NC Attorney General investigating OBX rental company for refusing vacation refunds amid COVID-19

Dozens of families are out thousands of dollars after their rental company changed its mind about giving money back amid COVID-19.

Troubleshooter Diane Wilson heard from the frustrated customers of Surf or Sound Realty. So far, more than thirty families have reached out, saying they are owed refunds that total in excess of $60,000.

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Dana Mckenzie lives in Massachusetts and paid $4,416.13 for a Surf or Sound vacation rental in April at the Outer Banks.

They were excited for their vacation until COVID-19 hit.

Dare County closed off access to all visitors from March 4 through May 15. Since their vacation rental fell during the time restrictions were in place, she received email and Facebook confirmation from Surf or Sound about a refund.

"We would receive a refund a week after our departure date," Mckenzie said of the email. She waited but no refund.



Harnett County resident Lisa Wollet is faced with the same frustration.

"We are talking thousands of dollars as we were paid in full," Wollet said.

She paid $4,500 for their vacation rental through Surf or Sound and was also promised a refund from the company since they couldn't get access to their rental home.

"They were the ones that offered me the refund, and now they are the ones that are reneging on that particular option," said Wollet.

Now that restrictions are lifted and visitors are allowed access to their vacation rentals, Surf or Sound Realty changed their mind when it comes to refunding customers.

The company emailed the following letter to those customers who did not have access to their vacation rental:

Dear Guests,

After much consideration, we have decided not to issue cash refunds to guests who had reservations between the dates of 4/4/20 and 5/15/20. We are however offering a dollar for dollar credit towards another stay either this year or next year. Hundreds of guests have already accepted this offer. Dare County's decision to close the road was not something that could not have been anticipated and is neither the fault of our guests or our homeowners. We feel the offer of a full credit towards another week in 2020 or 2021 is the fairest resolution for both

This offer is a change from our long-standing policy and lease agreement, which very clearly states that there are no refunds for access issues. We have never before offered any form of compensation for road closures, which are fairly common occurrences on Hatteras Island. However, because of the unprecedented nature of this event, we wanted to do something to help our guests. This option will only be available until June 19, 2020, so we encourage you to take advantage of it soon.

Option #1 - Switch your spring vacation to fall 2020 and we will try to match your same rate.

We may be able to switch your spring vacation to a relaxing vacation in the fall for the same rate. Travel Insurance, if purchased, can be transferred to the new dates of stay.

Option #2 - Apply what you paid for your spring vacation to summer 2020

We have limited availability, so please act quickly if you would like to apply your payments to a 2020 summer week. Travel Insurance, if purchased, can be transferred to the new dates of stay.

Option #3 - Switch your 2020 vacation to a week in 2021 in the same home

This option affords you additional flexibility if your remaining 2020 vacation time is uncertain.

Please click here to complete this form, indicating your preferred option.

We are, of course, aware of the North Carolina Real Estate Commission opinion suggesting that we provide cash refunds. However, we believe that opinion is wrong and would have long lasting implications for our business on Hatteras Island. We do apologize for the delay in arriving at this decision. There were many different factors, which all needed to be carefully considered. We realize that not everyone will be happy with our decision but we feel that it represents a fair compromise for all parties.

This stance by Surf or Sound Realty goes against the North Carolina Real Estate Commission's opinion that licensed vacation rental brokers must provide refunds if the renters were affected by access closures.

The commission is now investigating saying they have 123 complaints on Surf or Sound, and as far as they are aware, this is the only instance where a licensed property management firm is refusing to return money it held in trust under the particular circumstances that existed in that area of the state.

North Carolina Attorney General Josh Stein's office is also investigating.

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"If you have a contract that cannot be performed, it's not a contract, and you're due your money back," Stein said.

Stein said his office sent Surf or Sound Realty a letter explaining its stance and is waiting to hear back.

"We are in the process of digging into this and investigating it, and if what we find out leads us to conclude that these people are in the legal wrong and they need to pay these people back we will do whatever necessary to get these customers their money back," Stein said.

Besides the state's investigation, a class action lawsuit is in the works.

Gary Jackson, with the Law Offices of James Scott Farrin, said they're filing a suit against Surf or Sound Reality on Tuesday in Dare County.

"The statute says that consumers are entitled to refunds under The Vacation Rental Act in North Carolina. Our case has a breach of contract and unjust enrichment to Surf or Sound, unfair, and deceptive trade practices," said Jackson.

Jackson said his clients don't want credit towards a future rental like Surf or Sound is offering.

"Many of our clients are concerned that some of the owners of the houses won't be doing business with Surf or Sound, and the houses may not be available. They're concerned that Surf or Sound may not be around," Jackson added.

Many of the renters did purchase insurance on the rental, but the insurance doesn't cover their losses.

ABC11 reached out to Surf or Sound Realty, but have not heard back. In the letter to renters, it does state they're aware of the NC Real Estate Commission's opinion suggesting cash refunds be provided, however, they believe that opinion is wrong.

Meanwhile, for the Surf or Sound customers who didn't get to enjoy their beach rental, they are frustrated waiting for a resolution.

"I would like to have my money back, that's the option they offered me, and that's what I would like to see happen," Wollet said.
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