ASHEVILLE – A celebrated entrepreneur has had his real estate license stripped after keeping “at least” tens of thousands of dollars owed to Airbnb owners whose properties he managed, state regulators said.
Shawn Johnson has been known as a hard-working handyman whose praises were sung on social media. As a real estate broker, he ran a business based on managing local short-term vacation rentals through Airbnb.
But in February, the North Carolina Real Estate Commission permanently revoked his broker’s license after Johnson admitted to multiple violations, including running an unlicensed real estate firm; putting Airbnb owners’ money into his own bank accounts instead of trust accounts; and breaking a city ban against most short-term vacation rentals. Johnson made those and other admissions in a Feb. 13 consent order negotiated with commission attorneys in which he also said he neither admitted nor denied forging bank loan documents as alleged by the commission.
The license action was regulatory and outside any criminal or civil proceedings, though Johnson is also involved in lawsuits over ownership of Airbnb properties.
What’s behind the license revocation?
A license is needed to sell or buy real estate for others or to manage property — though Johnson’s had been limited because of a past federal conviction. Revocations are rare, happening about a dozen times a year, but Johnson’s case stood out because of its “scope and breadth,” said Rob Patchett, a commission attorney.
Because Johnson agreed to the revocation, the commission didn’t delve into exactly how much he wrongfully kept, Patchett said.
In interviews Wednesday and Thursday with the Citizen Times, Johnson gave mixed messages about the revocation. He said there was no need for him to keep trust accounts for the Airbnb earnings because he was partners with the owners, an arrangement that doesn’t trigger the same requirements as a broker-client relationship.
That explanation runs counter to the consent order in which he admitted he broke state regulations by not keeping trust accounts and wrongfully kept other people’s money.
“I’m not disagreeing with anything I signed in that document,” he told the Citizen Times when asked about the apparent contradiction. “But I’m saying I didn’t feel like fighting it.”
The revocation hasn’t hurt his business, Johnson said.
Sara Davis, who said Johnson owes her “thousands” of dollars in unpaid Airbnb rental fees, said he had a pattern in how he operated that “results in people losing money and results in him gaining control of other peoples’ property.” She says she believes she was conned.
The commission alleged Johnson tried to fraudulently take Davis’ property, where she lives outside Asheville in the Emma area. But Johnson did not admit to that in the consent order. He’s suing Davis, saying he’s an owner of the property which Buncombe County records show belongs to her. Davis has brought counterclaims.
Johnson said he doesn’t owe money because he wasn’t acting as a property manager, but rather as a partner, something contested by those with whom he dealt. “I screwed up by not having written agreements,” Johnson said, though with Davis he said he did have a written agreement.
Social media and real estate
Before he was a broker Johnson worked as a handyman. He was known for his can-do attitude and strong opinions aired in places like the West Asheville Exchange Facebook page, or “WAX.”
He applied for a broker’s license in 2014, but was denied because of a 2010 federal counterfeiting conviction. Johnson requested a special hearing, and in 2015 the commission granted him a license but restricted him from managing anyone else’s property for seven years except under supervision of a broker-in-charge.
It was on WAX that Davis said she learned about Johnson, “so, I reached out to him and said I was interested in buying a house.”
In April 2016, Johnson was picked as one of the featured speakers at a local economy forum, hosted by Western Carolina University and the Citizen Times. The same year, the commission received a complaint about him, setting off a multiyear investigation, Patchett said.
In January, the commission sent him a notice that it planned to hold an evidentiary hearing looking into multiple allegations. The trial-like procedure can result in a revocation, one of the commission’s most serious disciplinary actions.
The commission oversees nearly 107,000 brokers. From 2016-18 it revoked 10-14 licenses annually. None involved Asheville brokers.
Patchett said in most cases the commission attempts to negotiate a consent order, as it did with Johnson. Among his admissions were specific statutory violations including “pursuing a course of misrepresentation or making of false promises through agents, advertising or otherwise.”
How much is involved?
Johnson collected $428,788 for nine or more Airbnbs he managed from December 2016 to November 2018, according to commission allegations. In terms of how much Johnson wrongfully kept, Patchett said it was “at least” tens of thousands of dollars.
“We believe it was a significant amount of money. I can’t put a dollar amount on it for sure for a couple of reasons,” the attorney said.
One reason is that Johnson didn’t have written agreements with property owners as required by state rules. He also didn’t keep records, another state requirement.
And Airbnb’s system does not make it easy to discern payment histories, Patchett said
Like Davis, Carl Woermann did Airbnb business with Johnson and said he had a similar experience.
“It’s like, ‘Hey, let’s buy a house with your money,'” Woermann said.
Johnson would then suggest he rent the property via Airbnb, Woermann said. “Then you say, ‘Hey, where’s the money?'”
Woermann brought a civil suit against Johnson for rental proceeds and Johnson brought counterclaims saying he didn’t owe money because they were partners. The case has not gone to trial, but Buncombe County Superior Court Judge Marvin Pope in a Sept. 29, 2017, preliminary injunction order said Woermann was likely to prevail, so he ordered Johnson for the time being to stay away from the property and stop making claims he was an owner.
In a separate civil case, Woermann in October won a $50,000 judgment against Johnson and builder Whit Rylee for not paying money owed in another business deal.
Rylee, who has been recognized for his local historic preservation work, declined to comment. County records show he owns 72 Tremont St., one of the properties the commission alleged Johnson managed in violation of state and city rules.
The city has tried to take action against the short-term vacation rentals Johnson acknowledged operating counter to the city ban at 72 Tremont, 16 Upstream Way and 64 Pine Cone Drive. But when city staff tried to send notices of violation or collect fines for the three as well as two other unpermitted Airbnbs with which they say Johnson is involved they’ve hit roadbloacks, said Shannon Tuch, principal city planner and zoning administrator.
“It is unclear what Mr. Johnson is responsible for and what…the property owners are responsible for,” Tuch said. “We will need to sit down with them to review their respective cases further.”
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This article originally appeared on Asheville Citizen Times: Asheville Airbnb broker’s license revoked; kept owners’ money