By Michelle Wagner | Outer Banks Voice on June 2, 2020
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.”