Arkansas Real Estate

Commission

Whiteley, Jason Lance

Respondent(s): Jason Lance Whitley, Principal Broker, The Real Estate Firm of Whitley & Associates, Jonesboro, Arkansas, Formal Hearing #3585 (February 26, 2016)

Violation(s): Multiple violations of Arkansas Code Annotated §17-42-311(a)(2) and §17-42-311(a)(6), and Commission Regulations 7.6(b), 8.5(a), 10.7(c), 10.10(a), 10.21(a), and 10.22(g). 

Sanction(s): It is therefore ordered that Respondent Jason Lance Whitley’s Arkansas real estate broker license is surrendered for no less than two (2) years from the date of this Order, after which he must appear before the Commission if he wishes to be considered for and determined to be eligible to apply for an Arkansas real estate license. During such appearance before the Commission, the Commissioners may require Respondent to complete appropriate educational programs or courses; successfully complete an appropriate licensing examination, and place conditions or restrictions upon the Respondent’s practice or license. Restrictions may include, but not be limited to temporarily restricting Respondent to a salespersons license only. 

It is further ordered that the Commission shall retain jurisdiction of this matter for purposes of implementing and enforcing this Consent Order and that the Commission may conduct further proceedings herein to hear claims by Complainants pursuant to Arkansas Code Annotated § 17-42-401 et seq. seeking to recover damages suffered as a result of Respondent’s violations of law as set out above.

Recovery Fund Order: As a direct result of the proven violations by Respondent Jason Lance Whitley in the February 26, 2016 Consent Order, Formal Hearing #3585, in the subsequent Recovery Fund Hearing held August 12, 2019, the Commission finds that Respondent Jason Lance Whitley is liable and ordered to pay the complainants within thirty (30) days of the date of this Order.

As a result of the above proven violations, the Commission voted for Respondent Whitley to pay as follows:

Complainant Willie Mae Cornelius for $10,631.81.

Complainant Darren J. Smith, Landlord

On or about February 24, 2015, Complainant Smith entered into a Residential Management Agreement with Respondent’s real estate firm identified as Agent for the property located at 1511 Country Manor, Jonesboro, Arkansas. Paragraph 4 stated "The Owner shall pay the Agent as a management fee a sum equal to (10%) of the gross rentals collected..." Paragraph 11 stated "This Agreement shall continue for a period of one (1) year from the date of execution and shall be automatically renewed from year to year unless terminated by either party upon written notice to the other party not less than sixty (60) days before any expiration date." Paragraph 20 stated "Agent shall manage the cash flow and records of the Property in a comprehensive manner. The distribution of funds less reserve for each month shall be forwarded to Owner no later than the twentieth (20th) day of the following month", and "No later than the twentieth (20th) day of each month, with respect to the preceding month, Agent shall render, to Owner or to whomever Owner shall designate, detailed statements of receipts and disbursements. Agent, if requested, forward, to Owner or to whomever Owner shall designate, copies of all paid invoices, vouchers or bills pertaining to the Property, supporting all charges against the Property’s disbursement statement for that month. Agent shall preserve originals of such invoices, vouchers and bills until such time as this Agreement is terminated, whereupon, at the request of Owner, all such original invoices, vouchers, bills or statements shall be transferred to Owner." Paragraph 23 specified the commencement date of the agreement as February 24, 2015. 

On or about April 1, 2015, Complainant Smith and Tenants Davis entered into a Lease Agreement on the subject property. Respondent’s real estate firm was named as the authorized agent of Landlord Complainant Smith. The agreement stated rent was $975 per month. The ending date for the lease was March 31, 2016. The agreement showed a Security Deposit sum of $0.00. 

From April 1, 2015 through July 30, 2015, Tenants Davis’ ledger reflected rent payments made each month which totaled $3,750. Respondent’s rental statement for Tenant Davis indicated monthly rental payments were paid on April 1, May 5, June 1 and July 8, 2015. Expenses for the second quarter of 2015 plus the month of July 2015 as reflected in Respondent’s records totaled $2,194.80. Respondent did not provide Complainant Smith monthly cash flow statements and distribution of rents pursuant to paragraph 20 of the Residential Management Agreement for the months of April, May, June or July of 2015. Respondent’s Rental owner ledger reflects two Owner Draws for 1511 Country Manor for June 30, 2015 and July 31, 2015 totaling $1,555.20. Respondent’s Ledger Reconciliation for Complainant Smith reflects that on or about September 5, 2015, Respondent Whitley distributed $1,555.20 to Complainant for the months of April 2015 through July 2015 rents. 

From August 1, 2015 through November 30, 2015, Tenants Davis’ rental statement reflected rent payments made each month totaling $3,900. Respondent’s rental statement for Tenants Davis indicated monthly rental payments were paid on August 5, September 9, October 6 and November 6, 2015. Expenses for the August through November of 2015 as reflected in Respondents records totaled $234.50. Respondent did not provide Complainant Smith monthly cash flow statements and distribution of rents pursuant to paragraph 20 of the Residential Management Agreement for the months of August, September, October or November of 2015. Respondent’s Rental owner ledger reflects an Owner Draw for 1511 Country Manor for November 30, 2015 for $3,665.50. Respondent’s Ledger Reconciliation for Complainant Smith reflects that on or about December 31, 2015, Respondent Whitley distributed $3,665.50 to Complainant Smiths for the months of August 2015 through November 2015 rents. 

For December 2015, Tenants Davis’ rental statement reflected rent of $975 was paid on December 5, 2015. Expenses for December 2015 as reflected in Respondents records totaled $48.75. Respondent did not provide Complainant Smith a monthly cash flow statement and distribution of rent pursuant to paragraph 20 of the Residential Management Agreement for the month of December 2015. Respondent’s Rental owner ledger reflects an Owner Draw for 1500 Country Manor for December 31, 2015 of $926.25. Respondent’s Ledger Reconciliation for Complainant Smith reflects that on or about February 10, 2016, Respondent Whitley distributed $926.25 to Complainant Smith for December 2015 rent. 

For January 2016, Tenants Davis’ rental statement reflected rent of $975 was paid on January 7, 2016. Expenses in the form of management fees for January 2016 as reflected in Respondents records totaled $48.75. Respondent did not provide Complainant Smith a monthly cash flow statement and distribution of rent pursuant to paragraph 20 of the Residential Management Agreement for the month of January 2016. Respondent’s Ledger Reconciliation dated May-16 reflects a payment of $926.25 by check # 6098 was made on March 7, 2016 for January 2016 rent distribution. 

On April 8, 2016, Respondent Whitley sent an email to Complainant Smith to inform him that Tenants Davis were behind in rent and were in the process of moving out. Respondent Whitley stated Tenants Davis had paid part of February 2016 rent and no rent in March. For February, 2016, Tenants Davis’ rental Statement reflected rent of $300 was received on February 16, 2016. Expenses for February 2016 as reflected in Respondents records totaled $15.00. Respondent did not provide Complainant Smith a monthly cash flow statement and distribution of rent pursuant to paragraph 20 of the Residential Management Agreement for the month of February 2016. No further rental distribution was made to Complainant Smith until May 2016.

By email to Complainant Smith dated April 21, 2016, Respondent stated in part "I think it is best at this time for us to terminate our agreement. Obviously your expectations are different than what we feel is realistic at this time. If you would like for me to continue to show the property tomorrow and this weekend I will be more than happy to, however the leasing fee will be 10% of the value of the lease and will be due upon the tenants’ execution". By email to Respondent dated April 21, 2016, Complainant stated "Do continue to show the property". Respondent did not obtain a written and signed agreement with Complainant Smith for the 10% leasing fee.

On April 28, 2016, Tenants Frogge and House signed a Lease Agreement with Complainant Smith. Respondent’s firm was named as the authorized agent for Landlord Complainant Smith. The agreement stated monthly rent was to be $1,025 with a lease term of May 1, 2016 to April 30, 2017. Tenants Frogge and House signed a Security Deposit Agreement in the amount of $500. Tenants Frogge and House paid a Security Deposit in the amount of $500 and rent in the amount of $1,025. 

On May 11, 2016, Respondent Whitley sent an email to Complainant Smith which stated, "The tenants have moved in and have paid rent through 5/31/16. I issued a check in the amount of $44.75 which was the remaining balance in your account with us after expenses. This check in addition to the check for $926.25 that hit your account in early March totals $971, which is everything from 1/1/20/16-5/21/2016. These are the close out documents from us on your account. As you will recall my email dated 4/21/2016 specified that we would continue to show and lease your property, however there would be a 10% leasing fee for the value of the lease, that would be due payable at the lease execution, and you replied to continue showing. The value of the lease was $12,300 @10% totals a leasing fee of $1,230, which you will see expensed under management fees in the Income Statement Detailed report attached." 

In an email dated May 16, 2016, Complainant Smith asked Respondent Whitley "Does closing out documents related to said property mean you have officially terminated out (sic) contractual agree (sic)?" In an emailed response Respondent stated "Yes I have closed out your documents to end the agreement per my email several weeks back..." . 

Respondent prepared an Income Statement Detailed for 2016 to close out Complainant’s account for 1511 Country Manor. The statement included February rent and expenses plus May 2016 rent and security deposit paid by Tenants Frogge and House. In addition to other expenses the statement included an expense of $1,230 identified as "12 mo 10% 12,300 lease value". 

By letter dated May 25, 2016 AREC mailed Complainant Smith’s Complaint and an answer form to Respondent Whitley at his address of record. The letter was returned to AREC with a hand written note, "No Longer @ this address – F.C.L.J." By letter dated July 29, 2016, AREC mailed the complaint and answer form via certified mail and requested Respondent Whitley respond within five (5) days. A certified copy was also mailed to Attorney for Respondent Whitley, Martin E. Lilly. Attorney Lilly’s mail was delivered August 3, 2016. Respondent did not file an answer to the complaint pursuant to the requests. Respondent had not informed the Commission that his address had changed. On June 19, 2017, Respondent’s Attorney Dennis Zolper provided to AREC Respondent Whitley’s answer to multiple complaints for which Respondent had not filed a written answer with AREC. Respondent Whitley’s answer stated, "As for Mr. Smith, we plan on reaching out so we can find out exactly what his claim may be and if we can be of assistance in resolving his claim."

Complainants Walter and Willie Mae Cornelious, Landlord

Complainants Cornelious owned property located at 1000 Sandino Drive in Jonesboro, Arkansas. On April 24, 2013, Complainant Willie Cornelious entered into a Residential Management Agreement with Whitley & Associates, Inc. for the property referred to in the management agreement as "Willie Starks Property". The Residential Management Agreement listed the property as located at Exhibit B. Exhibit B stated 1000 Sandino. Paragraph 2(d) of the Residential Management Agreement stated "Agent will deposit all rents from the tenants to the Owners Operating Trust Account. Owner will pay all expenses relating to the Property, including but not limited to: the mortgage, real estate taxes and assessments, insurance…" Paragraph 4 of the Residential Management Agreement stated "The Owner shall pay the Agent as a management fee a sum equal to (7%) of the gross rentals collected..."." Paragraph 11 stated "This Agreement shall continue for a period of one (1) year from the date of execution and shall be automatically renewed from year to year unless terminated by either party upon written notice to the other party not less than sixty (60) days before any expiration date.". Paragraph 18 stated "This Contract may not be modified, altered, or mended (sic) in any manner except by an Agreement in writing executed by all parties". Paragraph 20 stated "Agent shall manage the cash flow and records of the Property in a comprehensive manner. The distribution of funds less reserve for each month shall be forwarded to Owner no later than the twentieth (10th) day of the following month…", and "No later than the twentieth (20th) day of each month, with respect to the preceding month, Agent shall render, to Owner or to whomever Owner shall designate, detailed statements of receipts and disbursements. Agent, if requested, forward, to Owner or to whomever Owner shall designate, copies of all paid invoices, vouchers or bills pertaining to the Property, supporting all charges against the Property’s disbursement statement for that month. Agent shall preserve originals of such invoices, vouchers and bills until such time as this Agreement is terminated, whereupon, at the request of Owner, all such original invoices, vouchers, bills or statements shall be transferred to Owner." Paragraph 23 specified the commencement date of the agreement as April 23, 2013. 

Sometime between April 30, 2013 and December 31, 2013, Complainants Cornelious verbally agreed for Respondent Principal Broker Whitley to make Complainants’ mortgage payments to Nationstar Mortgage from the rents collected on the subject property. Complainant Cornelious identified five late payments that resulted in additional fees for February 29, 2016; March 31, 2016; April 29, 2016; June 30, 2016 and July 29, 2016.

On the Complainants’ Rental Owner Statement, Respondent Whitley listed four Owner Draws which Complainants Cornelious stated they never received. Those draws occurred on January 31, 2014 in the amount of $223.34; April 30, 2016 in the amount of $2,828.76; May 31, 2016 in the amount of $225.12; and June 30, 2016 in the amount of $401.12. 

Sometime in May of 2016 Complainant Cornelious went to Respondent Whitley’s office and found the building unoccupied.

On August 19, 2016, Complainant Cornelious terminated the Property Management Agreement with Whitley & Associates, Inc. and requested the deposit and balance of account. Complainant Willie Cornelious stated she never received anything from Respondent Whitley after this date.

On September 7, 2016, Complainant Cornelious filed a complaint with the Real Estate Commission. In the complaint, Complainant stated "Money owed to homeowner $4,910.64." By letter dated July 17, 2017 Respondent’s Attorney, Dennis M. Zolper filed Respondent’s answer to the complaint in which Respondent stated "I do not wish to contest Mr. & Mrs. Cornelious’ statement as to the amount owed as I was ultimately responsible for seeing that they received the appropriate funds. I plan thru my Attorney to contact Mr. & Mrs. Cornelious next week to make arrangements to re-pay the sum of $4,910.64 which is claimed". Respondent also stated in his answer "When I closed my office a significant amount of electronic (records) was lost and can’t be recovered".

By letter to Complainant Willie Mae Cornelius dated July 17, 2017 Attorney Zolper extended Respondent’s offer to pay Complainant the sum of $4,910.64. By a letter of response dated July 21, 2017 to Attorney Zolper, Complainant requested $8,180.69 from Respondent. In a letter to the Real Estate Commission Investigator dated July 21, 2017, Complainant stated that she had declined the Respondent’s offer and was asking for $8,180.69. On or about July 24, 2017, Attorney Zolper wrote AREC a letter advising AREC that Complainant Cornelius declined Respondent Whitley’s offer to pay $4,910.64, the amount stated in the complaint. Attorney Zolper stated the additional amount which Complainant Cornelious claims are due was a result of events and occurrences that Whitley & Associates, Inc. would not have been responsible for under the management agreement. On or about January 31, 2018, Attorney Zopler wrote AREC a letter advising AREC that Responded would still agree to pay the amount due Complainant Cornelius as set out in her complaint.

By letter dated September 13, 2016, AREC mailed a copy of Complainant Cornelious’ complaint and answer form to Respondent Whitley at his address of record. The letter was returned to AREC marked Return to Sender with a handwritten note "Not @ this address". By letter October 14, 2016, AREC mailed the complaint and answer form via certified mail and requested Respondent Whitley respond within five (5) days. A certified copy was also mailed to Attorney for Respondent Whitley, Martin E. Lilly. Attorney Lilly’s mail was delivered and signed for by Martin E. Lilly. Respondent did not file an answer to the complaint pursuant to the requests. Respondent had not informed the Commission that his address had changed.

Arkansas Real Estate Commission 

Respondent’s CHECKING DEPOSIT slips for J A WHITLEY INVESTMENTS LLC TRUST ACCOUNT included dollar amounts which were not identified to a specific property, tenant or owner to which they were applicable.

Respondent Whitley stated in his response to this complaint that he was not able to provide copies of Property Management contracts and ledgers because he had lost the electronic records when he closed his office. Respondent Whitley did not notify AREC of the closure of his office and/or provide information regarding the location of where books and records would be stored.

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Arkansas State Government

Arkansas Real Estate Commission
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