If a real estate licensee (sales associate, brokers associate, or broker) in Florida is suspected of misconduct, there is a 7 step process in order to ascertain whether or not such misconduct actually occurred and if so, what the remedy will be. These steps are:
- Complaint filed
- Investigation
- Probable cause determination
- Formal administrative complaint
- Informal or formal hearing
- Recommended and final order
- Judicial review (appeal)
A disciplinary process may terminate after only a few of these steps, but it can also go through all 7 steps. Let’s take a look at each step in detail.
1. Complaint filed
Complaints against real estate professionals are filed online or by mail with the DBPR, and the filing procedure is the same as for all professionals regulated by the DBPR. Complaints may be filed against real estate licensees, real estate license applicants, or unlicensed persons accused of offering real estate services. Anyone can file a complaint, and complaints can even be filed anonymously.
The complaint itself must be “legally sufficient“, meaning that the person who is the subject of the complaint must have allegedly violated a real estate related law, DBPR rule, or FREC rule. All allegations and supporting documentation must be provided to the DBPR at the time the Uniform Complaint Form is filed.
Some of the most serious accusations can include:
- Fraud
- Misrepresentation
- Concealment
- Commingling of escrow or trust funds with operating funds
- False promises
- False pretenses
- Dishonest dealing by trick, scheme, or device
- Culpable negligence
- Breach of trust
- Failure to account for, deliver, or maintain escrowed property
- Violating a duty imposed upon him or her by law or by the terms of a contract
Each of the violations above would result in more than a citation and fine. However, complaints can also be filed for minor violations.
Minor violations
To be considered minor, a violation must not result in any of the following:
- Economic or physical harm to any person,
- Adverse effects on public health, safety, or welfare, or
- A significant threat that the public may be harmed.
Here are some examples of common minor violations for real estate associates and brokers, along with the relevant citation fines:
- Broker failure to comply with signage requirements ($100)
- Sales associate or broker associate serving as an officer or director of a registered brokerage corporation ($500)
- Sales associate operating as a sales associate without a registered employer due to failure to renew or properly register ($500)
- Failure to timely notify the DBPR of the current mailing address or any change in the current mailing address ($500)
- False or illegal advertising that is not fraudulent or otherwise criminal ($500)
However, for first offenses, the DBPR issues an initial notice of noncompliance before issuing the citation and fine. The initial notice explains the statute or rule that has been violated and provides information on how to comply. The offender then has 15 days from when the notice is received to comply.
Initial notices of noncompliance will NOT necessarily be sent for second or later offenses.
2. Investigation
When the DBPR receives an anonymous complaint in writing, an investigation will begin if 3 conditions are met:
- The DBPR determines that the complaint applies to an illegal action,
- The allegation is substantial enough to be investigated, and
- There is reason enough to believe that the complaint may be true.
If a complaint is filed and then later withdrawn, the DBPR may or may not continue with the investigation.
When an investigation of a subject is undertaken, the DBPR forwards a copy of the complaint to the subject unless the allegations involve a criminal violation. If it is apparent that any criminal violation has taken place, the FREC will promptly report it to a government prosecuting authority.
If the DBPR’s investigation determines that a (non-criminal) complaint is valid, it will send you or your attorney a notice at which point you may respond with any relevant information and documentation.
At any point during the investigation or later hearing, the DBPR or FREC may decide that allowing the licensee to continue to work would pose a danger to the public. In that situation, the DBPR Secretary can issue a Summary Suspension (also called an Emergency Suspension) to suspend the license of the alleged violator until the conclusion of disciplinary action.
3. Probable cause determination
Once the investigation is complete and legally sufficient, the DBPR will prepare and submit an investigative report to the Probable-cause Panel of the appropriate regulatory board. The report will contain the investigative findings and the recommendations of the DBPR concerning the existence of probable cause. The purpose of the Probable-cause Panel is to determine if there is probable cause to issue a formal complaint against the alleged violated. The Panel must reach a decision on whether such probable cause exists within 30 days of receiving the investigative report.
For real estate matters, the Probable-cause Panel consists of two members:
- One current FREC member
- One former FREC member
And at least one of those two members must hold a current real estate license.
Other current FREC members are not allowed to attend Panel meetings so that they maintain their objectivity.
If the Panel decides the case should be dismissed, it will issue a a letter of guidance to the subject of the investigation as well as the broker who employs the licensee. The letter is also retained in the subject’s DBPR file.
4. Formal administrative complaint
If the Probable-cause Panel finds that probable cause exists, then a Formal/Administrative Complaint is filed. This complaint includes all allegations and charges against the licensee and is sent to the licensee by mail or email. An Election of Rights form is included with the Formal Complaint, giving the person charged with violation 3 courses of possible action to decide among:
- Dispute the allegations and request a formal hearing,
- Do not dispute the allegations and waive a hearing, or
- Do not dispute the allegations and request an informal hearing.
However, a licensee may also ask for a stipulation, which is a statement of the facts of the case. To do this, a licensee should (but is not required to) retain legal counsel. The licensee or their attorney then meets with an attorney for the Division of Real Estate to create the stipulation which must thereafter be approved by both the FREC and the DBPR. The licensee or their attorney will then ask for a Settlement of Penalty where an arrangement is worked out between the attorneys regarding the penalty for the licensee. This is sort of like out-of-court settlement and avoids a formal or informal hearing. The Settlement of Penalty must also be approved by the FREC and the DBPR.
5. Informal or formal hearing
Informal hearing
If the licensee does NOT dispute any material facts, then the case can be presented in an informal hearing before the FREC. This hearing is usually held at a regular FREC meeting, and anyone who served on the Probable-cause Panel does not attend the hearing. The licensee may present his or her case with the support of documented evidence and/or witnesses. The FREC then decides whether the licensee is guilty as well as what penalties to apply if so. The FREC then issues its conclusions in a Final Order. If the licensee disputes any material facts during the informal hearing before the FREC, then the case will be referred to the DBPR for a formal hearing.
Formal hearing
If the licensee disputes any material facts, then the case will go to a formal hearing with the DBPR, unless the licensee or their attorney requests a stipulation. At the request of the DBPR, the hearing will be conducted by a full-time administrative law judge. That will make the two litigating parties the DBPR and the alleged violator. The judge may inspect records for facts, hear evidence, and listen to witnesses. The alleged violator is also entitled to speak on his or her own behalf or may be represented by an attorney. Within 90 days of the formal hearing, the administrative law judge must rule on the case and submit a Recommended Order to all concerned parties. The parties involved have 15 days to file exceptions to a Recommended Order, after which it is submitted to the FREC. The purpose of filing an exception is 2-fold: (1) to convince the FREC why the Recommended Order should not be accepted as a whole; and 2) to set the stage for a later appeal, should the FREC disagree.
A licensee may choose to voluntarily surrender (relinquish) their license for permanent revocation. Voluntary relinquishment while a disciplinary action is underway will mean the relinquishment will show as an action against the licensee, and it means the licensee can never again practice real estate in Florida. Why would someone agree to this? Possibly as part of a Settlement of Penalty negotiation in order to get a lower fine or other less ominous penalties.
6. Recommended and final order
If a formal hearing is held, then the administrative law judge will issue a Recommended Order. The FREC will then review the Recommended Order and issue its own Final Order, which is a final verdict of innocence of guilt, as well as any penalty imposed. The Final Order may accept, modify, or reject the administrative law judge’s Recommended Order and impose those penalties at FREC’s discretion. That means the FREC, not the administrative law judge, makes the final decision of penalty and action taken against the licensee.
The FREC must issue its Final Order within 90 days of receiving the Recommended Order.
The Final Order becomes effective 30 days after it is issued, and, except in the case of a Summary Suspension Order, the real estate licensee may continue to practice real estate during those 30 days.
7. Judicial review (appeal)
A licensee may appeal the Final Order within 30 days of receiving it. The appeal must be filed with the DBPR and the district court of appeals. If the Final Order involves license suspension or revocation, the licensee may request a stay of enforcement to stop such action until the appeal has been heard.
If the appeals court agrees to hear the case, they can issue a writ of supersedeas to place the stay of enforcement.
The court also has the power to reverse the FREC’s Final Order and issue a writ of mandamus (a type of court order to the FREC to reinstate the licensee’s privileges).
If the Florida District Court of Appeals agrees with the FREC, the licensee can appeal one step further to the Florida Supreme Court.
Types of violations
FREC does not have the authority to issue penalties for criminal activity — only a court of law can do that. The strongest penalty that FREC can impose is a permanent revocation of a real estate license and the imposition of a maximum fine of $5,000 per violation of F.S. chapters 455 and 475.
Penalties issuable by a court of law
- Violations of F.S. 475.42(1) items a through n constitute second-degree misdemeanors.
- Failing to provide accurate and current rental information for a fee is a first-degree misdemeanor, and the license of any broker or sales associate who participates in any rental information transaction which is in violation of the law is subject to suspension or revocation by the FREC.
- An individual who believes they have a case against a broker or sales associate can initiate a civil court case without filing a complaint with the DBPR.
- Operating as a broker or sales associate without a license is a third-degree felony punishable by a fine of up to $5,000 and/or up to 5 years in jail.
- Providing false or fraudulent information on an application for licensure or renewal may cause the licensee to be charged with a third-degree felony.