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Complaint, Investigation and Hearing Procedure for Real Estate Licensees
Terms in this set (19)
Anyone can file a complaint with the Department against a licensee. A complaint is filed with the Department of Business and Professional Regulation. If the complaint is in writing and signed by the complainant, the DBPR is charged with the responsibility of investigation. When the investigation is complete, it is the responsibility of the FREC to determine the guilt or innocence of a licensee or potential licensee.
The DBPR may also investigate on its own or investigate an anonymous complaint if the circumstances dictate (meaning that an immediate danger to the public exists). A complaint must be legally sufficient to be investigated. This means that the complaint must allege that a violation of Florida Statute, DBPR rule or FREC rule has occurred. Occasionally, a complaint may be withdrawn by the person making the original charges: the DBPR may stop the investigation or may pursue it and the Commission will take appropriate action. If criminal activity is suspected, the Department may proceed with the investigation without notifying anyone who is under investigation.
In some cases for a minor violation the Department may issue a Notice of Noncompliance for a first time offense, providing that this offense does not endanger the public. If the violation is not corrected or the licensee does not comply in a timely manner, a Citation is issued with a fine, if warranted. If the violation is not listed in the citation rules, disciplinary hearings will proceed. (See screen 14 for more information on Citations and citation rules.)
A summary suspension is an emergency suspension order. It is issued by the Secretary of the DBPR when the public is in immediate danger from the actions of the licensee. The suspension must be followed by action by the FREC.
Violations of Ethics do not fall under the DBPR's investigation criteria (this is settled by the local association of REALTORS®) nor do items which are considered to be scruples or morals as they cannot be enforced either. Suffice it to say, a Law or Rule must have been violated.
An investigator is appointed if the DBPR feels that the complaint is legally sufficient; or that after preliminary inquiry, feels that alleged violations are true; or, if the alleged violations are significant.
A copy of the complaint is sent to the licensee or the licensee's attorney and the licensee will have an opportunity to answer the complaint against him. The answer is given to a Probable Cause Panel, investigating the case. All the information obtained is considered confidential until 10 days after probable cause is found. If the complaint is found to be criminal, it is forwarded to the State Attorney's Office for resolution.
Investigators for the Department are allowed by law to demand information from anyone and have subpoena* power from that department, if needed, for the investigation. Investigators may seek any records, documents or witnesses pertinent to the investigation. The investigators report findings in a written report for the probable cause panel, but are not allowed an expression of any personal feelings (meaning that all of their findings must be Objective).
DBPR adds its recommendation and forwards to the FREC Probable Cause Panel.
*A subpoena is a legal order requiring a person to appear before the courts to give testimony.
Two members of the FREC are appointed by the Chairperson to review the investigator's report and receive the investigation of the DBPR. Only one of the FREC can be a lay member (one of the non-licensed members of the Commission) of the two and it may include the Chairperson or Vice Chairperson. The panel could also include former commissioners, with one of the panel being current. All the information obtained is considered confidential until 10 days after probable cause is found.
These two members act as a grand jury: they determine if they believe there is a law violation- not guilt or innocence. They must act in a 30 day period. They recommend whether to take further action or dismiss the case to the DBPR. Other members of the FREC do not attend these hearings since they will be called upon at a later date to make judgment on the case if it advances. The hearing is not open to the public and its only purpose is to decide if a probable cause (a law violation) has occurred. The panel reviews all the evidence and listens to Department staff attorney's recommendations.
The panel is required to meet and make a decision within 30 days. If it does not meet within this time, the Department may make the decision.
If the panel does not believe probable cause exists, the Department has ten days to override the decision and file its own charges. The Department may also refer the case to the FREC and the FREC may obtain its own independent counsel and continue the investigation. If the panel does not believe probable cause exists, the panel may dismiss the case or it may issue a letter of guidance about the matter to the person charged.
If the panel believes there is probable cause, the panel tells the Department to file a formal complaint against the licensee. The licensee (with his legal counsel) is entitled to a formal or informal hearing.
If probable cause is found, a formal or "administrative" complaint is filed against the licensee involved. The formal complaint clearly defines all of the charges against the licensee. The Department has a limitation of 5 years in which to file the complaint.
The licensee is notified in writing and has 20 days to file an answer. The license in the complaint will be issued an Election of Rights form, which will explain the hearing process. The licensee has the choice of a formal or informal hearing. The formal hearing is before an administrative law judge; the informal hearing will be held if there are no disputed facts in the case, before the FREC, usually during a regular meeting. A licensee who does not agree with the charges, even in part, MUST request a formal hearing if he/she wishes to present his or her case. In either of these hearings, the licensee is entitled to present his case and he may have legal counsel present. A licensee may agree to a stipulation, which is voluntary agreement between the Division of Real Estate and the licensee, which will then end the case. The licensee may also choose Voluntary Relinquishment for Permanent Revocation. These agreements will still be set before the FREC so that they may be recorded.
An informal hearing is held at a meeting of the FREC, usually at its regular meeting time. The licensee is given the opportunity to be heard, to bring witnesses to support his case. Commission members who did not serve on the probable-hearing panel will be present.
When there is an agreement of the facts, or a stipulation or the issue is resolved between the FREC and the licensee, the findings are put in writing and are recorded.
When there is a dispute or disagreement on the facts, the case will be sent to an administrative law judge for a formal hearing to hear the case.
Each party involved in the case has the right to an attorney. The hearing is similar to an adversarial hearing and the hearing officer may issue subpoenas for the attendance of witnesses.
Notice must be given to the parties charged. The notice must include:
the date, time and place of the hearing
the jurisdiction and legal authority under which the hearing is to be held
a list of the rules purported to be broken
a short summary of the case
As in any court case, the licensee has the right to be represented and to bring any evidence forth that supports his case. Witnesses may be subpoenaed and testimony is given under oath.
The administrative law judge prepares a Recommended Order, with the original delivered to the Division of Administrative Hearing and copies served to the parties. The order is based on findings of fact and rulings of law.
Each party is allowed 15 days to file exceptions to the hearing officer's order.
A Final Order Panel is convened of all the members of FREC except those that sat on the Probable Cause Panel in the same action. The Final Order Panel receives the Recommended Order from the administrative law judge order along with exceptions. The licensee has the right to be present, to have an attorney and to make final arguments.
The FREC has the power to accept, reject, reduce, or modify the Recommended Order, with the final order being submitted within 90 days of receiving the Recommended Order.
The Final Order must be signed by the Chairperson, Vice Chairperson or Director of the Division of Real Estate. This is called the "Certificate" and is the final directive of the FREC. It can be used as prima facie evidence* in civil suits. This is placed on record by the Division.
*Prima facie evidence - Requiring no further proof; acceptable on the face.
The licensee may appeal to the courts if the FREC did not rule in his favor. The licensee must appeal within 30 days to the District Court of Appeals. While the case is under appeal, the licensee does not receive a stay enforcement (stop enforcement) against the FREC. The FREC or the courts may issue a writ of supersedeas (stop the suspension or revocation) if the situation warrants or if the public is not endangered.
When the courts hear the case, the appeal will be based on disputed issues of procedure, findings of fact and rulings of law.
If a material error is found on the part of the FREC, the court sends it back to the FREC for corrective action.
If the court finds for the FREC, the actions of the FREC will stand.
Violations and penalties
The Florida Real Estate Commission is authorized to do a number of tasks. These are:
deny a license
refuse to renew a license
suspend a license
revoke a license
issue Notice of Noncompliance
Denial of license
When a license is denied by the FREC, a copy of the order is mailed to the applicant by registered or certified mail, setting forth the reasons for denial and advising the applicant has 21 days from date of receipt to request a hearing.
Florida Real Estate Commission
Any of the following may be the basis for denial of a license:
Did not file an application in the proper form or pay the correct fee,
Did not correct an error or omission on an application,
Did not take the examination within two years from date of application,
Did not pass the state exam or cheated on the exam,
Did not prove qualifications for licensure,
Has a reputation for bad business dealings or incompetence,
Is being investigated by another state for an act that would be a violation of Florida law,
Has committed an act in the previous year that could have resulted in discipline had the applicant been licensed at the time.
Refusal to renew a license may be the following:
Did not file the proper paperwork in a timely fashion,
Did not pay the appropriate fee,
Did not take the continuing education or post-license courses,
Is being investigated in another state for an act that would be a violation of Florida law,
Has committed an act while licensed which resulted in discipline.
Suspend a license
A suspension of a license is considered a short term, temporary penalty that can last up to 10 years. Generally a suspension is the penalty for an illegal act which was less serious in its violation than a revocation of license would demand. The Commission has flexibility to determine what punishment it will give, from the least penalty to the most, based on the Discipline Guidelines.
An example as listed in the guidelines is 475.42(1) (j) which states:
No broker or sales associate shall place upon the public records any false, void or unauthorized information that affects the title or encumbers any real property.
The penalty guideline states: The usual action of the Commission shall be to impose a penalty of a five-year suspension to revocation.
No licensee can act in a real estate capacity with a suspended license until the suspension is lifted, however, the licensee MUST complete all education requirements and renewals during his or her period of suspension.
Revocation of a license
Revocation of a real estate license is permanent and as such it is a very serious punishment.
The only exceptions to this rule is when a licensee filed for renewal without completing his continuing education or post-licensure course by the expiration date; or if he filed an application which contained fraudulent or false information. In these cases the individual cannot apply for a sales associate's license for a period of five years after the filing of the Final Order revoking the license unless the Commission specifies a lesser period of time in the Final Order, the lesser period of time based upon mitigating factors presented by the individual. This is otherwise referred to as Revocation without Prejudice. The Commission may refuse to issue a license or renew a license if they feel that the individual does not meet qualification standards of honesty and integrity. This is referred to as moral turpitude, and may be a consideration in any future attempts to gain a state approved license which deals with the public.
When the active broker's license is revoked, all sales associates and broker associates licenses are placed in involuntarily inactive status. If it is a partnership or corporation, the partnership or corporation must re-qualify with a new partner. While resolving replacement of the broker, no real estate business may be conducted.
A complete list of violations for which citations can be issued is listed in 61J2-24.003. Citations are issued by the Division of Real Estate. The licensee has 30 days to pay the citation (fine) or request a hearing. If the licensee does not respond in 30 days, more serious discipline may occur.
Generally citations are monetary punishments. These funds collected are considered administrative fees and go into the Florida Real Estate Recovery Fund.
An example of a citation is:
475.22(1) and 61J2-10.024: Failed to maintain the required office entrance sign.
The penalty is: $100.00
The FREC has the right under law to fine anyone found guilty of a violation of Chapters 455 or 475 a fine for each violation of the law.
The fine for each offense is not to exceed $5,000 for each violation of Florida Statutes Chapter 475 and $5,000 for each offense under FS Chapter 455. The fines are frequently given in connection with another punishment such as revocation or suspension. The money is collected and transferred to the Real Estate Recovery Fund. Reference is 475.25 (1)
Disciplinary Guidelines 61J2-24.001 is a list of violations that clearly defines the usual punishment for each count is during a formal or informal hearing. An example of the Guidelines is
(g) 475.25 (1) (f)
Convicted or found guilty of a crime related to real estate or involves moral turpitude or fraudulent or dishonest dealing.
The usual action of the Commission shall be to impose an administrative fine of $1000 to $2500 and 30 day suspension for a first offense. For second and subsequent violations, $2500 to $5000 fine and suspension for up to six years or revocation.
Probation as a penalty, unless otherwise stated, is for a period of 90 days starting within 30 days after the filing of the Final Order. The probation order contains specific instructions to take a class or grant an audit which must be completed in a 90 day period unless the licensee asks and is granted an extension of time. Extensions are granted for illness or unavailability of a required course.
A licensee can be released early from probation if the terms of the probation are completed and the required information being submitted to the Division of Real Estate Legal Section.
A licensee who is on probation may not conduct any real estate business during that time.
Notice of Noncompliance
The FREC has set forth the rules, and statutes that are considered minor violations and for which the DBPR can provide a licensee, registrant or permit-holder with a Notice of Noncompliance. A violation is minor if it does not result in economic or physical harm to a person or adversely affect the public health, safety, or welfare or create a significant threat of such harm. The notice of noncompliance shall only be issued for an initial offense of a listed minor violation.
The DBPR issues the Notice of Noncompliance subject to the statute or rule that has been violated. The notice must identify which rule or statue is violated and how to comply with the statute or rule. The DBPR allows 15 days for compliance and notifies the licensee of this. The time begins from the time the licensee receives the Notice. If the licensee does not comply with the Notice in the time allowed, it will result in an issuance of a citation or regular discipline.
The Notice of Noncompliance is delivered by certified or registered mail.
Remember: the Notice of Noncompliance can only be issued for an initial offense! The broker does not have to cease operations with a Notice, but must comply with it immediately.
Penalties issued by a Court of Law
The Department and the FREC do not issue criminal prison sentences. They only respond as shown in the previous slides. The commission shall promptly report to the proper prosecuting authority any criminal violation of any statute relating to the practice of a real estate profession regulated by the commission.
The courts, however, may issue criminal punishments to licensees.
Violations which will lead to a First Degree misdemeanor are:
failing to provide accurate and current rental information for a fee
The penalty for a First Degree misdemeanor is not more than $1000 fine (for each offense) and/or not more than one year in jail.
Violations which lead to a Second Degree misdemeanor are all other licensee violations (Chapter 475) not listed above. Criminal violations include a fine up to $500 and imprisonment for a period of not more than 60 days. Because a corporation is an entity rather than a person, it can be fined only. These fines are criminal, not administrative.
Unlicensed real estate activity, and falsifying an application are third degree felonies and may be punished with a fine of not more than $5,000 and/or up to 5 years in jail.
Buyers or sellers or tenants may seek legal action against brokers when they feel they have been victimized. The Commission has no authority to order any commission (compensation) paid to be returned to these alleged victims. Civil courts can and do seek the recovery of compensation. The courts can also order the broker to pay damages if appropriate.
Real Estate Recovery Fund
The Real Estate Recovery Fund was designed to serve as consumer protection for those consumers who were harmed in a real estate transaction and who seek compensatory (compensation) damages. Punitive damages (punishment) are never awarded.
The fund is financed through money received from administrative fines and a surcharge on each new and renewing license. The maximum the fund can have is $1 million dollars and when it reaches that level, surcharges on licenses are suspended until the fund drops to $500,000 when the charge will again be levied. The surcharges are $3.50 per year for both the new and renewing license for brokers and $1.50 for the new and renewing sales associates' license. The FREC authorizes the funds to be disbursed by the State Treasurer.
To obtain the funds, a civil suit must be filed against a broker or sales associate claiming a violation of Chapter 475. The individual who has brought the lawsuit must claim that by reason of an act committed, as part of a real estate transaction, he suffered monetary damages. The suit goes to the civil courts of any competent civil jurisdiction in the state. Three things must have been in place at the time of the transaction:
the broker or sales associate must have held a valid, active real estate license at that time,
the broker or sales associate was neither the seller, buyer, landlord or tenant in the transaction; nor an officer or member of a corporation or partnership, a member of a limited liability company or a member of a limited liability partnership,
the broker or sales associate was acting solely in the capacity of a real estate licensee in the transaction.
The injured party is awarded a judgment. The assets of the licensee are first used to satisfy the judgment. A search of the assets must be done to offset or satisfy the judgment. The maximum that can be claimed is $50,000 per single transaction or a maximum of $150,000 for multiple transactions or the unsatisfied portion of the judgment, whichever is less. A notice by certified mail must be sent by the injured party to the FREC of the intent to file a claim against the Recovery Fund. The recovery fund does not pay for legal fees or for punitive damages against the licensee.
Once a payment has been made from the Real Estate Recovery Fund, the licensee's license is automatically suspended until full repayment to the fund has been made.
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