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Road to Recovery for Chetola Resort Condo Rentals

Release from Chetola Resort 

Multiple meetings, countless working hours, a network of supporters, and infinite prayers. That’s only part of what was needed for Chetola Resort’s condominiums to get back online after a three-month period that found the Blowing Rock resort restricted from renting its privately owned condominiums due to a non-compliance issue with the North Carolina Real Estate Commission (NCREC). It also took an inordinate amount of due diligence and patience. Which in the end, all paid off.

Chetola proprietor Kent Tarbutton says that in early April the resort’s condo rentals will return to business as usual via a newly formed partnership between RSK Mountain Resorts (operating as Chetola Resort) and local real estate attorney Rob Angle. The pair has teamed up to create Watauga Property Management, a new management company that will handle the 100 privately owned condominiums rented to Chetola guests. Angle will serve as the broker in charge (BIC). The condominiums should be available to rent approximately three weeks in advance of one of Blowing Rock’s largest festivals, SAVOR Blowing Rock: A Festival of Food & Drink, which takes place April 20-23.

One of the main confusions and struggles that led to these last few months of suspension — which, incidentally, applied strictly to condominiums and not the hotel’s lodge or Bob Timberlake Inn rooms because of a NCREC law requiring rental money for privately owned units to be placed in a separate rental trust account and not an operating account — were initiated by a random audit in February 2016. This was the first audit in Tarbutton’s tenure as owner since 1997. In hindsight, the non-compliance audit uncovered was fortuitous, albeit frustrating and expensive. But it enlightened Tarbutton on several oversights that he acknowledges were wrong but not premeditated.

“The North Carolina Real Estate Commission found no fraud, no theft,” says Tarbutton about what the commission uncovered. “It just wasn’t compliant. And ever since last April, when we were first notified of the violations, we have spent that time exhaustively searching for a solution. [The NCREC] knows how hard we have been working to get this situation corrected. And although there were plenty of rumors — some of which I laughed about, others that kind of hurt — it was when things got difficult that I found out how many people truly care about me and our Chetola family. So many
people offered their time, their knowledge, their prayers. Their efforts and the good advice of the North Carolina Real Estate Commission are why we are where we are today.”

The complexity behind what happened between February 2016 and March 2017 is why there are real estate lawyers. In a nutshell, here is the timeline:

Chetola Resort purchased a new resort-wide international hospitality software called Agilysys, at a price tag of approximately $220,000. The company claimed to be NCREC-compliant. 

February 4, 2016 – RSK Mountain Resorts underwent a random routine audit by
the NCREC.

April 2016 – NCREC notified Chetola of a series of violations, most of which were fixed within a few weeks. The most significant violation to correct, however, was that Agilysys was unable to separate funds used for Chetola amenities such as Timberlake’s Restaurant and the Spa from those used as a deposit for the rental of privately owned condos, as required by the NCREC. The Agilysys software was not capable of doing this. 

June 22, 2016 – Tarbutton signed a consent order to have the situation corrected by October 1, 2016. Agilysys vowed to update the software into compliance but was unable to do so.

July 8, 2016 – Chetola discovered Agilysys software would never work and with the help of consultant Richard Evans, owner of Blue Heron Smalla Business Consulting, located new HomeAway V12 software, a system approved by the NCREC.
Sept. 15, 2016 – All compliance issues were resolved except for the reservation software. Tarbutton was granted an extension to Jan. 1, 2017 by the NCREC because of his efforts.

January 1, 2017 – Chetola flipped the switch on its new software system. The initial reporting from the new system was not able to bring all into compliance for the NCREC.

January 3, 2017 – Kent Tarbutton, proprietor of Chetola Resort, and realtor representing RSK Mountain Resorts, was given a 36-month suspension by the NCREC. 

Another setback, another challenge. Tarbutton’s immediate thought, after the initial humiliation and frustration, was that the problem he created impacted the condo owners. “It wasn’t their fault,” he says. “I wanted to make sure they were taken care of.”

In response, Tarbutton gave the owners three options:

1) Accept payment from him for lost revenues in January, February and March 2017 that matched their income from that same 2016 time period;

2) Rent the condos unit themselves;

3) Find another real estate company. Only two owners declined option number one. Tarbutton devised a good-faith payment plan that guaranteed the owners the equivalent of what they made the first three months of 2016: “We have paid them more than $150,000. Add in the time we have been unable to rent condos and it’s probably twice that.”

To date, 50 percent of those owners have agreed to re-sign with Watauga Property Management. Angle will take over the rental listings and handle the properties through WPM. Licensed realtors Brock Baird and Debbie Coffey will handle all real estate sales of condo units through their new entity, Chetola Real Estate.

The V12 team spent the week of March 20 training the accounting staff on the new software configuration, which ensures that rental monies received from guests for condo rentals are deposited into a separate trust account. Tarbutton and the Chetola staff anticipate that the implementation process will be in place the first week of April and all condos will be online immediately thereafter.

“All the prayers and the conscientious consideration of the Real Estate Commission have given us a chance to turn this around,” says Tarbutton.