The Real Estate Commissioner may temporarily suspend, or permanently revoke, the license of a real estate licensee for a violation of any of the provisions of California Code Business and Professions Code, Sections 10160, 10161.8, 10162, 10163, or subdivision (b) of Section 10164. (The specific types of agent violations will be explored further in Chapter 3.)
A restricted license is enforced for a time period congruent with the severity of a licensee’s violation and the opinion of the Commissioner.
Suspension of a licensee’s license may occur at any time, even before a defendant’s court appearance. A licensee who has his or her license suspended must comply with specific conditions in order to have the license reinstated.
The Department of Real Estate must hold a formal hearing in order to revoke a licensee’s license. If his or her license is revoked, a licensee possesses no right to get it reinstated; renewal is at the discretion of the Department of Real Estate.
Complaints Against a Licensee
If its validated that a real estate licensee violated a law, their license status may be altered to a restricted license. The Real Estate Commissioner handles listening to and potentially investigating complaints made against real estate brokers and salesperson. Complaints can arise from buyers, sellers, brokers, private groups, and different real estate associations. Formal complaints must be made in writing, informing the DRE of negligence, wrongdoing or malicious business practices.
Charges can only be waged against the licensee given factual documentation indicating the licensee’s wrongful action. If charges and violations are substantiated, the state can suspend or revoke the broker or salesperson status. If the real estate license is revoked, an applicant cannot reapply for license for at least one year.
Depending on the severity of the violation of the licensee, the state may reduce the violating party’s license to a restricted license, rather than an unrestricted license. In some scenarios of negligence, the real estate commissioner and DRE may:
Restrict length of license term (rather than four years, perhaps two years).
Require licensee to work under the supervision of a specific firm or entity.
Require the applicant to complete more real estate studying hours to prevent issue reoccurrence.
Require the licensee to pay a fine. The fine is typically paid to the Reimbursement of Real Estate Recovery Account. The fund’s proceeds are used to pay violated victims.
Submit documents to the state.
A restricted licensee cannot renew or change status of license until the restriction or hold is removed. Suspension of license can occur at any point and for any reason, even while the state determines the verdict for the licensee.
Common Violations (Found in Business and Professions Code 10176)
1. Misrepresentation: Misrepresenting status of a property and/or the details of the transaction. An example of misrepresentation may be an agent misrepresenting the presence of mold or known damages in a property. Misrepresentation claims are commonly brought forward on the basis of the condition of the property.
2. False Statements: Like misrepresentation, false statements are used to misguide a client or agent of a transaction.
3. Undisclosed dual agency: This occurs when the agent does not inform the buyer and seller that they are representing both parties of the transaction. Dual representation must be approved by both the buyer and seller.
4. Listing Termination Date: Licensee holders must disclose a listing terminating date. Properties cannot be listed with an agent for an indefinite term. Terms must be disclosed and agreed by agent/broker and buyer/seller.
5. Extra Profit: Profit is the name of the game, for both buyer/sellers and all agents involved, however it is illegal to make an extra profit at the expense of the other party. All profits/charges must be disclosed to all buyers/sellers and agents. For example, an agent intentionally listing a clients property for below market value property, then having themselves or friend/family buy the property for below market value with the intent of reselling the property for a profit is unlawful.
6. Dishonest Practice: Agents and brokers cannot employ in dishonest business practices. All buyers/sellers and agents must represent only legitimate people. It is illegal for agent’s to represent straw buyers in an attempt to alter the final sales price.
7. Consent: Agents and brokers cannot obtain signatures from buyer without the consent of the seller. Seller can choose and approve buyer.
Real Estate Licenses can be suspended or revoked if any of the following can be proved:
1. Fraud License: Getting a real estate license by fraud will result in the suspension of that license. Misrepresentation can be cited as fraud even if at an earlier time.
2. Licensee’s Undisclosed Activities: If license holder has failed to mention previous criminal activity, the state can suspend or revoke the license.
3. False Advertising: Providing false advertising with the intent of solicitation. Distribution and circulation proves intent of the spread of false information. This includes misleading the public about the size, condition, or details of a transaction. For example, it is unlawful for an agent to claim a property could be built up to 15 units if the building is not yet approved for the construction of 15 units. False advertising also includes failing to disclose the agent’s name, licensing information, and contract information. This is referred to as blind advertising.
4. Misrepresentation of Organization: A licensee cannot falsely claim they are a member of a group or organization for the purpose of soliciting business. For example, claiming one is a member of the Realtor organization when in reality this is not true.
5. Negligent Supervision: Lack of oversight by brokers of salesperson. Carelessness and incompetence, either intentionally or not.
6. Government Trust: Misusing access to government documents or information.
7. Restricted License Violation: Violating the terms of a restricted license.
8. Emotion Selling: Convincing people to buy or sell a property using race, ethnicity, religion, or market conditions to bait clients to make irrational decisions. This is known as panic selling- using a homeowner’s fear to sell on their emotion. An example of this is, “your property value is going down, sell your house now, before it keeps going down because the minorities are coming into this neighborhood.”
