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.”


  • Mary

    ALL renters should receive a FULL refund if requested! The greedy rental home owners and rental companies need to “suck it up!” If you can’t make your mortgage on your 2nd home, you made a bad investment! Sell it! Be thankful it’s not your permanent home mortgage as so many people of this country are now faced!

    Tuesday, Jun 2 @ 4:30 pm
  • Sheila Wiernicki

    Really? Really? They can’t pay mortgages on their second/vacation homes or in some cases purely investment property? Then let them negotiate with their lenders to extend their mortgages. Get a loan. Take less profit for the other months this year. Try to lease “off season”. Or maybe they don’t get to vacation this year to help recoup their loss. They have options!

    Tuesday, Jun 2 @ 7:05 pm
  • 60s Suzanne (Karen Folb)

    RE: Renter refunds
    If these renters could not legally get to their cottages on Hatteras Island through no fault of their own, they are due full refunds.
    This might be hard on some of the homeowners, but everyone is having a hard time right now and they are no different.
    When they bought their cottage to turn into a rental they were making an investment, hoping to own a 2nd home that was paid for by renters, not out of their own pockets. All investments come with risk. You might be doing well then hit a bump in the road.
    Since this only happens once in a lifetime I feel like the owners should have had Plan Bs for their mortgages should anything like this ever happen.
    The renters are totally innocent in this. They paid their money as was required and were looking forward to a nice vacation. They did not CHOOSE to be told they could not legally come to the island. It would be wrong to take their money when they had no choice in the situation.
    We love our homeowners, but they must remember their home was bought as an investment. Investments can go up or down. Just ask my 401k.

    Tuesday, Jun 2 @ 7:18 pm
  • Jodie M.

    I think I’d be more accepting of this policy change if Surf or Sound had said: “We are working on a resolution. We’ll get back to you.” But to the contrary, I was repeatedly promised a full refund. I was asked to “be patient” and told that my name was “at the top of the list “ for a refund. Any child with an innate sense of justice would agree that we were lied to. We feel betrayed and I so wish that we had stayed with the OBX realty company that we used 3 times prior. I’m shocked that Surf or Sound is okay with all this negative press and the loss of consumer confidence. Now they won’t even return our phone calls. They may keep our $2400 this time. But we will never book with them again!

    Tuesday, Jun 2 @ 8:47 pm

    @60s Suzanne (Karen Folb)
    Renter refunds from a different perspective
    Owners are no more at fault than the renters in this situation. NCREC opinion which I find a bit preposterous is that its the home owners fault for renters not being able to access the rental. It wasn’t our choice to illegally block access to the island. In fact even owners access to OUR HOMES was denied!
    So why should the owners foot the entire bill when renters CHOOSE to sign a contract and have an option to buy insurance that will cover missed trips due to closures like when the power was cut to the island or for hurricane closures this happens frequently enough that it is an option that renters are told about it upfront during their booking. As a renter you take the risk of not buying the insurance. This isn’t any different then the no show fee a doctors office has.
    Every home is an investment whether its your first, second or however many you have. My property value is taking a big hit from the counties actions of closing access illegally. Tell me who would like to buy a home that they can’t have access to?

    Wednesday, Jun 3 @ 9:54 am
  • surf123

    The renters are owed there money because the product they purchased was not available to use (the reason does not matter).

    I feel no pain for “investors”. Will all investments there are risks and if an investor is living paycheck to paycheck (e.g. rent to rent) then they should not have purchased the investment.
    Those with 2nd or 3rd homes are unaffected because they have the funds to support their lifestyle choices. These are sensible people.

    The insurance policy is complete B.S. and can easily be challenged in court should someone choose to do so. If you sell someone a product and do not deliver then you have been ripped off. I really do wish the renter’s would challenge these forced evacuation non-refunds because they will win.

    As for the county having been closed illegally can you deliver some sound legal references showing the county did not have the right to close. It will be a mistake if the county is ruled to have done so illegally as they will shore up the local laws and ordinances to make it work next time.

    Wednesday, Jun 3 @ 10:59 am
  • surf123

    I’ll add that this is a reason to insert a 3rd party between the renter’s and the rental agencies. The 3rd party would work much like a lawyer does at a house closing by holding the funds until the transaction is complete. If the product is not delivered or is partially delivered the renter is protected. At the very least the rental company should be required to hold any deposits until the renter picks up the key, at which time they will be released. After the key is returned the final payment will be released to the homeowner.

    @OBX_OWNER A no show at a doctor’s office is by choice. Being told you cannot show is completely different. It sounds to me like you are overextended which is not a good place to be. I recommend a rainy fund for when other events happen that do not allow your “investment” to be rented. Furthermore the rental insurance was not necessary when the power lines were cut as the company settled with those who did not buy it, whereas those who did were on their own.

    Wednesday, Jun 3 @ 11:07 am
  • Janet

    Homeowners have the ability to recoup their monies through the summer rentals when the rental fees are 2 to 3 times more than in the spring. To offer 10% off a summer rental of $5000 would bring it down to $4500 which is far above the cost of a spring rental of $2000. That is not an option. rebooking for next year is not an option either as vacation weeks have not been set for schools, etc. We were told we could pick one of the three options, refund, discount or rebook. I picked refund but along with hundreds of others I have received nothing but ignored phone calls and emails from Surf or Sound.

    Wednesday, Jun 3 @ 11:34 am
  • Janet

    I also note that I purchased the travel insurance offered by Surf or Sound at the beginning when SOS indicated the pandemic was covered by the insurance. I made a claim to Red Sky and have officially been denied. So purchasing travel insurance was just more money we had to spend and now are trying to recover.

    Wednesday, Jun 3 @ 11:41 am
  • Lil Johnny

    There is a class action lawsuit out there you can join that is being started by a couple in Richmond Va. to try to recoup lost rent and use of your property . I doubt the Croatan Transplant tribe will ever understand what their sneaky little secret local government officials did to legal citizens of OBX but as they say what goes around comes around and eventually they will get the CTT’s as well and probably soon since there was a big loss in revenue.

    Wednesday, Jun 3 @ 11:44 am
  • Melissa

    The issue isn’t with the homeowners necessarily. The issue is with Surf or Sound posting on their facebook page, their website and via email communication to the renters that if he island remained closed, that they would receive a full refund. I myself know, that if a refund was never an option when the island closed and that I could only rebook, I probably wouldn’t be so mad about this. However, the fact that we were told we would get our money back and then the president of the company changing his mind is not only wrong on many levels but also illegal. You cannot post an advertisement, which is what they did by posting it on their facebook page, their website and sending out emails to their customers, and then say “oh, oops were losing too much money, so Ive changed my mind and Im not giving you the money back that I would.” I don’t think this is the homeowners issue, I personally think this is 100% false advertising by Surf or Sound. I think they owe their homeowners and their renters.

    Wednesday, Jun 3 @ 12:04 pm
  • Susan Scogno

    In response to OBX_Owner

    The travel insurance would not cover the closure…quoted and verified by the insurance company! Surf or Sound not only posted on THEIR website, but emailed renters that there would be full refunds to those that could not enter the Outer Banks…furthermore, the closure was only for 9 weeks….not 9 months! Homeowner’s counted their chickens before they hatched! Plus…mortgage companies across the Nation were graciously allowing mortgagee’s to be late on payments without penalties.
    March’s mortgage should have already been paid, April’s income was already disbursed to the homeowners so that’s paid, and the roads opened 5/16 to renters….those funds were disbursed as well! Bottom line? You don’t EVER buy anything in hopes that someone else will pay your bill!

    Wednesday, Jun 3 @ 12:15 pm
  • Lisa Lague-Greco

    I am also part of the group that has been highly mistreated and, even after several promises of being refunded, have not received my $4200 back for not being able to go to Avon due to the pandemic. This entire situation is disgusting, and the way Surf or Sound is handling both the situation and how they are treating those of us who are having to deal with the ramifications of their business practices, is so highly unethical, I simply have no other words to say about it. I am comparing SOS’s behavior with that of other businesses….specifically hospitality type (Airbnb, hotels, vacation rentals) all of whom have done the right things across the country and given refunds during this pandemic….simply as a very basic “right thing to do” as we are “all in this together”, right? Remember? I live at the foot of a mountain in Vermont where there is a huge ski resort a few miles away….jay peak. They had given refunds for all reservations through the end of the year within two weeks of the lockdown on March 17. This resort employs hundreds in the area and are very dependent on Canadian and out of state tourists. They have lost millions….but they still did the right thing. And quickly. And this from a company that has been trying to keep its head above water after having had some poor ownership behaviors a few years back. They completely lost what would have been one of their biggest years! Hundreds lost their jobs and for a small rural area like ours it has had great impact. So please….don’t cry to me, SOS, about how terrible it is for your company or for these second home business owners. Yes it sucks but it does for all of us. And worse…this was not their peak season at all. Jay Peak lost their peak season, and probably the next as well…..they had refunds out in two weeks. Cause they did the right thing. SOS is plain and simply highly unethical and their business practices would be considered illegal most anywhere. Really hoping the state steps in and puts them in check. But they seem to be finding ridiculous loopholes. Just the fact that they are Looking for loopholes makes me ill. Apparently, humanism has left them and capitalism…at the stake of whoever they harm in the process…is their motto. Disgusting!
    And actually….another example….I had an Airbnb reservation in Washington DC on March 18-23. Learned on the 17th I couldn’t go. I had my money back from Airbnb in 24 hours….no questions no issues. I have a friend who does Airbnb as his business and is his only income. Again he lost an entire peak season of customers. He refunded money immediately and is dealing with his losses, as we all are.
    So again, the fact that we are all having to fight so hard to get our money back in this particular situation is ridiculous. Some are paying for lawyers to help, which just means the refund money will then go to lawyer fees, and hold it all up for god knows how long. It is unnecessary. The fact that SOS is actually trying to sue the state for the lockdown, again, in light of what we are all living and dealing with at this time, is completely ridiculous as well. You are sueing them for protecting you?
    We are in a pandemic, folks…and each of us is being affected in one way or another. As business owners, step up and do what is right…what you would expect if you were on the other side of this. And where is our money anyway? In a trust? So the homeowner gets it even though they didn’t rent the property? Or you get it, even though you didn’t follow through with the rental? This is insane, any way you look at it. Do the right thing, SOS. Hopefully the state does step in and stop this madness, and force them to return funds to us who put our trust in them.

    Wednesday, Jun 3 @ 12:43 pm
  • WindyBill

    Surf or Sound needs to fully realize something very important: Some lawyers are quite happy to argue a case before the bar of justice as long as they get paid win or lose.

    Wednesday, Jun 3 @ 1:09 pm
  • Jodie M

    I appreciate the owners’ perspective. But let’s enlarge upon the comparison of the “no-show fee” incurred for a missed doctor’s appointment. (I work at a private medical practice). If irrefutable extenuating circumstances such as a road closure prevented a patient from keeping his appointment, he could never be charged. That would be illegal and unethical, no matter the inconvenience or financial loss to the office. Further, the patient would not be charged for extra services such as an x-ray or labs, that may have been needed. But our entire Surf or Sound payment, including extras paid for unused services like pool heat, pet privileges and linens, is being withheld.

    Clinical practices are certainly NOT charging no-show fees to patients who were unable to keep their appointments during COVID-19 lockdown. Those offices understand that the lockdown measures were entirely beyond the patients’ control. If as a result, the offices need financial assistance, they will seek it elsewhere, not from their patients. Surf or Sound is doing the opposite – charging their clients for unused services and benefits when the client bears no fault.
    I empathize with the owners. No doubt they are facing losses. So if anything, I’d agree to Surf or Sound’s withholding the reservation fee. That’s the part of our contract that actually occurred.

    Wednesday, Jun 3 @ 1:20 pm
  • Luminous

    @OBX_OWNER: The people who took your advice and bought insurance are out twice, for the rental money and the insurance premium. Vacation rental and travel insurance companies have generally refused to cover coronavirus claims. Is this really news to you?

    Surf or Sound, shame on you. Withdrawing money from Donna Moody’s account on April 17th and expecting her to sue Dare County to recover? Just disgraceful. To say nothing of the hundreds of other trusting customers. Why would any renter knowingly use you again?

    We may need a state law that says prepaid rental money is held in escrow accounts until the vacation.

    /OBX homeowner year-round

    Wednesday, Jun 3 @ 1:23 pm
  • Janet

    Homeowners of the rental properties have the ability to recoup their profits through the remainder of the rental season which I am sure goes to October. Considering the rents in the summer months are 3 times that of spring there is plenty of ability to pay their mortgages. I was also given three options once the lockout occured. Taking 10% off a summer week of $5000 or more means $500 off the rental which is a far cry from the $1800 I paid for April. Rebooking was not an option for next year as school vacations have not yet been scheduled. So I picked Surf or Sounds third option, a refund. After my initial contact with them in early April, I have been unable to get anyone of the phone and they have ignored emails. And, yes, I bought the travel insurance they recommend back in January. I have since made a claim with Red Sky insurance and have been officially denied. So, no purchasing insurance does no good except giving Surf or Sound the ability to keep more of my money with no return. All we are asking for are refunds for services never rendered.

    Wednesday, Jun 3 @ 2:24 pm
  • Trashcan Man

    NRPO’s engage in speculative real estate as an investment. There are risks, and this type of investment carries much more risk than the stock market. Yet, you refuse to accept the risk now that it has come to be.You contracted to deliver a service and the service was not delivered. In any other world, you are indisputably liable for the loss. Good business practice is to carry business insurance….did you?
    You took the risk of speculating in vacation property business in a place vulnerable to many risks. Now you don’t accept the folly of your decision.

    Wednesday, Jun 3 @ 3:04 pm
  • Lou Briccant

    OBX_OWNER, while I’m sympathetic to your side of the equation as well please show me an insurance policy that paid out for this… they’ve all issues the same denial with, “pandemics are foreseeable” excuse from what I’ve seen…

    Wednesday, Jun 3 @ 3:32 pm
  • Rosemary Grooms

    @60s Suzanne. I was one of the people whom has been deceived and lied to. As a renter, I did CHOOSE to purchase the travelers insurance that Surf or Sound recommended. SOS promised on there website, in a phone conversation and an email that I could get a cash refund. I chose to get a cash refund.
    I also contacted the travelers insurance company to be told that “Since it was a government shutdown and a pandemic, they were not obligated to fulfill the contract. So, how is it that I chose to do the right thing and I am the one losing all of my money? Not the owners, not the insurance company and not Surf or Sound. I loss my vacation time, I loss the money for the insurance and I lost the money I gave to Surf or Sound. So tell me who is going to give me back my hard earned money? Since SoS says it is the county faults, since home owners are crying I can’t make my mortgage payments, because they did not put money aside for emergencies. Since the insurance company is saying it’s a government shut down. Every single owner, SoS and the Insurance company is profiting off of us renters.

    Wednesday, Jun 3 @ 4:00 pm