Governor Announces Commissioner Appointments

ARKANSAS

REAL ESTATE COMMISSION

NEWSLETTER

April 2013

Arkansas Real Estate Commission

612 South Summit Street

Little Rock, AR 72201-4701

Phone: 501-683-8010

Fax: 501-683-8020

Administration:

[email protected]

Investigations: [email protected]

Licensing:

[email protected]

Web page:

www.arec.arkansas.gov

Members of the Commission

Tina B. Daniel, Chairman

Searcy

Ken Gill, Vice Chairman

Little Rock

Sylvester L. Smith III

Little Rock

Sherman E. Tate

Little Rock

Allen W. Trammell

Little Rock

Commission Staff

Gary C. Isom

Executive Director

Andrea S. Alford

Deputy Executive Director

Debra Randolph

AREC Supervisor, Investigations

Governor Announces

Commissioner Appointments

By Gary C. Isom, Executive Director

Governor Mike Beebe recently appointed two new members to the Arkansas Real

Estate Commission. ey will take the place of two outgoing Commissioners - Jim

Newell of Little Rock, Consumer Representative, and Karen Crowson of Benton, In-

dustry Representative - who ably represented the Arkansas Commission in both state

and national venues.

In January Governor Beebe appointed Sherman E. Tate of Little Rock and Al-

len W. Trammell of Alexander to serve three-year terms on the Commission. ey as-

sumed their new duties as Commissioners at the February AREC Business Meeting.

Both Commissioner Tate and Commissioner Trammell

bring years of experience in the real estate industry and

public service to the AREC.

Commissioner Tate has an established record of

service in communications, energy supply, govern-

ment, education and community aairs over the past

four decades. He takes the Consumer position on the

Commission.

Commissioner Tate is currently President and CEO

of e Domino Eect, Inc., a consulting company, and

is also chairman of the Southern Bank Board. Prior to

founding e Domino Eect, he was Executive Direc-

tor of Public Policy for Verizon Wireless. Previously he

has held senior man-

agement positions

with the State of Ar-

kansas, Arkansas Louisiana Gas Company and Alltel

Corporation. In the public service arena, he served 12

years as Chairman of the Board of Trustees of Philander

Smith College in Little Rock, and was honored by the

college in its naming of the Sherman E. Tate Student

Activity Center.

Commissioner Tate is a past chairman of the Greater

Little Rock Chamber of Commerce, and is the rst

and only African American to serve as Chairman of the

Little Rock Chamber. Additionally, he has served as an

ocer with the Arkansas Army National Guard, attain-

ing the rank of Colonel.

Commissioner Trammell, owner and Principal Bro-

ker of Trammell and Co., brings over 40 years of valuable experience in the real estate

industry to the Commission.

Allen W. Trammell

Sherman E. Tate

(Continued on Page 3)

Page 2

A Final Farewell to a Champion of Real Estate Educators,

A Free Spirit, and a True Friend

You will note that the front page of this newsletter lists Tina B.

Daniel of Searcy as Chairman of the Commission. Sadly, and as

most of you know by now, this will be the last edition of the news-

letter that will include our friend, Tina, as a member of the Com-

mission. On Sunday, March

3, 2013, Tina passed away.

is news came as a shock

to many of us who had en-

joyed Tina’s company during

the previous week at the Ar-

kansas Realtors Association

Leadership meeting and Leg-

islative Reception. Tina and

I joined together to speak to

a legislative committee on

Wednesday before her death.

It all seemed surreal as we at-

tended Tina’s funeral the fol-

lowing Wednesday.

While Tina’s absence will

leave a void for so many, both

personally and professionally,

her presence will be felt for years to come in so many ways. From

a state regulatory perspective, we won’t ever be able to discuss real

estate education without covering an element that Tina somehow

inuenced. Real estate licensees who attended Tina’s courses will

seldom handle a transaction without adhering to some aspect of

Tina’s teaching. Real estate instructors who taught with or partici-

pated in workshops with Tina will often use some technique or

concept that they observed in their interaction with her.

As for buyers and sellers of homes for their families, many who

never had the pleasure of knowing Tina will experience her inu-

ence through the actions of those Tina taught to treat their clients

and customers professionally and ethically.

Tina’s accomplishments are far too many to list in this article.

Suce it to say she taught real estate in all fty states and ve

countries. As a friend and colleague of Tina, her appointment to

the commission in 2011 was a milestone in both of our careers.

She and I rst met in 1987 when we traveled Arkansas to present

nineteen continuing education seminars. We conded regularly

and remained close friends for the next thirty years.

Many of the readers of this article were also touched by Tina.

So, you know that Tina would have a few words of advice for us.

Everyone who knew Tina could add to the list, but here are a few

things Tina would tell us about enjoying life and career.

Go to a Gaither concert. Travel to someplace new with family and

friends. Take lots of pic-

tures of people you know

and meet. Buy a vehicle

that does everything

you need it to. Invest

in yourself. Take time

to relax by a lake, river,

mountain or whatever

gives you solace. Build

up lots of frequent yer

miles and always ask for

an upgrade. Treat ev-

eryone as you like to be

treated. Put the newspa-

per down and turn o

your cell phone when the

show opens. Take lots of

notes. Share stories about

your family and friends.

Learn to enjoy some-

thing as simple as a cow

grazing in a eld. And

nally, whenever it seems

to be dark all around, light a candle and reach out to someone.

anks to Tina for giving us all she had to give, and to Walt

and the rest of the family for sharing her with us.

By Gary C. Isom, Executive Director

Tina B. Daniel

Everywhere she went,

Tina made friends, including

on a recent trip to Las Vegas.

2012 Sees Several AREC Regulation Changes

• Regulation6.3:ExpiredLicenses:ischangegiveslicenseesoneyearinsteadofthreeinwhichtoreinstatealicensethathasex-

pired without having to reapply, and allows only the prior year identied as expired to be considered as if inactive for purposes of continuing

education requirements. Eective January 1, 2013.

• Regulation3.1:Fees:ischangeincreasestheamountsfortheannuallicenserenewalfeesfrom$70.00to$80.00forbrokersand

from$50.00to$60.00forsalespersons.EectiveJuly1,2013.

• RegulationSection15:RealEstateAuctionDenitionsandRequirements:esechangesaddressconcernsexpressedbyrealestate

auctioneers and members of the public who attend auctions. ose concerns involve alleged abuses in the auction of real estate with regard

to absolute versus reserve actions and the use of false bids being utilized to unfairly raise the prices of real estate being auctioned. Eective

January 19, 2013.

FulltextversionsoftheabovechangesmaybeviewedontheNewspageoftheARECwebsite:www.arec.arkansas.gov.

Page 3

What I Know Now That I Didn’t Know Then

By Former AREC Commissioner Karen C. Crowson

My past six years of service on the Arkansas Real Estate Com-

mission (AREC) has by far been the most rewarding experience

of my real estate career. I was given opportunities to grow pro-

fessionally and personally. I am grateful to the Arkansas REAL-

TORS® Association for giving me the opportunity to serve a

second term. e three year terms we have in Arkansas can be

a hindrance to Commissioners who want to be involved in the

Association of Real Estate License Law Ocials (ARELLO).

Many jurisdictions have longer terms for their Commissioners.

AREC Executive Director Gary Isom encouraged me to get

involved in ARELLO leadership in my very rst year. I was

fortunate to have a great mentor in Gary as he was moving up

the leadership ladder with ARELLO. Gary served as ARELLO

President in 2010. Just two years later, due to a unique set of

circumstances, I was elected as 2012 ARELLO President.

In my role as President, I had the opportunity to meet with

licensees across our globe which included Canada (Nova Scotia

and Newfoundland), South Africa (where I was asked to speak

to a government forum between ocials and licensees), and

Japanese and Chinese delegations who were in the US discover-

ing the way we regulate the real estate industry. ese meetings

reinforced the belief I already had that our regulations not only

protect the public but also benet me as a licensee.

When I took that rst oath of oce as a Commissioner, I

knew my duties would include serving at the hearings when a

licensee was charged with violating the License Law. After serv-

ing many years with ARA Professional Standards Committee,

I thought this would be fairly easy. I had served on many Pro

Standards hearing panels both as a panel member and Chair. I

realized very quickly that I had much to learn about the pro-

cess and manner in which we would hear each case. Again,

this is where ARELLO membership is valuable to our Commis-

sioners. ARELLO administers Commissioner College for its

Commission members, training them in the art of the hearing

process and the regulation of the real estate industry.

I have learned that Arkansas is blessed to have a wonder-

ful working relationship between the REALTOR® association,

the Commission and all licensees. I can tell you that sta at

AREC are truly concerned that licensees have a working knowl-

edge of our laws and regulations. AREC hearings provide the

best knowledge regarding law violations. e agents in my of-

ce have benetted from the wealth of material for sales meet-

ing topics I received. All hearings are open to the public and I

would encourage every licensee to attend.

I have learned that Commissioners are very involved in the

creation and presentation of proposed laws and regulations. In

the past two sessions we have seen passage of new laws that

protect the public and aid our industry. e new Broker edu-

cation program will go a long way toward developing Brokers

who know how to operate with a keen awareness of our law and

regulations.

More than anything, it's about the relationships developed by

serving together. I have learned much from those I have served

with. Each Commissioner has a dierent approach to asking

questions during the hearing process, which enabled us to usu-

ally arrive at a consensus fairly quickly in deliberation. And,

in tribute to my friend, Tina Daniel, (I am sure those of you

who've attended one of her classes can relate) her Columbo-

style of asking questions left many respondents with their heads

spinning from not knowing what hit them.

Finally, I've learned that I have to use care in all my transac-

tions and to expect the unexpected. Many times in the past six

years, I've thought to myself that complaints from the public

can occur so easily; even when we try so hard to do the right

thing. But, I've also learned that we have friends at AREC who

are always willing to answer our questions and would prefer that

we ask, rather than ending up in the complaint process.

Commissioner Trammell, CRB, CRS, GRI, found-

ed Trammell and Company Realtors of Little

Rock in August 1978. During his 40 years in the

industry, he has served as Area Management Broker for the De-

partment of Housing and Urban Development and Property

Management Broker for the Department of Veterans Aairs.

Commissioner Trammell’s area of expertise spans the real es-

tate industry; however, his primary focus is in REO listings and

sales. He works with multiple asset management companies,

assisting them in reselling their assets to the public. In addition

to his broker/agent duties, Commissioner Trammell is also a

Certied Residential Appraiser.

Commissioner Trammell has held numerous leadership roles

in both local and state associations, including President of the

Little Rock Realtors Association (LRRA), Zone Director of the

Arkansas Realtors Association (ARA) and District Vice Presi-

dent of ARA. He was Arkansas Realtor of the Year in 1992,

when he also became a member of Omega Tau Rho.

Commissioner Trammell’s professional aliations also in-

clude the National Association of Realtors® (NAR) and the Co-

operative Arkansas Realtors Multiple Listing Services. In addi-

tion, he is a Trustee for the ARA’s Political Action Committee

and a member of the ARA’s Legislative Committee.

Commissioner Trammell was born in Little Rock and now

resides in Alexander with his wife of 40 years, Carol, and their

four dogs. ey have two children and two grandchildren.

When not working, Commissioner Trammell enjoys vacation-

ing in Destin, FL, playing golf, and spending time with family

and friends at their home-away-from home - Branson, MO.

(Continued from Page 1)

Appointments...

Page 4

T One Commissioner’s Opinion:

A Look Back on My Three Terms

By Commissioner Sylvester Smith

I am now in the last year of what will be my third and nal

term as a member of the Arkansas Real Estate Commission.

Serving the people of Arkansas and regulating this honorable

profession has been one of the great privileges of my life.

ere is no training program for Real Estate Commission-

ers. For those of us who are consumer representatives, there is

a tremendous learning curve. I was literally a blank slate when

I began. Today, as I prepare to depart, I am the senior mem-

ber of the Commission, having served nearly a decade. Dur-

ing this time I have presided over countless cases and worked

with many wonderful commissioners. I have seen a great deal

during this time and would like to share some of what I have

learned with you, the licensees.

Let me be clear, the content of this or any future article is

not legal advice. ese words are mine and mine alone. My

thoughts should not be taken as the policy position of the

Commission.

e Commission

e Real Estate Commission operates just like a court of

appeals. Instead of being in front of one judge, licensees appear

before a panel of commissioners. Like most judges, we come to

work every day with open minds and we know very little about

the case we will hear.

If the matter involves a complaint, then the AREC sta

will present the evidence against the licensee via an attorney

from the Arkansas Attorney General’s Oce. e licensee will

present their evidence themselves or with the help of private

counsel.

e commissioners listen to all of the evidence. en we

retreat to another room and we discuss the case. We argue back

and forth about what the evidence is and what it means. We

try to persuade one another. Often our decisions are the result

of compromise. Maybe a commissioner will vote to nd that

a licensee did in fact violate the rules in exchange for another

commissioner supporting a lighter punishment. Our system is

very much a judicial democracy.

Personalities Make a Dierence

An important thing to remember about the Commission

is that its membership regularly changes. With each new ap-

pointment the chemistry and personality of the body is altered.

During my early years on the Commission I served with Roy

Rainey and Doug Smith. I used to refer to them as the “hang-

ing judges.” ose two gentlemen valued the integrity of the

profession above all else. ey were quick to bring swift and

severe punishment to those who broke the rules.

e Commission has become more moderate in recent

years. Until recently, the Commission was chaired by real estate

educator, Tina B. Daniel. Tina’s recent demise has left a void at

the Commission and saddens us greatly. However, in her all-

too-short tenure, Tina helped us to understand the important

role of education and remediation for those who make unin-

tentional mistakes.

My Best Advice About Appearing Before the Commission

Don’t appear before the Commission. Far too often I have

seen cases come before us which should have been settled be-

fore a complaint was ever led. As I stated earlier, the Com-

mission is just like a court. I would not advise anyone to go

to court, unless the facts are clearly in your favor, because you

never know how a judge or jury will react to the facts of your

case.

e same can be said about the ve members of the Real

Estate Commission. Unless you have come and watched one of

the hearings or done extensive research, you will not know the

personality of the group of commissioners who will be decid-

ing your fate. You could nd yourself in front of a group of

“hanging judges” who will not tolerate the slightest missteps,

or you could appear in front of a group of more patient com-

missioners who end up requiring you to undertake many hours

of continuing education. Either experience could be costly.

I remember a case not too long ago when two agents were

ghting over a $1,600 commission. e agent who was the

respondent that day was found guilty of several rule violations.

is agent paid thousands of dollars in legal fees to their attor-

ney and a hefty ne. e agent was required to take continuing

education and also had their license suspended. e total cost

tothisagentwaswellover$10,000.Allforacasethatlikely

couldhavebeensettledfor$800.

is is not to suggest that licensees should allow themselves

to be threatened or bullied by people with baseless claims. e

Commission is well adept at separating legitimate claims from

meaningless ones. e suggestion here is that if you know your

case is on the margins, or that you broke the letter or spirit of

the law, then you may want to consider a settlement.

e Funny Cases

During my time on the Commission I have seen and heard

many interesting things. ere was the gentleman who wanted

a license and claimed that all of his troubles could be traced

back to his one mistake in life, which was marrying a Canadian

stripper. We once had a case in which a licensee was paying his

cable bill from his trust account and truly thought there was

nothing wrong with that.

e funniest of all was the case that

(Continued on Page 7)

Page 5

A Conversation Regarding Land

Contracts And Contracts for Deed

By Gary C. Isom, Executive Director, and Tim Grooms, Attorney

vation advances). Preferably, the buyer would want payments

(or that portion thereof that will pay the PITI payment on the

underlying loan) paid directly to the existing lender.

Similar consideration should be given with regard to real

estate and special assessment taxes – the Buyer must be sure

these are timely paid. In addition, the Buyer needs to re-

cord the Land Contract or a “memorandum” thereof so

that the world is on record notice of the Buyer’s interest.

Many buyers cause all payments to be made through a

reputable escrow agent, attorney or real estate broker with

express instructions to pay the PITI payments on the un-

derlying loan, taxes, assessments and other charges owed re-

garding the real estate, before any excess distribution is paid

to the Seller. e Escrow Agreement often includes a deed

from the Seller so that, when the Buyer has made all pay-

ments, the deed is simply recorded and a title policy issued.

Let us not all forget that these transactions have implications

for a Seller, also. Recently, the Arkansas Court of Appeals called

into question the available interest rate limitation – in the past,

being exempt from the Arkansas Usury law has been one of

the reasons for Land Contracts – and, in addition, agricultural

Land Contracts have interest rate and default limitations.

In addition, many sellers think they have the right to convey

their property in a “wraparound” situation and not pay o an

existing mortgage lien. However, most residential and com-

mercial mortgages have a “due-on-sale” clause which may be

triggered if a Land Contract is entered into since, like a typical

real estate contract, upon execution the buyer obtains “equi-

table title” which qualies as a “sale” under a due-on-sale clause.

Finally, there is a misconception that sellers have the im-

mediate ability to evict a Land Contract purchaser for default.

is may or may not be true, based on the down payment

made, number of installment payments made and improve-

ments to the property made by the buyer. Arkansas law follows

the ancient maxim that “equity abhors forfeiture” – translated,

that means that a Buyer who has quite a bit of “skin in the

game” may not be subject to eviction for default and, instead,

may have the protections of statutory and equitable redemp-

tion which may have to be foreclosed, either judicially or non-

judicially.

Recently, the issue of what persons or entities may avail

themselves of the statutory foreclosure remedy was questioned

by a federal bankruptcy court in Arkansas. e case was re-

versed, but questions remain that may need resolution in the

legislature.

Introduction: I recently visited with Attorney Tim Grooms

of Quattlebaum, Grooms, Tull and Burrow, PLLC, in Little

Rock about a real estate instrument commonly referred to as

a Contract for Deed or Land Contract. We occasionally nd

these legal documents at the center of complaints led with the

Real Estate Commission.

Gary Isom: Tim, Contracts for Deed, also referred to as

Land Contracts, have become a red ag for the Real Es-

tate Commission’s investigative section over the years.

While these instruments can certainly be used legitimate-

ly and legally, it has been our experience that the Con-

tract for Deed can also present problems and lead to

misfortune for those party to such instruments.

However, before we talk about the pitfalls we see with these

types of contracts, please explain for us how a Contract for

Deed diers from the more usual real estate transaction.

Tim Grooms: In a Contract for Deed, also known as a Land

Sale Contract or an Installment Land Sale Contract, the fee

simple title to the property remains with the seller until the

seller nancing is satised. Only when the buyer’s debt to the

seller is paid in full does the seller convey fee simple title to

the buyer. Of course, in a more typical real estate contract, fee

simple title passes immediately at closing.

Gary: anks for that clarication, Tim. Now, if a party de-

cides to enter into a Contract for Deed, what are some of the

essential components that the party should seek or be con-

cerned with to protect their interests?

Tim: First and foremost, the buyer should obtain a title search

or title commitment to learn what encumbrances may exist on

the property. It is helpful to know the relationship the buyer

may need to have with any existing lender, including a possible

right to cure any default by the seller regarding the existing

loan.

e buyer should also wish to know that the payments to

be made under the Land Contract will be sucient to cover

required payments on the existing loan and, in addition, that

the aggregate of payments under the Land Contract will pay o

the existing loan.

e buyer may also wish to obtain an “estoppel” from the

existing mortgage lender conrming the loan payo, monthly

payment amounts, whether taxes or insurance are escrowed

and conrming the mortgage lender will not make any “future

advances” under the existing loan (other than property preser-

(Continued on Page 8)

Page 6

FORMAL HEARING DECISIONS

Thee following information is extracted from Findings of Fact, and Conclusions

of Law and Order issued by the Commission from December 2012 through February

2013.

Louis Butler, Salesperson, and Michael Stinnett, Princi-

pal Broker, Stinnett Realty, Little Rock, AR:

InFormalHearing#3253,RespondentButler’ssalesper-

son’s license was revoked and Respondent Butler was ordered

topayaneof$5,000to theAREC within30 daysof the

date of the nal Order. Respondent Stinnett was also ordered

to successfully complete a minimum of six hours broker agent

continuing education to be approved in advance by the Execu-

tive Director and in addition to the annual continuing educa-

tion hours required to renew a license. e Executive Director

shall determine the time for completing the extra hours. Re-

spondent Stinnett was also ordered to submit a written oce

policy/procedure manual on agent-owned property within six

months of the date of the nal Order. e Commission

found Respondent Butler guilty of violating A.C.A. § 17-42-

311(a)(4), 17-42-311(a)(6), 17-42-311(a)(7), 17-42-311(a)

(13), 17-42-311(a)(9) and 17-42-311(a)(11), and AREC Reg-

ulations10.7(a)(1),8.5(a)and10.1(b). RespondentStinnett

was found to be in violation of A.C.A. § 17-42-311(a)(2) and

AREC Regulation 10.4(b).

InDecember2010,theSubjectPropertylocatedat12205

Sundew Cove, North Little Rock, AR, was quitclaimed from

the owner Larue Young to Carla Perkins, Respondent Butler’s

companion. At the time, the Subject Property was still subject

to a mortgage held by BAC Home Loan Servicing. e Quit-

claim Deed was never led with the Pulaski County Circuit

Clerk. Respondent Butler had no interest in the Subject Prop-

erty recorded or unrecorded.

On June 1, 2011, Complainants Karona and Shannon

Smith entered into a Residential Lease with Option to Pur-

chase the Subject Property with Respondent Butler. Respon-

dent Butler signed the agreement as Lessor even though the

agreement referred to him as Lessee. Complainants Smith paid

RespondentButler$5,000asanon-refundabledownpayment

for the Option to Purchase the Subject Property. e term of

theinitialleasewas12months,with$1,100dueeachmonth.

e total purchase price of the Subject Property was agreed to

be$150,000minusthedownpayment.

e$5,000wasnotplacedinatrustaccount,escrowac-

count or any account controlled by Respondent Butler’s Prin-

cipal Broker, Respondent Stinnett. Respondent Butler did not

disclose to Complainants Smith that he held an Arkansas Sales-

person License. Complainants Smith believed that Respondent

Butler was the owner of the Subject Property and that they were

leasing the property from Respondent Butler. From June 1,

2011untilJune1,2012,RespondentButlercollected$1,100

rent each month from Complainants Smith. ose funds were

not remitted to Larue Young or the mortgage holder.

On June 20, 2012, Complainants Smith received notice

from the Mikel Law Firm of Little Rock, AR, acting on behalf

of the mortgage holder, BAC Home Loan Servicing, notifying

the Complainants Smith that the Subject Property was in fore-

closure and would be sold at the Pulaski County Courthouse

if action was not taken. At this time, Complainants Smith dis-

covered that Respondent Butler was not the owner of the Sub-

ject Property. On August 3, 2012, Complainants Smith ter-

minated the lease on the Subject Property. Respondent Butler

refundedComplainantsSmith$3,900fromtheoriginaldown

payment.OnAugust15,2012,theSubjectPropertywassold

at foreclosure to Federal National Mortgage Association.

Respondent Stinnett was fully aware of Respondent But-

ler’s property management activities with respect to the Sub-

ject Property, but Respondent Stinnett took no action to en-

sure that Respondent Butler placed the non-refundable down

payment into a trust or escrow account. Respondent Stinnett

took no action to ensure that Respondent Butler remitted the

monthly rents to him as supervising Broker.

Eric P. Lambert, Salesperson, ERA Henley Real Estate,

Conway, AR:

InFormalHearing#3255,RespondentLambertwasal-

lowed to keep his real estate license.

Respondent Lambert was found to be in violation of A.C.A.

§ 17-42-311(a)(7).

On October 11, 2012, the Arkansas Commission on Law

Enforcement Standards and Training revoked the certication

of Respondent Lambert pursuant to Arkansas Code Annotated

§12-9-402 and Regulations 1010(3)(a)(iii), 1010(3)(a)(iv),

1010(3)(a)(viii), and Specication S-21 of the Commission on

Law Enforcement Standards and Training. e factual ndings

in the Findings of Fact, Conclusion of Law, and Order entered

by the Arkansas Commission on Law Enforcement Standards

and Training on October 11, 2012, have become nal and were

incorporated into the Findings of Fact, Conclusion of Law, and

Order entered by the Arkansas Real Estate Commission.

Page 7

FORMAL HEARING DECISIONS

ee following information is extracted from Findings of Fact, and Conclusions

of Law and Order issued by the Commission from December 2012 through February

2013.

Jerey (Scott) Davis, Inactive Salesperson, Springdale,

AR:

InFormalHearing#3252,RespondentJerey(Scott)Davis

wasorderedtomakepaymentinfullof$75totheCommis-

sion within 30 days of the date of the Hearing. If Respondent

fails to make payment in full within that time, his real estate

license will be revoked.

Respondent Davis was found to be in viiolation of A.C.A.

§ 17-42-311(a)(13), and AREC Regulations 3.2(a) and 3.2(b).

On or about April 9, 2012, Respondent provided a coun-

ter checkinthe amount of$50.00as payment of apenalty

in accordance with the Commission’s Consent Order, Formal

Hearing # 3209. e subject counter check was dishonored as

“Account Closed” by Arvest Bank. e Respondent was noti-

ed of this action by letter on August 31, 2012, and advised

thata$25.00servicechargewasincurredasaresult.Amoney

order or cashier’s check was therefore required as payment of

thepenalty.Fundsintheamountof$75.00werenotreceived

and a second letter of notication was sent to the Respondent

on September 24, 2012. Both letters were sent by certied mail

to the Respondent, who accepted both of them. Payment of

thepenaltyandbadcheckfeeforatotalof$75.00,todate,had

not been paid to the Commission by the Respondent.

(NOTE:RespondentJerey(Scott)Davisfailedtomakepay-

ment as ordered by the Commission and his license was re-

voked in accordance with the Commission’s order.)

Changes in Auction Regulations Effective January 19

ChangesinSection15oftheRealEstateCommissionRegu-

lations are intended to address concerns expressed by real estate

auctioneers and members of the public who attend auctions.

ose concerns involve alleged abuses in the auction of real

estate with regard to absolute v. reserve auctions, and with the

use of false bids being utilized to unfairly raise the prices of

real estate being auctioned. e changes, which went into eect

January19,addresstheseissuesasfollows:

o Adds denitions to applicable terms

o Species the content that must be included in an auc-

tion agreement

o For absolute auctions, specically requires a statement

in the auction agreement between the auctioneer and the sell-

er by which the seller acknowledges the legal repercussions of

agreeing to an absolute auction

o Adds language providing the legal meaning of standard

auction practices such as bidding, retracting bids and the auc-

tioneer’s announcement of completion of the sale

o Establishes specic requirements applicable to adver-

tising of an auction

o Sets out requirements for establishing validity of ab-

sentee and internet bidders

o Establishes record maintenance and retention require-

ments, specically identifying documents that should be main-

tained for absolute auctions

o Identies prohibited activities that can lead to disci-

plinary actions against the auctioneer and his or her supervising

brokers

o Extends jurisdiction of Real Estate Commission to un-

licensed individuals participating in a real estate auction

(Continued from Page 4)

I will always call the “a tree is a tree case.” In that case, a seller’s

agent had listed several pieces of undeveloped land for sale. e

agent had taken a picture of one of the lots which consisted of a

series of trees. e agent then used this one picture for all of the

lots in this grouping of properties and listed them on the MLS.

A young woman came upon one of the listings and decided

to make an oer. e seller’s agent then took the woman and

her agent to the site where she had taken the picture and said,

“is is it.” e young woman saw that this property had road

access, which would save her money, so she made an oer and

shortly closed on the property.

Several months later the young woman was driving by her

lot and found a group of men working on the property. She

stopped to talk with them and found out this lot was not her

property at all. In actuality the land she bought was several

hundred yards away and land-locked.

e sales agent came before us in a hearing. When she was

asked why she would use the same picture for all of the lots,

and how she could take the young woman to the wrong lot,

the agent responded, “ere was nothing but trees out there.

What’s the dierence between one tree and the next? A tree is

a tree.”

Sure enough, a tree is a tree. A ne is a ne. A suspension is

a suspension, and a license revocation is forever.

e salient point here is that what you do is very impor-

tant. You have the power to give people the great gift of home

ownership. e vast majority of you are wonderful professional

people who take your jobs very seriously. Unfortunately, there

are a few bad apples in every bunch. For those of you who

choose to be bad apples, I’m sure I’ll see you soon.

Until then, be well. If any of you would like for me to come

share my interesting stories and insight at your sta meetings

or Realtor Board please call the sta or email me at Sylvester.

[email protected].

Commissioner Smith...

Arkansas Real Estate Commission

612 South Summit Street

Little Rock, AR 72201-4701

Inside This Issue

April 2013

Two New Commissioners Named.....1

Farewell to a Friend..........................2

2012 Regulation Changes.................2

“What I Didn’t Know Then”...............3

“One Commissioner’s Opinion”.......4

Land Contracts.................................5

Formal Hearing Decisions.............6,7

Changes in Auction Regulations......7

PRSRTSTD

US POSTAGE

PAID

PERMIT #75

LITTLE ROCK AR

Page 8

(Continued from Page 5)

Gary: Ok, let’s speak more specically about mortgages on the

property. Can an owner of property sell their property by Con-

tract for Deed if the owner has an existing mortgage on the

property? Secondly, can the owner of the property take out a

mortgage on the property after the owner has “sold” the prop-

erty by Contract for Deed?

Tim: e answer to both questions is “yes” - as to existing

mortgages we discussed that before and the recordation of the

Memorandum of the Land Contract (or the Land Contract it-

self) prevents any future mortgages from having “priority” over

the Land Contract buyer’s interest.

Gary: Tim, those of us close to the real estate profession know

that licensed real estate agents are allowed to practice law under

very limited circumstances so that they may ll in the blanks

of real estate contracts that have been pre-approved by an Ar-

kansas attorney. Does that limited authority allow a real estate

agent to complete a Contract for Deed, or, should an attor-

ney be engaged to prepare the legal instruments in this type of

transaction?

Tim: I fear the limitation in the Pope County case, requiring

a present transfer of a fee simple interest, is very limiting with

regard to licensee involvement in Land Contracts.

Gary: Tim, thanks for taking time to share your thoughts with

us on the Contract for Deed. Is there anything else that you

would like to share for the benet of real estate agents and con-

sumers who encounter situations whereby a Contract for Deed

is the chosen method to sell real estate?

Tim: I strongly encourage licensees to involve a qualied real

estate attorney to assist in these matters. It may be required

by the Pope County case (and thus AREC Regulation 10.10)

but, in any event, these transactions have been the subject of

much litigation and hearings before the AREC. No further

proof should be needed that these situations are fraught with

peril for the Buyer and, correspondingly, the licensees involved

in the transaction.

A Conversaon About Land Contracts, Contracts for Deeds...