Insight | July 2013

Cover Story

The NC REALTORS® 2013 Convention & Expo returns to The Grove Park Inn this September as the historic property celebrates 100 years. Join us in making history.

Brokering Lease-Purchase Transactions and Lease-Option Transactions

Discover how to best handle lease-option and lease-purchase transactions with the impact of new legislation.

New Mortgage Product Can Mean New Business

If some of your clients are being kept out of the market by limited down payment funds, a new mortgage product could help you turn them into homeowners.

By PATRICE wILLETTS PRESIDENT

So, What MATTERS??

I hAvE NEvER hAd SO MuCh TO SAy. WELL OkAy, MAyBE I hAvE, juST ASk My huSBANd. BuT IT hAS NEvER BEEN AS IMpORTANT AS IT IS NOW TO TRy ANd fINd WAyS TO BEST COMMuNICATE TO ThOSE ThAT MATTER. ANd yOu, MATTER! yOuR ACTIONS ANd yOuR vOICE MATTER.

The first thing on everyone’s mind is Tax Reform. We have been working so very hard to support and promote property ownership, but elected officials in Raleigh don’t seem to think the same way. I am all for Tax Reform, but not if it is funded on the backs of N.C. property owners.

NCAR has some very dedicated and smart volunteers and staff focused on this issue. They have driven to Raleigh for meetings, appeared on TV and radio shows, watched for and participated in Calls For Action, and posted and reposted information on Facebook. Everything you do to make sure our voice is heard MATTERS. Members at their local level are engaging their neighbors on the topic of Tax Reform. They are letting them know what is at stake. Mortgage Interest Deductions MATTER, Property Tax Deductions MATTER. Local members are letting us know at the state level what they are hearing from their Senators and House Members. Many of you are working very hard to be fully engaged with your officials. For that I want to thank you so very much. Actions like this MATTER!

NCAR can only be as strong and as effective as our dedicated members help us to be. Please make sure that you volunteer at the NCAR level. You, and what MATTERS to you, can help to make us the best we can be. Bring your talent and experience to the forefront and volunteer. Help us be influential on the issues that MATTER, to us and to those that we represent.

So what else MATTERS?? Fun MATTERS! Yes, FUN! This year our Convention will be at the Grove Park Inn located in beautiful Asheville, N.C. This is the 100th anniversary of the Grove Park Inn. I understand that it has recently gone through major renovations. I can’t wait! September in the mountains is a great time of year to visit.

If you have never been to the Grove Park Inn you are in for a treat. Besides being a beautiful venue with a beautiful view, the NCAR Convention Committee knows what MATTERS to you. Along with the staff, everyone has worked so very hard to make sure this Convention is one to remember. We have close to 80 exhibitors and sponsors lined up and have scheduled our best educational programs to date.

You have been through some tough times. You have fought hard and are still standing. I have had the opportunity to speak with many members this year, one on one. Many issues have impacted so many of us. I invite you to join me in what MATTERS to me…..YOU! Please come to the Convention this year and help me celebrate a very busy and successful year and to say thank you to all of you for hanging in there and doing what MATTERS most…Protecting and Promoting Property Rights and Ownership.

I really do hope to see you there.

Sincerely,

Patrice Willetts

Key Dates in the Coming Months

By BLAIR wILBuRN EDITOR

Eager to Return to the Grove Park Inn

GROWING up, My fAMILy MAdE SEvERAL TRIpS TO ThE GROvE pARk INN. I STILL REMEMBER My fIRST vISIT ThERE I WAS, STANdING IN ThE MIddLE Of ThE ExpANSIvE GREAT hALL. I WAS BLOWN AWAy.

I have always loved historical places – especially historical architecture. Even as a child, it was so intriguing. I remember running the halls playing hide-and-go-seek with my brother and sister and sunset family dinners on the stone patio, overlooking the Blue Ridge Mountains. The Grove Park Inn is one of my favorite places.

Many years passed before returning to the resort as an adult. It was just as I remembered – a beautiful setting with a seemingly majestic energy. It was during this trip that I first heard the story of the Pink Lady Ghost. Perhaps the most famous of all The Grove Park Inn’s guests, the Pink Lady has been seen, felt and experienced by hotel staff and guests for

The numbers tell the story.

40 Percentage of Americans who say now is a good time to sell a home — up from 16 percent just one year ago. Sellers are in a more favorable position with confident buyers on the market.

34 Average age of active homebuyers. It’s likely that this generation, who are known as millennials or Generation Y, will force some type of shift in the housing market because they prefer an array of housing types close to shops and mass transit.

75 The percentage of families who say their health has improved since becoming home owners. They reported fewer illnesses caused by colds, flu, allergies, and stress, according to a study done in Canada.

5X The increase in likelihood that home owners with poor math skills will end up in foreclosure during the housing crisis. A recent study found that 25 percent of borrowers who scored the lowest in math skills had defaulted on their mortgage payments within five years of getting the loan.

$968M The amount Citigroup has agreed to pay Fannie Mae for millions of mortgages the bank is accused of misrepresenting to the mortgage giant. About 3.7 million mortgages are part of the resolution agreement.

more than half a century. Stories swirl around about a young woman who fell to her death at the Palm Court atrium in 1920. The mysterious Pink Lady is rumored to appear in room 545, a room located two stories above the Palm Court atrium floor. The spirit has been described as a soft pinkish haze, often experienced by guests through cold chills or a gentle touch.

On this particular trip, a colleague of mine had his own experience with the elusive spirit. From the television turning on and off, to the feeling of an embrace from something unseen, a self-proclaimed skeptic was that no more.

To this day, I don’t know if what he experienced was a visit from the legendary Pink Lady Ghost. What I do know is that my love for historical surroundings does not outweigh my apprehension of the mysterious guest of The Grove Park Inn. I am eager to return to Asheville this fall for our 2013 Convention & Expo, but I’ll surely have one special request –any room assignment other than 545. v

Making History…

at The Grove Park Inn

By Blair Wilburn

Anticipation is building as we return to the Grove Park Inn this fall for the annual NC REALTORS® Convention & Expo. This year promises to be one to remember. Asheville is known for beautiful fall foliage and attending Convention will put you right in the midst of one of the most scenic areas in our great state.

A Rich histoRy

The Grove Park Inn is known as one of the most romantic places to stay in the United States. The hotel is an important example of American Craftsman style architecture and is listed on the National Register of Historic Places. Nestled in the Blue Ridge Mountains of Asheville, the historic resort is celebrating its 100 year anniversary this year.

Edwin Wiley Grove, a Civil War veteran and pharmaceutical inventor, was the visionary behind the famous hotel. Originally from Tennessee, Grove spent time in Asheville throughout the year per his doctor’s instructions – to take advantage of the clean mountain air. During the time at his summer home in Asheville, Grove purchased 408 acres in north Asheville, including what would become The Grove Park Inn.

Planning and building the hotel proved to be a task. Four hundred men worked 10-hour shifts, six days a week. With only the use of mules, wagons and ropes, granite boulders up to 10,000 pounds were hauled from

the mountain to build the hotel. Just three days shy of one year, The Grove Park Inn opened on July 12, 1913. Secretary of State, William Jennings Bryan, delivered the keynote address to four hundred of the most distinguished men of the South at the opening banquet. He had no idea of how true his words would become when he proclaimed that The Grove Park Inn “was built for the ages.”

hoMe to FAMous Guests

The Inn has played host to 10 United States’ Presidents, including Herbert Hoover, Dwight D. Eisenhower, Franklin D. Roosevelt, and Barack Obama. The list of distinguished guests doesn’t stop at presidents. The hotel has hosted numerous celebrities over the years including Thomas Edison, Harry Houdini, Jerry Seinfeld, and John D. Rockefeller. F. Scott Fitzgerald stayed at the hotel for two years to write while his wife was in an insane asylum in Asheville. Plaques adorn the hallways, noting where the many famous guests have stayed.

PResent DAy

As The Grove Park Inn embarks on its 100th anniversary, there is a $25 million dollar renovation underway. With all the enhancements taking place, we’re pleased to still be able to offer great pricing on rooms; even less than members paid at our Conventions in 2002 and 2004.

We are not alone in singing praise for the historic property. The Grove Park Inn, a AAA Four-Diamond Hotel since 2001, continually receives high accolades, including a 2011 ranking in Travel + Leisure as a Top Hotel Spa in the U.S., and a 2012 Condé Nast Traveler — Top 121 Golf Resorts in the World.

Let’s make history at The Grove Park Inn. You can do it all this September at the NC REALTORS® Convention & Expo. Our Committee has worked hard all year to bring you one of our best Conventions to date. We hope you’ll plan on joining us! v SEE

Here’s a sampling of the highlights:

m This year’s minimal registration fee includes welcoming refreshments and the opening evening reception on Sunday, lunch on Monday, and coffee breaks on Monday and Tuesday.

m Our dynamic keynote speaker has been described as “one of the most innovative and inspirational” speakers around! Jared James, known as the “Why Guy”, has made quite a name for himself as the leading expert in identifying the intangibles that are necessary to help individuals achieve personal growth.

m Sunday night’s opening evening reception will feature local bluegrass from the Blue Kudzo Quartet, all while overlooking breathtaking views of the Blue Ridge Mountains from the Skyline Room and Mountain View Terrace.

m Later that night, impress your friends and showcase your trivia knowledge at the first-ever RPAC Trivia and Auction! The winning team will receive $1,000, along with bragging rights.

m Monday morning kicks off what we believe to be our best educational lineup to date! Learn about new technology that can increase your productivity at work. Discover new time saving techniques. Explore how to use videos to generate leads, grow sales and gain customer loyalty! With many more topics ranging from marketing, communication, stress reduction, and real estate investments, the Convention is one event your business cannot afford to miss!

m Back by popular demand… join us on Monday night for the Dance Party with The Nightlife Band!

m Stick around on Tuesday and sign up for one the exciting Asheville Adventures we have lined up. The more leisurely traveler can enjoy discounted rates at the world-famous Spa at The Grove Park Inn, embark on a half-day tour of the magnificent Biltmore House, take private studio tours of fine arts and crafts on the Asheville Art Safari, or join the Asheville Distillery & MicroBrewery Tour. The adventure-seekers can take off on the Urban Zipline Adventure, Navitat Canopy Adventure, or go Whitewater River Rafting down the French Broad.

By JOhN A. TuRNER PRESIDENT AND ShAREhOLDER OF TuRNER LAw OFFICE, PA

Brokering Lease-Purchase and Lease-Option Transactions

Note: In 2009 the author wrote an article for the May/June issue of Insight magazine entitled “Brokering Lease-Purchase Transactions; Are They More Than You Bargained For?” The following year, the North Carolina General Assembly enacted new legislation codified as Chapters 47G (“Option to Purchase Contracts Executed With Lease Agreements”) and Chapter 47H (“Contracts for Deed”) of the North Carolina General Statutes. Each of these new Acts applies to one-to-four family residential properties intended to be occupied by the purchaser as a primary residence. These new laws could substantially affect how a lease-purchase or leaseoption transaction must be handled. As such, the author has updated the previous article to address the impact of the new legislation on lease-option and lease-purchase transactions and to provide some practice pointers for how best to handle them when acting as either a listing or a selling agent.

In times of tight credit and soft real estate markets, many would-be sellers have to con sider the possibility of some kind of leasing arrange ment to facilitate a future sale. The two most common arrangements are a lease with option to purchase (leaseoption) and a lease-purchase agreement. In a leaseoption, the tenant/buyer is granted a discretionary right to purchase the subject property for a stated price within a stated option term. In a lease-purchase agreement, the tenant/buyer has a definite obligation, and not merely an option, to purchase the property during or immediately following a lease term. This article will explore some of the inherent risks and potential complications of leaseoption and lease-purchase transactions that may confront both the tenant/buyer and the seller and also compel the consulting and drafting services of legal counsel.

Lease-Option Agreements

A seller/lessor who enters into a lease-option assumes many risks. While the specified rent provides a source of funds to service a mortgage and to reduce both vandalism and insurance risks from lack of occupancy, there is no real assurance

that the buyer will ever proceed with the purchase. If a prospective tenant/buyer cannot presently qualify for a mortgage, there is obviously substantial risk that this tenant/ buyer would not qualify at the end of the lease period. Even worse, the tenant/buyer could assume possession, default on rent payments, and then declare bankruptcy before eviction. The seller/lessor would then need to hire counsel to obtain an order for relief from the bankruptcy court’s stay of collection or eviction efforts. This process can take months, which in the interim, could force a struggling seller/lessor into insolvency and potential foreclosure.

The status of the lease-option as a “leaseplus” may also deprive the seller/lessor of the expedited remedy of summary ejectment in Small Claims Court, forcing the seller/lessor to pursue a far slower and more expensive eviction action in civil District or Superior Court.

The tenant/buyer may also fail to adequately care for the premises and cause the property to depreciate from the tenant’s neglect or abuse. Such damages could far exceed the typical onemonth deposit charged in residential tenancies and could delay the seller’s ability to prepare the premises for re-showing or re-letting. Finally, as an inherent risk of any tenancy, the tenant/buyer’s failure to pay utility accounts could also result in substantial liabilities that the seller/lessor must satisfy to obtain continued service.

Given these risks, the seller/lessor should require both a credit application and also the tenant/ buyer’s authorization to obtain a credit report as conditions to considering any lease arrangement. A criminal record check on each potential tenant/buyer is also suggested.

Chapter 47G

A prospective lessor/seller entering into a lease-option transaction could face substantially heightened burdens if the transaction falls under the jurisdiction of Chapter 47G of the North Carolina General Statutes. Chapter 47G applies to residential lease contracts containing an option to purchase the leased property, or options to purchase residential property that are executed concurrently with leases for the property, if the property is intended to be or become the tenant/buyer’s primary residence. If Chapter 47G applies, the burdens it imposes upon the lessor/option-seller include:

w A tenant-option holder’s three-day right to cancel the option contract

w The obligation to include numerous disclosures in the contract documents and to record the contract within five days following its execution

w The one-time right of the tenant/buyer to cure a default within thirty days from receipt of notice

There is also the obligation to terminate the agreement through either a mutually-executed termination or a final court judgment. It could take many months to obtain either, therefore clouding title to the property and preventing re-sale in the interim to a replacement purchaser. In addition, the lessor/option-seller faces potential liability for unfair and deceptive trade practices for any violation of Chapter 47G.

Even if a seller/lessor were comfortable with merely renting the property and not relying upon any likelihood that the tenant/buyer would exercise his or her option to purchase, the substantial burdens from having to comply with Chapter 47F should discourage the seller/lessor from accepting any lease arrangement falling under this statute’s jurisdiction. Instead, if the tenant/buyer insists upon receiving some defined option to purchase as a condition to leasing the property, and if the seller/lessor still wants to lease to the prospective buyer, it is recommended that the tenant must first comply with all terms and conditions of the lease for a probationary period of several months before the seller would be obligated to grant the tenant an option to purchase under defined terms. The resulting time separation between lease commencement and option contract execution would remove the transaction from the jurisdiction of Chapter 47F.

to-purchase upon the tenant/buyer’s period of satisfactory performance. In this manner, the seller could seek to avoid the lease becoming a “lease-plus,” which might prevent the seller from eligibility to evict the tenant using summary ejectment or expedited eviction.

Tenant/Buyer Considerations

If a tenant/buyer wants to negotiate a lease-option, he or she should consider disclosing any circumstances that would prevent qualification for mortgage financing which many sellers could understand and accept. Examples could include:

w A recently initiated self-employment opportunity or other career change (Conventional lenders generally require self-employed individuals to provide tax returns from two years of work to qualify them for mortgage financing.)

w A recent move to a new town or city

w A recent business failure suffered by someone who has a long history of good credit and is demonstrating a likelihood of returning to financial stability

w A deflating market

In consultation with an attorney, the tenant/buyer should also try to gain some of the protections provided by Chapter 47G (whether or not the act actually applies) by insisting that the option be recorded, that the seller/lessor disclose any mortgage or similar default, and, if possible, that the option fee be held in escrow rather than paid at time of contract to the seller.

In order to further protect the seller, consider creating an agreement separate from the lease to grant a future option- (continued on page 10)

While the specified rent provides a source of funds to service a mortgage and to reduce both vandalism and insurance risks from lack of occupancy, there is no real assurance that the buyer will ever proceed with the purchase.

(continued from page 9)

Lease-Purchase Agreements

Those who prefer simply to sell, but are willing to rent temporarily, are far better served by a lease-purchase agreement. Under this arrangement, a tenant who fails to proceed to purchase by a defined date is in breach of contract and liable for damages, unless protected by the failure of a condition to the tenant’s purchase obligation. For protection, the seller should require that the tenant/buyer post a deposit, separate from the security deposit, to secure the obligation to purchase. The deposit, or down payment, would be credited to the buyer at closing, but would be non-refundable should the buyer fail to close. It would also be important for the lease-purchase contract to provide no more than four installment payments to the purchase price, (beyond the deposit/down payment) whether those installments were part of or separate from the rent. Providing for five or more such installment payments could render the lease-purchase agreement a “Contract for Deed” subject to the requirements of Chapter 47H of the General Statutes.

Chapter 47H

Similar burdens, as discussed above in Chapter 47G, apply to the seller/lessor through Chapter 47H. Attorneys have advised both seller and buyer clients for years to stay away from contracts for deed, as they present a full list of potential perils for either party. While Chapter 47H has increased protections for tenant/purchasers whose agreements fall within the jurisdiction of the statute, these contracts remain fraught with trouble for seller/lessors. In addition, as the inherent risks of renting property (including the worst-case default and bankruptcy scenario outlined above in the lease-option review) are also present with any lease-purchase transaction, it is essential to obtain as much information as possible about the tenant/buyer’s credit-worthiness prior to entering into a lease-purchase.

Insurance Considerations

Any residential property owner considering becoming a lessor needs to understand that the North Carolina homeowner’s insurance policy is generally not intended to cover leased property. This may result in inadequate, or even denial, of coverage should a claim be filed during the leasehold, especially if the insured owner-lessor fails to disclose the leased status of the property to the insurance carrier. Appropriate coverage for leased property should include benefits for loss of rental income. Not surprisingly, obtaining coverage on rental property is more expensive than on owner-occupied premises. Before committing to any lease arrangement, the property owner should discuss the coverage issues with both his or her attorney and an experienced insurance professional.

Tenant/Buyer Risks

Tenant/buyers also assume risk with lease-option and leasepurchase arrangements. Tenant/buyers who pay significant

purchase deposits may lose them should the seller suffer foreclosure or prove unable to convey clear title. Tenants whose rent is to be partially credited to purchase under the terms of contract, may discover that the underwriter reviewing their subsequent loan application may refuse to credit these incremental payments as equity contributions, regardless of the language of the contract. They may instead reduce the effective purchase price by the total of such payments, thereby imperiling the buyer’s ability to receive adequate funding. Tenants who project an ability to receive financing at the end of the lease term may find that underwriting standards have tightened or that anticipated improvement in their financial condition has failed to occur.

Use of Legal Counsel

Given the potential applicability of Chapters 47G and 47H to lease-purchase and lease-option transactions, it is imperative that any potential tenant-purchaser or lessorseller receive thorough advice and assistance from an experienced North Carolina real estate attorney. Although brokers may complete standard form rental contracts and Offers to Purchase and Contract, creation of proper lease-purchase or lease-option agreements should be left solely to the drafting expertise of competent counsel. An attorney’s involvement ensures that the client receives appropriate legal advice, with a clear understanding of potential risks and benefits, before entering into a complex transaction.

As the economy and real estate market continue to slowly improve, the prevalence of lease-option and leasepurchase transactions may decline, but there will always be sellers desperate to cover mortgage debts on vacated homes, and buyers unable to obtain immediate institutional financing, for whom such transactions will appear attractive. The hope for this article is to provide a least a general orientation for approaching such transactions should the need arise. v

John A. Turner is President and Shareholder of Turner Law Office, PA in Boone, N.C.; a Past Member of the Real Property Council of the North Carolina Bar Association; and a Past Chairperson of the NCBA-NCAR Joint Task Force on Residential Forms.

Those who prefer to simply sell, but rent temporarily, are far better served by a lease-purchase agreement.

“ ”

By ADAIR COLLINS DIRECTOR OF POLITICAL COMMuNICATIONS

Tax Reform: Protecting Our Industry & Economy

EvER puT OuT A fIRE ON A STOvE? SEEN A hOuSE ON fIRE? ThAT IS WhAT ThE LAST TWO MONThS hAvE BEEN LIkE fOR NC REALTOR® AdvOCATES

Since May, when competing tax reform plans were rolled out in the North Carolina General Assembly, state mortgage interest and property tax deductions clearly have been in danger. Recognizing these are vital components of a stable and thriving family, housing industry and economy, the NC Association of REALTORS® and our members have responded strongly to the threat. At press time, despite strong public support for preserving the deductions, the fire was still raging and NC REALTORS® and homeowners continued battling the blaze to save the deductions.

“If you believe that home ownership is good for the economy, which it is, and good for family wealth creation, which it historically has been, then government policy should support it, as it has over the last century,” said Mark Zimmerman, chair of the NC REALTORS® legislative affairs committee, in an interview with The Associated Press.

NCAR is encouraged that, due to our advocates’ active outreach, legislators in the House included both housing deductions in House Bill 998 — a proposal sponsored by Representatives David Lewis (R-Harnett), John Szoka (R-Cumberland), Tim Moffitt (R-Buncombe) and Mitchell Setzer (R-Catawba). The bill allows also for the deductions to be considered separate from charitable contributions, and does not impose a transfer tax or tax on real estate services. However, it imposes a combined cap on the deductions totaling: $25,000 for married taxpayers filing jointly, $20,000 for head-of-household filers, and $12,500 for married taxpayers who file separately and for single filers.

While Senate and House leaders discuss possible negotiations behind closed doors, homeownership advocates are urging State Representatives to maintain inclusion of unlimited mortgage interest and property tax deductions in any legislative compromise ahead, and are encouraging them to further ensure the safety and vitality of homeowners, the housing

industry and the economy by opposing the Senate’s proposal to limit home deductions to $15,000 for married taxpayers filing jointly ($7,500 for those filing single).

“NCAR offers its sincere thanks to all NC REALTORS® who have reached out—and continue to reach out—to their legislators in support of well-informed and responsible tax reform. Your voice is absolutely critical to keeping communities strong. Our Government Affairs staff looks forward to standing side by side with you — as long as it takes — until the fire is out,” said Patrice Willetts, 2013 president of NC REALTORS®. v

Impact on the State Budget

The General Assembly’s tax reform debate has impacted the State government’s budget determinations. In late May, the Senate released its plan for the budget for the next two years, followed by the House’s release of its version in early June. The House and Senate will meet in conference committee to sort out their differences. They intend to hold off on finalizing an agreement, however, until an agreement is reached on a tax reform plan, as it may include revenue cuts to the budget.

Governor of North Carolina Pat McCrory has said that he is reviewing multiple analyses of tax reform, and particularly considering how proposed cuts to tax revenue would impact the efficiency and effectiveness of State government operations.

With tax reform and budget agreements currently pending in House–Senate negotiations, both chambers passed a continuing resolution (CR) on June 25. The CR will allow the State government to continue operating at 95 percent of its current spending level into the next fiscal year, until the final budget is voted on in the coming weeks. The CR will be in effect July 1 through July 31.

Mark Zimmerman

Patrice Willetts

Sharpen Your #1 Sales Skill: Communication

NCAR members are welcome to the luncheon presentation: “Communicating Beyond the Generational Divide”

Thursday, August 22, 2013

11:30 a.m. – 2 p.m.

$20 registration fee

High Point Regional Association of REALTORS® 1830 Eastchester Drive, High Point, NC

Communication expert, John Ansbach, will explain generational preferences and expectations in the marketplace. If you want others to wonder why you are so successful, then you need to come to this event!

Register online at www.ncrealtors.org

This member benefit provided by NCAR and HPRAR through a grant from NAR.

By KRISTIN MILLER RPAC MANAGER

Are You Smarter Than…Another REALTOR®?

ARE yOu A TRIvIAL puRSuIT LEGENd? A puB quIz ChAMpION? ThEN yOu dON’T WANT TO MISS ThE 2013 RpAC TRIvIA ANd LIvE AuCTION fuNdRAISER

On Sunday, September 15th, the NC REALTORS® Political Action Committee (NC RPAC) will host a Trivia Night and Live Auction fundraising event in conjunction with the annual NCAR Convention and Expo in Asheville, N.C. We’ll kick things off at 9:30 p.m. with an intense competition to test your knowledge in entertainment and sports, history and science and everything in between. Trivia teams may have up to five players, and the cost to play is $25 per person or $125 per team. Your team will want to reach for the top because the top three teams will receive amazing prizes, including $1,000 for the crowned champions.

Being a part of this event will also allow you to participate in the live auction, to be held between trivia rounds. A variety of exclusive items will be available, including a three-night stay at a riverside cabin on the banks of the French Broad River. This tremendous offer was generously donated by Liz Wiederhold, from the Asheville Board of REALTORS® Whether your idea of getting away is fly-fishing, camping or just sipping lemonade on the deck, according to her, “you will not want to miss the opportunity to bid on this cabin.”

Come enjoy a cocktail and test your skills in a fun, friendly competition with your peers, while also investing in your career and your industry! Event starts at 9:30 p.m. Advanced tickets are required. For more information, visit www.ncarconvention.org or email RPAC Manager, Kristin Miller at kmiller@ncrealtors.org. v

Get on the Bus for Homes4NC

AS AN NCAR MEMBER, yOu kNOW hOW CRITICAL IT IS TO SuppORT hOuSING AffORdABILITy. MAkING SuRE ThERE ARE SAfE, dECENT ANd AffORdABLE hOMES AvAILABLE IN NORTh CAROLINA IS WhAT yOuR hOuSING OppORTuNITy fOuNdATION – hOMES4NC –IS ALL ABOuT

This year, Homes4NC is asking you to support the “Get on the BUS” fundraiser during the annual NC REALTORS® Convention & Expo. For $50 a ticket, you can hop on LaZoom’s iconic purple bus and explore the funny or haunted side of Asheville. These historical and hysterical tours feature outlandish comedy skits, entertaining and edgy tour guides, loads of Asheville information and much more. Additionally, Green Man Brewery, one of North Carolina’s oldest breweries, will be sponsoring cold beverages for everyone on the bus.

Homes4NC will offer two different tours. The first tour will be comedy-themed and will take place on Sunday, September 15th

from 3:00-4:30pm. The second will be a haunted tour on Monday, September 16th from 6:30-7:30pm.

The NC Association of REALTORS® established Homes4NC as a public charity to promote safe, decent and affordable housing for all North Carolinians. We do this by raising funds through events like the “Get on the BUS Fundraiser” and by making matching grants to nonprofit agencies that help low-income families with their housing needs.

Let’s show the world what can happen when REALTORS® come together to make a difference in the lives of others! The buses have limited seating so visit www.ncarconvention.org and click on Events & Education to reserve your seat today. For questions contact Kristin Miller at kmiller@ncrealtors.org. v

By TONy hAwKINS BROKER/INSTRuCTOR, GRI

The New Normal…Are We There Yet?

ThE ApRIL 18, 2013 uNC REAL ESTATE CONfERENCE ENTITLEd “ThE NEW NORMAL…ARE WE ThERE yET?” WAS AN INfORMATIvE ANd ThOuGhT-pROvOkING pRESENTATION Of CuRRENT REAL ESTATE TRENdS RELEvANT TO ThE COMMERCIAL dEvELOpER ANd INvESTOR

The presentations reviewed national marketplace trends and stats. Three significant issues presented themselves as occurring in the investor development world of transactions: joint ventures, company culture and knowing the numbers. Not surprisingly, the matters have relevance in the residential market as well.

Partnership or Joint Ventures

It appears that mutual cooperation fosters an “it makes sense to do this” transaction. A joint venture is a strategic alliance where two or more parties, usually businesses, form a partnership to share markets, intellectual property, assets, knowledge and of course, profits.

Joint ventures have been apparent in the commercial arena for a few years. The residential market may want to consider teaming up with another REALTOR®, group of professionals, or business entity for the purpose of expanding their business influence and creating a more powerful market presence. Joint ventures are in, and if you’re not utilizing this strategic weapon, chances are your competition is, or will soon be, using the strategy to their advantage. Possibly even against you!

The Company Culture

Company Culture can be defined as the shared values and practices of the company’s employees or affiliates. Daily interactions and professional execution of duties play an important part of the company philosophy and overall public perception of the organization.

According to Sohrab Vossoughi in the Harvard Business Review, (company) culture is one of those fuzzy terms that makes business analysts roll their eyes. Its true power lies in the fact that unlike other competitive advantages, it is nearly impossible to copy. Vossoughi defines culture as “the things that people in an organization do without thinking, often

because of a precedent set by management.” He cites companies like Southwest, Costco and IBM as examples.

One of the conference’s joint venture company participants and Kenan-Flagler alum proved their expertise in the “git ‘er done” culture. It was evident in the successful venture’s outcome that the company culture was focused on competent and positive behaviors.

Inside the Numbers

I was first introduced to the Sunday morning NFL program “Inside the Numbers” a few years ago. If ESPN can examine the numbers for an NFL team or individual football player in just about any category you name, shouldn’t REALTORS® do the same? It is very important for REALTORS® to stay abreast of various statistics, market reports and trends to further assist buyers and sellers. It was evident during the conference that the presenters displayed a depth of detail and knowledge of their projects. The commercial REALTOR®, especially those involved with investment properties, looks “inside the numbers” with absolute rationale. A proposed project is analyzed from Main Street to Wall Street and then the area is surveyed with reconnaissance as ground troops pose as accountants!

James D. Murphy in his book, “Flawless Execution”, states a purposeful standard of execution. First a project is Planned, participants are Briefed, the plan is then Executed and afterward in the Debrief, the participants examine the plan’s outcomes creating a culture of learning.

Participants of the Kenan-Flagler alum project shared knowledge and discussed the entrance into the power of cognitive diversity. The established company culture helped facilitate individual accountability leading all contributors to learn and know the numbers. Everyone was not only accountable but also able to identify their part and others. Knowing the numbers meant knowing the anticipated outcome. Debriefing the team on the outcome creates a culture of learning that’s critical to adapting in a rapidly changing environment and producing better leadership skills.

The New Normal…Are we there yet? Yep-some of us are. v

NCAR Welcomes New Team Members

Adair F. Collins

Director of Political Communications

Adair Collins joined the North Carolina Association of REALTORS® in May 2013 as the Director of Political Communications. Before joining the NCAR staff, Collins worked in Washington, D.C. for organizations such as the nonpartisan Office of the Clerk of the U.S. House of Representatives; an association, Grantmakers for Children, Youth, and Families; the Cystic Fibrosis Foundation’s National Office; and the U.S. Peace Corps Headquarters. She holds a M.A. from American University and a B.A. Honors Degree from Sweet Briar College, with a year at the University of St. Andrews, Scotland.

Mckenzie Hamrick

Communications Specialist

Mckenzie Hamrick joined the North Carolina Association of REALTORS® in June 2013 as Communications Specialist. Hamrick has worked in communications for a number of

years, most recently serving as Marketing Assistant and Collateral Designer for The Jewell Agency in Charlotte, N.C. She has direct experience in graphic design, public relations and digital marketing. Born and raised in the Tar Heel state, Hamrick earned a bachelor’s degree in Journalism and Mass Communication from the University of North Carolina at Chapel Hill.

Mike Buescher

Director of Business Development

Mike Buescher joined the North Carolina Association of REALTORS® as the new Director of Business Development on June 3, 2013. He has many years of business development experience in the shopping center industry and previously served as Director of Marketing for Tanger Outlet Centers. A Toledo, Ohio native, Buescher has a BBA degree in Marketing from the University of Toledo. v

NCAR members present a wreath at the Tomb of the Unknown Soldier in Arlington National Cemetery during NAR’s Midyear Meetings.

ATTENTION NC REALTORS® MEMBERS

Important Information Regarding Election of 2014 Officers

The elections of the North Carolina Association of REALTORS® for 2014 Officers, NAR Directors and Issues Mobilization Committee members will be held August 26-29, 2013.

Please review the following information and take the appropriate action if needed:

w As approved by the Board of Directors, the electronic method of voting is the ONLY means by which voters may vote in the Annual Election. As outlined in NC REALTORS® Electronic Voting Policy, an NC REALTORS® member is entitled to vote if he/she: (1) is eligible under the NCAR bylaws to vote in the Annual Election; (2) has provided NCAR with a valid, unique email address; and (3) has not notified NCAR that he/she no longer wishes to receive email messages from NCAR.

w Eligible voters will use the same login and password that is used to access the NC REALTORS® website or forms (email and NRDS number). There are some real estate team members who use the same email address and such is recorded in our NRDS system. Please note that the voting system will only allow an email address and NRDS number to be used once.

w All eligible voting members must have a current, unique email address in the NC REALTORS® (NRDS) system. Please contact your local REALTOR® Association to update your email address by July 24 to allow adequate time for reporting of changes to NCAR. All eligible voter information will be submitted to our voting service on July 31. Members whose information has not been entered into the database by that time will not be able to vote.

w Many members have taken measures to prevent junk emails and have indicated in their member record through the local REALTOR® Association that they do not wish to receive emails from the NC Association of REALTORS®. Members who have asked for their member record to be marked as such will be unable to vote because their information will not be included in the information sent to our voting service provider.

w Members without an email address on file with the association or those who have asked that emails be blocked from the NC Association of REALTORS® will NOT receive any election information by any other method of communication, such as mail or facsimile.

w If assistance is needed with voting, NC Association of REALTORS® staff will be available during business hours, 8:30 am -5:00 pm.

w Election results will be announced at the general membership meeting of the NC REALTORS® Annual Convention in Asheville, North Carolina, on September 15, and will be posted on www.ncrealtors.org the following day.

When the election begins, you may access the ballot through our website at www.ncrealtors.org and click on the “VOTE ” button on our home page. Online Polls will be open 24 hours a day, Eastern Standard Time, from 12:00:01 A.M. on Monday, AUGUST 26, 2013, to 11:59:59 P.M. on Thursday, AUGUST 29, 2013.

2014 Officer Candidates and Election Information

Participate in voting for the 2014 Officers. Further election information can be found on our website.

PRESIDENT-ELECT:

Tony Smith, ABR,CRS,GRI

Wanda Smith & Associates, Charlotte Charlotte Regional REALTOR® Association

TREASURER:

Treasure Faircloth, RFC, GRI, e-PRO, CRS Allen Tate Company, Inc., Winston-Salem Winston-Salem Regional Association of REALTORS®

FINANCE COMMITTEE: Jerry Evans, CSSS, GREEN Century 21 The Realty Group Washington Washington-Beaufort Co. Board of REALTORS®

T. Anthony Lindsey, SFR Globe Crossing, LLC, Charlotte Charlotte Regional REALTOR® Association

Wilson Sherrill Resort Brokerage & Consulting, Ocean Isle Beach Brunswick County Association of REALTORS®

Kent Wood, CCIM Wood Commercial Properties, Charlotte Charlotte Region Commercial Board of REALTORS®

NAR DIRECTOR:

Sandra L. O’Connor, ABR, AHWD, CRB, CIPS, GRI Allen Tate Company, Greensboro Greensboro Regional REALTORS® Association

ISSUES MOBILIZATION COMMITTEE:

Mark Zimmerman

RE/MAX Winning Edge, Chapel Hill Greater Chapel Hill Association of REALTORS®

REGIONAL VICE PRESIDENT

Region 1

David Perrot, ABRM, CDPE, CRB, CRS, GRI, SFR

RE/MAX Ocean Realty, Kill Devil Hills Outer Banks Association of REALTORS®

Region 2

Larry D. McNeill ABR, e-PRO, GRI Coastal Shores Resort Prop LLC, Ocean Isle Beach

Brunswick County Association of REALTORS®

Region 2

Jody Wainio, SFR, WHS Buyer’s Choice Realty, Wilmington Wilmington Regional REALTORS® Association

Region 5

Amy Hedgecock, GRI, CPM Fowler & Fowler REALTORS®, High Point High Point Regional Association

Region 7

Marsha Jordan, CRB, CRS, GREEN, GRI Apple Realty of Lincolnton Lincoln County Board of REALTORS®, Inc.

Region 8

Alison Royal-Combs, e-PRO Keller Williams, Lake Norman Charlotte Regional REALTOR® Association

Region 10

Jose Serrano, ABR, BPOR, CIPS, CPDE, CRS, GRI, SFR, SRES, TRC

RE/MAX United, Raleigh Raleigh Regional Association v

By wILL MARTIN GENERAL COuNSEL

Otis Gets The Low-Down On Contract Changes

Dear Forms Guy: I’m sitting around doing nothing in particular and thought I’d check to see if you can tell me about the new changes to the Offer to Purchase and Contract. Sincerely, Otis

Dear Otis: Wastin’ time, eh? Sure, I’ll be happy to tell you about the changes. Are you by chance sitting on a dock someplace, Otis? Sincerely, Forms Guy

Otis: How’d you know?

Forms Guy: Oh, just a guess. The changes to the Offer to Purchase and Contract went into effect on July 1st. Permitted users will have 60 days from the effective date to begin using the new version.

Otis: Are there a lot of big changes?

Forms Guy: I would not describe any of the changes as “big.” For the most part, the changes are just to clarify a few things. For example, in paragraph 1(d) of the Contract, the term “good funds” has been replaced with “cash or immediately available funds.” The purpose of the change is to clarify that if the buyer has failed to deliver the Due Diligence Fee or Earnest Money Deposit by their due dates, or if any check or other funds paid by buyer have been dishonored, it will not be sufficient for the buyer, following notice from the seller, to simply deliver another personal check that has been made good or notify the seller that a previously-delivered check is now good.

Otis: Okay, that makes sense. Have any changes been made regarding fuel tanks? I was involved in a deal recently where the seller sold the fuel in a propane tank back to the fuel provider before settlement and the buyer claimed that the propane belonged to him because it was still in the tank at settlement.

Forms Guy: The laundry list of fixtures that are included in the purchase price are located in paragraph 2 of the Contract and include “fuel tank(s) whether attached or buried and including contents, if any, as of Settlement.” Therefore, in situations where a fuel tank and/or its contents are not going to convey as a part of the sale, it is very important that they be excluded from the sale by describing them in the blank space at the end of paragraph 2. In order to underscore the importance of identifying fuel tanks and/or fuel contents that are not going to convey, a new second sentence has been added to the “NOTE” at the end of paragraph 2 which reads as follows: “FUEL TANKS AND

ANY FUEL IN THEM WHICH ARE NOT TO CONVEY SHOULD BE NOTED IN THE BLANK ABOVE.”

Otis: How is a buyer supposed to know whether or not a fuel tank is owned or leased by the seller?

Forms Guy: Good question, Otis. A new item has been added to the buyer’s due diligence list in paragraph 4(b) of the Contract regarding inspections to determine the existence, type and ownership of any fuel tank located on the Property. Also, a new “Note” has been added advising the buyer, in cases where any fuel tank is leased, to check with the owner of the tank to determine the terms under which Buyer may lease the tank and purchase fuel.

Otis: Has any thought been given to adding something to the listing agreement about fuel tanks? It would be helpful if we could get information about any tank up front so that we could pass it along to agents for buyers.

Forms Guy: Yes. A new paragraph has been added to the “Seller Representations” section of the Exclusive Right to Sell Listing Agreement (form 101) regarding fuel tanks that may be located on the property. This should help the listing agent get information up front from the seller about any tanks on the property so that they may provide that information to a buyer’s agent.

Otis: Excellent. Are there any other changes to the Contract?

Forms Guy: Yes. A new sentence has been added at the beginning of the “Repair/Improvement Negotiations/ Agreement” paragraph of the Contract (paragraph 4(c)) to more explicitly communicate to the buyer and seller that absent agreement to the contrary, the property is being sold in its current condition. That sentence will read as follows: “Buyer acknowledges and understands that unless the parties agree otherwise, THE PROPERTY IS BEING SOLD IN ITS CURRENT CONDITION.”

Otis: Why was it necessary to add that to the Contract?

Forms Guy: Another good question, Otis. The Contract does not obligate a seller to make any repairs to the property. If a seller declines to make any requested repairs, the buyer can purchase the property in its current condition or termi-

nate the contract. This was true under the old “Alternative 1” approach to repairs and it continues to be true under the new “due diligence” contract. Still, some sellers and their agents feel the need to insist on adding “as is” type language to the Contract to clearly evidence the seller’s intent not to make any repairs. Legally speaking, the addition of “as is” wording is unnecessary and may actually raise legal questions about intent of the parties since the term “as is” means different things to different people. This new sentence does not change the meaning of the contract, but it is hoped that it will help eliminate the perception that additional wording must be added to the Contract to establish a seller’s intent not to make repairs.

Otis: Anything else?

Forms Guy: New wording has been added in paragraph 7(f) of the Contract to make it clear that if the seller checks “yes” to any of the three representations about oil and gas rights, it does not relieve the seller of the obligation to convey title to the property free of defects or encumbrances unless the parties agree otherwise. Severed oil and gas rights would constitute a defect or encumbrance on the title. A new “Note” has been added at the end of paragraph 7(f) advising the parties to consult with a North Carolina real property lawyer of the effect that severed oil and gas rights will have on the use and enjoyment of the property and, if the parties both desire to proceed with the transaction, to recommend and draft appropriate changes and additions to the Contract.

Otis: Oil and gas rights should also be addressed in the listing agreement in my opinion.

Forms Guy: The Forms Committee agrees with you, Otis! Another new paragraph has been added to the “Seller Representations” section of the Exclusive Right to Sell Listing Agreement that includes the oil and gas rights disclosures that are now in the Contract.

Otis: That’s good. Something else—I’ve heard about a new lien law that went into effect earlier this year but I don’t know much about it. Will that have any effect on the Contract?

Forms Guy: Changes to the lien did go into effect April 1st. Briefly, the new lien law applies to projects to improve real property where the anticipated cost of the project at the time the building permit is issued is $30,000.00 or more. In such cases, the owner will be required to designate a “lien agent” to whom potential lien claimants will be required to give notice. A new sentence at the beginning of paragraph 8(e) of the Contract will obligate a seller who is covered under the

new law to appoint a lien agent and to deliver a copy of the appointment to the buyer after the contract has been formed.

Otis: Whoa! Are you saying that any time an owner has made an improvement, he’ll have to appoint a lien agent?

Forms Guy: Not to worry, Otis. The new law does not apply to improvements to an existing single-family residential dwelling unit that is used by the owner as a residence. The lien law that existed prior to April 1st will still apply to projects that aren’t covered under the new law. Sellers of property who are covered by the “old” lien law will still be obligated under paragraph 8(d) to furnish the required lien waiver forms as they have in the past.

Otis: Where can I get more information on

the new lien law?

Forms Guy: For starters, you can check out the Forms Guy Q&A in the May/June issue of Insight, available by clicking on the following link: http://www.ncrealtors.org/uploads/MayJun13formsguy.pdf)

Otis: Is that all the changes?

Forms Guy: There are a number of other technical changes to the Contract, but let me mention one more. A new parenthetical has been added in paragraph 13 which specifically states that the 14-day permitted delay period applies not only to the original Settlement Date, but also to any new Settlement Date that the parties agree to in writing. This addition does not represent a change to the intent of paragraph 13, but the question has been raised a number of times about whether the 14-day period applied to an amended Settlement Date because it did not specifically say so. The new parenthetical should put that question to rest.

Otis: Speaking of rest, nothin’s gonna change unless I get moving. Thanks for the info, Forms Guy!

Forms Guy: Any time, Otis. I hope lots of deals come your way.

By BILL hOBBS LENDER LIAISON NORTh CAROLINA hOuSING FINANCE AGENCy

New Mortgage Product = (New) Business

If SOME Of yOuR CLIENTS ARE BEING kEpT OuT Of ThE MARkET By LIMITEd dOWN pAyMENT fuNdS, A NEW MORTGAGE pROduCT COuLd hELp yOu TuRN ThEM INTO hOMEOWNERS. ThE N.C. hOME AdvANTAGE MORTGAGE™ OffERS COMpETITIvE INTEREST RATES ANd GENEROuS dOWN pAyMENT ASSISTANCE – up TO 3 pERCENT Of ThE LOAN AMOuNT– fOR BOTh fIRSTTIME ANd MOvE-up BuyERS. ThE MORTGAGE hAS NO SALES pRICE LIMITS

Developed by the North Carolina Housing Finance Agency, the new product owes its flexibility to its creative use of taxable financing. The 30-year fixed-rate FHA, VA and USDA mortgages are funded through the sale of government-insured, mortgage-backed securities. Down payment assistance is structured as a zero-interest, second mortgage, forgiven in 15 years. The N.C. Home Advantage Mortgage™ is the only loan product in the state with this benefit.

“REALTORS® play an important role helping fami lies navigate the home buying process, from under standing what they can afford to applying for the loan,” said Bob Kucab, executive director of the N.C. Housing Finance Agency. “We’re excited that the N.C. Home Advantage Mortgage™ will help REALTORS® make homes affordable for more North Carolinians.”

Buyers may be eligible for an N.C. Home Advantage Mortgage™ if they:

w Are buying a new or existing home in North Carolina and occupy it within 60 days of closing

w Have an annual qualifying income of $85,000 or less

w Are legal residents of the United States

w Have a credit score of 640 or higher

Buyers don’t need to repay the down payment unless they sell, refinance or transfer their home. The loan is completely forgiven at a rate of 20 percent per year beginning in year 11, making it completely forgiven after year 15.

First-time home buyers and veterans can even use a tax-saving Mortgage Credit Certificate (MCC) with the N.C. Home Advantage Mortgage™. The MCC can reduce the home buyer’s federal income tax liability up to $2,000 a year for each year they occupy the home as their primary residence. MCC income and sales price limits and other limitations apply. Move-up buyers, other than veterans, are not eligible.

You can learn more about the N.C. Home Advantage Mortgage™ and the MCC (and earn CE credits) through Financing Dreams, a four-hour class offered by the N.C. Housing Finance Agency. Real estate agents who complete the class are listed as Preferred Real Estate Agents at www. nchfa.com. The N.C. Housing Finance Agency also provides marketing materials, including an electronic flyer that agents can tailor with their own information.

To learn more about Financing Dreams, contact Kat Driscoll, training and outreach coordinator, kjdriscoll@nchfa.com or 919-877-5683.

You and your clients can find additional information about the N.C. Home Advantage Mortgage™ and MCC and locate a participating lender from our statewide network at www.nchfa.com. v

This year’s NC REALTORS® Convention & Expo attendees can take advantage of the Financing Dreams class onsite at the Grove Park Inn.

By ANDREA BuShNELL EXECuTIVE VICE PRESIDENT

Ensuring Tax Reform Does Not Kill the Homeownership Dream

We support a North Carolina where businesses, small and large; schools and universities; and citizens can thrive. But, the following statement from NAR’s Federal Tax / Tax Reform Issue Summary states, very succinctly, the disadvantages of tax reform:

Tax reform carries high stakes for real estate professionals and those who own real estate. The current system is very efficient and generally favorable for real estate. Alterations to that system would change – likely to the detriment –the economics of homeownership and of real estate investment. Any modification of real estate-related tax benefits in the current fragile economy could do serious damage and will certainly create uncertainty for prospective purchasers.

Also, tax reform based on a goal to lower the tax rates as much as possible could mean that policy makers ignore the societal and economic benefits of important and long-standing deductions, such as the mortgage interest deduction, in favor of reaching the ultimate low tax rate. While lower rates could help take some of the sting out of lost tax benefits, and generally be positive for the economy, the trade-offs would create many winners and losers among individuals, businesses, and entire industries. There is no assurance that tax reform would result in a net positive for real estate or for the economy. Indeed, the real estate sector could take a big hit, as it did in 1986, the last time tax reform was successfully undertaken.

NCAR has been working around the clock to ensure that tax reform does not damage the recovering, but still fragile, real estate market in North Carolina. President Patrice Willetts, Legislative Chairman Mark Zimmerman, our leadership team, our local association AEs and staff members, NCAR staff and, in particular, Cady Thomas, NCAR’s lobbyists and consultants and our wonderful members have all pitched in to ensure that tax reform does not kill the dream of homeownership in North Carolina. I cannot possibly express better why the fight is so important than to republish Mark Zimmerman’s comments delivered in writing to our legislators (see letter on page 29).

This has been one of the hardest fought battles in my tenure with the REALTOR® family, dating back to 1995. We are continuing the fight and may very well have to come back to fight the fight another year. Many of the original tax proposals adverse to property ownership have been defeated (e.g., real estate transfer tax, tax on services impacting the real estate industry, application of the franchise taxes to LLCs). This is a huge victory for North Carolina, its citizens and NCAR. But, we are not yet ready to declare this victory and go home. As long as a limitation on mortgage interest and property tax deductions are being proposed and discussed we will remain vigilant on behalf of all our members and property owners in North Carolina. We will continue the good fight. Please join us and answer our Calls for Action. This is for your future; this is for the future of North Carolina.

yOu hEAR IT EvERyWhERE – TAx REfORM. IT SOuNdS LIkE A GOOd IdEA. ThE NORTh CAROLINA ASSOCIATION Of REALTORS® SuppORTS TAx REfORM ThAT RESuLTS IN ThE CREATION Of SOuNd ECONOMIC ANd TAx pOLICy.

Dear Members of the North Carolina House of Representatives,

I want you to think hard about your decisions on reforming the North Carolina tax code. I‘m concerned about shifting the tax burden on homeowners by curtailing the Mortgage Interest and property tax deductions. Home ownership is important to growing family wealth, creating more stable communities and bolstering North Carolina’s economy. Home ownership is something tax policy should encourage. Therefore, quite frankly, I’m dumbfounded why legislators would place an artificial limit on that goal. Good government policy supports home ownership. You must not compromise that principle. You must be fully committed.

For exactly 100 years, since the very first federal tax code, mortgage interest has been a centerpiece of gov- ernment policy. So much so that in 1982, when my former boss, President Ronald Reagan, took on the same hard task of tax reform that you are grappling with, he personally insisted on retaining the Mortgage Interest Deduction. In a speech in 1982, he said:

“In America, private ownership has been the bedrock of our social system. Let me state, categorically, that for this administration, housing is one of our highest social priorities. Our policies for this industry are based on the essential right to private property. And in private property, nothing is more important than home ownership. I also want to state my firm, personal commitment to preservation of the homeowner mortgage tax deduction.” Reagan understood how important home ownership is to our American way of life, and though he fundamen- tally changed our tax system, he preserved the Mortgage Interest Deduction. In fact, over the past century, wherever there’s been a Mortgage Interest Deduction, it’s never been limited by a legislature – until now, here in North Carolina

You understand how this works. If North Carolina compromises, then all the cash-starved states will pounce on this homeowner deduction – and so eventually will a cash-starved Congress. Your vote will begin the abandonment of support for home ownership. Do you really want this to be your legacy?

If you believe in promoting home ownership, you must not compromise with some arbitrary cap. You must stand firm in saying we need tax reform and need to reaffirm the 100 years of good tax policy unconditionally supporting home ownership

We must also preserve the property tax deduction. Local taxes are a huge burden that will only grow worse. Homeowners currently shoulder half the cost of local government through property taxes. They are doing more than their fair share. By stripping them of this deduction, you will devalue families’ homes and discourage homeownership.

To the Republicans in the House: I ask you to “win one for the Gipper” and the principles he fought for, to keep our American society strong.

To both parties: I ask you to win one for your constituents, the 2,958,000 home-owning families in North Carolina.

You must only support tax reform with the full Mortgage Interest Deduction and the property tax deduction. Otherwise, you will compromise the principles you agree on and create tax policy that would lead North Carolina into a worse state in the future.

Sincerely,

Mark Zimmerman

Administrative Andrea Bushnell Executive Vice President 336-808-4220

Bryan Jenkins Chief Financial Officer 336-294-3112

Denise Daly Membership Records Coordinator/Bookkeeper 336-808-4223

Michael Buescher Director of Business Development 336-808-4229

Sherry Harris Administrative Assistant 336-808-4230

Amanda Lowe Accounting Assistant 336-217-1048

Phyllis Lycan Accountant 336-808-4224

Donna Peterson Executive Assistant 336-808-4221

Sarah Beth Coggin Partners Program Manager 336-217-1047

Caroline Main Receptionist 336-808-4220

Communications & Marketing Blair Wilburn Director of Communications and Marketing 336-808-4228

Samantha Ashburn Electronic Communications Manager 336-808-4226

Mckenzie Hamrick Communications Specialist 336-808-4227

Professional Development Ellie Edwards Director of Professional Development 336-808-4231

Monica Huckaby Professional Development Coordinator 336-217-1051

Legislative Cady Thomas Director of Government Affairs 919-573-0996

Adair Collins Director of Political Communications 919-573-0992

Dominic Palvisak Political Specialist 919-573-0984

Kristin Miller RPAC Manager 919-573-0995

Nicole Arnold Shared Local GAD 336-808-4237

Legal

Will Martin General Counsel 336-808-4238

Kay Bailey Legal Assistant 336-808-4235

Events Mandy Lowe Director of Events 336-808-4236

Keri Epps-Rashad Meeting Planner and EXPO Manager 336-217-1049