Chapter 6: Violations of License Law: Penalties and Procedures Flashcards Preview

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Flashcards in Chapter 6: Violations of License Law: Penalties and Procedures Deck (52)
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1
Q

What are the 3 separate entities capable of imposing discipline?

A

• Criminal courts
• Civil courts
• Administrative agencies
They operate separate and apart from one another. Any one of the three may impose a penalty for a given offense, but all three could impose a penalty for the same offense.

2
Q

A violation of F.S.475

A

475 by a real estate licensee or an unlicensed person may result in criminal, civil, and administrative penalties.

The Commission can impose an administrative penalty against a licensee,

The courts may impose criminal and civil penalties against both licensed and unlicensed persons. A member of the public may file civil action against either a licensee or an unlicensed party. The civil penalty imposed for the unlicensed practice of real estate is a minimum fine of $500 and maximum of $5,000.

The Department has certain civil authority as well.

The Department and the Commission may also refer suspected violations of law discovered during an investigation to the State Attorney’s office for investigation and possible prosecution.

3
Q

Criminal Penalties

A

Are imposed by criminal courts. A violation of F.S. 475 may be a first or second-degree misdemeanor or a third-degree felony
Corporations cannot be imprisoned, although a criminal fine may be levied. Imprisonment is possible for officers and directors of corporations who are guilty of violations.

4
Q

First-Degree Misdemeanors

A

is punishable by a fine of up to $1,000 and/or imprisonment not to exceed one year
• Violating the requirements concerning rental lists, information, and contracts.

5
Q

Second-Degree Misdemeanors

A

may be punishable by a criminal fine of up to $500 and/or imprisonment for up to 60 days. Examples:
• Disseminating false or misleading advertising
• Any sales associate who collects money in connection with any real estate brokerage transaction, whether as a commission, deposit, payment, rental, or otherwise, except in the name of the employer and with the express consent of the employer.

6
Q

Third-Degree Felonies

A

are subject to criminal court proceedings, and punishable by a criminal fine of up to $5,000 and/or imprisonment of up to 5 years.
• Acting as a broker or sales associate without being the holder of a valid and current active license
• Knowingly giving false or misleading information in the course of applying for or obtaining a license.
• Stealing or reproducing an examination administered by the Department

7
Q

Civil Penalties

A

are fines or other financial payments imposed by a state or federal agency for violation of laws or regulations. A civil fine is not considered to be criminal punishment since it is primarily imposed to compensate for harm or wrongful conduct.
If a licensee commits fraud in a transaction or an unlicensed person performs a real estate service, a commission is not owed; therefore, a civil suit for collection of a commission in court would not be successful. If a commission had already been paid, a suit to recover the money paid to anyone not entitled to the commission would be successful.
Occasionally, the Commission uses its administrative powers to assist citizens in the event of fraud by a licensee. The Commission may make the return of an improperly collected commission part of the order of suspension with a stipulation that the order of suspension will not be removed until the money is voluntarily repaid.

8
Q

Administrative Penalties

A

The Commission can impose administrative penalties. F.S. 455, “Business and Professional Regulation: General Provisions,” provides the Commission with the legal authority under which investigations and hearings are conducted. Hearing procedures are established by F.S. 120; the Administrative Procedure Act.

The Commission can give consideration to either mitigating or aggravating circumstances. Mitigating circumstances are considered to be extenuating, and reduce the degree of culpability. Aggravating circumstances add to the injury caused by the act. Violations that involve mitigating circumstances will generally carry a lesser penalty than those of aggravating circumstances. If the charge against a licensee includes multiple counts or a combination of violations, the Commission can impose a higher penalty.

9
Q

Division of Real Estate Responsibilities

A

The Division of Real Estate (DRE) within the Department serves as intermediary between the Commission and the Department. The Division handles administrative functions; investigations, and prosecution of complaints in disciplinary proceedings against licensees. Administrative responsibilities include ministerial services such as filing, record keeping, and other clerical functions pertaining to real estate licensees. The offices of the Division and the Commission are located in Orlando. The Division routinely inspects and audits licensed real estate professionals to ensure compliance with rules and regulations. It determines if complaints made against licensees should be investigated for alleged violation.

10
Q

F.S.455.2273 requires licensing agencies to adopt

A

guidelines under which disciplinary actions may be imposed on those persons and entities under their jurisdiction.
Administrative complaints must be filed within 5 years of the time of the act giving rise to the complaint, or within 5 years from discovery of the act with due diligence.

11
Q

Licensees Must Report Convictions

A

All licensees are required to report to the Department within 30 days of being convicted or found guilty of, or having pled nolo contendere or guilty to a crime in any jurisdiction. Licensees who fail to report this information are subject to disciplinary action. Completion of the “Criminal Self-Reporting Document” must be mailed to the Department. Failure in doing this can result in suspension to revocation and an administrative fine of $500 to $2,500 (for first offenses) or $1,000 to $5,000 (for subsequent offenses).

12
Q

Breach of trust

A

when a broker violates their duties to the principal in an agency relationship.

13
Q

Concealment

A

when a broker fails to disclose information to a party, to whom the broker has such a duty, and that is material to his or her decision.

14
Q

Conspiracy

A

when a broker forms a scheme or design with another person with the intent to defraud a third party.

15
Q

Conversion

A

when a broker uses the funds or other property that belongs to another for his or her personal or personal business use.

16
Q

Culpable Negligence

A

if a broker operates in a reckless, careless, and excessively negligent manner. Can be held legally accountable.

17
Q

Failure to account

A

is a form of conversion that occurs when a broker is required to produce money or property that belongs to another in the normal course of business and either cannot or will not produce the money or property.

18
Q

False or misleading advertising

A

no one may disseminate or cause to be disseminated any false or misleading information by any means for the purpose of offering for sale, lease, or rent any real estate located in this state.

19
Q

Filing false documents

A

occurs if a broker clouds the title to real estate by filing false, void, or unauthorized documents in the public record such as liens, contracts, or deeds. The broker is guilty of fraud.

20
Q

Misrepresentation

A

is the misstatement or omission of facts. Misrepresentation 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. Misrepresentation also includes exaggeration in an opinion of value.

21
Q

Moral turpitude

A

is conduct that is considered contrary to standards of justice, honesty, or good morals. The idea of inherent baseness or depravity in the private social relations or duties owned by man to man or by man to society. The courts also held crimes such as bookmaking or selling fake licenses as crimes of moral turpitude.

22
Q

Rendering an opinion of title

A

could be considered as practicing law, which is beyond the scope of a real estate license. If a question relating to the title of property arises, a broker is required by law to advise a prospective purchaser to obtain title insurance or to insist upon procure an abstract and obtain an attorney’s title opinion.

23
Q

Promise to resell

A

when a broker makes a promise to resell or repurchase property at a future date. The broker must abide by the promise or be guilty of fraud.

24
Q

Properties with liens

A

the broker must inform a prospective buyer of any liens against the property prior to the payment of any portion of the sales price. It is fraudulent and dishonest dealing for a broker to offer a property knowing that the title is un-merchantable.

25
Q

Using Lotteries

A

a broker who uses lotteries or trading schemes that involves the selling of certificates or chances to induce any person to buy real estate is guilty of fraud. Contests where no purchase is required may be permissible.

26
Q

Range of penalties from lowest to highest

A
  1. Reprimand
  2. Administrative fine
  3. License suspension
  4. License revocation or denial
27
Q

Reprimand

A

criticism from the Commission that notes that the conduct of the licensee is not considered satisfactory. May be given with or without a letter of guidance that advises the licensee.

28
Q

Administrative fine

A

may be imposed by the Commission for violations of laws or rules. The maximum administrative fine per violation of F.S. 475 is $5,000.

29
Q

Probation

A

a conditional arrangement in which the Commission allows a licensee to continue to practice real estate service if the licensee completes specified requirements. The term of probation is 90 days, unless otherwise stated.

30
Q

License Suspension

A

considered to be a temporary penalty. The Commission may suspend the license for a maximum period of ten 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.

31
Q

License Revocation or Denial

A

revocation permanently removes the license. The maximum penalty for misrepresentation, concealment, and obtaining a license by fraud is revocation plus a fine of $5,000. If a license is issued by mistake, it will be revoked without prejudice, allowing the individual to reapply. If a licensee is under investigation and voluntarily relinquishes their license, the license would be considered to be permanently revoked. Denial of license occurs if an individual is deemed by the Department to lack character or competence to deal with the public safely, or is found guilty of acts that could have resulted in the suspension or revocation of a license if the individual had already been licensed. If an application for license is denied, the Department must notify the applicant in writing, give reason for the denial, and inform the applicant of their right to request a formal hearing to protest the denial within 21 days.

32
Q

Minor violations may result in these two

A

Notice of noncompliance or citation

33
Q

Notice of Noncompliance

A

used to handle first time minor violations by licensees. A violation is considered to be minor if it does not result in economic or physical harm to persons or adversely affect the public health, safety, welfare, or create a significant threat of harm. Can be issued by the Division to a licensee by certified mail or personal service. It must identify the rule which the licensee has violated, and provide information to assist the licensee on actions necessary to comply. The licensee is allowed 15 days after receiving to correct the violation. Failure to comply with the notice results in issuance of a citation or full disciplinary proceedings.

34
Q

Citation

A

can be issued for specified violations by the Division 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. Can be handled by the issuance of a citation that requires payment of a fine as a penalty. Division investigators, during a brokerage office audit or routine inspection, commonly find violations that may be dealt with by citation. Prior to the issuance of a citation, a licensee must demonstrate that the violation either has been corrected or is in the process of being corrected. A citation is served upon the subject at the last known address by either personal service, certified mail, or restricted delivery. The licensee may accept the penalty and pay the fine or go through the formal hearing process. If the citation is not disputed within 30 days, the citation becomes a final order.

35
Q

Brokerage Office Inspections and Audits

A

Each office is visited every three-to-five years. The investigators conduct both real estate and appraisal investigations. The uses of notices of noncompliance and citations reduces the number of formal complaints and eliminates the need for lengthy disciplinary proceedings.

36
Q

The Disciplinary Process

A
  1. Complaint
  2. Investigation
  3. Probable Cause Panel
  4. Formal Complaint
  5. Hearing
  6. Final Order
  7. Appeal
37
Q

Complaint

A

is an allegation by a complainant that a violation of the law or rule has occurred. A complaint must be submitted in writing to the Department, Division of Real Estate Consumer Complaint Section.

38
Q

Investigation

A

if the complaint is legally sufficient, the complaint is sent to the enforcement section of the Division. A case number is assigned and an investigator is appointed. A copy of the complaint is delivered to the individual against whom the complaint was made. The investigator may demand information from anyone who may have pertinent information or records. Investigators cannot issue a subpoena or offer an opinion concerning the case. At the conclusion of the investigation, the investigator submits a report to the Division that cannot contain any personal opinions or recommendations of the investigator.

39
Q

Probable Cause Panel

A

prosecutors from the legal section review the investigative report and make a recommendation regarding prosecution of the case to the probable cause panel. This panel consists of two current members of the Commission or past Commission members, of whom no more than one can be a lay member. The panel has 15 days in which to make a request for any additional information. Once a complete report has been received, the panel has 30 days to recommend dismissal of the case or the issuance of a formal complaint.

40
Q

Formal Complaint

A

if determined that probable cause exists, an administrative complaint, also known as formal complaint, is filed. The administrative complaint constitutes the formal administrative charges made by the Department and is served upon the respondent. The Commission, by rule, allows 21 days for the respondent to file an Election of Rights form. If the respondent fails to file an answer, the Commission will proceed with a hearing. The Election of Rights form requires the respondent to state whether or not he or she disputes the allegations in the complaint.

41
Q

Hearing

A

if a respondent does not dispute the facts, the case is brought to the Commission for an informal hearing. The respondent is entitled to present testimony to explain mitigation circumstances that could reduce the punishment. The Commission will then impose discipline based upon the specific statues or rules that have been violated. If the respondent disputes material facts, the case will be scheduled for a formal hearing before an administrative law judge from the Division of Administrative Hearings (DOAH), which is not part of the Department of the Commission. The respondent by law must be given no less than 14 days’ notice of a formal hearing.

42
Q

Final Order

A

A final order panel of the Commission reviews the administrative law judge’s recommended order. The final order panel is composed of all Commission members except those who served in the probable cause finding. The commission then enters its final order. The final order becomes effective in 30 days during which time the licensee can continue to practice real estate. The respondent can either accept the final order or file an appeal. For an unlicensed individual, the administrative law judge’s findings of fact are sent to the Secretary of the Department for a final order. The Secretary’s final order can petition the court for enforcement against the unlicensed individual.

43
Q

Appeal

A

may be filed with the Florida District Court of Appeals within 30 days of the final order. The review of the case by the district court can either affirm or reverse the final order of the Commission. During the appeal process, a licensee is out of business unless a stay of enforcement is granted. A stay will be granted unless a threat of probable danger to the welfare of the public is shown. The District Court of Appeals issues the stay and grants a writ of supersedeas, which supersedes the action of the Commission and allows the licensee to continue to practice until the case can be heard on appeal. If the appeal reverses the final order of the Commission, the district court will issue a writ of mandamus, which is an order by the court to the Commission to restore the licensee’s privileges. If the court affirms the action of the Commission, the defendant may appeal to the Florida Supreme Court. If the Florida Supreme affirms the action of the Commission and district court, the final order is effective. If either the District Court of Appeals or the Florida Supreme Court reverses and sets aside the final order, the matter decided may not later be reexamined by the Commission or any court.

44
Q

Reimbursement for Monetary Damages Resulting from Violations by Licensee

A

The Florida Real Estate Recovery Fund was established for the purpose of reimbursing those persons or entities that have suffered monetary damages as the result of F.S. 475 committed by real estate licensees.

45
Q

Suit for Damages Filed and Judgment Obtained

A

To be eligible for reimbursement from the Recovery Fund, a suit for damages must first be brought in a civil action against a broker, broker associate, or sales associate. After a judgment has been obtained, the personal assets of the licensee must first be used to satisfy the judgment. If the assets of the licensee are insufficient to satisfy the judgment, the party awarded the judgment may request reimbursement from the Recovery Fund. When multiple parties have valid claims against a licensee, the order of payment is by date of the claim.

46
Q

Broker who Followed EDO: Recovery of Damages and Attorney Fees

A

A broker who follows a Commission escrow disbursement order and is later sued in court may be reimbursed from the Recovery Fund for damages imposed by the court. The broker’s reasonable attorney’s fees and court costs will be paid from the Recovery Fund as well. If the plaintiff prevails, the plaintiff’s attorney’s fees and court costs will also be paid. No action will be taken against the licensee.

47
Q

Persons Not Qualified to Make a Claim

A

Payment from the Recovery Fund will not be made to the spouse of a judgment debtor, or to any licensee who operated as a licensee in the transaction. If a licensee acted in the capacity of a buyer or seller only, the licensee would only be eligible to collect following the same procedures as any other member of the public.

48
Q

Reimbursement Limits

A
  • Single Judgment: Maximum $50,000
  • Multiple Judgment: Maximum $150,000
  • Only Actual or Compensatory, Not Punitive
49
Q

License Suspended Until Fund Repaid

A

Once a payment is made from the Recovery Fund in the name of a licensee, the real estate license of that individual is automatically suspended until the money plus interest has been repaid. The filing of bankruptcy by a licensee does not relieve them of any obligation or penalty associated with the Real Estate Recovery Fund.

50
Q

Enforcement: Lien Against Licensee’s Property

A

The Commission requires the holder of the judgment to assign the judgment to the Commission as a condition of reimbursement from the Recovery Fund. This gives the Commission the power to enforce repayment to the Recovery Fund by the licensee, as the Commission will then have a lien against all property owned by the licensee, which can be foreclosed if the money is not voluntarily repaid.

51
Q

Maintained by Fees and Fines: $5.00 per year

A

The Recovery Fund is maintained by fees and fines paid by licensees.
• A fee of $3.50 per year is added to the license fee for both new and renewal licenses for brokers
• A fee of $1.50 per year is added for new and renewal licenses for sales associates.

52
Q

Collection of Fees

A

If the total amount in the Recovery Fund reaches $1,000,000 collection of these fees is discontinued until the amount in the recovery fund falls below $500,000.