Unit 6: Violations of License Law, Penalties, and Procedures

Conversion

Unauthorized use or retention of money or property that rightfully belongs to another person.

Per year, the recovery fund fee for active and inactive sales associates is

$1.50

The max payment based on multiple transactions against a single licensee is

$150K

The authorized fund limit or max fund amount is

$1M

The max payment from the fund for single transaction is

$50K

Period of incarceration for a 1st degree felony

1 year

Maximum period a license can be suspended

10 years

Number of days to correct a minor infraction listed in the notice of noncompliance

15 days

Time period to request reimbursement from the recovery fund

2 years

Number of days after which a final order becomes effective

30 days

Number of days licensee has to accept or file a written objection to a citation

30 days

Time period to file an appeal

30 days

Period of incarceration for a 3rd degree felony

5 years

Period of incarceration for a second degree misdemeanor

60 days

Time Limit to File a Claim

A claim must be made within two years of either the alleged violation or discovery of the alleged violation. However, in no case may a claim for recovery be made more than four years after the date of the alleged violation.

Second-Degree Misdemeanor

A criminal violation of Chapter 475 is a misdemeanor of the second degree (except as noted earlier). For example, false and misleading advertising is a second-degree misdemeanor. A second-degree misdemeanor is punishable by a fine of not more than $500 and/or by imprisonment for not more than 60 days.

Final Order

A decision rendered by the FREC.

Recommended Order

A determination by an administrative law judge that includes findings and conclusions, as well as other information required by law or agency rule to be in a final order.

Misrepresentation

A false or misleading statement of a material fact; concealment of a material fact.

Voluntary Relinquishment For Permanent Revocation

A licensee-respondent may choose to avoid a disciplinary hearing and relinquish the real estate license in lieu of discipline, permanently revoking the license.

Material Fact

A piece of information that affects the value of real property and is relevant to a person making a decision about that property.

Formal Hearing

A session in which testimony and arguments are presented, especially before an official.

stay of enforcement

A stay of enforcement, if granted, stops the enforcement of a suspension or revocation in the final order pending the outcome of the appeal process. To obtain a stay of the final order, the district court of appeals must issue a writ of supersedeas. The writ is an order issued by a court that supersedes the action of the Commission and allows the licensee to continue to practice until the case can be heard on appeal.

Subpoena

A writ or order commanding the person named to appear and testify in a legal proceeding.

Civil Penalties

Civil penalties may be enforced by the courts if an unlicensed person performs real estate services or a licensee commits fraud in a real estate transaction. A civil suit can be undertaken to recover money paid to a licensee or to deny payment of commission to an individual not entitled to the commission.

Types of Administrative Penalties

Denial of license application (or refusal to renew a license). Letter of reprimand (LEAST severe penalty) is a letter that is placed in the licensee's file describing a minor incidence of misconduct that resulted in no disciplinary action (also called a letter of guidance). Notice of noncompliance is a warning for a minor violation (an initial offense only) that allows a licensee 15 days to correct the minor infraction without consequence (nonresponse could result in disciplinary action). Citation concerns a violation of no substantial threat to the public and involving a fine that currently ranges from $100 to $500. Probation allows the licensee to continue to practice real estate under the guidance of the FREC for a period of time while completing conditions specified by the FREC, such as to complete education courses, attend FREC meetings, and satisfy all the terms of the penalty. Fine may be up to $5,000 for each violation of Chapter 455 and Chapter 475. Suspension of a license (for up to 10 years). Revocation of a license is permanent.

Breach Of Trust

Failure to do or perform what has been promised.

Culpable Negligence

Inadequate attention to duties and obligations by those who know, or should know, what is required of them.

Notice Of Noncompliance

Issued by the DBPR in the case of a minor rule violation that does not endanger the public health, safety, and welfare.

First-Degree Misdemeanor

It is a first-degree misdemeanor to fail to provide accurate and current rental information for a fee. The penalty for a first-degree misdemeanor is a fine of not more than $1,000 and/or up to one year in jail.

Third-Degree Felony

Making misleading statements or giving false information on a DBPR license application is a third-degree felony. Unlicensed activity, including providing real estate services for compensation without a real estate license, is a third-degree felony. Theft or reproduction of a license exam is also a third-degree felony. The penalty for a third-degree felony is a fine of not more than $5,000 and/or up to five years in jail.

Probable Cause

Reasonable grounds or justification for prosecuting.

What does Section 475.25(1)(b), F.S. entail?

Sbjects a real estate licensee to discipline for committing "fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealings by trick, scheme, or devise, culpable negligence, or breach of trust [italics added for emphasis] in any business transaction."

Failure To Account For And Deliver

The act of failing to pay money to a person entitled to receive it.

Concealment

The act of keeping from sight or keeping secret.

Under Florida Statute 455, which penalty may be imposed on an individual for unlicensed practice of real estate? A) Suspension B) Revocation C) $5,000 fine per count D) Any of these

The answer is $5,000 fine per count. Revocation and suspension are penalties that may be imposed against a holder of a real estate license. The FREC is authorized to issue fines of up to $5,000 per count to a person it finds guilty of unlicensed activity.

The maximum amount that may be collected from the Real Estate Recovery Fund as a result of a single real estate transaction is A) $50,000. B) $25,000. C) $100,000. D) $150,000.

The answer is $50,000. Payments for claims arising out of the same transaction are limited, in total, to $50,000 or the unsatisfied portion of a judgment claim, whichever is less.

Division Of Administrative Hearings (DOAH)

The governmental entity that hears all formal hearings resulting from an administrative complaint against a licensee.

Fraud

The intent to misrepresent a material fact or to deceive in order to gain an unfair advantage or to harm another person.

TorF: The FREC may issue a summary suspension when a licensee's actions endanger the public.

The statement is false. A summary suspension (or emergency suspension) must be issued by the DBPR secretary or a legally appointed designee of the secretary.

TorF: The Florida Real Estate Commission possesses the authority to sentence a licensee to imprisonment.

The statement is false. All imprisonment penalties must be obtained in a court of law because the Commission lacks the authority to assess such penalties.

TorF: Appealing a final order stops the enforcement of any penalty stipulated in that order.

The statement is false. Appealing an order does not stop enforcement of the penalty. If the penalty would suspend or revoke a license, however, the court will normally grant supersedes (stay suspension) as a matter or right on conditions considered reasonable.

TorF: Falsifying a license application is a second-degree misdemeanor.

The statement is false. It is a third-degree felony to falsify a license application.

TorF: The probable-cause panel is composed of two current professional members of the Commission.

The statement is false. One of the panel members must be a current FREC member. The other member may be a former commissioner. At least one panel member must be either a current or former professional (not consumer) member.

TorF: The claimant can be reimbursed for punitive damages from the recovery fund.

The statement is false. Only actual damages awarded by a court can be reimbursed from the fund. Punitive damages cannot be paid from the fund.

TorF: Probable-cause proceedings are open to the public.

The statement is false. Probable-cause proceedings are not open to the public, and the remaining FREC members are prohibited from attending.

TorF: The Florida Real Estate Commission can order a real estate licensee to pay restitution to a seller who was harmed by a licensee.

The statement is false. The Commission does not have the authority to order restitution to an injured party. If the acts of a licensee harm a consumer, the injured party may seek damages in a court of law.

TorF: A complaint is legally sufficient if it contains facts indicating that a violation of Florida statute has occurred.

The statement is true. A complaint is legally sufficient if it contains facts indicating that a violation of Florida statue, DBPR rule, or FREC rule as occurred.

TorF: An administrative fine of up to $5,000 may be issued for a violation of Chapters 455 and 475, F.S.

The statement is true. A fine of up to $5,000 may be issued for each violation of Chapter 455 and Chapter 475.

TorF: A licensee who receives a notice of noncompliance for a minor violation must take action to correct the violation within 15 days.

The statement is true. A licensee has 15 days to take action to correct a violation stipulated in a notice of noncompliance. Failure to take corrective action may result in a fine or other disciplinary penalties.

TorF: A subpoena is a legal document commanding an individual to appear at a certain time and place to give testimony.

The statement is true. A subpoena is a command to appear at a certain time and place to give testimony or produce records.

TorF:A broker placed security deposits from tenants into the business operating account. This is an example of commingling funds.

The statement is true. Commingling is the mixing of money of a buyer or a seller (tenant or landlord) with the broker's own money, or to combine escrow money with personal or business funds. License law requires the broker to place security deposits into an escrow fund.

TorF: A claim will be denied if the offending licensee had an expired license at the time of the transaction.

The statement is true. Individuals who cannot make a claim for recovery include a person who files a claim against a licensee who did not hold a valid and current license at the time of the transaction.

TorF: Examples of moral turpitude include embezzlement and crimes of larceny.

The statement is true. Moral turpitude is defined as a vile act, which is conduct contrary to honesty, good morals, justice, or accepted custom. Embezzlement and crimes of larceny fall under this definition.

TorF: Unlicensed activity is a third-degree felony.

The statement is true. Providing real estate services for compensation without a license is a third-degree felony.

Moral Turpitude

An act of corruption, vileness, or moral depravity; a disgraceful action or deed.

Stipulation

An agreement as to the penalty reached between the attorneys for the DRE and the licensee or licensee's attorney.

Formal (administrative) Complaint

An outline of the charges against a licensee that must be answered within the statutory time limit.

A buyer was defrauded by a real estate licensee. The buyer is awarded a judgment against the licensee in the amount of $7,000 damages plus $2,300 for attorney's fees and court costs. The buyer has been unable to collect on the judgment, but it is determined that the buyer may seek reimbursement from the Real Estate Recovery Fund. How much can the buyer recover from the Fund? A) $9,300 B) $50,000 C) $10,000 D) $7,000

The answer is $7,000. The buyer can recover the amount of the judgment up to $50,000 or the unpaid amount of the judgment, whichever is less. The buyer cannot be reimbursed from the recovery fund for court costs or attorney's fees.

A case is heard before an administrative law judge in a formal hearing. In such cases, who renders the final order? A) DBPR secretary B) Attorney general C) FREC (with members who served on the probable-cause panel excused) D) Administrative law judge

The answer is FREC (with members who served on the probable-cause panel excused). The FREC (with the members who served on the probable-cause panel excused) issues the final order. In matters heard by an administrative law judge in a formal hearing, the FREC reviews and considers the administrative law judge's findings and recommended order before issuing its final order.

A warning for an initial offense that allows a licensee to correct the minor infraction without consequence is called A) a citation. B) a letter of reprimand. C) a notice of noncompliance. D) an administrative fine.

The answer is a notice of noncompliance. A notice of noncompliance is a warning for a minor violation of an initial offense that allows a licensee 15 days to correct the minor infraction without consequence.

Another term for a formal complaint is A) an administrative complaint. B) legally sufficient. C) a consumer complaint. D) prima facie evidence.

The answer is an administrative complaint. A formal complaint (also called an administrative complaint) is an outline of allegations of facts and charges against the licensee.

A broker who fails to pay an earnest money deposit at the title closing in accordance with the contract for sale and purchase may be charged with which offense? A) Failure to account for and deliver B) Breach of contract C) Moral turpitude D) Commingling

The answer is failure to account for and deliver. Failure to account for and deliver is the act of failing to pay money to a person entitled to receive it.

Which violation is a third-degree felony? A) Broker fails to register a trade with the Commission B) False advertising C) Sales associate fails to deliver an earnest money deposit to her broker before the end of the next business day D) Individual performs real estate services for compensation without a real estate license

The answer is individual performs real estate services for compensation without a real estate license. It is a third-degree felony for an individual to perform real estate services for compensation without a real estate license.

When a consumer files a complaint against a real estate licensee that contains facts indicating that a violation of FREC rules has occurred, the complaint is said to be A) evidence. B) formal. C) prima facie evidence. D) legally sufficient.

The answer is legally sufficient. A complaint is legally sufficient if it contains facts indicating that a violation of Florida statute, or DBPR or FREC rule, has occurred.

The broker followed the directions issued in an escrow disbursement order that became the subject of a lawsuit. The consumer-plaintiff obtained a judgment against the licensed real estate broker. It is determined that the consumer is eligible to seek reimbursement from the Real Estate Recovery Fund. The fund may NOT reimburse which expense? A) Plaintiff's attorney's fees B) Broker-defendant's court costs C) Broker-defendant's attorney's fees D) Punitive damages

The answer is punitive damages. In all cases, punitive damages, treble damages, and interest may not be recovered from the Real Estate Recovery Fund.

Which penalty is NOT an administrative penalty that may be imposed by the FREC? A) Probation B) $5,000 fine for violation of Chapter 455 C) Restitution to the injured party D) Revocation

The answer is restitution to the injured party. The FREC does not have the authority to order restitution to an injured party. If the acts of a licensee harm a consumer, the injured party may seek damages in a court of law.

Who renders a determination as to whether probable cause exists? A) Seven-member Commission B) DBPR investigator C) Administrative law judge D) Two-FREC-member panel

The answer is two-FREC-member panel. The probable-cause panel is composed of two members of the FREC. The probable-cause panel's sole responsibility is to determine whether probable cause exists.

The Florida Real Estate Recovery Fund's purpose

is to reimburse an individual or business entity judged by a Florida court to have suffered monetary (compensatory) damages as a result of an act committed by a broker or sales associate who: was at the time the alleged act was committed, the holder of a current, valid, active real estate license issued under Chapter 475; was not the seller, buyer, landlord, or tenant in the transaction (except as noted below) nor an officer or director of a corporation, a member of a partnership, a member of a limited liability company, or a partner of a limited liability partnership that was the seller, buyer, landlord, or tenant in the transaction; and was acting solely in the capacity of a real estate licensee in the transaction.

The Recovery Fund can never reimburse for

punitive damages, treble damages or interest

Individuals Who Cannot Make a Claim

the following individuals cannot make a claim for recovery from the fund: The spouse of the offending licensee (judgment debtor) A licensee who acted as a single agent or transaction broker in a real estate transaction that is the subject of the claim An individual whose claim is against a licensee who owned the property under contract, and the licensee was dealing for licensee's own account (the licensee was not acting as a broker or sales associate) A person who files a claim against a licensee who did not hold a valid and current license at the time of the transaction Individual who obtains a judgment against a real estate brokerage entity only, rather than against a licensed individual