Chapter 6 - Violations of License Law: Penalties and Procedures (2%)

Question 1

Section 6.1: LICENSE LAW VIOLATIONS

:::STATE EXAM CONTENT AREA: VI.C: TYPES OF PENALTIES:::

**1) Criminal Penalties

Answer 1

 Administered by the Court

 Penalties are for violations of laws or rules

 In addition to FREC penalties

** a) 3RD DEGREE FELONY

** Violations RE: Acting as a broker or sales associate w/o a valid and current active license

**Fine up to $5,000 and/or 5 year imprisonment

b) 1ST DEGREE MISDEMEANOR
- Violations RE: Rental lists, info, and contracts
- Fine up to $1,000 and/or 1 year imprisonment

** c) 2nd DEGREE MISDEMEANOR (99% of criminal violations)

**Violations RE: Disseminating false or misleading ads

**Fine up to $500 and/or 60 days imprisonment

Question 2

Section 6.1: LICENSE LAW VIOLATIONS

:::STATE EXAM CONTENT AREA: VI.C: TYPES OF PENALTIES:::

2) Civil Penalties

Answer 2

 Administered by Court

 Penalties are in terms of Dollars (Judgment)

 In addition to FREC penalties

Question 3

Section 6.1: LICENSE LAW VIOLATIONS

:::STATE EXAM CONTENT AREA: VI.C: TYPES OF PENALTIES:::

3) Administrative Penalties

Answer 3

 Administered by FREC

 Violation of FS 475

 Violation of FREC Rules – 61J2

 Administrative penalty only

 $5,000 maximum fine

• For example, being found guilty of FRAUD, MISREPRESENTATION, CONCEALMENT, FALSE PROMISES, FALSE PRETENSES, DISHONEST DEALING BY TRICK, SCHEME, OR DEVICE, CULPABLE NEGLIGENCE, OR BREACH OF TRUST in any business transaction can result in an administrative fine of $1,000-$2,500 and a 30 day suspension to revocation (for first offenses) or $2,500-$5,000 and 6 months suspension to revocation (for second offenses)

Question 4

Section 6.1: LICENSE LAW VIOLATIONS

:::STATE EXAM CONTENT AREA: VI.B - VIOLATIONS AND PENALTIES:::

Fraudulent Activities

Answer 4

 BREACH OF TRUST (e.g. violating fudiciary duties)

** CONCEALMENT - when a broker fails to disclose info to a party

 CONSPIRACY

** CONVERSION (e.g. shorage in escrow account) - using other’s funds or property for own personal or business use

** CULPABLE NEGLIGENCE (e.g. forgetting to collect deposit) - operating in a reckless, careless, or excessively negligent manner

 FAILURE TO ACCOUNT (e.g. when broker doesn’t pay agent)

 FALSE OR MISLEADING ADVERTISING –> 2nd degree misdemeanor

 FILING FALSE DOCUMENTS

** MISREPRESENTATION - the misstatement or omission of facts. Can lead to fraud if statements are intentional and relied upon. Misrepresentation of value by a licensee could be considered fraud and might lead to breach of contract or breach of trust. Also includes exaggeration in an opinion of value

 MORAL TURPITUDE (e.g. selling fake licenses)

 RENDERING AN OPINION OF TITLE - if a question about the title arises, broker is required by law to advise purchasher to get title insurance or procure an abstract and obtain an attorney’s opinion

 PROMISE TO RESELL - broker must abide if promised

** PROPERTIES WITH LIENS - if a mortgage or other liens exist against a property (i.e. TITLE IS UNMERCHANTABLE), the broker must inform a prospective buyer of such conditions PRIOR to the payment of any portion of the sale price.

** USING LOTTERIES - a broker who uses lotteries or trading schemes that involve the selling of certificates or chances to induce any person to buy real estate is guilty of fraud.

** Exception: contests where no purchase is required may be permissible

Question 5

Section 6.1: LICENSE LAW VIOLATIONS

:::STATE EXAM CONTENT AREA: VI.F: DISCIPLINARY GUIDELINES:::

**Range of Penalties

Answer 5

**The purpose of disciplinary guidelines is to give notice to licensees of the range of penalties that normally would be imposed for each count during a formal or information hearing. Based on a single violation, from least severe to most severe the range of penalties are:

**1) REPRIMAND

**2) ADMINISTRATIVE

** Maximum $5,000 per violation

**3) PROBATION

**4) SUSPENSION

**5) REVOCATION

**6) DENIAL OF LICENSE

 FREC cannot deny payment of commission or imprison

NOTE: Minor violations may be dealt with by issing a CITATION or a NOTICE OF NONCOMPLIANCE

 Conducts Office Inspections and Audits

 Notice of Noncompliance

 First time minor violation

 15 days to correct

 Failure to correct- citation issued

 Citation

 requires payment of fine

 Citation not disputed within 30 days – final order

 Final order – 30 days to pay

Question 6

Section 6.1: LICENSE LAW VIOLATIONS

:::STATE EXAM CONTENT AREA: VI.B.1: VIOLATIONS AND PENALTIES - GROUNDS FOR DENIAL:::

Denial of License

Answer 6

 Lack character or competence

 Would have resulted in suspension or revocation if licensed

 Did not pass State exam

 Didn’t pay application fee

 Application denied

 Applicant notified

 Request a formal hearing to protest within 21 days

Question 7

Section 6.1: LICENSE LAW VIOLATIONS

:::STATE EXAM CONTENT AREA: VI.B.2: VIOLATIONS AND PENALTIES - GROUNDS FOR SUSPENSION:::

Suspension

Answer 7

• Temporary penalty
• FREC may suspend the license of a licensee for up to 10 years
• The seriousness of the violation determines the length of suspension.
• A second suspension for a violation can result in revocation of a real estate license

Question 8

Section 6.1: LICENSE LAW VIOLATIONS

:::STATE EXAM CONTENT AREA: VI.B.3: VIOLATIONS AND PENALTIES - GROUNDS FOR REVOCATION:::

Revocation

Answer 8

 Most severe penalty that FREC can administer

 Permanent with 2 EXCEPTIONS:

 1) license issued in error

 2) fraudulent renewal or obtaining license by fraud

 Renewing without completing education requirement

 May reapply after 5 years

Question 9

Section 6.3: THE DISCIPLINARY PROCESS

:::STATE EXAM CONTENT AREA: VI.A: COMPLAINT PROCESS - SEVEN STEPS:::

** The Disciplinary Process - Step 1) COMPLAINT

Answer 9

** Complaint is filed with DBPR/DRE

** Whether licensed or unlicensed person

** Must be Legally Sufficient - a violation of:

 Florida Statute

 FREC rule

 DBPR rule

Question 10

Section 6.3: THE DISCIPLINARY PROCESS

:::STATE EXAM CONTENT AREA: VI.A: COMPLAINT PROCESS - SEVEN STEPS:::

The Disciplinary Process - Step 2) INVESTIGATION

Answer 10

 DBPR investigates through DRE

 Minor violation

 May issue notice of noncompliance or citation

 When complete a report is sent to FREC’s Probable Cause Panel

 Investigator may not express opinions or recommendations

Question 11

Section 6.3: THE DISCIPLINARY PROCESS

:::STATE EXAM CONTENT AREA: VI.A: COMPLAINT PROCESS - SEVEN STEPS:::

The Disciplinary Process - Step 3) PROBABLE CAUSE PANEL

Answer 11

 2 members of FREC (may use one former member if necessary)

 Operates similar to a grand jury

 Possible outcomes are

 Dismiss the Case

 Letter of Guidance

 Formal (Administrative) Complaint

Question 12

Section 6.3: THE DISCIPLINARY PROCESS

:::STATE EXAM CONTENT AREA: VI.A: COMPLAINT PROCESS - SEVEN STEPS:::

The Disciplinary Process - Step 4) ADMINISTRATIVE COMPLAINT

Answer 12

 An Administrative (Formal) Complaint is an outline of the charges

 Must be answered within 21 days or the license is usually Revoked

 Respondent files Election of Rights Form

 No dispute of facts – Informal Hearing

 Stipulation

 Negotiated settlement

 Dispute of facts

 Formal Hearing

Question 13

Section 6.3: THE DISCIPLINARY PROCESS

:::STATE EXAM CONTENT AREA: VI.A: COMPLAINT PROCESS - SEVEN STEPS:::

**The Disciplinary Process - Step 5) FORMAL/INFORMAL HEARING

Answer 13

INFORMAL - FREC

 Probable Cause Panel Members are excluded

 Issue resolved and penalty assessed unless there is Disagreement over material facts

FORMAL

 Conducted similar to court by an Administrative Law Judge

 Member of the Florida Bar Association at least 5 years

** May issue Subpoenas , Swear Witnesses and Take Testimony

** The respondent has the right to respond to or answer the complaint, the right to present evidence and cross-examine witnesses, and the right to be represented by legal counsel. A respondent may request that an Administrative Judge subpoena a witness.

 Issues a Recommended Order to all parties involved

Question 14

Section 6.3: THE DISCIPLINARY PROCESS

:::STATE EXAM CONTENT AREA: VI.A: COMPLAINT PROCESS - SEVEN STEPS:::

The Disciplinary Process - Step 6) FINAL ORDER

Answer 14

 Members of FREC not on the Probable Cause Panel issue a Final Order which may Accept , Reject or modify the recommended order

 Take effect in 30 days

 Summary Suspension may be issued by the Secretary of DBPR in situations posing an immediate danger to the public

Question 15

Section 6.3: THE DISCIPLINARY PROCESS

:::STATE EXAM CONTENT AREA: VI.A: COMPLAINT PROCESS - SEVEN STEPS:::

**The Disciplinary Process - Step 7) JUDICIAL REVIEW (APPEAL)

Answer 15

** If the licensee does not agree with the final order of the Commission, a PETITION FOR REVIEW may be filed with the Florida District Court of Appeals

 A Judicial Review (Appeal) may be filed with the DISTRICT Court of Appeal within 30 days - BEFORE A REAL JUDGE

 An appeal does not stay enforcement (stop enforcement)

 Writ of Supersedeas (Stay of enforcement)– suspends enforcement of the Final Order pending appeal

*** Writ of Mandamus - REVERSAL (unusual)

 Court order to restore the licensee’s privileges

Question 16

Section 6.3: THE DISCIPLINARY PROCESS

:::STATE EXAM CONTENT AREA: VI.D: REAL ESTATE RECOVERY FUND:::

Florida Real Estate Recovery Fund

Answer 16

 Purpose

 Reimburse members of the public for Monetary (COMPENSATORY or ACTUAL) damages

 As a result of an act by licensee.

 NOT punitive damages

 DOES NOT INCLUDE legal fees or court costs.

Question 17

Section 6.3: THE DISCIPLINARY PROCESS

:::STATE EXAM CONTENT AREA: VI.D: REAL ESTATE RECOVERY FUND:::

Florida Real Estate Recovery Fund (CONTINUED)

Answer 17

 In the case of licensee wrong doing

 The Claimant must

 First win a Civil Judgment against a licensee in a Florida court

 Collect as much as possible from licensee

 Make a claim for the unsatisfied portion up to a maximum of

 $ 50,000 for a single transaction

 $ 150,000 for multiple transactions against one licensee

 Assign the judgment to FREC

Question 18

Section 6.3: THE DISCIPLINARY PROCESS

:::STATE EXAM CONTENT AREA: VI.D: REAL ESTATE RECOVERY FUND:::

**Florida Real Estate Recovery Fund (CONTINUED)

Answer 18

 Payment from the fund for wrong doing results

 Immediate Suspension until repaid with interest,

 Except, if suspension would conflict with Federal Bankruptcy Law

** Only violation when license is automatically suspended

Question 19

Section 6.3: THE DISCIPLINARY PROCESS

:::STATE EXAM CONTENT AREA: VI.D: REAL ESTATE RECOVERY FUND:::

**Florida Real Estate Recovery Fund (CONTINUED)

Answer 19

** Collection of fees for the fund are stopped when it reaches $1,000,000 and not resumed unless fund drops below $500,000

**/*** Broker - $3.50 per year ($7.00 with renewal)

**/*** Sales associate - $1.50 per year ($3.00 with renewal)

Question 20

Section 6.3: THE DISCIPLINARY PROCESS

:::STATE EXAM CONTENT AREA: VI.D: REAL ESTATE RECOVERY FUND:::

**Florida Real Estate Recovery Fund (CONTINUED)

Answer 20

** Persons not covered

** Judgment debtor or spouse

** Licensee unless buyer or seller

** Payment to licensee

** Acting as buyer or seller

** Suffered monetary damages as a result of a licensee in the transaction

Question 21

Section 6.3: THE DISCIPLINARY PROCESS

:::STATE EXAM CONTENT AREA: VI.D: REAL ESTATE RECOVERY FUND:::

**Florida Real Estate Recovery Fund (CONTINUED)

Answer 21

 Reimburse a broker for damages

 Resulting from complying with an Escrow Disbursement Order (EDO)

 May include legal fees or court costs for broker or if ordered for the prevailing party.

Question 22

Section 6.3: THE DISCIPLINARY PROCESS

:::STATE EXAM CONTENT AREA: VI.E: LEGAL TERMS TO KNOW:::

Answer 22

1) Nolo contendere - no contest; plea bargain; neither admitting guilty or not guilty
2) Write of mandamus - an order by the district court to the Commission to restore the licensee’s priviledges
3) Write of supersedeas - supersedes the action of the Commission and allows the licensee to continute to practice until the case can be heard on appeal
4) Stay of enforcement - During the appeal process, licensee is out of business, unless one of these is granted
5) Petition for review - to appeal a final order of the Commission; filed with the Florida District Court of Appeals
6) Stipulation - similar to a plea bargain
7) Election of Rights form - requires the respondent to state whether or not he or she diputes the allegations in the complaint
8) Administrative Complaint (formal complaint) - filed against the licensee if the Commission determines that a probable cause exists
9) Letter of Guidance - in lieu of discipinary action, the Commission advises the nature of its concern and the appropriate action required of the licensee
10) Summary (emergency suspension) - if the complaint is found to be of an extremely serious nature that poses an immediate and serious danger to the safety and welfare of the public, the Secretary of the Department can order one of these, which immediatey suspends the license and initiates the process of a full disciplinary hearing
11) Mediation - an informal process with the objective of assisting the complainant and the subject of the complaint to reach a mutually acceptable resolution
12) Legally sufficient - alleges a violation of law or rule has occurred and contains sufficient supporting evidence