An Outer Banks rental company at the center of investigations by the North Carolina Attorney General's Office, NC Real Estate Commission and a class-action lawsuit responded to ABC11 about the customer complaints it has received for not offering refunds for vacation beach rentals amid COVID-19.
"We understand that our decisions during the Dare County road closure were confusing at times. We apologize those decisions made a difficult time more challenging for some guests," CEO of Surf or Sound Realty, Dale Petty, said in a statement.
Earlier this month, ABC11 reported that dozens of families were out thousands of dollars after the company changed its mind about giving money back for canceled trips.
More than 30 families reached out, saying that they were owed refunds that totaled more than $60,000 for vacation rentals they had no access to due to COVID-19 because Dare County closed off access to all visitors from March 4 through May 15.
Surf or Sound Realty originally promised customers a refund for their rental. Now that restrictions are lifted and visitors are allowed access to their vacation rentals, Surf or Sound Realty changed their mind.
Harnett County resident Lisa Wollet paid $4,500 for hers and was one of the customers promised a refund.
"They were the ones that offered me the refund, and now they are the ones that are reneging on that particular option," said Wollet.
Instead of refunds, the company is offering to give customers who did not have access to their rental a dollar for dollar credit toward a future rental.
This stance 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 said it was investigating after receiving 123 complaints on the company. They also said that, as far as they were aware, it was the only instance where a licensed property management firm was 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 also said it was investigating.
"If you have a contract that cannot be performed, it's not a contract, and you're due your money back," Stein said. "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."
The company is now facing a class-action lawsuit.
"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," Gary Jackson, with the Law Offices of James Scott Farrin, said.
Jackson said his clients don't want credit toward a future rental like the company 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 said.
Many of the renters did purchase insurance on the rental, but the insurance doesn't cover their losses.
Read the full statement from Petty below:
"First and foremost, we understand the frustration felt by our rental guests as we all navigate this extraordinary time in our country. At Surf or Sound Realty, the interests of our homeowners and our guests are top priority and the COVID-19 pandemic has brought challenges never expected nor imagined.
We understand that our decisions during the Dare County road closure were confusing at times. We apologize those decisions made a difficult time more challenging for some guests.
When Dare County first issued its road closure, the CDC was recommending a two-week shutdown to slow the spread of the virus. When it became evident the road closure would be extended indefinitely, we needed to honor our fiduciary responsibility to our homeowners. We sought to find a reasonable option that would serve the interests of both homeowners and guests. And, for the first time in 28-years-began offering dollar-for-dollar transfers.
As of June 18, two-thirds of guest reservations affected by the road closure have been resolved, but that isn't good enough. Our team is continuing daily to assist every guest who chose to do business with us. We are committed to finding a resolution for each and every individual.
We feel privileged to have represented Hatteras Island homeowners and visitors since 1978, and are committed to serving our guests, our community, and our homeowners with integrity for many more years to come."