Virginia REALTOR Magazine. Spring 2018. by Virginia REALTORS®

Virginia REALTOR

The magazine for Virginia’s real estate professionals

Spring 2018

magazine

Tax Reform: What it means for YOUR business

INSIDE 50 th Anniversary of the FHA

Tax Reform

Lessons Learned

Down Payment Grants & More Tell Your First-time Buyers: “Ask Your Lender if You Qualify for a VHDA Loan Combo!”

PRESIDENT’S MESSAGE

What

Change? The single most constant thing in our real estate lives is probably change. Some of us love it, some of us hate it. But it is the fact of our life.

VHDA’s Loan Combo is designed with your first-time homebuyers in mind! It includes: u u u u

An Affordable VHDA Mortgage Down Payment Grant MCC Homebuyer Tax Credit VHDA’s Free Homebuyer’s Class

We offer the ONLY loans in Virginia with this combination of money-saving benefits! Find a VHDA Loan Combo lender at: vhda.com/LoanCombo

Every day, we are bombarded with more change… and that will not change! It is continuous and growing at an exponential pace, as it should… So, what do we do about it? We should be “change aware” and know that it is coming, whether we like it or not. We should be ready to adjust, to pivot, to turn on a dime, whatever you want to call it. You don’t have to be a great tech whiz to know that technology is driving some of the change, and you don’t have to be a tech whiz to use the new technology to your advantage. However, you have to be able to understand that all those tech features might be great tools for you to use as you build your business.

For the most part, our clients already know that lots of tech tools are out there, and they use them on a regular basis. Our clients often know what they want out of us before they ever get to us…or at least they think they do. They know they will get great service—that’s part of being partnered with a REALTOR®. But I’m referring to thinking beyond just service. What they really need, and they may only have an inkling of this, is our skills. They need our skills as trusted advisors, negotiators, marriage counselors, baby-sitters, hand-holders, and guides to making their lives better, whether they are buying or selling. TAKE THE LEAD and embrace the change so that it is less intimidating for you and for your clients. It will make them happier, and while it might make you uncomfortable in the short run, the final result will be that you are happier, too!

Jay Mitchell 2018 President Virginia REALTORS®

COMMONWEALTH | SPRING 2018

Virginia REALTOR Magazine

The FHA: A Crusade for Fair Housing

Published by the Virginia REALTORS® Shaping the future of real estate. Virginia REALTORS® 10231 Telegraph Road Glen Allen, Virginia 23059 General Office Hours: 8:30 a.m. to 5:00 p.m. Telephone: 804.264.5033 The mission of the Virginia REALTORS® is to enhance members’ ability to achieve business success. Virginia REALTOR® Magazine (ISSN#10888721) is published by the Virginia REALTORS®, 10231 Telegraph Road, Glen Allen, VA 23059-4578; (804) 264-5033. Virginia REALTORS® members’ annual dues include a subscription to Virginia REALTOR® Magazine. Periodicals postage paid at the Glen Allen, Virginia, post office and additional mailing offices USPS Per. #9604. Postmaster: send address changes to Virginia REALTOR® Magazine, 10231 Telegraph Road, Glen Allen, Virginia 23059 Custom design services provided by Polychrome Collective Virginia REALTOR® magazine by the Virginia REALTORS® is licensed under a Creative Commons Attribution-Non Commercial-No Derivs 3.0 Unported License.

contents 3 6 10

President’s Letter 50th Anniversary of the FHA Tax Reform

stay in the loop 16 18 20

VIRGINIA REALTOR® MAGAZINE | SPRING 2018

Forms Factor Legal Lines Lessons Learned

24 28 30

Legislative Update

www.virginiarealtors.org

Virginia REALTORS® products, services, and information.

Member Benefits Update CEO’s Letter

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Request to join our member group for access to business news and event updates.

VIRGINIA REALTOR® MAGAZINE | SPRING 2018

FEATURE

The FHA: A Crusade for

Fair Housing by Donna Harrison

As recently as the 1960s, “steering” was an accepted procedure in real estate: directing people of color away from white communities. “Redlining” was legal: the practice of withholding loans and government funds from minority neighborhoods, which were often outlined in red on maps. Funding, however, flowed more freely in neighborhoods outlined in green, which were white, middle- or upper-class areas. And advertisements for rentals could specify “No Children.” Religious discrimination also occurred, with many deed restrictions preventing Jewish individuals from living in certain neighborhoods or certain buildings. April 11, 2018, marks the fiftieth anniversary of the Fair Housing Act, a significant step in ending discrimination. This law, Title VIII of the Civil Rights Act of 1968, is still a leading concern in the day-to-day actions of real estate professionals. The FHA protects individuals and families from unfair treatment by providers of housing (landlords, real estate companies, municipalities, and lending companies). This discrimination might be in the sale, rental, financing,

negotiating, or advertising of housing. Discrimination is prohibited when based on race, color, religion, national origin, sex, disability, and familial status. Virginia also added “elderliness” as a protected category, preventing age (55 years and older) from being a source of discrimination. Some localities have adopted additional categories, as well. The Fair Housing Act was initially part of the Civil Rights movement’s push for racial justice. Martin Luther King, Jr. was one of its strongest supporters; after King’s assassination, President Lyndon B. Johnson urged Congress to pass the bill in King’s memory. The House passed it on April 10, 1968, and Johnson signed it the next day. Over the years, the act has been expanded to prohibit discrimination based on gender and disability, and to protect families with (or expecting) children. The U.S. Department of Housing and Urban Development (HUD) administers the FHA, investigating complaints and adjudicating cases or arranging for other agencies to do so.

“Today, the FHA reports that most complaints are based on discrimination faced by clients with disabilities.”

VIRGINIA REALTOR® MAGAZINE | SPRING 2018

Virginia REALTORS® played a significant role in having two agencies handle fair-housing issues in the Commonwealth. The Association worked hard to ensure that complaints involving real estate licensees be handled by the Virginia Real Estate Board, which understands both licensees and real estate-related issues, while complaints against non-licensees be handled by the Virginia Fair Housing Board. Martin Johnson, Senior Vice President of Government Relations, and his Policy and Advocacy team have worked hard to represent the rights of REALTORS® regarding fair housing.

regarding assistance animals. Virginia REALTORS®’ legislative consultant Chip Dicks, who works with members of the General Assembly and legislative staff to ensure legislation upholds and reflects the intent of Virginia REALTORS®, played a significant role in this achievement. Chip worked closely with the Property Managers Council to ensure this law protected the rights of the disabled, while also preventing abuse of the assistance-animal designation. This law clarifies what an assistance animal is, explains how a landlord can request information identifying an assistance animal as opposed to a pet, and explains the interactive process required by the FHA. With this legislation, Virginia became the first state to pass a comprehensive reasonable accommodation statute.

Today, the FHA reports that most complaints are based on discrimination faced by clients with disabilities. Housing providers must make reasonable accommodations available. One issue regarding these accommodations is the presence of assistance animals. According to HUD, these animals are not pets; instead, they provide assistance to alleviate the effects of a disability. Tenants with assistance animals cannot be denied housing or charged a pet-deposit and/or pet-rent. In 2017, Virginia REALTORS® was instrumental in passing a law providing Virginia property managers with a clear process to follow

The FHA approaches situations regarding disabilities on a case-by-case basis. A landlord can request exemption from providing accommodations that may be considered unreasonable or an undue financial burden. In addition, the FHA offers exemptions from compliance under other conditions: owner-occupied buildings with no more than four units, single-family housing sold or rented without a broker, and housing operated by organizations that provide housing only to members. HUD and its agencies ensure the application of the law by sending out “testers” to determine if housing providers are in compliance with the FHA. For that reason, real estate

VIRGINIA REALTOR® MAGAZINE | SPRING 2018

professionals should take care to avoid the appearance of noncompliance and follow these steps:

• Always use the equal opportunity housing logo. While not required by law, the logo indicates that you intend to comply with fair housing laws. • Provide objective, third-party information such as data collected by a school district or the state. Avoid interpreting information or being accused of providing only limited information. • Let clients make their own choices and place limitations on the areas where they look for homes. Although real estate professionals must provide equal access to housing, buyers and renters may discriminate and limit home searches to areas determined by their own criteria. Avoid making suggestions that might be considered “steering” your clients. • Apply the same standards to all clients. • Don’t write listing copy that might appear to be aimed at certain homebuyers.

FINALLY

• Check state and local housing laws, and be sure to follow them as well.

The FHA embodies the REALTORS®’ commitment to equality. Challenges to the FHA remain and, after fifty years, its application remains a primary concern of REALTORS®. Under this law, all Americans will receive equal treatment and access to housing.

say yes to success.

“A REALTOR pledges to conduct business in keeping with the spirit and letter of the Code of Ethics. Article 10 imposes obligations upon REALTORS and is also a firm statement of support for equal opportunity in housing.” ®

VIRGINIA REALTOR® MAGAZINE | SPRING 2018

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FEATURE

The Highs and Lows of the New Tax Reform and What It Could Mean for Virginia

“Where homes are valued high enough, an owner would be better off taking MID over the standard deduction.”

by Shannon O’Neill

The passing of the Tax Cuts and Jobs Act heralds a new and uncharted era for the U.S. economy. The new law increases standard deductions and limits itemized deductions which alters the relationship between home ownership and tax incentives. Under the new law many will pay lower taxes, which could translate into renters saving money for a downpayment, but also means a diminished incentive when it comes to the tax benefits of home ownership. Key changes include: • The Mortgage Interest Deduction (MID) is capped at $750,000, down from $1 million previously • A $10,000 cap on the amount of state and local property taxes and income or sales taxes paid Recent analyses show that under the previous law, roughly 44 percent of U.S. homes were worth enough for it to make sense for a homeowner to itemize their deductions and take advantage of the MID. Under the new law, the percentage drops to 14.4 percent. In a statement made after the law passed, National Association of REALTORS® (NAR) President Elizabeth Mendenhall raised concern as to what the new law means for

VIRGINIA REALTOR® MAGAZINE | SPRING 2018

REALTORS® and homeowners and how “The new tax regime will fundamentally alter the benefits of homeownership by nullifying incentives for individuals and families while keeping those incentives in place for large institutional investors. That should concern any middle-class family looking to claim their piece of the American Dream.” There are some positives as well—the capital gains tax remains basically the same, and agents and brokers who earn income as independent contractors or from passthrough businesses will see a substantial deduction on that business income. While it’s too early to tell what this will ultimately mean for the housing market in Virginia, there are some statistics and projections that help clarify how the new law could impact real estate and how REALTORS® can prepare. The NAR is projecting a slowdown nationally in the projected growth of home prices of one to three percent in 2018 due to some of the tax changes as well as low inventories and job momentum. According to their estimates, the higher cost and higher tax markets are most likely to be impacted negatively because of the mortgage interest and state and local tax incentives. For example, states that will see price VIRGINIA REALTOR® MAGAZINE | SPRING 2018

Benefits for REALTORS® One bonus for agents and brokers who earn income as independent contractors or via pass-through businesses is a significant 20 percent deduction on business income (aka Section 179 Expensing). The new law increases the amount of qualified property eligible for immediate expensing from $500,000 (current law) to $1 million, expands the definition of qualified real property and business-related equipment eligible for expensing and significantly increases the amount of first-year depreciation that can be claimed on passenger automobiles used in business.

declines like New Jersey (-6.2 percent), District of Columbia (-4.8 percent) and New York (-4.8 percent) are also those with higher cost housing and taxes. By comparison, the NAR’s home price forecast for Virginia shows an expected increase of 1.6 percent (based on current market conditions, interest rate effect, and employment and construction momentum). The crux of the matter is that in higher priced markets where homes are valued high enough, an owner would be better off taking MID over the standard deduction. In the NAR’s 2018 Price Forecast for Virginia, the number of owners claiming the MID for homes over $750,000 is estimated to be 79,973. Under the new tax law, these owners could lose out on their potential savings of around $1,264 which would not just be a one-year event but over 10 years. It’s important to keep in mind that this is a relatively small number when compared with a state like California where over 800,000 owners fall into this category. “(With) the impact on the incentives of owning a home due to the increased standard deduction and due to the limitation of the state and local income taxes, I do think the tax incentives are not as great as they previously were,” says David Reardon, CPA and partner at Mitchell Wiggins in Richmond. “For example, I think a couple making $150,000 a year with maybe a $300,000 mortgage, they could very likely take the standard deduction as opposed to having to itemize their interest and real estate taxes and other things. I think it could impact those owning a home in that they will not take those deductions, they’ll just take the standard deduction.” According to real estate data and analytics firm 12

VIRGINIA REALTOR® MAGAZINE | SPRING 2018

ATTOM Data Solutions, two areas of Virginia have loans above the new $750,000 threshold—20 percent of the homes in Arlington and 27 percent of homes in Falls Church. And, with Alexandria and Arlington having the highest percentage of homeowners with property taxes over $10,000, owners who fall into these groups would lose out on some savings from the incentives. Nationally speaking, this percentage is still a good deal lower than higher priced markets like New York County (Manhattan) where 63 percent of homes are above the $750,000 threshold. Though Northern Virginia has a higher percentage of homes above the $750K threshold and higher property taxes— a fall 2017 analysis for the Northern Virginia Association of REALTORS® (NVAR) by Spencer Shanholtz, a research associate with the George Mason University Center for Regional Analysis, shows Falls Church as the most expensive jurisdiction with a July 2017 median sale price of $830K, followed by Arlington ($567,500), then Alexandria, Fairfax County and Fairfax City averaging close to $500,000—that’s not the case in the rest of the Commonwealth where the number of homes above the threshold are under five percent. For example, the median home value in Virginia is $246,300. So, when you look at areas like Norfolk with a median home value of $182,000 or the Richmond Metro area at $212,900, the potential impact of the MID lessens. It’s also important to note that the $750,000 cap only applies to mortgages originating after Dec. 15th, 2017. Homes purchased before this date are “grandfathered in,” meaning that homeowners who bought before that time can still deduct interest on up to $1 million.

Evan Liddiard, NAR’s senior representative for tax policy, highlighted the benefit during a recent panel discussion on the topic, saying, “The reason (for) this 20 percent deduction put into the law is to prevent people from feeling like they have to incorporate to get this lower deduction . . . they’re seeing regular corporations getting this huge tax reduction so why not other people who are earning business income through other types of entities?”

the tax credit must be spread out over five years (unless the developer bought property by Dec. 31, 2017, and starts construction work on it by July 1). The new tax reform law will have an impact on how we think about housing and considerations taken when purchasing a home. Mark Zandi, chief economist at research firm Moody’s Analytics, explained the potential impact of the tax reform in a recent analysis, saying, “Current house prices reflect current tax breaks. That’s because home buyers generally purchase as much home as they can afford, after considering taxes. If those tax breaks are scaled back, as they are in the new tax law, then house prices will suffer.”

Tax Credits that Remain The capital gains tax structure on the sale of a home remains and the like-kind exchange for real property remained relatively unchanged. Meaning homeowners selling a home lived in for at least two of the past five years can still exclude up to $250,000 of the capital gains from the sale (if single) and $500,000 if married. “That’s positive as there was some discussion about reducing that or eliminating that. That’s still an effective tax strategy,” says Reardon. In addition, the Historic Tax Credit was modified but retains the 20 percent credit for certified historic structures. This is significant for Virginia where cities like Richmond, Hampton Roads, and Roanoke have seen historic structures like tobacco warehouses revitalized by developers into condos and luxury apartments. According to recent studies conducted by Virginia Commonwealth University’s Center for Urban and Regional Analysis at the L. Douglas Wilder School of Government and Public Affairs, from 1997 to 2014, state tax credits were used for 2,582 building projects in Virginia. What cost the state about $1.2 billion in tax credits, spurred over $4 billion of private investment in building projects. Previously, developers could take the entire 20 percent federal tax credit in the first year, but under the new law, VIRGINIA REALTOR® MAGAZINE | SPRING 2018

Interested in receiving free legal updates while on the go? Laura Farley General Counsel

Subscribe to Caveat REALTOR®, the popular podcast from the Virginia REALTORS® legal team.

Erin Barton Deputy General Counsel

Cate Oroszlan Staff Counsel

Jon Haley Staff Counsel

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11. RISK OF LOSS: All risk of loss or damage to the Property by fire, windstorm, Loss of Risk Keeping the casualty, or other cause Property Insured is assumed by Seller until settlement. In the event of substantial loss or damage to the Property before settlement, Purchaser shall have the option of either (i) terminating this FORMS FACTOR

by Laura Farley General Counsel, Virginia REALTORS®

Two days before settlement, disaster strikes, and the house is significantly damaged. What happens to the contract? Do the parties still need to go to settlement? The Virginia REALTORS® Residential Contract for Purchase (Form 600) contains a provision to allocate the risk of loss during the contract period. Because the property still belongs to the seller until closing, and is often still in the seller’s possession, he is not only in the best position to prevent substantial damage to the property, he is likely the only one able to insure the property against such loss or damage. In the event that there is substantial damage or loss to the property prior to settlement, the purchaser has two options available to them: terminate the contract and receive the deposit, or, continue with the contract. If the buyer opts to continue with the contract, the seller must sign over any insurance rights to the buyer. Note that this provision applies to substantial loss or substantial damage. Any damages to the property that can

be repaired prior to settlement or very shortly after are not likely extensive enough to trigger this paragraph, and buyers should not use this as a “get out of jail free” card if there is minor damage to the property prior to settlement. While the seller is obligated under different provisions of the contract to convey the property in the same condition as of the date of contract, except as otherwise agreed, this paragraph is intended to deal with situations where it would be nearly impossible for the seller to provide the property in the same physical condition. Because the risk of loss remains with the seller until settlement, listing agents should counsel their clients to keep the property insured until after settlement. Sellers who may be proactive and contact their insurance company to cancel the policy effective the day of settlement may find themselves in trouble if settlement is delayed for any reason and damage is sustained to the property in the interim.

Form 600: Residential Contract for Purchase

11. RISK OF LOSS: All risk of loss or damage to the Property by fire, windstorm, casualty, or other cause is assumed by Seller until settlement. In the event of substantial loss or damage to the Property before settlement, Purchaser shall have the option of either (i) terminating this Contract and recovering the

Deposit, or (ii) affirming this Contract, in which event Seller shall assign to Purchaser all of Seller’s rights under any policy or policies of insurance applicable to the Property

VIRGINIA REALTOR® MAGAZINE | SPRING 2018

LEGAL LINES

Lions and Tigers and Bears by Erin Barton Deputy General Counsel, Virginia REALTORS® Recent news on emotional support animals has peaked public interest with sometimes seemingly unbelievable tales of peacocks trying to board planes, bear cubs comforting students in classrooms, and ducks treating post-traumatic stress disorder. Although these stories are sometimes exaggerated through news and social media, emotional support animals can provide an important service as we have seen with the use of therapy dogs at schools to comfort children after violent trauma. Unfortunately, the confusion and misunderstanding surrounding the issue of emotional support animals, and the possibility of fraud and legal violations, are real as well. There are several different laws that address assistance animals. The Americans with Disabilities Act allows trained service animals in places of public accommodation like shopping malls or grocery stores. The Air Carrier Access Act allows emotional support animals, with the proper documentation, onto planes. Most relevant to real estate, the Fair Housing Act obligates landlords to modify their policies to allow residents to have emotional support animals under certain circumstances. It is discriminatory to refuse to make reasonable accommodations to your policies or services when an accommodation may be necessary to afford a person with a disability equal opportunity to use and enjoy the dwelling unit. Specifically, a landlord cannot refuse to rent to someone solely because they have an assistance animal, despite the presence of a “no pets” policy. So, what do you do when a person makes a request for an assistance animal? 18

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Oh My!

In Virginia, the term assistance animal is defined broadly as an animal that helps an individual with a physical or mental disability and includes service, emotional support, therapy, and companion animals. These animals are not required to be specially trained or certified and are not limited by species or breed. If a potential tenant requests a reasonable accommodation to allow an assistance animal, the parties must participate in an interactive process to resolve the request. But what kind of information can you ask the requestor to provide? The law looks at three different scenarios. First, if a person’s disability is obvious or known, or if the need for the accommodation is readily apparent or known, the landlord may not request any additional verification of the Tenant’s disability. For example, if the tenant is blind and uses a guide dog, you cannot ask her to prove she is disabled. However, if a person’s disability is readily apparent or known, but the need for an assistance animal is not, the landlord may ask for additional verification to evaluate the disability-related need for the animal. For example, if a developmental disability is known, but you don’t understand how an assistance animal is necessary, you can ask for verification of a disability-related need for the animal. Finally, if a person’s disability is not obvious, readily apparent, or otherwise known, the landlord may request that the tenant provide documentation verifying a disability and the disability-related need for an assistance animal.

For example, it would not be readily apparent if a person was suffering from anxiety, so a landlord could request verification. It’s important to note here that you are not requesting medical records or a diagnosis. You are merely asking for documentation that there is a legally qualifying disability and that an assistance animal would provide a disability-related need (i.e. comfort). The increased reports of websites where you can simply print fraudulent “proper documentation” prompted recent legislative changes requiring that documentation must be provided by someone with whom the requester has a therapeutic relationship. A therapeutic relationship is defined in the code as (1) the provision of medical care, program care, or personal care services in good faith to the person with the disability by a mental health service provider; (2) a person with a valid unrestricted state license, certification, or registration to serve persons with disabilities; (3) a person from a free peer support or similar group who has actual knowledge about the disability; or (4) a caregiver, reliable third party, or government entity with actual knowledge of the person’s disability. However, there is no requirement that the person be located or licensed in Virginia. Once a landlord has the proper verification and/or documentation, the landlord can evaluate whether the animal poses a clear and present threat of substantial harm to others or the dwelling itself. That evaluation must be based on actual evidence or reports related to the specific animal, and cannot be solely based on the breed, size, or type of animal. VIRGINIA REALTOR® MAGAZINE | SPRING 2018

LESSONS LEARNED

Lessons Learned

property mismanagement CASE STUDY 1

THE SITUATION Don Lock engaged the services of Liberty Properties, Inc. to manage his two rental properties, which had originally been managed by Moon City Realty. On December 1, 2014, while the property was managed by Moon City Realty, Amy Baylor entered into a Lease Agreement for Mr. Lock’s property located at 200 Main Street, Richmond, Virginia (“Main Street Lease”). The Main Street Lease provided for a security deposit in the amount of $400 to be held by Moon City Realty. The lease also had an automatic renewal provision for one year if the tenant did not provide 60 days’ notice. On December 7, 2015, after Mr. Lock switched management companies from Moon City to Liberty Properties, Inc., as the Landlord, and Thomas Smith, as Tenant, entered into a Lease Agreement for Mr. Lock’s property located at 100 West Ave, Richmond, Virginia (“West Ave Lease”). The West Ave Lease provided for a security deposit in the amount of $600 to be held by Liberty Properties, Inc. This lease also had an automatic renewal provision for one year if the tenant was occupying the property as of November 30, 2017. On November 1, 2016, Mr. Lock signed a Property Management Agreement for Wise Real Estate Company to manage these two rental properties. Wise Real Estate Company never received the security deposits for the Main Street Lease or the West Ave Lease from Liberty Properties, Inc. Mr. Lock received the security deposits on October 10, 2017 for both of the leases from Liberty Properties, Inc. Mr. 20

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by Cate Oroszlan Staff Counsel, Virginia REALTORS®

CASE STUDY 2

Lock filed a complaint against the principal broker of Wise Real Estate Company, Jane Boone. THE INVESTIGATION Investigators learned that Wise Real Estate Company maintains a written Policies and Procedures Manual that employees are to sign to acknowledge that they have read and received the manual. However, the manual is provided to employees involved in real estate transactions only, not those engaging in property management transactions. Further, investigators learned that property management policies and procedures are not incorporated into the manual. During the investigation, Ms. Boone stated that, “the timely return of Mr. Lock’s deposits slipped through the cracks due to the dismissal and hiring of a new property manager occurring at the same time as the release of his Property Management Agreement with Wise Real Estate Company.” THE RESULT The Board determined that Ms. Boone did not exercise reasonable and adequate supervision of her agents because she did not ensure that agents engaged in property management services knew of the policies and procedures of Wise Real Estate Company. The Board required Ms. Boone to complete four classroom hours of continuing education pertaining to Property Management and issued a fine of $250.

THE SITUATION In August 2017, Alice Roy entered into a verbal agreement with Trey Thomas, principal broker of Thomas Real Estate and Auctions, to provide property management services for her property located at 241 Concord Road, Lynchburg, Virginia. On August 15, 2017, Ms. Roy entered into a lease agreement with Jeffrey Mills to lease the property. Mr. Mills left for vacation on September 17, 2017. Upon his return on October 1, 2017, he discovered that the locks on all doors had been replaced with temporary deadbolt locks. There was a key in one of the locks, so Mr. Mills had access to the property. He immediately contacted Mr. Thomas and Ms. Roy. Ms. Roy said that Mr. Thomas would have the locks fixed. On October 6, 2017, Mr. Mills reported to Ms. Roy that Mr. Thomas had not fixed the locks and had not responded to his daily messages. Mr. Mills continued to request that the property be secured, but Mr. Thomas was not responsive. On October 11, 2017, a locksmith came by the property and put the old locks back on the doors. However, Mr. Mills discovered that the old locks did not line up with the holes on the door frames and therefore the doors could not be secured. Mr. Mills continued to contact Mr. Thomas about the doors. On October 23, 2017, Mr. Mills was hospitalized for stress and moved out of the property. Mr. Mills filed a complaint against Mr. Thomas and Thomas Real Estate and Auctions.

THE INVESTIGATION Investigators confirmed that Mr. Thomas and Ms. Roy never had a written Property Management Agreement regarding this property. Mr. Thomas reported to the investigators that he received a call from Mr. Mills’ business partner stating that Mr. Mills had abandoned the property. He said that Ms. Roy told him to inspect the property and to change the locks if Mr. Mills had abandoned the property. After deciding that Mr. Mills had abandoned the property, Mr. Thomas hired a locksmith. Mr. Thomas reported that the locks were off the doors to the property for only a short time but was unsure of exactly how long. The locksmith reported that he was hired by Mr. Thomas to change the locks. He could not recall how long the temporary locks were on the doors but confirmed that he was not asked to perform any other work on the property. THE RESULT The Board determined that Mr. Thomas failed to safeguard the interests of the public by providing property management services to Ms. Roy without a written property management agreement and failing to ensure the property was secure between October 1, 2017 and October 23, 2017. The Board required Mr. Thomas to complete four classroom hours of continuing education pertaining to Real Estate Agency and issued a fine of $1,500. VIRGINIA REALTOR® MAGAZINE | SPRING 2018

#VirginiaREALTORS

LEGISLATIVE UPDATE

COULD RADON IMPACT YOUR SALES? The Virginia Department of Health (VDH) can answer all your questions and provides free radon training courses specifically designed for Realtors.

RPAC

Zone 1 Highest Potential (greater than 4 pCi/L) Zone 2 Moderate Potential (2-4 pCi/L)

Virginia REALTORS had an extremely successful year. ®

Zone 3 Low Potential (less than 2 pCi/L)

ALL 11 OF THE VIRGINIA REALTORS®’ INITIATIVES PASSED THE GENERAL ASSEMBLY WITH STRONG SUPPORT. Contact Ryan Paris - Radon Coordinator, 804-864-8150, ryan.paris@vdh.virginia.gov www.vdh.virginia.gov

HB 311

Clarifying a Virginia Supreme Court ruling regarding unlawful detainers after a foreclosure sale. Passed the House 99-1. Passed the Senate 40-0. Approved by the Governor on March 9.

HB 439

Protecting REALTORS® from liability when referring clients to a language translation service. Passed the full House 98-0. Passed the Senate 40-0. Approved by the Governor on February 26.

HB 824

Regarding short-term rental ordinances in Lexington and Virginia Beach. Passed the House 90-3. Passed the Senate 39Y-1N-1 Abstention. Approved by the Governor on April 4.

HB 855

Clarifying the process of accepting “rent with reservation.” Passed the House 96Y-3N-1 Abstention. Passed Senate 40-0. Approved by the Governor on March 9.

HB 862

Regarding certain aspects of real estate teams. Passed the House 100-0. Passed the Senate 40-0. Approved by the Governor on March 9.

HB 864

Regarding Earnest Money Deposits, Broker CE, Post-License CE and other technical changes. Passed the House 98-0. Passed the Senate 40-0. Approved by the Governor on February 28.

HB 923

Creating a one-page summary of important information in POA/COA documents. Passed House 100-0. Passed the Senate 40-0. Approved by the Governor on March 2.

SB 197

SB 514

Regarding Earnest Money Deposits, Broker CE, Post-License CE and other technical changes. Passed the Senate 39-0. Passed the House 100-0. Approved by the Governor on March 2.

HB 528

Protecting REALTORS® from liability when referring clients to a language translation service.

Broker Conference 2018

Passed the Senate 39-0. Passed the House 100-0. Approved by the Governor on March 2.

SB 758

Creating a one-page summary of important information in POA/COA documents. Passed the Senate 40-0. Passed the House 100-0. Approved by the Governor on March 9.

OCTOBER 17, 2018 RICHMOND HILTON RICHMOND HOTEL & SPA/ SHORT PUMP

Clarifying the process of accepting “rent with reservation.” Passed the Senate 40-0. Passed the House 97Y-1N-1 Abstention. Approved by the Governor on March 9.

VIRGINIA REALTOR® MAGAZINE | SPRING 2018

MARK YOUR CALENDAR

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Map

Virginia REALTORS® 2018 Annual Convention September 25-27, 2018 Join us for Virginia REALTORS®’ biggest event of the year, offering outstanding The Main | Norfolk, VA education from the nation’s leading industry experts. Join hundreds of REALTORS® from across Virginia to build your referral network, learn, get inspired, and of course, enjoy some MAJOR fun.

This year’s event will be held at Norfolk’s new destination hotel: The Main. This modern, upscale hotel sits along the downtown Norfolk waterfront, offering gorgeous views of the Elizabeth River in a thriving downtown setting.

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VIRGINIA REALTOR® MAGAZINE | SPRING 2018

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MEMBER BENEFITS

All member

Legal Hotline

Member Benefits Be sure and utilize your member benefits to help answer your legal questions, keep you up-to-date on industry news, and help troubleshoot technical difficulties.

Legal Hotline: www.virginiarealtors.org/legal-hotline

Inman Select Membership inman.com

Tech Helpline 1-800-276-4216

The Virginia REALTORS® Legal Hotline is the fastest way to get vital answers on questions regarding Virginia’s real estate law. This member benefit gives you FREE access to our expert legal team AND can help you avoid the costly expenses of lawyer fees. Every effort will be made to contact you within four business hours after you submit your question.

Knowledge is Power, and with your subscription to Inman Select, you’ll gain insight into what’s happening in the industry. Virginia REALTORS® offers members this benefit to keep you in-the-know with leading information and resources. Inman Select is the subscription publication for professionals who need the inside scoop on real estate news and trends. The membership includes access to daily real estate news, informative webinars and in-depth special reporting segments, as well as $100 off Inman Connect events using your email as the promo code. Regularly a $199 annual membership, Inman Select is provided to all members of Virginia REALTORS®.

REALTORS® rely on technology every day. So, what happens when something goes awry? For Virginia REALTORS®, crises can be averted by making a FREE call to our Tech Helpline!

Examples of frequently asked questions include • “What are my disclosure obligations for advertising?” • “Do I have to be licensed to practice property management?” • “When does an Earnest Money Deposit have to be deposited in a purchase transaction?”   • “There was a mold problem that was remediated by a qualified professional; do I, as the Listing Agent, need to disclose that?” Save big money on legal fees while protecting your bottom line by consulting with our lawyers on your next question!

VIRGINIA REALTOR® MAGAZINE | SPRING 2018

The Tech Helpline offers support for hardware, software, networking, and digital devices. Members can contact knowledgeable analysts via phone, e-mail, or online chat for help with any device. The Tech Helpline staff will troubleshoot problems and offer solutions, and their team is especially attuned to your needs as a REALTOR®.

VIRGINIA REALTOR® MAGAZINE | SPRING 2018

HEADQUARTERS

From the CEO’s Desk 2018 is off to a fantastic start for the Virginia REALTORS®! Following a tremendously successful General Assembly, it’s exciting to look at all that’s already been accomplished and all that’s still on the horizon in 2018. This year, we aim to keep YOUR voice at the forefront. I would like to personally thank each of you who has taken the time to submit a “Big Idea” to our 2018 President Jay Mitchell, as well as those of you who submitted feedback for our communications survey. Each submission is read and valued, and we thank you for making us aware of what is important to YOU. I want to take a moment to focus on this year’s General Assembly. I was able to visit the Session several times, and I even testified against a bill that would have prevented our brokers from receiving revenue from brokerowned affiliated companies like mortgage or title companies. It was really something to watch our Policy and Advocacy team in action. This year, they had nearly 20 newly elected legislators they had to get to know—trying to build relationships in such a short period of time is exceptionally challenging. And just like real estate sales, lobbying and advocating to policymakers on our issues is only effective when we have those relationships. I received great feedback from the leaders on both sides of the aisle about how responsive

VIRGINIA REALTOR® MAGAZINE | SPRING 2018

our state lobby team is. Mary Lawson and Meghan Welch were new additions to our team this year, and they had no trouble adapting to the needs of our members. Together, with Martin Johnson, Anthony Reedy, and our talented Legislative Counsel, Chip Dicks, meaningful relationships with legislators were grown. This was all done in an effort to not only pass new laws that are beneficial to REALTORS®, but also to prevent harmful legislation from ever seeing the light of day. With that in mind, I also want to recognize each of you who has taken time to build relationships with legislators while back at home! These bonds play an essential role in our ability to work with the legislators when they come to the state capital. When hours are long and stress levels are high, these relationships carry us far. As 2018 continues, I encourage each of you to continually lend your voice, ideas, and passion to our pursuits. Your expertise and insight are invaluable as we work to support the real estate business environment for both REALTORS® and the clients and customers you serve. Virginia REALTORS® are proud to TAKE THE LEAD in shaping the future of real estate in Virginia. Cheers to a great year!

Terrie Suit CEO Virginia REALTORS®

Contact Virginia REALTORS

2018 Leadership Team

We’re online at www.virginiarealtors.org

Jay Mitchell President Berkshire Hathaway Home Services Towne Realty, Virginia Beach jay.mitchell@BHHSTowne.com 757.422.2200

Virginia REALTORS®: The Blog can be found at virginiarealtors.org/blog

Beckwith Bolle President-Elect Carter Braxton Preferred Properties, Leesburg beckwith@carterbraxtonproperties.com 703.777.7772

For membership, site log-in, and dues questions: Ask for Amy Hafer, Director of Business Systems ahafer@virginiarealtors.org | 804.249.5725

Kemper Funkhouser Vice President Funkhouser Real Estate Group, Harrisonburg kemper@funkhousergroup.com 540.434.2400 Pat Sury Treasurer Montague Miller & Company, Charlottesville sury@ntelos.net 434.973.5393 Claire Forcier-Rowe Immediate Past President Long and Foster Real Estate, Richmond claire.forcier.rowe@gmail.com 804.360.3636 Terrie Suit Chief Executive Officer Virginia REALTORS® tsuit@virginiarealtors.org 804.264.5033

If you have questions, we’re ready to help. Our office can be reached at (804) 264-5033. Hours of operation are from 8:30 am to 5:00 pm.

For questions about professional standards and Code of Ethics: Contact our Legal Department at ProStandards@virginiarealtors.org For questions or comments related to our magazine or website: Ask for Steve Daley, Senior Vice President of Marketing and Events sdaley@virginiarealtors.org | 804.387.0480 If you’d like to have someone speak at your association or brokerage: Ask for Lynne Wherry, Association Outreach Director lwherry@virginiarealtors.org | 804.249.5711 To find out more about conferences, seminars, and professional education: Ask for Lili Paulk, Education Director lpaulk@virginiarealtors.org | 804.249.5704 For information about RPAC: Ask for Kathy Felton, Director of RPAC Development kfelton@virginiarealtors.org | 804.622.7950

VIRGINIA REALTOR® MAGAZINE | SPRING 2018

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