Respondent(s): David Yarbrough, Principal Broker, Yarbrough and Yarbrough, Fort Smith, Arkansas, Formal Hearing #3423

Violation(s): A.C.A. §17-42-311(a)(11), §17-42-311(a)(2), §17-42-310(a)(1), §17-42-311(a)(6), and Commission Regulations 10.22(g), 10.7(b)(2), 10.19(a)(9), 10.19(b), 9.2(b), 7.3(a), 7.3(d), 7.3(e), 7.6(a), 10.10(b), 10.10(a), 10.8(g)(2), 10.7(b)(3), and 10.8(g)(3)

Sanction(s): Respondent David Yarbrough’s license was suspended until (1) the Complainant receives rent and management history that is brought up to date and all funds due to the Complainant are paid;  (2) all records requested by AREC staff are received; and (3) there is a full reconciliation of all trust accounts made available to the Arkansas Real Estate Commission’s Executive Director.  Additionally, Mr. Yarbrough was required to pay a $500 fine and must attend the first available property management education and training course offered by the Commission.  If those requirements were not met within a ninety (90) day period upon receipt of this Order, Respondent David Yarbrough’s license shall be revoked.  NOTE:  By letter dated June 15, 2016, Executive Director Gary Isom advised Respondent Yarbrough that his license was revoked.

(Complainant Gerald McClellan d/b/a Treasure Map Investments II, LLC)

            In 2002, Complainant McClellan purchased the subject property, 2320 N. 55th Lane, Fort Smith, Arkansas using the services of Respondent Yarbrough.   Complainant McClellan entered into an agreement with Respondent Yarbrough to manage subject property. 

            From March 2013 through April 2014, Complainant McClellan did not receive monthly rental reports or monthly rental proceeds from Respondent Yarbrough for the subject property. On or about May 21, 2014, at Complainant’s request, Respondent provided a 2013 year end rental statement and a 2014 year to date rental statement. 

Respondent Yarbrough issued Check # 9455 in the amount of $3,017.72 to Complainant for net rent amount due for the period March 2013 through April 2014.  

            On or about May 21, 2014, Respondent Yarbrough provided to Complainant a list of expenses deducted for 

repairs for the subject property. Respondent failed to provide Complainant and the Real Estate Commission copies of invoices from vendors substantiating those expenses.

            Complainant McClellan entered into a new Property Management Agreement with Respondent Yarbrough on or about May 21, 2014, Respondent Yarbrough did not sign the Property Management Agreement.  Complainant McClellan was not provided copies of any lease agreements or monthly rental statements on the subject property. 

            On or about July 21, 2014, Complainant McClellan received a direct deposit to his bank account in the amount of $603.00 from Respondent Yarbrough, but never received a statement displaying that amount.  Complainant McClellan did not receive further rent distributions or monthly reports for the subject property.

            March 25, 2015, Complainant McClellan’s attorney sent a letter to Respondent Yarbrough and requested a full accounting of costs and rents for the subject property.  Respondent Yarbrough did not supply the information.  

            May 20, 2015, Complainant McClellan entered into a Property Management Contract with another company.  

            By letter dated September 21, 2015, AREC mailed Complainant McClellan’s complaint to Respondent Yarbrough.  Respondent Yarbrough did not file a written response.  By letter dated October 5, 2015, AREC mailed Complainant McClellan’s complaint via certified mail to Respondent and requested a response within five days of receipt of the documents.  Respondent signed for the documents on or about October 22, 2015.  Respondent did not file a written answer to the complaint.

(Arkansas Real Estate Commission)

            AREC Supervisor Halstead and Investigator Sullentrup scheduled an office visit to Respondent Yarbrough’s office in Fort Smith, Arkansas on August 13, 2015.  The purpose of the meeting was to conduct an office review of transaction files, trust account records and to discuss Complainant McClellan’s complaint.  Respondent Yarbrough requested they meet him at the Library in Fort Smith and stated he had moved offices but the new office was not ready.  AREC Supervisor Halstead informed Respondent Yarbrough he had thirty days to provide a change of business location and picture of his sign to AREC.  Respondent did not supply the new office location information and picture of sign to AREC until January 4, 2016.

            Respondent Yarbrough did not bring any transaction files to be reviewed to the meeting.  Respondent Yarbrough brought bank statements for 2013 and 2014 for his Trust Account to the meeting.  None of the monthly statements had been reconciled to his check register. AREC Investigator Sullentrup provided Respondent Yarbrough a list of property addresses for both sales transactions and property management transactions for which Respondent was requested to provide copies of his files to AREC.  Respondent was requested to provide bank reconciliations for the Trust Account for December 2014 and July 31, 2015, along with a listing of total Trust Funds being held for both property management and pending sales transactions for the same dates.  AREC Supervisor Halstead requested that Respondent Yarbrough provide the information within thirty days.  This information was not provided as requested.

            On or about September 9, 2015, Respondent Yarbrough provided Investigator Sullentrup the pending transaction file for 503 E. Broadway, Huntington, Arkansas. The Real Estate Contract indicated Respondent represented both Buyer Eliad Properties, LLC and Seller. Respondent provided an Agency Representation Disclosure Form 

signed by Buyer without any type of agency relationship disclosed.  Respondent Yarbrough informed AREC Investigator Sullentrup that his agency relationship with the Buyer was non-exclusive and therefore not reduced to writing. Respondent did not provide AREC Investigator Sullentrup a substantial justification for not reducing the agency agreement to writing.  Respondent Yarbrough failed to date the acceptance of the Real Estate Contract. 

            On or about September 10, 2015, Respondent Yarbrough provided Investigator Sullentrup a pending transaction file for 4109 Marshall Drive, Fort Smith, Arkansas.  The Real Estate Contract indicated Respondent represented both Buyer Eliad Properties, LLC, and Seller. Respondent provided an Agency Representation Disclosure Form signed by Buyer without any type of agency relationship disclosed.  Respondent Yarbrough informed AREC Investigator Sullentrup that his agency relationship with the Buyer was non-exclusive and therefore not reduced to writing.  Respondent Yarbrough failed to list a commission amount or percentage on the Exclusive Right to Sell Agreement.  The HUD-1 reflected Respondent was paid a commission of $1,650 by the Seller.

            By email dated September 10, 2015, Investigator Sullentrup requested that Respondent Yarbrough send additional documents by September 18, 2015.  Respondent Yarbrough failed to provide the additional items as requested.