I love the intertubes. ("Intertubes": What the former United States Senator Ted Stevens from Alaska calls the internet.) Since the late 90's, every-day people have been doing their business online. This puts everybodies' business ~ online.
Old newsletters become a snapshot of an organization's personality. Let's look at the Tennessee Real Estate News-Journal (an Official Publication of the Tennessee Real Estate Commission) ~ for instance:
In the Summer 2000 TREN-J, there is a very nice explanation of exactly what makes up a Vacation Lodging Service (VLS) license. An excerpt:
Both types of firms [real estateoffices and VLS licensed offices] aresubject to the same requirementsregarding handling of escrowfunds which include: proper andtimely deposit and disbursementof all funds received by the VLSfirm, proper accounting proceduresto assure compliance withTREC regulations, retention ofrecords, review of records byTREC, and discipline when mishandlingor misrepresentation offunds is determined.
Bill Stewart, the TREC Auditor, contributed to the Fall-Winter 2001 edition with "Primer on Escrow Accounts" and includes a distinct paragraph relating to vacation rental management companies:
For vacation lodging operations,all funds received for acustomer to reserve or occupy arental unit must be deposited toand maintained in the escrowbank account until that customerhas checked out. Multiple unitsand multiple reservations ofeach unit at any point in timemake detailed records keepinga necessity. Bank statementreconciliation should be coordinatedwith the accounting recordson which monthly reports to unitowners are based. Reservationdeposits must be maintained inthe escrow account until theybecome earned rental revenue.Rental revenue due a unit ownermust remain in the escrowaccount until properly paid tothat owner. Commissions orexpenses deducted from rentalrevenue and due the firm mustbe disbursed at least monthly.Sales and hotel/motel taxes areadditional examples of amountsthat may be included in fundingrequirements depending on firmprocedures.
Very interesting! Thank you, Mr. Stewart!
Oh, yeah. I forgot to mention that the TREN-J, published about quarterly, always has a DISCIPLINARY ACTION section. Yup. Every issue. The DA section is what makes that publication the gossip rag of the industry.
Two very interesting disciplinary actions appear in the same issue as Mr. Stewart's escrow article. I would go so far as to say ~ dare i say ~ that these two companies were actually the INSPIRATION for what now feels like a lecture on escrow accounting from Mr. Stewart:
EAGLE PROPERTY MANAGEMENT,INC.Lic. No. VLS254741Pigeon Forge, TNFollowing an audit of the firm wherea deficit in the escrow account wasfound, Principal Broker Bradley K.Walker agreed to the following: (1)pay a civil penalty of $7000.00, (2)have the firm be on probation forone year, (3) fully fund the escrowaccount, and (4) provide theCommission with quarterly reconciliationreports while on probation.
Chad McCarter at Great Smokies Management Corporation (Echota) also received a fine and probation in that issue, but only to the tune of $3000 for his substantial escrow deficit. Otherwise, the rest of the hand-slappings for Tennessee licensees is pretty boring.
TIMBER TOPSLic. No. 255489VLS ApplicantSevierville, TNThe respondent, at the time ofaudit, was found to have asubstantial escrow account deficitand was also operating an unlicensedbranch office. For theseactions the respondent agreed to:(1) pay a civil penalty of $11,100.00;(2) fully fund the escrow accountand make restitution of all moniesdue by 09-30-01; (3) be onprobation for a period of one year;and (4) provide the Commissionreconciliation reports on a quarterlybasis while on probation.
OAK HAVEN RESORTLic. NO. F255329Sevierville, TNPrincipal Broker Chuck B.McCarter agreed to pay a$1000.00 civil penalty, be onprobation one year, provide theCommission with quarterly reportsabout the escrow accountand fully fund the escrowaccount after an audit of the firmrevealed a deficit in the escrowaccount.
MOUNTAIN VALLEYPROPERTIES, INC.Lic. No. FM 254925Pigeon Forge, TNFollowing an audit conducted byCommission staff which noted adeficit in the firm’s escrow account,Principal Broker David B.Myers agreed to the following:Pay a civil penalty of $4,000.00,have the firm placed on probationfor a one year period, fullyfund the escrow account by November30, 2001, and providethe Commission quarterly reconciliationreports while on probation.
And, on the same page, this little gem:
MOUNTAIN RENTALSOF GATLINBERGLic. No. FM 255738Gatlinburg, TNPrincipal Broker Ted L. Mullikinagreed to pay a civil penalty of$1,000.00 for refusal to providea Commission auditor access toinformation required to completean audit and further for acting asprincipal broker of the firm afterexpiration of his license.
Here's what i read into this: 5 companies were fined $23,100 for allowing the Auditor in the door. One company, Mountain Rentals owned by Ted Mullikin of Gatlinburg, was fined $1,000 for not... OMG! This means crime pays in Tennessee.
Yes, it makes me mad at the fined offenders for disrespecting their escrow accounts. But it just doesn't seem fair that not complying with the Auditor's request for access to the books results in a much, much, much, much smaller fine.
And did you just ask yourself "Why didn't Ted get probation like the others?" I asked myself the same thing. For goodness sakes, Ted's hands were even dirtier because he was operating without a license. Was the $1,000 harsh (not) penalty he received punishment for ignoring his license or ignoring the Auditor?
With this kind of disparity, you can see the attitudes and conduct that led to the rules being changed in 2003 so that these poor rental companies don't have to be fined for driving Jags and Escalades and Mercedes, anymore (aw, the real estate agents don't get to cash in on the rule change that would let them pay for that stuff from their escrow accounts).