Chapter 6 - Real Estate

Administrative Penalty

Penalty that can be imposed by the FREC

Civil or Criminal Penalties

Penalty that can be imposed by the courts

Civil Penalty

Penalty, imposed by a court, that imposes a fine or other financial payment, typically as compensation for harm or wrongful conduct

First-Degree Misdemeanor

Criminal penalty imposed for violation of rental list requirements

Third-Degree Felony

Criminal penalty imposed for acting as a broker or sales associate without a license

Second-Degree Misdemeanor

Criminal penalty imposed for disseminating false or misleading advertising

Third-Degree Felony

Criminal penalty imposed for knowingly giving false information when applying for or obtaining a license

Second-Degree Misdemeanor

Criminal penalty imposed on a sales associate who collects money in connection with a real estate transaction other than in the name of the employer

Third-Degree Felony

Criminal penalty imposed for stealing or reproducing DBPR examination

Range of penalties for a first-degree misdemeanor (i.e. rental list violation)

A criminal fine of up to $1,000 and/or imprisonment not to exceed one year

Range of penalties for a second-degree misdemeanor (i.e. false advertising or sales associate collecting money directly from member of the public)

A criminal fine of up to $500 and/or imprisonment for up to 60 days

Range of penalties for a third-degree felony (i.e. acting as a broker without a license, false information on license application, stealing or reproducing an exam)

A criminal fine of up to $5,000 and/or imprisonment of up to five years.

Mitigating Circumstance

Circumstance that might reduce a penalty

Aggravating Circumstances

Circumstances that could add injury caused by an act, possibly increasing the penalty

Timeframe within which an administrative complaint must be filed

Within five years of the time of the act causing the complaint, or within five years from the discovery of the act with due diligence

Misrepresentation

Misstatement or omission of facts that could lead to fraud

Concealment

Agent’s failure to disclose information to his or her principal that could materially affect the principal’s decision

Breach of Trust

Actions of a broker who violates his or her fiduciary duties to the principal in an agency relationship

Conversion

Actions of a broker who uses escrow funds for his or her personal use

Failure to Account

Conversion that occurs when a broker is unable or unwilling to produce money or property that belongs to another

Culpable Negligence

A broker who operated in a reckless, careless, and excessively negligent manner

Conspiracy

Actions of two or more licensees acting together to defraud a third party

Culpable Negligence

Fraud that a sales associate may be charged with who forgets to collect an escrow deposit as specified in a sales contract

Condition under which a broker may be able to use a lottery to induce a person to buy real estate

When no purchase is required to participate

Action required by a broker when a question relating to the title or property arises

Advise the prospective purchaser to obtain title insurance or to obtain an attorney’s title opinion

Action required by a broker who knows of the existence of a lien encumbering a property

Broker must disclose the existence of any and all liens

The maximum administrative fine that may be imposed by the FREC for a violation of a law or rule

$5,000 per violation

The minimum penalty administered by the FREC

Reprimand (criticism from the FREC that notes the licensee’s unsatisfactory conduct)

The maximum penalties administered by the FREC

License Revocation or Denial of License

Impact of license revocation on the licensee’s ability to practice real estate

Revocation permanently removes the license, preventing further practice of real estate in Florida

Maximum FREC imposed penalty for misrepresentation, concealment, or obtaining a license by fraud

License revocation plus a maximum fine of $5,000 per violation

Probation

Term that refers to a conditional arrangement in which FREC allows a licensee to continue to practice real estate services if the licensee completes specified requirements

Typical term of probation

90 days, unless otherwise stated

Suspension

Type of FREC-imposed penalty that temporarily prevents a licensee from practicing real estate for a specified periods of time, depending on the seriousness of the violation

Maximum period of suspension

10 years

Possible consequences of a second suspension

License Revocation

Licensee action required upon being convicted or found guilty of, or having pled nolo contendere or guilty of a crime in any jurisdiction

Report to the DBPR within 30 days (“Criminal Self-Reporting Document”)

Penalty range for failure to self-notify the FREC in writing within 30 days of being convicted of found guilty of, or having pled nolo contendere to, or guilty of a crime in any jurisdiction

Suspension to revocation and an administrative fine of $500 to $2,500 (for first offenses) or $1,000 to $5,000 (for subsequent offenses)

FREC use for a Notice of Noncompliance

Handling first time minor violations that do not result in economic or physical harm to persons or adversely affect the public health, safety, welfare, or create a significant threat or harm

Time period within which a licensee must correct a violation after receiving a Notice of Noncompliance

Within 15 days after receiving the Notice

Consequence of failing to correct a violation within 15 days of receiving a Notice of Noncompliance

Issuance of Citation (or full disciplinary proceedings)

Conditions under which a citation can be issued by the FREC

For specific violations when no substantial threat to the public health, safety, and welfare exists or if the potential for harm has been removed prior to the issuance of the citation

Options for licensee who has been issued a citation that requires payment of a fine as a penalty

Accept the penalty and pay the fine or dispute the citation within 30 days and go through the formal hearing process

30 days

Time period after which an undisputed citation becomes a final order

Steps in the FREC disciplinary process

1. Complaint

2. Investigation

3. Probable cause panel

4. Administrative/Formal complaint

5. Formal/Informal hearing

6. Final order

7. Appeal

Complainant

Term that refers to the person who files a complaint that a violation of a law or rule has occurred

Legally Sufficient Complaint

Type of complaint that alleges that a violation of law or rules has occurred and contains sufficient supporting evidence

Mediation

Type of informal dispute resolution that may be used for the resolution of violations that are economic in nature or that can be remedied by the subject of the complaint, such as the failure to maintain an office sign

Summary (of Emergency) Suspension (license is immediately suspended by the Secretary of the DBPR)

Type of order that may be issued by the Secretary of the DBPR for a complaint that is found to be of an extremely serious nature that poses an immediate and serious danger to the safety and welfare of the public

Actions that take place as part of the processing of a complaint (Step 1)

• Investigation of written complaints against licensed and unlicensed persons

• Complaint review to determine if they are legally sufficient, requiring investigation (Mediation may be used to resolve some complaints that are economic in nature)

Actions that take place as part of the processing of a complaint (Step 2)

• Investigation and determination of probable cause

• Report submission to the DRE (without personal opinion or recommendations) (Cease and desist order may be issued for unlicensed individual; complaints of a serious nature may be forwarded for possible legal action and/or result in a summary suspension order)

Actions that take place as part of the processing of a complaint (Step 3)

• Review of the investigator’s report by panel of 2 current FREC members or past members to determine the probability of guilt

• Within 30 days, dismissal of case or recommendation for formal complaint

Type of FREC power that is exercised by the Probable Cause Panel

Executive Powers

Time when the Probable Cause Panel’s information and deliberations cease to be confidential

10 days following a finding of probable cause (filing of a formal complaint)

Individual who is the subject of a formal complaint

Respondent

Provided by the respondent to indicate whether he or she disputes the allegations in a formal complaint

Election of Rights form

Time period within which a respondent must file an Election of Rights form

Within 21 days of the formal complaint (Failure to file results in a hearing)

Stipulation (similar to a plea bargain)

Term that refers to a negotiated settlement agreement between respondent and DBPR attorneys in which the respondent, in most cases, neither admits guilt nor denies the complaint allegations, but agrees to the imposition of a negotiated disciplinary action instead)

Actions that take place as part of the processing of a complaint (Step 4)

• Administrative (Formal) Complaint is filed and served against the respondent

• Respondent has 21 days to file Election of Rights form

• Final order entered for FREC-approved stipulation or if not approved, case proceeds to hearing

Type of FREC power that is exercised by the issuance of a formal complaint

Quasi-Judicial Powers

Conditions under which an informal hearing is conducted

Respondent does not dispute the facts of the allegations in the complaint (respondent can present testimony to explain mitigating circumstances that could reduce the punishment)

Actions that take place as part of the processing of a complaint (Step 5)

• Formal hearing (licensee disputes facts) before an administrative law judge (ALJ) from the DOAH with possible subpoena of witnesses

• ALJ submits a recommended order to the FREC within 90 days after formal hearing

• Parties have 15 days to file exceptions to the recommended order

Actions that take place as part of the processing of a complaint (Step 6)

• FREC FINAL order Panel (FREC members who were not on the Probable Cause Panel), reviews the ALJ recommended order

• Final Order Panel can accept the ALJ recommended order or amend it

• Final order is made by the FREC and becomes effective in 30 days

Documents filed within the Florida District Court of Appeals within 30 days of the final order by a licensee who does not agree with the final order of the FREC

Petition for Review

Condition under which a licensee may continue to practice real estate during the appeal process of a final order

Stay of Enforcement is issued and a Writ of Supersedeas is granted by the District Court of appeals (will not be granted if a threat of probable danger to the welfare of the public is shown)

Condition under which a Writ of Mandamus is issued by the District Court of Appeals to restore the licensee’s privileges

If the appeal reverses the final order of the FREC

Licensee’s final appeal option if the District Court of Appeals affirms the action of the FREC

Appeal to the Florida Supreme Court

Purpose of the Florida Real Estate Recovery Fund

Reimbursing members of the public who have lost money as a result of fraudulent actions of licensees

Condition under which reimbursement from the Recovery Fund may be made

• Member of the public must file a civil suit first against the licensee and receive a judgment

• Licensee’s personal assets were used first but were insufficient to satisfy the judgment

Reimbursement limitation amounts form the Recover Fund

• Single judgement limited to $50,000

• Multiple judgments limited to $150,000

• May collect unsatisfied portion of judgement only, not court costs or attorney fees

License status of licensee whose action resulted in a disbursement form the Recovery Fund

License is automatically suspended until the money plus interest has been repaid (bankruptcy does not relieve licensee of this obligation)

Method by which the FREC can enforce repayment by the licensee

FREC has lien against all property owned by the licensee, which can be foreclosed if the money is not voluntarily repaid

Source of funds to maintain the Recovery Fund

Funded by fees and fines paid by licensees

• $3.50 per year added for new and renewal broker licenses

• $1.50 per year added for new and renewal sales associates licenses

Conditions under which a licensee is eligible to receive reimbursement from the Recovery Fund

Licensee is acting in capacity of buyer or seller only, loses money as a result of fraudulent actions of another licensee, and meets the same eligibility requirements as members of the public