Property management seems to continue to be the most consistent violation. The June/July Open House Publication of the Nevada Real Estate Division identified eight (8) Licensees who were disciplined regarding property management activities. The violations included allowing operation of unlicensed property management services; failing to deposit security deposits into the security deposit trust account; failure within a reasonable time to remit money that belonged to others which came into Licensee’s possession; engaging in property management activity without first obtaining a permit to do so (multiple licensees); commingling clients’ funds with those of Licensee; failure to submit client funds to broker; performing services outside of area of expertise; engaging in property management activity without the knowledge of broker; failure to maintain designated trust accounts; and, entering into residential lease and property management agreements, and otherwise managing properties, in the name of an entity not registered with the Division. The violations resulted in discipline included mandatory education fines between $2,500 and $330,000, and license revocation!
One matter involved a number of violations including failure “to provide her transaction file to her broker”. Obviously, the duty of the broker is to supervise licensees and one of the most important ways to complete this duty is by the requirement of a company or transaction file which is to contain all the relevant documents pertaining to the transaction. In fact, NAC 645.607(7) provides, in pertinent part, that “in determining whether a licensee has been guilty of gross negligence or incompetence under paragraph (h) of subsection 1 of NRS 645.633 or conduct which constitutes deceitful, fraudulent or dishonest dealing under paragraph (i) of that subsection, the Commission will consider, among other things, whether the licensee: …has ensured that each agreement for the sale, lease or management of property or time shares is contained in a written agreement that has been signed by all parties and that his or her real estate broker and each party to the real estate transaction has a copy of the written agreement.” Moreover, a complete record of each real estate transaction, together with records required to be maintained pursuant to NRS 645.310, must be: (a) kept in this State; and (b) open to inspection and audit by the Division upon its request during its usual business hours, as well as other hours during which the licensee regularly conducts his or her business. NAC 645.655(2).
That’s right – you have an obligation to ensure the transaction file is complete and a violation can result in discipline by the Division!
PRACTICE POINTER: Maintaining an up to date transaction file is not only required by law but also assists the Broker in his/her duties and is another way to ensure that another experienced real estate professional reviews the transaction in order to prevent mistakes. Conducting your transactions with a lack of transparency is an invitation to disaster.