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Broker's Arrest Raises Questions about Real Estate Industry Background Checks

By Michael Klazema on 11/15/2016

Background check standards are a major topic in the real estate industry this week after a realtor in South Carolina was arrested for kidnapping and murder. Per a report from Inman, a real estate news website, the accused, Todd Kohlhepp, has been linked to seven murders. Kohlhepp is a licensed realtor in the state of South Carolina. He is also the owner and broker-in-charge of a company called TKA Real Estate, which has two offices, one in Greenville and the other in Spartanburg.

Per the Inman article, Kohlhepp has been working in the South Carolina real estate industry for 10 years. In that time, he garnered positive word-of-mouth from most of his clients, earning five-star reviews on top realtor review sites like Zillow and Realtor.com.

Those clients were unaware that Kohlhepp had a criminal record and was a registered sex offender. So was the South Carolina Department of Labor, Licensing and Regulations, which approved Kohlhepp's application for a real estate license a decade ago. He was convicted of rape in the 1990s and spent 15 years in prison for the offense. Per Inman, his victim was a 14-year-old girl who he forced into his bedroom at gunpoint.

Per a BBC report, it all began with a tip-off received by the police from a "sex-crime investigator." The tip-off led officers to Kohlhepp's property, where he was keeping a woman chained and held captive in a shipping container. Police also found seven dead bodies on the premises.

The Inman report noted that, in the wake of Kohlhepp's arrest, discussions have erupted in the real estate industry about safety and background checks. The prevailing question among other brokers and realtors—including Kohlhepp's employees at TKA Real Estate—is how a registered sex offender and convicted rapist qualified for a real estate license in the first place.

The oversight was due to the policy that the South Carolina Department of Labor, Licensing and Regulations used to handle criminal history when Kohlhepp applied in 2006. At the time, the department did not run any background checks on individuals applying to get real estate licenses. Instead, the licensing process worked on an honor system in which applicants were expected to self-disclose their criminal history. Kohlhepp didn't disclose his criminal history or his sex offender status, so those factors weren't considered in his license approval.

Since then, the Department of Labor has implemented background checks for license applicants. Per coverage, it has become standard for local real estate associations to require their own background checks. Real estate companies will usually conduct checks as well. Since Kohlhepp started his own business, he never had to go through an employment background check once he had his license.

Sources: https://www.inman.com/2016/11/09/two-bodies-found-on-realtors-property-identified/

http://www.bbc.com/news/world-us-canada-37932208

http://www.goupstate.com/news/20161104/accused-kidnappers-coworkers-shocked-in-disbelief


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