The current residential real estate
market in Nevada has created questions and
issues relating to how
to handle multiple
offers. The Real
Estate Division
recently published
guidelines to deal with
multiple offers, which
are posted on our web
site at
www.red.state.nv.us
.
Although the guide-
lines do not cover all
possible scenarios and
situations, they do give
general principles to
observe.
One of the pressing
issues is whether the
terms of a purchase
agreement can be
disclosed by the listing
agent. The Real
Estate Commission
and the Division have
had discussion
regarding the handling
of multiple offers dur-
ing public meetings
over the past several
months. The conclusion of the discussion
was that disclosing the terms of another
buyer’s offer could violate NAC 645.605 (6)
MULTIPLE OFFERS
Volume 26 Issue 1 Department of Business & Industry Summer 2004
Inside
this
issue . . .
by Pam Riebe
Chief of Compliance
Real Estate Division
which states: “Has breached his obligation of
absolute fidelity to his principal’s interest or his obliga-
tion to deal fairly with
all parties to a real es-
tate transaction.”
Along the same lines,
an “acceleration”
clause in an offer
could violate the same
law. For example, if
an offer is written to
state, “I will pay
$2,000.00 over the
highest offer up to
$300,000.00,” how
would the purchaser
know what the highest
offer was? It seems
that the buyer would
have to be shown – or
at the least told – what
the highest offer was.
Then the question
becomes: Is this fair
to the buyer who
submitted the highest
price offer?
We recognize that
in today’s market there
are more buyers than
sellers. We
caution licensees to keep in mind the laws that govern
their license, and their duty to “deal fairly with all
parties to a real estate transaction.”
From the Administrator's Desk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
What You Need to Know About Nevada’s Business License. . . . . . . . . . . 4
Protect Your Clients . . . Refer Them to a Certificated Mover . . . . . . . . . 6
Manufactured Home Dealer or Real Estate Broker . . . . . . . . . . . . . . . . . . 7
Real Estate Disciplinary Actions - Hearings . . . . . . . . . . . . . . . . . . . . . . . 9
Real Estate Disciplinary Actions - Stipulations . . . . . . . . . . . . . . . . . . . . . 12
The Toxic Mold Crisis: Will it be the Next Asbestos . . . . . . . . . . . . . . . 14
Division Contact Numbers and E-mail . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Open House
Volume 26, Issue 1
is an official publication of the
STATE OF NEVADA
DEPARTMENT OF BUSINESS
AND INDUSTRY
Sydney Wickliffe
Director
REAL ESTATE DIVISION
Gail J. Anderson
Administrator
Matt Di Orio
Editor
LAS VEGAS OFFICE
2501 E Sahara Avenue, Suite 101
Las Vegas NV 89104-4137
(702) 486-4033
CARSON CITY OFFICE
788 Fairview Drive, Suite 200
Carson City NV 89701-5453
(775) 687-4280
http://www.red.state.nv.us
Production of Open House is financed
by the Real Estate Education
and Research Fund, as provided
in NRS 645.842.
The mission of the Real Estate Education Fund
is to ensure awareness of relevant laws and
practices by all licensees through proactive
education and information efforts.
Articles by outside experts express the authors’
viewpoints and should not be mistaken
for official policy of the Real Estate Division.
They are included because they address relevant
issues that may be of interest to Nevada licensees.
REAL ESTATE COMMISSION
Joe Mayer, President
895 Roberta Lane, Suite 101 B1
Sparks, NV 89431
Charles Mack, Vice President
4035 S. Tenaya Way, Suite 200
Las Vegas, NV 89147
Beth Rossum, Secretary
3875 South Jones
Las Vegas, NV 89102
Lee Gurr
554 S. Fifth Street
Elko, NV 89801
Ben Green
85 Continental Drive
Reno, NV 89509
2 Open House Volume 26, Issue 1
REMINDER: Even if INACTIVE, a licensee
must notify the Division of a change of
residential address.
NAC 645.360 states, in part:
The Division may cancel a license if . . . a
licensee, whether active or inactive, fails
to inform the Division within 10 days after
a change in the address of his business or
residence.
DID YOU KNOW . . .
. . . that you can receive law/ethics continuing educa-
tion credit
by attending a meeting of the Real Estate Commis-
sion? Here’s how it works:
1. Attend a meeting of the Commission which lasts at least three
hours;
2. Make sure you sign-in and sign-out on the attendance roster;
3. Use up to six hours of continuing education once during any
two-year period.
The Commission is scheduled to meet on the
following dates:
Reno: July 20-22
Las Vegas: September 21-23; November 16-18
Credit will not be given during the time a licensee participates
or is otherwise affiliated with a specific disciplinary hearing.
For meeting agenda, date, time, and location, go to our website
at www.red.state.nv.us/
Look for items of interest on our web
site at www.red.state.nv.us
/
• Proposed regulations and Workshops for NAC 645
• FY 04 Licensing Statistics
• Requests for Proposals for FY 05 ERRF funding
• Calendar of approved Continuing Education courses
• Schedule and agendas of Commission meetings
• Future Open House newsletters
• 2005 Legislative Bill Drafts (when released)
From the Administrator's Desk . . .
Gail J. Anderson
Students are
proposed. Many
of the changes in
the education
areas are a result
of the work of an
Education Task
Force, which met
in 2001-2002, and
made
recommendations to the Real Estate
Commission. The Division will conduct
workshops on the proposed regulations after the
draft language from the Legislative Council
Bureau is returned to the Division. We anticipate
one workshop in Carson City and one in Las
Vegas. Please check our web site for the
posting of the Workshop dates and locations and
the draft language.
Several of my section heads have been
involved with the new Commission for
Common-Interest Communities in working with
them as they draft regulations for their new
jurisdiction. Myself and the Chief Investigator,
and the Legal Administrative Officer for the
Division will work with that Commission on an on-
going basis. The Division has three Governor
appointed Commissions with which we work –
and that alone keeps us very busy.
I would also like to introduce you to my new
Deputy Administrator, Lisa Young. Lisa is
based in the Las Vegas office, and oversees the
personnel matters, the Licensing Section, the
Education Section, the Information Section, and
the Fiscal Section of the Division. It has been a
tremendous help to me to have Lisa literally “at
my right hand” in assuming areas of
administrative responsibility.
I am very pleased with the staff we have at the
Division. We are working very hard to respond to
inquiries and issues and to conduct our
processes in a timely and professional manner.
By the end of the next fiscal year, we will have
fully implemented the new data system – allowing
us to perform more functions electronically, to
provide licensee information via the web, and to
produce more efficient reports and statistics.
For those of us in State government, our “year”
ended June 30
th
. Fiscal Year 2004 was a
productive and very busy year.
It was a banner year for technology at the
Division! Two major accomplishments came out
of the 2003 Legislative Session. The Division
was funded for new computers and upgraded
software throughout the agency. This was the
first time in the agency’s history that all
employees received new equipment and
upgraded software – at the same time. The new
equipment was desperately needed, but was also
in preparation for the new data system
implementation.
The Legislature approved funding for the
Integrated Data System, which will combine the
17 separate data base systems the Division
currently utilizes. Real estate licensee data has
been housed since 1981 in a Cobol mainframe
program. Appraisers and timeshare agents were
added to the mainframe. As other licensing and
registration programs were added to the
jurisdiction of the Division, internal data bases
were created in Excel and Access for them. The
new system will integrate all of our various data
systems, and will provide web-based access to
the public portions of the system. The Request
for Proposal process took many months, and the
Board of Examiners in June approved the
selection of CAVU Corporation out of Raleigh,
North Carolina, as the vendor for our system. In
July, the Division begins working with CAVU to
implement the system.
The Real Estate Commission conducted a ten-
year review of the regulations of Chapter 645.
The Commission began reviewing regulations at
their June 2003 meeting in Reno, and continued
through April 2004. As a result, there are
extensive proposed changes to NAC 645. Some
of the changes are minor housekeeping clean-up.
Other changes are more substantive, and include
the adoption of the 30 hour post-licensing
curriculum and an increase in continuing
education hours from 15 to 24 hours for the
subsequent two-year renewal periods. Instructor
qualifications for pre-licensing, post-licensing,
and continuing education are made consistent.
Standards for Instructors and Standards for
Open House Volume 26, Issue 1 3
Effective 7/22/03, all businesses doing business in Nevada must obtain a State Business
License as required by SB8 of the 20
th
Special Session of the Nevada Legislature.
1. Q. What is the cost of a State Business License?
A. The State Business License Fee is $100. The license is renewable annually.
2. Q. How much is the renewal fee and when is it due?
A. The renewal fee is $100. Taxpayers who currently have a business license shall pay
the renewal fee based on their anniversary date.
Entities no longer in business in this state must submit a written statement to the
Department at least 10 days before their anniversary date in order to avoid the annual fee
and a penalty for non-payment.
3. Q. What is the penalty for late or non-payment?
A. A person who fails to submit the annual fee required by the due date shall pay
a penalty in the amount of $100 in addition to the annual fee. This penalty
goes into effect 07/01/04.
4. Q. Are there any other requirements for businesses obtaining a State Business
License?
A. Every business that purchases tangible personal property for storage, use or other
consumption in this state must register with the Department of Taxation for a Use Tax
Account.
5. Q. What constitutes a business?
A. A corporation, partnership, proprietorship, limited-liability company, business
association, joint venture, limited-liability partnership, business trust and their
equivalents organized under the laws of the State of Nevada or another jurisdiction shall
be deemed to constitute a business for the purposes of NRS 360.760 through NRS
360.795 regardless of any purpose for which that entity is organized or operated and
regardless of whether that entity conducts an activity for profit.
6. Q. Are any businesses not required to obtain a State Business License?
A. Government entities, nonprofit religious, charitable, fraternal, or other organizations
that qualify as a tax-exempt organization pursuant to 26 U.S.C. § 501(c), or a business
whose primary purpose is to create or produce motion pictures are not required to obtain
a State Business License. A “Limited-Liability Company which consists of a single
member if the limited-liability company is disregarded for the purposes of federal income
taxation as an entity separate from its owner, and a natural person who is regarded as a
substantial owner of any trust or portion thereof pursuant to the provisions of U.S.C. 671
to 679.
Also, a person who operates a business from his home and earns from that business (net
income from the business reported on the Federal Tax Return) not more than 66 2/3 percent
of the average annual wage, as computed for the preceding calendar year, pursuant to
chapter 612 of NRS, is not required to obtain a State Business License for the next year. The
average annual wage fluctuates, for 2003 the 66 2/3 percentage of the average annual wage
is $21,500. For 2004 the 66 2/3 percentage of the average annual wage is $22,000.
NEVADA DEPARTMENT OF TAXATION
WHAT YOU NEED TO KNOW ABOUT NEVADA’S
BUSINESS LICENSE
4 Open House Volume 26, Issue 1
WHAT YOU NEED TO KNOW ABOUT NEVADA’S BUSINESS LICENSE (cont.)
7. Q. What is meant by “person who operates a business from his home”?
A. A person who operates a business from his home means a natural person who does not
own, lease, rent or license any real property, other than his personal residence, for use in
furtherance of that business and does not hold any part of his personal residence open to the
general public. A natural person shall not be deemed to own, lease, rent or license any real
property that he uses strictly for the purpose of maintaining a post office box, posting a
business license in accordance with requirements imposed by a county or municipal
ordinance, or periodically selling or exhibiting wares at craft shows.
8. Q. Are trade show or convention participants required to obtain a State Business
License?
A. A business not located in this State that takes part in a trade show or convention held in this
State is not required to obtain a business license specifically for that one event.
9. Q. Are businesses selling at swap meets in this State required to apply for a State
Business License?
A. Yes, they are considered to be renting space outside of their personal residence and are
required to apply for a State Business License.
10. Q. Are real estate agents and brokers required to apply for a State Business License?
A. Yes, they are not considered to be working from their personal residence and are
required to apply for a State Business License.
11. Q. Are a husband and wife considered one taxpayer?
A. Yes, as long as the business is not separately incorporated.
12. Q. How do I obtain a State Business License?
A. You may obtain an application by downloading one from our website at
http://tax.state.nv.us or by contacting the Nevada Department of Taxation office nearest you.
When submitted, the application must be accompanied by the $100 license fee. A signer’s
signature on an application is considered a sworn statement of his or her authority to sign on
behalf of the entity being registered.
13. Q. If I have several businesses, but they are all owned as sole proprietor businesses,
do I have to get State Business Licenses for each one?
A. Sole proprietors may have more than one business and only be required to have one State
Business License. However, if a person is a sole proprietor and also conducts business under a
separate corporation or other entity, State Business Licenses will be required for each entity.
14. Q. What are some examples of businesses that are now required to apply for a
business license that were not required to apply prior to the implementation of SB 8 of the
20
th
Special Session of the Nevada Legislature?
A. Sole proprietors without employees were not previously required to obtain a State Business
License. However, employer status no longer is a factor in determining which businesses must
register for a State Business License. All businesses are now required to obtain a State
Business License unless they are exempted for one of the reasons listed above in #6. In
addition, individuals who lease or rent out property and report this on a Federal Tax Return form
1040 schedule E and individual owners of farms who report on a Federal Tax Return form 1040
schedule F must also obtain a State Business License.
15. Miscellaneous—A Business is required to keep all records for four years. The same or
similar provisions which exist for other Title 32 taxes regarding audits, confidentiality of
information, administrative procedures, etc., are applicable to this license fee.
Open House Volume 26, Issue 1 5
6 Open House Volume 26, Issue 1
The TSA receives numerous complaints from
persons who have contracted for moving services
with companies that are operating illegally. The
majority of these complaints involve excessive
property damage, stolen/missing property, or being
overcharged for services. To help protect the public
and get the word out on illegal movers, the TSA has
asked the Real Estate Division to share this article
with you to enhance your awareness regarding the
regulation of household goods movers (HHG) in the
State of Nevada.
Household goods movers must obtain a
Certificate of Public Convenience and Necessity
(CPCN) from the State of Nevada TSA before they
may legally conduct intrastate transportation of
household goods. If an intrastate moving company
does not have a CPCN then they are operating
illegally. A CPCN should not be confused with a
business license from a local governmental agency.
Most persons don’t realize that there is a difference.
The State of Nevada CPCN is a privileged license
and requires the holder to meet a number of
standards such as the establishment of uniform
rates and the maintenance of proper insurance. A
CPCN also requires moving companies to assure
that annual safety inspections of their vehicles have
occurred and to verify that their drivers are qualified
and drug tested in accordance federal guidelines.
As licensed real estate professionals, if you are
making recommendations or referrals to moving
services, it is important that you are familiar with the
laws regulating HHG movers. There are two sets of
Nevada law that apply. They are the Nevada
Revised Statutes (NRS), chapter 706 and the
Nevada Administrative Codes (NAC), chapter 706.
The TSA regulates common motor carriers which
are defined by NRS 706.036 as “any person or
operator who holds himself out to the public as
willing to transport by vehicle from place to place,
either upon fixed route or on-call operations,
passengers or property, including a common motor
carrier of passengers, a common motor carrier of
property, and a taxicab motor carrier.” Household
goods (HHG) movers are included in this definition.
The transportation of household goods is defined
by NRS 706.137as “the transportation by motor
vehicle of household goods between places within
this state including:
The movement of household goods;
Any combination of packing, loading and unloading,
incident to the movement of household goods; and
Any movement of household goods accomplished
through the use of a rented or other vehicle not
owned by the shipper which is driven by someone
associated with an entity that has a commercial or
financial interest in providing services related to the
movement of household goods which are being
transported.”
If a person operates as a HHG mover without a
certificate, then he is in violation of NRS 706.386
which states “It is unlawful, except as otherwise
provided in NRS 373.117, 706.446, 706.453, and
706.745, for any fully regulated common motor
carrier to operate as a carrier of intrastate
commerce and any operator of a tow car to perform
towing services within this state without first
obtaining a certificate of public convenience and
necessity from the Authority.”
If a person advertises as a HHG mover without a
certificate then he is in violation of NRS 706.758
which states in part that, “It is unlawful for any
person to advertise services for which a certificate
(see Protect Your Clients, page 8)
Real Estate Licensees: Protect Your
Clients…Refer them to a Certificated Mover
by: Byram Tichenor, Chief of Enforcement & Tim Janda, Investigator
Nevada Department of Business and Industry
Transportation Services Authority
Byram Tichenor is the Chief of Enforcement / Manager
of Transportation for the Nevada Transportation Services
Authority (TSA). The TSA is responsible for providing
regulatory oversight to intrastate transportation companies
involved in the operation of limousines, household goods
moves, tow trucks, busses and taxi cabs operating outside
of Clark County. Mr. Tichenor assumed his current posi-
tion with Nevada TSA following a career totaling nearly 30
years in federal law enforcement.
Special thanks to TSA Investigator Tim Janda who
provides key oversight to the household goods mover
initiative in Las Vegas and who contributed greatly to this
article. Mr. Janda is the Authority's point of contact for mat-
ters pertaining to household goods movers. He may be
contacted at (702) 486-3303, ext. 406.
As a professional courtesy, the Manufactured
Housing Division offers a limited license for the
sale of used manufactured/mobile homes
(personal property) in conjunction with the sale of
real property. Requirements and application for
this license are minimal compared to a regular
dealer’s license. A limited dealer’s 2-year license
is $1300 including legislature-mandated
Recovery Fund, and renewals are $800 including
Recovery Fund. Additionally, real estate
licensees working for a real estate broker who
holds a limited dealer’s license may sell under
the supervision of the broker without obtaining a
manufactured home sales license normally
required of other sales people working for other
dealerships.
A real estate broker who holds a limited
dealer’s license with the Manufactured Housing
Division pursuant to Nevada Revised Statutes
(NRS) 489.331 may sell a USED home only in
connection with the sale of a fee simple interest
in real property and the USED manufactured /
mobile home is situated on the real property sold.
A Limited Dealer is NOT LICENSED TO SELL
OR OFFER TO SELL ANY NEW HOME.
Additionally, a Limited Dealer CANNOT SELL
ANY USED HOME LOCATED IN A MOBILE
HOME PARK. NRS 489.7252 charges the
Division with the responsibility for providing a
mandatory form of contracts to be used in sales
transactions for manufactured/mobile homes.
How does this affect your sales transaction?
If the manufactured/mobile home has already
been converted to real property PRIOR to the
sale, only real estate statutes and regulations
apply.
If the home has NOT been converted to real
property at the time of the sale, manufactured
housing statutes and regulations apply. You
must use the “Purchase Contract Used Home
Purchase” and the “Listing Agreement” pursuant
to Nevada Administrative Code (NAC) 489.232
and 489.234. Copies of the contracts are
available at www.mhd.state.nv.us
. Even if the
home is to be converted at the end of your sale,
it is considered to be personal property at the
time of the sale.
A limited dealer is subject to NRS 489 and
NAC 489 just as are all licensees. This means
that for the personal property portion of the sale,
you must function as a manufactured/mobile
home dealer rather than a real estate broker.
The Manufactured Housing Division will take
disciplinary action against unlicensed dealers
and for violations of NRS/NAC 489.
Additionally, all disciplinary actions will be
reported to the Real Estate Division and any
other applicable jurisdiction.
As a dealer under NRS 489, you have
different and greater responsibilities than you
have as a real estate licensee, including
submission of Dealer’s Reports of Sale and
titling.
If you do not want to meet requirements of
NRS 489, you may always elect to utilize a
regularly licensed dealer to handle the sale of
the personal property manufactured/mobile
home.
The Manufactured Housing Division is
always happy to answer questions and help you
work out issues. For licensing questions call
Joan Hutchings at 702-486-4590.
For other questions call Jerry Holmes at
702-486-4135 ext 269.
Open House Volume 26, Issue 1 7
Manufactured Home Dealer or
Real Estate Broker?
by Jerry Holmes, Investigator
Nevada Department of Business and Industry
Manufactured Housing Division
The Division offices will be closed
Monday, September 6
th
in observance of Labor Day.
Jerry Holmes has been an Investigator for the Manu-
factured Housing Division since 1999 where his ex-
panded duties include writing regulation/legislation for
the agency. He began with the State of Nevada over ten
years ago for a short stint with Parole and Probation be-
fore he “escaped” to the Public Utilities Commission
where he became a Compliance Investigator.
of public convenience and necessity or a contract
carrier’s permit is required pursuant to NRS
706.011 to 706.791, inclusive, unless the person
has been issued such a certificate or permit.”
These laws could also impact you, as a real
estate professional. NRS 706.756 Subsection
1(a) through 1(i) states, “1. Except as otherwise
provided in subsection 2, any person who:
Operates a vehicle or causes it to be operated in
any carriage to which the provisions of
NRS 706.011 to 706.861, inclusive apply without
first obtaining a certificate, permit or license, or in
violation of the terms thereof;
Fails to make any return or report required by the
provisions of NRS 706.011 to 706.861, inclusive,
or by the Authority or the Department pursuant to
the provisions of NRS 706.011 to 706.861,
inclusive;
Violates, or procures, aids or abets the violating
of, any provision of NRS 706.011 to 706.861,
inclusive;
Fails to obey any order, decision or regulation of
the Authority or the Department;
Procures, aids or abets any person in his failure to
obey such an order, decision or regulation of the
Authority or the Department;
Advertises, solicits, proffers bids or otherwise
holds himself out to perform transportation as a
common or contract carrier in violation of any of
the provisions of NRS 706.011 to 706.861,
inclusive;
(g) Advertises as providing: (1) The services of a
fully regulated carrier; or (2) Towing services,
without including the number of his certificate of
public convenience and necessity or contract
carrier’s permit in each advertisement;
(h) Knowingly offers, gives, solicits or accepts any
rebate, concession or discrimination in violation of
the provisions of this chapter;
(i) Knowingly, willfully and fraudulently seeks to
evade or defeat the purposes of this chapter. . . is
guilty of a misdemeanor, and upon conviction
thereof shall be punished by a fine of not less than
$100 nor more than $1,000, or by imprisonment in
the county jail for not more than 6 months, or by
both fine and imprisonment.”
Protect Your Clients…Refer them to a Certificated Mover
(continued from page 6)
8 Open House Volume 26, Issue 1
TIPS FOR HOUSEHOLD GOODS MOVES
No matter how smoothly it goes, moving can be a stressful experience. To eliminate at least
some of the stress, the Nevada Transportation Services Authority offers the following suggestions:
1. Obtain a list of certified local movers from one of our offices, either Las Vegas
(702-486-3303) or Sparks (775-688-2800).
2 . Be sure the mover explains the various insurance options. You may need to
purchase extra insurance to obtain full replacement of lost or damaged goods.
3. Get two or more estimates based upon a physical inventory of your possessions.
You are entitled to a written, binding estimate.
4. Get everything in writing. Don’t accept verbal price estimates or pick up and
delivery commitments.
5. If possible, visit the mover’s office beforehand to check out equipment and
warehouse conditions.
6. Discuss when and how payment will be made. Ensure that the contract reflects
your understanding.
7. Decide whether you or the mover will pack your goods. Make sure your moving
contract outlines what services the mover will perform and what work you will
do yourself.
8. As goods are loaded, keep track of them on an inventory sheet. Check them again
as they come off the truck. Note any missing or damaged goods before the movers
leave.
9. Attempt to resolve any dispute with the company. If the dispute cannot be
resolved contact the TSA.
10. Make sure there are no surprises at your destination that will prevent the quick
unloading of your goods.
February 2002
George Stanford
Respondent failed to provide Duties
Owed and agency Confirmation forms
to his client and failed to adequately
supervise his sales associate.
Respondent’s broker license was
revoked, respondent was assessed
costs of $409.44 and a $5,000.00 fine.
Katamauri Stalsbroten
Respondent made a material misrepresentation
and was found to be deceitful, fraudulent, dishonest,
grossly negligent and incompetent when she signed
her broker’s signature, without authorization, on a
termination form and submitted it to the Division.
Respondent failed to appear at the hearing.
Respondent’s salesperson license was suspended
until such time as respondent appears before the
Commission. Respondent was required to complete
18 hours of Nevada Law. Respondent was assessed
costs of $896.98; failure to pay costs within 12 months
will result in automatic license revocation.
Ruth Best-Gray
Respondent made a material misrepresentation
and failed to exercise reasonable skill and care when
she accepted payment for “cleaning services” that she
did not perform on a subject property. By accepting
client trust monies as payment, respondent also failed
to properly account for and remit money belonging to
others, commingled client trust monies, and engaged
in deceitful, fraudulent, dishonest, grossly negligent
and incompetent conduct. Respondent also failed to
produce and refused to provide documents requested
by the Division.
Respondent’s salesperson license was revoked,
respondent was assessed costs of $2,428.70 and a
$50,000.00 fine.
July 2002
Joseph Leon
Respondent failed to exercise reasonable skill and
care and acted in a deceitful, fraudulent and dishonest
way when he misrepresented that he had collected
$5,000.00 earnest money from his buyer-client, when,
in fact, he did not receive the money. Respondent
acted grossly negligent and incompetent by failing to
disclose to the sellers that he opened escrow with a
lesser amount of earnest money than agreed to by the
sellers. Respondent failed to have buyer-client initial
the appropriate terms on the
offer as well as failed to have
seller execute an addendum
prior to opening escrow with a
lesser amount of earnest
money than originally agreed to
by the parties.
Respondent was required to
complete 18 hours of Nevada
Law, 6 hours of What Every
Licensee Should Know, six
hours of Contracts, pay costs of
$1,414.35 and a $4,600.00 fine within six months.
Salesperson license will be automatically
suspended for failure to comply with this Order.
John E. Bissett
By failing to exercise reasonable skill and care,
Respondent failed to do his statutory duty to
adequately supervise and train his sales agent.,
Joseph Leon (see case above).
Respondent’s broker license was downgraded
to that of a broker-salesperson for a period of one
year. Respondent must provide to the Division a
complete policy and procedure manual for his
company, pay costs of $1,414.35 and a $5,000.00
fine. Respondent must complete 45 hours of
broker management prior to reinstating his broker’s
license.
David J. Firestone
Respondent was the owner-builder of a
property. The Respondent represented that he
was the property listing agent through use of
signage and business cards; however,
Respondent’s broker was not aware of the
transaction. Respondent did not disclose that he
was acting as a principal as opposed to acting as
an agent for his broker’s company. The purchase
contract states that Respondent is the licensee
representing both seller and buyer, but Respondent
failed to complete a Consent to Act form. The
Duties Owed & Confirmation forms state that
Respondent is a licensee acting on his own behalf
for the real estate brokerage, contradicting
language in the purchase agreement. Respondent
was found guilty of the claims alleged in the
complaint based on Respondent’s stipulation of
facts and liability.
Respondent was fined $2,000.00 and required
to complete 24 hours of education including
Nevada Law and What Every Licensee Should
Know.
Disciplinary Actions—Hearings
Open House Volume 26, Issue 1 9
Real Estate Commission
actions are not published in this
newsletter until the 30-day period
allowed for Commission appeal
has expired, or if an appeal is
taken and the disciplinary action
is stayed, until the stay is dis-
solved. (We do not publish names
of persons whose license applica-
tions are denied).
(continued next page)
September 2002
Elvis Nargi
Respondent altered the terms of a purchase
agreement in a manner that did not reflect the actual
agreement between buyer and seller and without an
addendum properly signed by the parties.
Respondent caused the seller to be a party to the
falsification of information on the purchase
agreement.
Respondent’s license was downgraded from
broker to broker-salesperson for a period of six
months. Respondent must complete 18 hours of
Nevada Law and six hours of agency designated
coursework and pay costs of $1,464.75 and a
$7,500.00 fine. Failure to comply with the Order will
result in automatic suspension of license.
November 2002
Joseph Guzman
Respondent was involved in two separate
transactions. In the first transaction, Respondent
located a property for a buyer. While the property
was still in escrow, Respondent wrote an offer on
behalf of some additional buyers and allowed them to
take possession of and make improvements on the
property. When the original seller discovered the
buyers were in the property, the buyers vacated.
Neither transaction closed escrow and the second
buyers were not reimbursed for the improvements
made during their occupancy. In the second
transaction, Respondent entered into a sale of
property owned by Respondent. An Earnest money
check in the amount of $2,000.00 was made payable
to the Respondent to be placed into escrow. The
check was never deposited to escrow. The buyers
cancelled escrow and entered into an agreement with
Respondent for the return of $1,500.00. Respondent
kept $500.00 for work performed for the buyers.
Respondent also appeared before the
Commission for failure to abide by the terms of a
Stipulation for Settlement of a Disciplinary Action
previously entered into with the Division.
Respondent is required to pay costs of $1,388.00
and a $30,000.00 fine. Respondent is currently
unlicensed and must appear before the Commission
prior to any license reinstatement.
Nellu Baciu
Respondent failed to furnish to the purchaser,
before execution of a purchase agreement, the
common-interest community documents and
information required to be furnished by NRS 116.4109
and respondent failed to secure a written waiver by the
purchaser of the NRS 116.4109 time requirement for
providing such documents and information.
Respondent also failed to secure a written prior
occupancy agreement governing payment of rent prior
to close of escrow.
Respondent was required to pay costs of $1,609.16
and a $1,500.00 fine. Respondent’s salesperson
license will be automatically suspended if respondent
fails to comply with the Order. The State of New
Mexico will be notified of this proceeding since
Respondent also holds a New Mexico license.
February 2003
Jennifer L. Guinn
Without having first obtained a property
management permit or community association
management certificate, Respondent conducted
community association management activities.
Respondent failed to disclose all facts and produce
documents pertinent to the Division’s investigation.
Subsequent to the unlicensed activity, Respondent
applied for a community association management
certificate, but was denied by the Division.
Respondent’s salesperson license was suspended
for a period of 6 months. Prior to reinstatement,
Respondent must complete 6 hours of What Every
Licensee Should Know and 18 hours of Nevada Law
classroom instruction. Respondent was assessed
costs in the amount of $1,196.83.
Respondent appealed the community association
management certificate Denial to the Commission
which dismissed the appeal, affirming the Denial.
Cesar Stein
Respondent receipted for a $1,200.00 earnest
money deposit in the form of a money order and
misrepresented that the deposit had been immediately
placed into escrow. Approximately six weeks later,
Respondent delivered $1,000.00 cash to the escrow
company and approximately one week later delivered
$200.00 cash to the escrow
Disciplinary Actions—Hearings
10 Open House Volume 26, Issue 1
(continued next page)
company.
Respondent was found guilty based on the
Stipulation of Fact and Liability entered. Respondent
was required to pay a $250.00 fine and complete 18
hours of Nevada Law and What Every Licensee Should
Know. If Respondent fails to comply with the Order,
Respondent’s license will be automatically suspended.
John Ronald Faulkner
Respondent misrepresented that he owned property
and entered into an agreement to sell property that he
did not own and was not authorized to sell.
Respondent failed to provide his broker with
documentation relating to his transaction and failed to
place trust funds into escrow or remit funds to his
broker. Respondent guaranteed future appreciation of
value and demanded a mortgage payment prior to
ownership of the property. Respondent failed to
provide listing documentation to his broker on four
other properties and signed his broker’s name without
authorization on those listing agreements.
Respondent failed to appear at the hearing.
Respondent’s license was revoked, and he must
appear before and be approved by the Commission
prior to re-licensure. Respondent must complete a
classroom pre-licensing course prior to re-licensure.
Respondent was assessed costs of $2,810.23 and a
$40,000.00 fine. Toronto, Canada will be notified of
this proceeding in that Respondent is a licensed real
estate agent and attorney in that jurisdiction.
Gregory Hartline
Respondent failed to have complete transaction files
in his office for three properties, failed to review agent
files, and failed to supervise his associates.
Respondent broker was found guilty based on a
Stipulation of Fact and Liability relative to the “John
Ronald Faulkner” case above. Respondent was
required to pay a $5,000.00 fine and complete 6 hours
of classroom education. Respondent’s transaction files
are to be audited every two months for one year.
Respondent is required to write an article for
publication in the Open House Newsletter (see Broker
Supervision article, page 15 of this issue). If
Respondent fails to comply with this Order, his license
will be automatically suspended.
June 2003
Craig C. Madsen
Respondent and Division stipulated to the
following facts and liability: Respondent was
operating his own property management business,
as a broker-salesperson without the knowledge or
permission of his broker. Respondent made
deposits to his own trust account and failed to remit
trust funds and written management agreements to
his broker. Respondent advertised as a property
management business through the Internet without
including the name of his broker and represented
himself as the owner. Respondent failed to provide
agency forms to his clients or broker. Since the
matter was brought to his attention, Respondent has
complied with all statutes and regulations and no
party suffered any monetary loss as a result of
Respondent’s conduct.
Respondent was required to pay a fine of
$5,000.00 and complete 15 hours of classroom
education. Respondent’s broker-salesperson
license was downgraded to salesperson for two
years. License will be automatically suspended if
payment of fine and education are not completed
within the required time.
Michael Fausett
Respondent misrepresented himself as a broker
by signing commission instructions as the broker
and received compensation on a transaction directly
from escrow without the knowledge or permission of
his employing broker. Respondent placed a realty
company “for sale” sign on his own property with
signage which read “too late” when there was no
sale of the property at that time. Additionally, the
realty company had no listing documentation in its
file. Respondent wrote a subsequent sales
agreement and misrepresented a $500.00 earnest
money check when, in fact, Respondent did not
receive any earnest money. Respondent failed to fill
out “Duties Owed” and “Confirmation of
Relationship” forms for the subsequent transaction.
Respondent’s license was suspended for a
period of one year. Respondent was required to
pay costs in the amount of $1,989.90 and a
$25,000.00 fine. Respondent was also required to
complete 18 hours of
Open House Volume 26, Issue 1 11
Disciplinary Actions—Hearings
(continued on page 17)
Disciplinary Actions - Stipulations
Allegations: Respon-
dent guaranteed the sale
of a property by misrepre-
senting that he would per-
sonally purchase the
property if the buyers
could not complete the
transaction. Buyers were
to take possession prior
to close of escrow but
were not able to complete
the transaction. Respon-
dent failed to complete the transaction as promised.
Stipulation
: Respondent agreed to pay a $7,000.00
fine and complete 20 hours of education.
Allegations
: A dispute arose between the Seller and
Respondent regarding the Respondent’s compensation
resulting in a complaint filed to the Division. Respon-
dent failed to obtain Consent to Act and Duties Owed
forms from the parties to the transaction. During the
Division’s complaint investigation, Respondent submit-
ted Consent to Act and Duties Owed forms to the Divi-
sion with forged signatures of the parties to the transac-
tion.
Stipulation
: Respondent agreed to pay a $5,000.00
fine and complete 18 hours of Nevada Law.
Allegations
: Respondent made a material misrepre-
sentation that a property could be subdivided into two
single acre lots; however, such land division resulting in
parcels of less than five acres was prohibited due to
localized problems. Respondent also failed to disclose
that he was a partial owner in the property.
Stipulation
: Respondent agreed to pay a fine of
$2,500.00 and complete 15 hours of law/ethics educa-
tion.
Allegations
: The Respondent assisted a salesperson
licensed with a separate brokerage company to repre-
sent the buyers in the purchase of a property. The Re-
spondent knew that the purchase forms used in the
transaction did not include either salesperson’s last
name, only their first names as buyers’ agents, and the
forms did not include the Respondent’s broker name.
Respondent failed to disclose that she was associated
with a different broker and stated that she was assisting
the licensee from another company in exchange for
leads generated from advertisement calls.
Stipulation
: Respondent agreed to pay a fine of
12 Open House Volume 26, Issue 1
$1,000.00 and complete 18 hours of education in
agency, law and ethics and What Every Licensee
Should Know.
Allegations
: Respondent broker failed to ade-
quately supervise a licensed salesperson associated
with him in the following matter: A salesperson li-
censed with another broker assisted the licensee as-
sociated with the Respondent in representing buyers
in the purchase of a property. The purchase forms
used in the transaction did not include either sales-
person’s last name, only their first names as buyers’
agents, and the forms included only the Respon-
dent’s brokerage name. The licensees failed to dis-
close that they were associated with different bro-
kers.
Stipulation
: Respondent agreed to pay a fine of
$1,000.00 and complete six hours of education.
Allegations
: Respondent was the owner/seller as
well as a buyer agent in a sales transaction. The
purchase agreement required $5,000 earnest money
which was received in the form of a certified check to
be deposited into escrow. The agreement also
stated: “This is a one year lease option, option mon-
ies to be released to seller upon possession. No
transaction documentation identified any sum of
monies as or provides a definition of “option
monies.” Although Respondent delivered the
$5,000.00 earnest money deposit to escrow, it was
treated as option money and released to Respondent
without agreement from the buyer. Subsequently,
the buyer discovered the earnest money had not
been deposited and disputes between the parties
arose. The buyer ultimately vacated the property.
Respondent had not refunded the earnest money.
Respondent failed to remit, commingled, or con-
verted money belonging to another, and acted
grossly negligent, incompetent and/or deceitful when
he prepared documents which failed to identify the
amounts and disposition of earnest and option
money.
Stipulation
: Respondent agreed to pay a $1,500.00
fine.
Allegations
: Respondent is a broker whose licen-
see associate was conducting property management
without either a permit or community association
management certificate. Respondent failed to ade-
quately supervise the licensee’s activities. Respon-
Stipulations occur when
both the Respondent and
Division have agreed to
conditions reviewed and
accepted by both sides. A
stipulation may, or may not
be an admission of guilt.
Stipulations are presented to
the Commission for review
and acceptance.
Disciplinary Actions - Stipulations
dent also failed to maintain the appropriate sign identify-
ing the brokerage.
Stipulation
: Respondent agreed to pay a fine
of$1,250.00 and complete 18 hours of classroom educa-
tion of Nevada Law and 6 hours of broker management.
Allegations
: Respondent’s broker license had expired
and Respondent acted without a valid property manage-
ment permit. Notwithstanding, Respondent engaged in
property management and sales activity.
Stipulation
: Respondent agreed to pay a fine of
$7,500.00 and costs of $1,350.00. Respondent agreed to
complete 18 classroom hours of Nevada Law and 6
classroom hours of What Every Licensee Should Know.
Allegations
: Respondent is a broker whose licensee
associate was operating his own property management
business, as a broker-salesperson without the knowledge
of Respondent.
Stipulation
: Respondent agreed to pay a fine of $1,000.
Allegations
: Respondent pled guilty to conspiracy to
commit HUD fraud and use of false social security num-
bers in U.S. District Court. Respondent created false
loan packets for low-income borrowers using false pay
stubs, W-2 forms, credit reports and verifications of em-
ployment, citizenship, income, and assets. Respondent
also gave false information to the Division during its in-
vestigation.
Stipulation
: Respondent’s salesperson license was re-
voked and in any subsequent application for re-
instatement as a real estate licensee, Respondent must
first personally appear before the Commission.
Allegations
: Respondent made an offer without a clear
expiration date; allowed a payment to the second trust
deed holder without verifying that the first trust deed
holder was aware of the payment; allowed the property to
record at $315,000 rather than the actual $340,000 sales
price; allowed client buyers to make a $25,000.00 pay-
ment in advance of close of escrow to a party who was
not the owner of the property at that time.
Stipulation
: Respondent agreed to pay a $2,500.00 fine
and attend a six hour classroom course on law and eth-
ics.
Allegations
: Respondent broker failed to properly super-
vise by allowing a licensed salesperson associated with
him to: make an offer without a clear expiration date; al-
low a payment to the second trust deed holder without
verifying that the first trust deed holder was aware
of the payment; allow the property to record at
$315,000 rather than the actual $340,000 sales
price.
Stipulation
: Respondent agreed to pay a
$10,000.00 fine and complete a 45 hour Broker
Management classroom course. Respondent’s
license was downgraded to
broker-salesman for one year during which time
Respondent agrees not to supervise any licensees.
Allegations
: Respondent broker failed to properly
supervise by allowing a licensed salesperson asso-
ciated with him to: accept a listing from someone
other than the owner; accept an offer without a
clear expiration date; allow a payment to the sec-
ond trust deed holder without verifying that the first
trust deed holder was aware of the payment; allow
the property to record at $315,000 rather than the
actual $340,000 sales price.
Stipulation
: Respondent agreed to pay a
$1,000.00 fine and not supervise any licensees for
a period of one year.
Allegations
: Respondent listed a property owned
by two individuals. Respondent failed to notify one
of the owners of an offer; however, the other owner
signed to accept the offer. The owner that was
unaware of the pending offer subsequently sold his
portion of the property to the owner who had
signed acceptance to the third-party offer. Respon-
dent acted grossly negligent and incompetent by
failing to notify both owners of the offer on the
property.
Stipulation
: Respondent agreed to pay a
$2,500.00 fine and complete an18 hour Nevada
Law course.
Allegations
: Respondent broker failed to properly
supervise by allowing a licensed salesperson asso-
ciated with him to do the following: salesperson
listed a property owned by two individuals. The
salesperson failed to notify one of the owners of an
offer; however, the other owner signed to accept
the offer. The owner that was unaware of the
pending offer subsequently sold his portion of the
property to the owner who had signed acceptance
to the original offer. Respondent acted grossly
negligent and incompetent by failing to notify both
owners of the original
Open House Volume 26, Issue 1 13
(see Stipulations on page 17)
14 Open House Volume 26, Issue 1
Editors Note: This commentary is a
shortened version of an article presented by
Professors Robert Aalberts and Richard Hoyt
to the American Real Estate Society meeting
in Naples, FL. In April, 2002. The article was
honored with a prize for best paper and an
award of $1,000.00
“If the priest finds greenish streaks in the
walls which seem to be beneath the surface
of the wall, he shall close up the house for
seven days and return…. If the spots have
spread in the wall then the priest shall order
the removal of the spotted section of the
wall…. Then he shall order the inside walls of
the house scraped thoroughly, and the
scraping dumped in a defiled place, without
the city… But if the spots appear again… the
house is defiled (and) he shall order the de-
struction of the house …”
Leviticus 14, verses 37-45.
The problem of toxic mold is as old as the
Bible itself. Yet today its impact on people
and real property is approaching biblical pro-
portions. A growing number of commentators
have even suggested that the legal conse-
quences of toxic mold will be as serious and
extensive as the tidal wave of asbestos litiga-
tion that took place over the past several
decades.
To an outsider it may seem odd that the
Las Vegas Valley, one of the driest cities in
the U.S., has mold problems and yet we
have an increasing number of cases re-
ported. However, our problems are not on
the scale as what we’re seeing from coast-to-
coast. Indeed, in just the last few years,
plaintiffs from Florida to California, have won
an increasing number of precedent-setting,
multi-million judgments and settlements due
to toxic mold.
Consider the following. In May 2001 two
women in Delaware, suffering from asthma
attacks and other health problems, were
awarded $1.04 million from their landlord who
had failed to correct mold problems. But land-
lords aren’t the only parties who must be con-
cerned. There also have been a growing num-
ber of successful bad faith lawsuits against
insurers when they denied their policyholders
losses due to mold. In one California insur-
ance case, the jury awarded the homeowner
$18 million, although it was later reduced to $3
million. Moreover a similar case in Texas re-
sulted in a 1.5 million settlement. Possibly the
largest judgment to date occurred in a Florida
case against an architect and builders for mold
problems, which caused 15 workers to be-
come ill. The $11.5 million award, along with
attorney’s fees, actually exceeded the build-
ings value.
Insurers are reacting predictably to these
developments. In recent Insurance Day article,
industry sources claim homeowners premiums
will rise by at least 10 percent due to toxic
mold claims. Compounding the problem, fewer
companies are now willing to insure these
risks. According to a recent Wall Street Jour-
nal article, at least 35 states now allow mold
exclusions in commercial and homeowners’
polices,
Homebuilders and others, particularly in
fast-growing Sunbelt states, are also suffering
from the legal fall-out caused by mold prob-
lems, as well as by construction defect litiga-
tion in general. Many are building less and
even freezing their activities. Others are going
out of business due to the rising premiums.
Some of the remaining builders have turned to
secondary or relatively unregulated insurers
that typically charge more, but provide less
coverage. All of this may be causing housing
shortages and have very likely increased the
price of homes in some parts of the U.S., in-
cluding in our valley.
The Toxic Mold Crisis:
Will it be the Next Asbestos?
Reprinted by permission from Lied Institute for Real Estate Studies, “The Lieder”
(continued on page 16)
Open House Volume 26, Issue 1 15
vision and compliance operations to others. With
proper training, a compliance officer in a large
organization can be an essential extension of the
broker’s business practice. Still, that broker’s
supervisory effectiveness will only be as efficient
as that compliance officer is on any given day.
Given the complexity of many contemporary real
estate operations, it is obvious that there is the
potential for more and more essentially unsuper-
vised activities by agents.
Responsible delegation begins with broker
training and supervision and ends with more
broker training and more and more ongoing
supervision. The contemporary real estate culture
is partially to blame. Profitability models which are
built on ever larger rosters are, in my opinion, not
in the best interest of the public. They are a
business reality that will not change in the
foreseeable future. Even the most responsible
delegation within these business models cannot
produce the kind of supervision that could ever be
construed as ideal. This ultimately puts more and
more responsibility on the individual agent to act
as professionally and as ethically as possible –
and often without someone overseeing them with
any degree of regularity. The agent certainly is
charged with a large degree of responsibility in the
ramifications of his or her actions. They are the
first line of defense. However, all of us are human
and we all make mistakes. It is the intentional
transgression, not the innocent oversight or error,
that is the subject of this consideration.
It would be easy to suggest that by “raising the
bar” in terms of pre-licensing standards we could
elevate the quality of agents so that all would
perform more satisfactorily. This is only a partial
solution. An ethically bereft agent will always be a
cancer in our industry - regardless of his or her
professional sophistication. Certainly, more
stringent licensing requirements could only help.
Increasingly more extensive pre-licensing
education coupled with better mentoring and
training upon licensure would, of course, be a
positive improvement. In my case, however, it
was the actions of a very sophisticated agent who
was acting intentionally unethically. The solution,
short of the impossibility of developing a somehow
more innately moral agent, is always better
supervision.
We live in a less than perfect world. There will
always be those agents
Broker Supervision
by Gregory Hartline, broker
Recently, my brokerage was threatened by
the actions of an agent who was not acting ethi-
cally. Unbeknownst to me, his business deci-
sions were solely the product of personal greed
and without any regard to the public that he was
charged with serving. Although sworn to uphold
the highest ethical standards, he had ignored
these obvious fiduciary responsibilities.
As his broker, I should have identified his
transgressions early on. I did not. Though I cer-
tainly never intentionally meant to harm anyone,
because of my lack of discovery an innocent
party was unfortunately damaged. As the super-
vising broker, I must ultimately share in the
blame by implication. Had I been aware of my
agent’s improprieties at an early stage, I would
have been able to intercede and correct the
situation before it grew into the significant infrac-
tion that it became. I have been asked to write
these words so that others may share in my ex-
perience. Perhaps, in light of this submission,
some other broker will be more vigilant and the
public will ultimately be better served.
This altogether unfortunate state of affairs
has brought me to reflect upon the nature of su-
pervision, delegation and, ultimately, broker
responsibility. I have learned that even the most
seasoned and sophisticated agent can act in
ways that are unethical and wholly unprofes-
sional. While those actions are frequently out-
side of the knowledge of their broker, ultimately
the broker will be held accountable. Vigilance is
the keyword, and none of us are omniscient.
We can never be completely aware of all of the
actions of those who are operating within our
companies. Our commitment to vigilance, while
imperfect, must be incessant. We are charged
with being as knowledgeable as possible with
regard to those who hang their licenses under
ours. For those of us who are involved in large
companies, we are faced with a particularly
daunting challenge. As company rosters grow in
size, the degree to which a broker can be
“hands on” is necessarily diminished.
Most brokers in larger companies will, of
necessity, delegate some degree of their super-
(see Supervision, page 18)
16 Open House Volume 26, Issue 1
Still, those who are victimized by mold claim
their problems are far from being frivolous. In-
deed, the effects of toxic mold on people and
property can be devastating. Some toxic molds
most notably the infamous stachybotrys or
“killer fungus”. Produces a potent mycotoxin
which has been linked to hundreds of illnesses
and even to the alleged deaths of several in-
fants in Cleveland from pulmonary hemosidero-
sis Another destructive mold ,poria incrassate
also called the “house –eating fungus,” attacks
buildings causing extensive damage to flooring
and walls.
Mold thrives when three factors are present:
water, warmth and a cellulose-based food
source. This includes gypsum, sheet rock,
wood and most other standard building mate-
rial. Moreover, according to Edward Cross in a
recent article in Los Angles Lawyer,”…More
indoor mold exists today than before. Increased
moisture intrusion problems have arisen from
construction defects and flaws in building de-
sign and maintenance procedures. Modern
construction methods create complex tempera-
ture, ventilation and humidity relationships that
never existed before.”
Water is the catalyst for toxic molds. As
Cross further points out “roof leaks, window
leaks, plumbing defects, drainage problems,
grading problems and any other source of wa-
ter intrusion can trigger a chain reaction of
events that can ultimately lead to high-stakes
litigation.”
A notable example of how water combined
with new construction methods can result in
serious mold problems is amply illustration by
the so-called “synthetic stucco lawsuits. Syn-
thetic stucco, which is also called the Exterior
Insulation and Finish System (EIFS), is a proc-
ess commonly used in the early 1900’s. The
technology underlying the EIFS system was
viewed at the time as being innovative and cost
effective. EIFS produces an exterior that offers
a better form of insulation, as well as being
crack resistant. The problem, however, lies in
its installation. In EIFS, a Styrofoam layer is
placed alongside the stucco. If this is not done
properly a barrier is created which, if water accu-
mulates, acts to prevent drainage. If the water
penetrates into any surrounding wood, such as
studs and plywood, mold grows. The problems
created by the EIFS system was amply demon-
strated recently when owners of condominiums
in Norfolk, Virginia were awarded $2.5 million in
damages from the manufacturer and distributor
of the stucco.
With these health and legal problems in
mind, mold is imperative. But removing it can be
difficult, expensive and sometimes risky. Mold
moreover thrives almost everywhere. The only
possible exception may be clean well main-
tained rooms. This fact creates enormous chal-
lenges for those who must eliminate it.
When mold is discovered behind walls it of-
ten becomes necessary to tear them down.
Bleaching simply does not eliminate the prob-
lem. Unfortunately, when certain harmful molds
such as stachybotrys are present, remediation
processes often cause the mold to become air-
borne, settling invisibly within the building. If hu-
mans breathe in the mold, serious medical prob-
lems can ensue.
Of course when mold is discovered, some-
body is going to be blamed. Builders, architects,
sub-contractors, landlords and building owners,
for example, have all been sued under a number
of theories for construction defects that plaintiffs
claim creates the mold. These theories include
negligence, fraud, products liability and decep-
tive and unfair trade practices.
One legal theory, the “economic loss doc-
trine” recently adopted by Nevada, and a grow-
ing numbers of other states, including California,
Florida, Arizona, seeks to limit construction de-
fect litigation. It may not, however help prevent
suits for toxic mold. Under the doctrine only
those remedies provided under a contract or
warranty can be awarded in construction defect
cases. The exception is when a person suffers
injury as opposed to just property damage.
Thus, if mold is present and a property owner,
tenant or other occupant makes a claim for per-
sonal injuries, it can ripen into an action in tort.
Tort damages are typically much higher than
The Toxic Mold Crisis
(continued from page 14)
(continued on page 18)
Open House Volume 26, Issue 1 17
(Continued from page 11) Disciplinary Actions
Nevada Law and re-take and pass the state portion of
the pre-licensing exam. Respondent’s license will be
automatically revoked if he fails to comply with this
Order.
July 2003
Nick Palumbo
Respondent failed to produce documents pertinent
to the transaction during the Division’s investigation and
subsequent Real Estate Commission Hearing.
Respondent’s license was revoked. Respondent
must personally appear before the Commission in
subsequent application for re-instatement as a real
estate licensee.
Guy M. Sheets
Respondent filed a Guilty Plea Agreement in Clark
County District Court to conspiracy to commit insurance
fraud and obtaining money under false pretenses.
Respondent received a suspended sentence and was
placed on probation by District Court. Respondent has
made full restitution to the insurance company and
State of Nevada investigation costs.
Respondent’s salesperson license was placed on
probation until January 2006 and will be automatically
suspended if Respondent violates his judicial probation.
Respondent is prohibited from obtaining a broker’s
license, supervising other licensees and obtaining a
property management permit prior to January 2006.
Respondent was assessed costs of $1,791.05.
hours of Nevada Law and six classroom hours of What
Every License Should Know. If Respondent fails to
comply with this Order, Respondent’s license will be
automatically suspended.
Allegations
: For approximately one month,
Respondent acted as the authorized agent for a prop-
erty management company when, in fact, Respon-
dent’s salesperson license was affiliated with another
real estate broker. Respondent stated that she was
told by the director of the property management com-
pany that she did not need to transfer her license
because she had thirty days in which to make the
change. Before thirty days had expired, she returned
to the broker where she was actually licensed.
Stipulation
: Respondent agreed to pay a $1,000.00
fine.
Allegations
: Respondent broker failed to properly
supervise by allowing a licensed salesperson associ-
ated with another broker do the following: For approxi-
mately one month, the salesperson acted as the
authorized agent for Respondent’s property manage-
ment company when, in fact, the salesperson’s license
was affiliated with another real estate broker. The
salesperson stated that she was told by the director of
the property management company that she did not
need to transfer her license because she had thirty
days in which to make the change. Before thirty days
had expired, she returned to the broker where she was
actually licensed.
Stipulation
: Respondent agreed to pay a $1,000.00
fine and attend the What Every Broker Should Know
course.
Stipulations (continued from page 13)
offer on the property.
Stipulation
: Respondent agreed to pay a $1,000.00
fine and complete a six hour broker education course.
Allegations
: Respondent facilitated conduct that was
deceitful and fraudulent by converting the money of
others to her own use when Respondent accepted
checks from an escrow company’s escrow accounts
and used the funds to make loans to the escrow officer.
The escrow officer was subsequently prosecuted for
fraud in connection with her inappropriate handling of
the escrow funds.
Stipulation
: Respondent’s broker license was sus-
pended for three months. Respondent was required to
pay a fine of $20,000.00 and complete 18 classroom
Look to this day.
Yesterday is already a dream
and tomorrow is only a vision . . .
But today, well-lived, makes
every yesterday
a dream of happiness
And every tomorrow
A vision of hope.
those available under contract. As Cross points
out “what would otherwise be a small defect can
quickly become rather distasteful when fungus is
discovered. A thousand dollars worth of water
damages can create hundred dollars worth of
personal injuries. What was once viewed with
enormous skepticism has produced tens of mil-
lions of dollars in plaintiff’s verdicts and settle-
ments.
Yet allegations of construction defects are
not the only legal problem that has arisen due to
mold. Under most states’ laws, for example, the
landlord owes the tenant an implied
warranty of habitability. This means that the
premises must be suitable for residential use.
Moreover, the property must conform not only to
normal building codes requirements, but must
be clean and sanitary. Since mold can cause
serious illness this would likely result in a breach
of the implied warranty.
Disclosure issues also are cropping up. A
seller of real estate has, in most states, a duty to
disclose any property defects to the buyer. Cali-
fornia recently passed laws extending this duty
to landlords and sellers I respect to mold. For
example, both these parties must provide written
notice to potential lessees or buyers when
there is visible mold or hidden mold that they
know about or have reasonable cause to believe
exists in the property. Still the mold must present
a health threat or must exceed the “permissible
exposure
limits.” (PELs) as set forth by the State
Department of Health Services (DHS).
Real estate agents must be aware of the per-
ils of mold. For example, under state laws, a
buyer’s agent normally has a fiduciary duty to
disclose material information to the buyer re-
quired for the buyer to make a well-informed de-
cision. This includes a duty to disclose reasona-
bly obtainable material
information. Seller’s brokers also fear liability. In
response, some real estate brokers,
including a number in the Las Vegas Valley, are
now requiring their clients to issue a Fungal Dis-
closure /Waiver, which states whether their
property has had any water damage whether the
damage has been repaired and what , if any
measures have been taken to remove mold.
Real estate appraisers are becoming aware
of heightened responsibilities as well.
Various commentators have noted that under
the Uniform Standards of Professional
Appraisal Practices, Competency and Ethical
Rules, appraisers should look for evidence of
water or moisture penetration in the structure
and then obtain the expertise of a trained
professional to determine remediation ad other
costs.
The recent proliferation of toxic mold cases
will spawn new challenges for real estate
professionals. With the likelihood of tremendous
economic burdens on builders and
insurance companies we may see new laws
designed to create a balance between compen-
sating the victims while hopefully keeping hous-
ing and insurance costs from spiraling out of the
reach of many home buyers and
tenants. In the meantime, we will almost cer-
tainly bear witness to more litigation and hefty
judgments as mold problem continue to unfold.
The Toxic Mold Crisis
(continued from page 16)
18 Open House Volume 26, Issue 1
who act irresponsibly.
This unfortunate reality
places the onus of responsibility for ethical service
squarely on the shoulders of the supervising broker.
It is also an unfortunate truth that a single errant
agent can erode an otherwise wholly conscientious
business operation. While the broker is busy super-
vising the newest and most neophyte agent on the
roster, an unethical veteran professional can be un-
dermining the entire integrity of the operation. Only
one bad agent can blemish an otherwise stellar
company.
Furthermore, the larger the brokerage, the more
exposure to liability the broker is required to
sustain. In these companies, it is all the more
important for the broker to “grow eyes” in the back
of his or her head. If those additional “eyes” are a
part of a delegated team, then that team is still
charged with protecting the interests of the public
and, by extension, the license of the broker. Harry
Truman was known to place a sign on his desk that
read “The Buck Stops Here.” The president’s apho-
rism is a paradigm of responsibility that every bro-
ker should embrace. To do so is to serve the best
interests of the public.
Supervision (from page 15)
CARSON CITY
788 Fairview Drive, Suite 200, 89701
MAIN: (775) 687-4280 FAX: (775) 687-4868
ADMINISTRATION ext. 307 LICENSING ext. 302
Jodee Yordy Marie Cloud
Joan Garrison
COMPLIANCE ext. 304 Julie Patterson
Charles Henry
APPRAISAL ext. 308
PROJECT REGISTRATION ext. 310 Brenda Kindred-Kipling
Laura Fox Alyce Baldwin
OMBUDSMAN’S OFFICE (Common-Interest Communities) ext. 311
Patricia Christian
LAS VEGAS
2501 E. Sahara Avenue, Suite 102, 89104
MAIN: (702) 486-4033 FAX: (702) 486-4275
ADMINISTRATION ext. 221 LICENSING ext. 240
Gail Anderson Susan Clark
Lisa Young Kim Kolbet
Tami DeVries Patricia Mongeon
Bob Kreller Sandra Saenz
Liza Paulino Autumn Kranovich
Sandra Scholten Information Mailouts ext. 248
COMPLIANCE ext. 235 EDUCATION ext. 241
Pam Riebe Matt Di Orio
Bruce Alitt Nancy Smith
Joyce Bennett
Lenora Mills
Linda Chavez Mary Kay Sosa
Denice Kelley
Roberta Monokroussos PROJECT REGISTRATION ext. 267
Helen Stefanich Shirley Penzel
Jan Weintraub JanLaree DeJulius
OMBUDSMAN’S OFFICE (Common-Interest Communities)
MAIN : (702) 486-4480 Toll Free 1-877-829-9907 FAX 702) 486-4520
Eldon Hardy Michael Lim
Sonya Meriweather Linda Riggs
Victoria Broadbent Jerry Thompson
Joanne Grierer Steve Urbanetti
LoRita Hines
STATE OPERATOR NORTH: (775) 687-5000
STATE OPERATOR SOUTH: (702) 486-3000
TOLL FREE: (800) 992-0900
Open House Volume 26, Issue 1 19
Division
General E-mailbox:
________________________________________
Website:
www.red.state.nv.us
3826
State of Nevada
Department of Business & Industry
Real Estate Division
2501 E. Sahara Avenue, Suite 101
Las Vegas, NV 89104-4137
RETURN SERVICE REQUESTED
PRSRT STD
U.S. POSTAGE
PAID
Carson City, NV 89701
PERMIT #15
LICENSE STATISTICS
(As of June 1, 2004)
COUNTY BROKERS BROKER/SALESMAN SALESMAN TOTAL
ACTIVE INACTIVE ACTIVE INACTIVE ACTIVE INACTIVE ACTIVE/INACTIVE
____________________________________________________________________________________________________________________________________________________________________________________________________________________
Carson City 73 2 66 14 210 57 422
Churchill 19 0 9 7 54 16 105
Clark 1,675 117 2,052 238 11,980 1,885 17,947
Douglas 100 9 114 12 446 61 742
Elko 33 1 13 2 60 7 116
Esmeralda - - 1 - - - - - - 1 2
Eureka - - - - - - - - - - 1 1
Humboldt 6 - - 5 1 15 5 32
Lander 4 1 - - - - 1 1 7
Lincoln 2 1 - - 1 1 8 13
Lyon 29 1 16 5 77 45 173
Mineral 1 - - 1 - - 2 1 5
Nye 46 1 28 2 123 10 210
Pershing 4 - - 3 1 2 1 11
Storey 2 1 1 - - 2 1 7
Washoe 506 56 434 78 1,829 577 3,480
White Pine 4 - - 2 - - 7 2 15
Out-of-State * 122 * 332 * 1,517 1,971
_____ _____ _____ _____
_____ _____ ______
TOTAL 2,504 313 2,744 693 14,809 4,196 25,259
Total Licensees . . . . . . . . . . . . 25,259
Note: *Active Out-of-State licensees are added to the county where each license is active.
