaded guilty in Mecklenburg County to a DWI. And, for the third time, the commission put him on probation.

Beaty hasn’t been receiving any special treatment from the commission; DWIs and lots of other crimes don’t necessarily result in the commission automatically revoking a license.

According to Tom Miller, attorney for the commission, there’s only one type of scofflaw who would lose their license almost immediately: a deadbeat parent.

“If you have a license issued by the state and you are delinquent in your child support obligations as a noncustodial parent and the court takes enforcement action against you, the court may cause your professional license to be revoked, whether it is broker or CPA (certified public accountant),” Miller said.

Last year, the commission — the agency that licenses and regulates real estate agents — revoked licenses in only 3 percent of the cases sent before it.

The commission, Miller says, doesn’t take revoking licenses lightly. Taking away someone’s license, he said, essentially robs them of their livelihood. Crimes of all sizes, from bank robberies to murders, could be committed and still the commission would allow a license holder to plead their case.

“If a real estate broker were to rob a bank, the court handling his criminal case has no authority to take away his real estate license,” Miller said. “Only the commission can do that.”

For certain crimes, the commission has taken away licenses. On Nov. 25, 1991, it did just that to Max Glover, of Robbinsville, saying he had been convicted of embezzlement and obtaining money by false pretenses and that he had failed to surrender his real estate license as ordered by the court.

The commission has also revoked brokers’ licenses for failure to properly handle trust accounts. Others have lost their licenses for using real estate firms’ funds for their personal use.

Those are among a small fraction of disciplinary actions the commission has taken over the years.

There’s no “three-strikes” rule for agents, Miller said, and every case is unique from the commission’s perspective.

“We look at the totality of the circumstances and determine if the circumstances warrant a response,” he said. “If there is a DWI and there is no property damage, no one has been hurt, etc., there would be no grounds for disciplinary action.”

That has come in handy for people like Beaty, who said he reported his recent DWI to the commission, “as I should have done.”

“They gave me a two-year (license) suspension but stayed that suspension since I met their requirements,” he said. “They know it was my third time.”

In November, the commission decided not to put his suspension into effect because he completed court-ordered substance-abuse treatment and gave up his right to be broker-in-charge for any deals for two years.

Although the commission takes felonies more seriously than a DWI, even then an investigation takes place before a license is taken away. Miller said the commission cracks down when the infraction deals with a broker’s real estate duties.

“If it involves a client or customer or someone associated with a real estate transaction, or if it happened while they were actively working on real estate business, the commission would consider that (a more serious infraction),” Miller said.

Miller said crimes that involve the deceit of clients or embezzlement are the big no-nos. The commission’s rules mention crimes that involve “moral turpitude which would reasonably affect a broker’s ability to be a broker.”  Such infractions are much more likely to spur the commission to revoke a license.

Miller said that particular part of the commission’s rules implies that there are crimes that might not affect someone’s ability to be a broker.

“A broker convicted of a misdemeanor traffic violation would argue that is not a crime of moral basis that affects his real estate license,” he said.

What about manslaughter?

“By its nature, manslaughter is a crime where the accused didn’t intend to kill,” he said. “Otherwise it would be murder. So he might argue that he had no moral basis because ‘I hate what I did but I don’t think you should take my license away’ and try to convince the commission that way.”

In South Carolina, state law lists violations that can get real estate agents and brokers in hot water.

Lesia Kudelka, spokeswoman for the South Carolina Department of Labor, Licensing and Regulation, said that, according to state law, a broker can face disciplinary action if they are found guilty of violating federal and state fair housing laws or committing forgery, embezzlement, breach of trust, larceny, obtaining money or property under false pretense, extortion, fraud, conspiracy to defraud or any other offense classified as a felony or “involving moral turpitude.”

In Georgia, felony convictions can lead to the fast revocation of a license, said Craig Coffee, Georgia Real Estate Commission deputy commissioner.

“If someone gets a felony conviction here in Georgia, they have 60 days to request a hearing, and if they do not we automatically revoke their license,” he said. “Many people don’t request that hearing because they are busy dealing with the conviction.”

Coffee also said that, like agents and brokers in the Carolinas, those in Georgia must report any legal woes. If they don’t, they’ll face the consequences.

“We see (those convictions) sometimes in the newspaper and have to revoke because of that,” Coffee said.

Coffee said he didn’t expect Georgia to adopt a “three-strikes” rule any time soon.

Out of about 60,000 active licensed brokers and agents in Georgia, 133 had their license revoked in fiscal 2010. That was down from the 206 licenses revoked in fiscal 2009, Coffee said.

When a North Carolina agent or broker does lose their license, it isn’t necessarily the end of their real estate career; Miller said agents and brokers could reapply for their license at any time.

Someone who has lost their license has to take the commission’s exams all over again, he said.

“They must convince the board that they have the moral fitness and reputation for trust so that they can be a broker,” he said. “If you had your license revoked because you took money out of your trust account and five years later you want to get licensed again, you have to convince the commission that things have changed.”

Baughman can be reached at [email protected].