AG and NCREC probing Surf or Sound Realty

By on June 2, 2020

The office of NC Attorney General Josh Stein says it’s received nearly 70 complaints about Surf or Sound.

The North Carolina Real Estate Commission (NCREC) and the NC Department of Justice (NCDOJ) are investigating complaints filed by clients of Surf or Sound Realty who say they have not received refunds for vacation rental properties they booked with the company during Dare County’s March 17-May 16 COVID-19 bridge closure.

According to DOJ Communications Director Laura Brewer, the Attorney General’s office has received 68 complaints about the Hatteras real estate company, noting that department will be taking a closer look at the complaints and “will take the next steps as appropriate.”

NCREC Legal Counsel Janet Thoren stated in an email that the commission has received “a number of complaints,” but could not comment on them since they are the subject of an investigation. Thoren noted that the commission, upon review of the law and consultation with the Attorney General’s Office, “has previously advised property managers that it is our opinion that tenants who were impacted by the road closures in Dare County were entitled to a refund.”

Surf or Sound tenants formed a private Facebook group last month as a platform for those who have not been refunded by the Hatteras Island agency after not being able to complete their reservations due to the Outer Banks closure. The group currently has more than 500 members and its administrator, Jessica Somers, told the Voice she estimates that 400 of those members still have not received refunds they believe the company owes them.

“We are hoping Surf or Sound will honor its first commitment to renters to refund us in full,” said Somers, a Maine school teacher who said she personally has not received a $1,962 down payment she made for an April 18 vacation with her family. Somers said Surf or Sound stated on its website early on during the pandemic that tenants had three choices – to book later this summer and receive a 10 percent discount, rebook for next year, or receive a full refund.

In a May 27 letter to Surf or Sound homeowners, owner Dale Petty wrote said that while his company provided initial refunds to tenants for the weeks of March 21 and March 28, the indefinite closure prompted him to reconsider that position.

“The Dare County travel restriction coupled with the NCREC opinion on refunds amounted to a weapon of mass destruction for vacation rental companies in Dare and Currituck counties,” he asserted, noting that the amount of guest refunds for the weeks of April 4 through May 16 amounts to just under $3 million. “The large majority of that nearly $3M, of course, belongs to our homeowners,” he wrote. “Some of our homeowners have lost their jobs and still others are concerned about how they will make the mortgage payments on their rental home.”

Petty noted in the May 27 letter that his company is offering and has already moved hundreds of affected guests to another week in 2020 or 2021, “although we don’t believe it is a legal obligation to do so…Except for the NCREC opinion, we believe that 90 percent or more of guests would already have accepted our offer to move to another week.”

In an interview with the Voice, Surf or Sound attorney Lloyd Smith said he has sent a letter to the NCREC challenging its opinion that landlords and real estate brokers should provide refunds to tenants during the bridge closure.

“Our legal opinion is that the premises were safe and habitable and could have been occupied, but for the government ordinance which prevented individuals from coming into Dare county to rent the homes,” he told the Voice. “And we believe that the law is when government interference causes that, then the tenants’ claim is against the governmental interference and not the [landlord].”

Calling it “the fairest resolution for both parties,” Surf or Sound offered a statement to the Voice noting that it is “offering a dollar for dollar credit towards another stay either this year or next year” for guests who were unable to vacation due to the Dare County travel restriction. “Dare County’s decision to close the road was not something that could have been anticipated and is neither the fault of our guests or our homeowners,” the statement read.

But Donna Moody and others in the “Surf or Sound Realty Owes Us a Refund Due to the Pandemic” Facebook group, say they feel they were not treated properly by the property management company.

Moody, in a June 1 post in the group, said her family had booked an April 18 vacation in Avon with Surf or Sound. During the month of April, she said that eight of her family members tested positive for COVID-19 and two died of the disease – her sister and sister-in-law. She noted she felt “sick” when she found out that Surf or Sound took a second payment out of her account the day before her scheduled vacation.

“I feel screwed over because SoS has decided to give full refunds to renters for some weeks but not others during the pandemic and Dare County’s shutdown to non-residents. I’ve been a customer of theirs for many years and I have lost money because of a hurricane…but this was different, and they’ve handled it in the worst possible way,” she wrote in the post.

Surf or Sound Vice President of Sales and Marketing Ann Wood acknowledged that in the earlier days of the OBX closure, Surf or Sound guests could choose from three options – switch their spring vacation to the fall for the same rate, save 10 percent or more by switching to a summer 2020 date or cancel and receive a refund.

“At that time, we had no expectation this would turn into a two-month road closure,” she told the Voice. “Once Dare County announced that the road closure was indefinite, we had to reconsider our position on the matter.”

For her part, Somers asserted that, “I can appreciate Surf or Sound’s stance regarding issues with the local government, but I don’t believe that impacts the promises it made to us.”





  • Tri-Village

    If it makes any renters feel any better Surf or Sound isn’t paying their vendors either. Many sub contractors are shelling out money for materials and receiving a fraction of the money owed. And they are the lucky ones. Many people are working without pay now hoping to get paid.

    Wednesday, Jun 3 @ 4:05 pm
  • Melissa

    Also, there is no guarantee that any one of us would have booked these houses in the first place. So had we not booked the weeks we did, SOS and the homeowners would have to eat the loss for the weeks anyway!!

    Thursday, Jun 4 @ 8:11 am

    @janet @ Susan Scogno @ Luminous @Lou Briccant
    It seems to me none of you read your contracts, or seeked out advice before signing if you didn’t understand. If you had you would realize the risk of renting a property in the OBX and maybe considered not renting there. Closures happen for many reasons, and you agree in your signed contracts to no refund for closures out of the control of the owner or management company. They encourage you to purchase travel insurance for this purpose. Just because a policy was suggested doesn’t mean you have to purchase that one. It is still upon you as an individual to do your homework and read what you are signing. By signing any document you are entering into a contract that may not be beneficial to you in some circumstances that’s why you as an individual need to read and understand what you are signing. Had you purchased an insurance policy with a “cancel for any reason clause” you would have gotten your money back.

    As I said before every home is an investment and yes they come with risks that are accepted when you purchase them. Just like every contract you enter without reading has risks. Its funny that you think I should have insurance to cover this loss but not the renters who entered into a contract that specifically says no refunds will be given buy travel insurance.
    Not all NRPOs rent out their homes some own them and do not rent them out, I’ve met many people that do that and claim its better because they don’t have to deal with all the wear and tear that renters cause. and I’ve considered doing that as well, but I like give people a chance to experience the OBX that I have fallen in love with. I’ve seen your comments on the covid closure its funny to me that you don’t mind infringing on property rights and think all owners and renters are bad. Since you were fine with the closure maybe you should should consider writing a check to all those owners and renters who were denied access?

    Thursday, Jun 4 @ 9:12 am
  • surf123

    @Tri-Village Surf or Sound not paying their vendors does not bode well for future existence as it basically implies they are surviving rental month to rental month.

    @Others I find it odd that I have not heard of any travel company not giving full refunds for failing to deliver a lodging product. Would you be expected to eat the cost of a rental if the house your rented burned to ground a week before you arrived? I am confident the renter’s insurance would not pay as the product is not available to use. This is no different in this case when the county was closed. Start writing those refund checks because you are going to have to at some point. You have already lost the renters and anyone who reads this and other articles about Surf or Sound stiffing their renters. I realize the closing of the county is contentious, but the renters were sold a product that was not delivered to them.

    Thursday, Jun 4 @ 10:17 am
  • Trashcan Man

    @ OBX_OWNER:
    I never said that the renters should not purchase insurance and of course they should read and understand the contract.
    Your property rights do not allow you to put me or anyone else at risk. Your Constitutional rights do not give you the right to do anything you want to do. It is a pandemic and a National Emergency was declared which gave broad powers to government to protect citizens.But to believe that your renting out your vacation home is altruistic so others have the chance to enjoy the OBX is not passing the laugh test. If that were true, why are you complaining so loudly about your lost revenue?

    Thursday, Jun 4 @ 12:15 pm
  • Beth Sweet

    @OBX_OWNER. The problem here has nothing to do with the contracts. The issue is that SoS told ALL renters via Facebook on March 20th and via email on April 3rd that they could receive a refund. And while renters insurance covers many things, they do not cover closures due to pandemics. Those of us that bought insurance are not able to get reimbursed via that avenue.

    Thursday, Jun 4 @ 1:18 pm
  • WindyBill

    Here is the formula: customer wants product; contract legally required for purchase; customer should read contract; product is a simple item (vacation rental); contract has many, many, many words, terms, conditions, and references to other terms and conditions available on request; smiling lawyer cost to analize, at least 3 hours; customer signs off on contract- just like we all do with those online ‘privacy’ or purchase agreements.

    Thursday, Jun 4 @ 1:47 pm


    Your ignorance must be bliss. Me being in MY HOME does not put you at any greater risk especially since all permanent residents and those from the surrounding counties were free to come and go as they please you could travel any where you wanted. When the island did open up to owners I was amazed to see how many “locals” were protecting themselves by drinking in a crowded bar as I drove by. You think I lost revenue and that I’m complaining about it shows how little you know or understand. I didn’t have any bookings through that time. Everybody thinks they are entitled to something and you think its ok to deny peoples rights as defined in the constitution simply for your own benefit. The funny part about that is you are truly the selfish one in this scenario.

    Thursday, Jun 4 @ 2:20 pm

    @Trashcan Man
    Your logic just like the counties is flawed. Me staying in my own home isn’t an illegal activity in any way shape or form and the risk to you is minimal at most. This is especially true because the county still allowed full time residents like yourself to travel freely and even allowed others from the surrounding counties to come and go as you pleased and I know more than a few that did just that. The fact of the matter is there was no more of an imminent danger 2 months ago during the closing than there is today. If one of your neighbors owns a gun should the county take it away because there is a chance it could be used to kill someone? Everyone has a responsibility to take care of themselves and to minimize the risks to others but that shouldn’t come at the expense of other people’s constitutional liberties.
    How would you feel if the county took your car and told you, you can have it back in 2 months? Don’t worry you can keep making the payments and pay all the taxes on it as well.
    Put simple the county was wrong on this one and so are you.
    Its unfortunate that you make a lot of incorrect assumptions and assertions about me, I never said I lost any rentals because of the shutdown, and I truly enjoy seeing a new family enjoying themselves doing the same things I did as a kid and what I was able to do with my kids. But as an owner of property for some time now I am tired of all these stories where people think they are entitled to something when they are not. Its easy to write a story and paint the owner as a rich thieving and conniving person. Most won’t speak up or out for fear of hurting their rentals.

    Thursday, Jun 4 @ 5:35 pm
  • Southern Dawn

    So you want to insult the intelligence of the renters? Want to exchange degree information? Give me your address and I’ll send you copies of mine.

    For those of you reading this who unfortunately have a pending reservation with SoS, login and go to your account. Change the payment method for the second payment to CHECK. When you initially pay by debit/credit, it automatically defaults to the second payment being charged the same way. The rental agreements do not allow for charge-backs so if there is another closure, you won’t lose as much money. Obviously, I’ve booked with several realty companies over the last 20+ years.

    The mounting negative reviews on every platform with SoS and other OBX realty companies will change how we all vacation in the future. Many OBX homeowners have already transitioned to VRBO and are offering free cancellation within 30 days and 50% cancellation fees within 14 days with much better travel insurance options. If SoS is the property manager, PASS. You will get the same rental agreement and the same treatment.

    As far at the contract you keep referencing OBX_OWNER, it’s not worth the paper it is printed on to take a renter to court for non-payment and all renters who sue will get their money back, Dare County closure or not. Individuals don’t even need an attorney. Just pay the filing fee. It’s simple contract law but I’m not giving free legal advice on this forum.

    Thursday, Jun 4 @ 7:55 pm
  • Trashcan Man

    “locals were drinking at a crowded bar as I drove past”…..c’mon, man! The bars were closed and just how do you see “locals” in a crowded bar as you drive past?

    Your credibility is now totally shot.

    Friday, Jun 5 @ 1:18 pm
  • Lou Briccant

    OBX_OWNER, for what has to be the 5th time… THE INSURANCE POLICIES ARE NOT COVERING OR REIMBURSING FOR THIS… why are you so dense????!!!! None of them are, none none none none…

    Friday, Jun 5 @ 5:43 pm
  • Greg Cremia

    I own live on the OBX and also own a vacation rental house here. I had no qualms about refunding their money to those who could not make it here for their vacation because of the closure even though I knew I was at risk of losing my investment. I did this before the announcement from the state because there is NO fine line between right and wrong.

    To OBX_Owner and sos, you are a blight on our community. Please find somewhere else to take advantage of people when they are down. No one will miss you.

    Monday, Jun 8 @ 8:17 am
  • John McNamara

    So, where exactly is the deposit money S or S received from the renters? Why cant they refund it? Did they spend it on bonuses for their management team?

    In addition to consulting their lawyer, they should have also consulted a PR advisor before getting themselves into this mess. They will end up losing far more from bad PR and loss of future rentals than than if they had refunded the deposits to begin with.

    Monday, Jun 8 @ 9:32 am
  • Southern Dawn

    @John McNamara – Great question. The rent is often held in a trust account and could have been dispersed to the homeowner prior to the closure but there is a large amount of money involved that went into SoS bank accounts.

    I personally believe SoS made unilateral decisions and did not contact individual homeowners regarding requests for refunds. See below for a breakdown.

    The deposits include 50% of the rent (their negotiated fee for each rental is embedded in the rent), plus 50% of $45 for a Home Service Fee, plus 50% of $69 for Home Protection fee (or a $600 deposit for damage) then add 6.5% sales tax and a 6.0 % occupancy tax. Travel insurance is added last but not taxed.

    The DOJ will have a lot to probe. The reversal to not give refunds in addition to the collection of sales and occupancy taxes for homes that were inaccessible and unoccupied for 60 days. Deceptive business practices at a minimum. Fraud in the worst case scenario.

    Monday, Jun 8 @ 4:20 pm
  • Devon

    I made a rental reservation for 4/18-4/25 through VRBO with SoS. At that time I purchased the VRBO trip cancellation insurance. When SoS contacted me, they told me that the VRBO insurance was not great, and that I should purchase it through Red Sky. I did. We filed a claim with Red Sky when we were unable to go on our trip. Denied. Thanks for the recommendation. Now SoS is telling me that I can’t have the refund they once promised, and that the house that I previously booked will no longer be available in 2021, so I have to find another house. The woman who called me, Kathy, said to contact her by June 19th with another house option, or all would be lost. I asked Kathy for her extension number and she told me she had none, as she moves around the office all day. I tried calling her back multiple times with no response so far.

    Tuesday, Jun 9 @ 8:09 pm