Chapter 6 - Violations of License Law: Penalties and Procedures (2%) Flashcards
Section 6.1: LICENSE LAW VIOLATIONS
:::STATE EXAM CONTENT AREA: VI.C: TYPES OF PENALTIES:::
**1) Criminal Penalties
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
Section 6.1: LICENSE LAW VIOLATIONS
:::STATE EXAM CONTENT AREA: VI.C: TYPES OF PENALTIES:::
2) Civil Penalties
Administered by Court
Penalties are in terms of Dollars (Judgment)
In addition to FREC penalties
Section 6.1: LICENSE LAW VIOLATIONS
:::STATE EXAM CONTENT AREA: VI.C: TYPES OF PENALTIES:::
3) Administrative Penalties
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)
Section 6.1: LICENSE LAW VIOLATIONS
:::STATE EXAM CONTENT AREA: VI.B - VIOLATIONS AND PENALTIES:::
Fraudulent Activities
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
Section 6.1: LICENSE LAW VIOLATIONS
:::STATE EXAM CONTENT AREA: VI.F: DISCIPLINARY GUIDELINES:::
**Range of Penalties
**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
Section 6.1: LICENSE LAW VIOLATIONS
:::STATE EXAM CONTENT AREA: VI.B.1: VIOLATIONS AND PENALTIES - GROUNDS FOR DENIAL:::
Denial of License
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
Section 6.1: LICENSE LAW VIOLATIONS
:::STATE EXAM CONTENT AREA: VI.B.2: VIOLATIONS AND PENALTIES - GROUNDS FOR SUSPENSION:::
Suspension
- 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
Section 6.1: LICENSE LAW VIOLATIONS
:::STATE EXAM CONTENT AREA: VI.B.3: VIOLATIONS AND PENALTIES - GROUNDS FOR REVOCATION:::
Revocation
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
Section 6.3: THE DISCIPLINARY PROCESS
:::STATE EXAM CONTENT AREA: VI.A: COMPLAINT PROCESS - SEVEN STEPS:::
** The Disciplinary Process - Step 1) COMPLAINT
** Complaint is filed with DBPR/DRE
** Whether licensed or unlicensed person
** Must be Legally Sufficient - a violation of:
Florida Statute
FREC rule
DBPR rule
Section 6.3: THE DISCIPLINARY PROCESS
:::STATE EXAM CONTENT AREA: VI.A: COMPLAINT PROCESS - SEVEN STEPS:::
The Disciplinary Process - Step 2) INVESTIGATION
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
Section 6.3: THE DISCIPLINARY PROCESS
:::STATE EXAM CONTENT AREA: VI.A: COMPLAINT PROCESS - SEVEN STEPS:::
The Disciplinary Process - Step 3) PROBABLE CAUSE PANEL
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
Section 6.3: THE DISCIPLINARY PROCESS
:::STATE EXAM CONTENT AREA: VI.A: COMPLAINT PROCESS - SEVEN STEPS:::
The Disciplinary Process - Step 4) ADMINISTRATIVE COMPLAINT
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
Section 6.3: THE DISCIPLINARY PROCESS
:::STATE EXAM CONTENT AREA: VI.A: COMPLAINT PROCESS - SEVEN STEPS:::
**The Disciplinary Process - Step 5) FORMAL/INFORMAL HEARING
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
Section 6.3: THE DISCIPLINARY PROCESS
:::STATE EXAM CONTENT AREA: VI.A: COMPLAINT PROCESS - SEVEN STEPS:::
The Disciplinary Process - Step 6) FINAL ORDER
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
Section 6.3: THE DISCIPLINARY PROCESS
:::STATE EXAM CONTENT AREA: VI.A: COMPLAINT PROCESS - SEVEN STEPS:::
**The Disciplinary Process - Step 7) JUDICIAL REVIEW (APPEAL)
** 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
Section 6.3: THE DISCIPLINARY PROCESS
:::STATE EXAM CONTENT AREA: VI.D: REAL ESTATE RECOVERY FUND:::
Florida Real Estate Recovery Fund
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.
Section 6.3: THE DISCIPLINARY PROCESS
:::STATE EXAM CONTENT AREA: VI.D: REAL ESTATE RECOVERY FUND:::
Florida Real Estate Recovery Fund (CONTINUED)
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
Section 6.3: THE DISCIPLINARY PROCESS
:::STATE EXAM CONTENT AREA: VI.D: REAL ESTATE RECOVERY FUND:::
**Florida Real Estate Recovery Fund (CONTINUED)
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
Section 6.3: THE DISCIPLINARY PROCESS
:::STATE EXAM CONTENT AREA: VI.D: REAL ESTATE RECOVERY FUND:::
**Florida Real Estate Recovery Fund (CONTINUED)
** 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)
Section 6.3: THE DISCIPLINARY PROCESS
:::STATE EXAM CONTENT AREA: VI.D: REAL ESTATE RECOVERY FUND:::
**Florida Real Estate Recovery Fund (CONTINUED)
** 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
Section 6.3: THE DISCIPLINARY PROCESS
:::STATE EXAM CONTENT AREA: VI.D: REAL ESTATE RECOVERY FUND:::
**Florida Real Estate Recovery Fund (CONTINUED)
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.
Section 6.3: THE DISCIPLINARY PROCESS
:::STATE EXAM CONTENT AREA: VI.E: LEGAL TERMS TO KNOW:::
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
