Real Estate Study Guide: What You Need to Know About Administrative Discipline

Licensed real estate brokers and real estate salespersons are required to follow federal and state real estate laws along with the relevant rules of professional conduct in their jurisdiction. If allegations arise that they have failed to do so, a real estate agent could potentially face administrative discipline from the regulator in their state. It is crucial that all real estate agents have a basic understanding of their professional duties — to protect their career and, prior to that, to help them pass the real estate exam.

Administrative Discipline is Handled on a State-by-State Basis

One of the most important things that prospective real estate professionals need to know about administrative disciplinary actions is that these cases are always handled on a state-by-state basis. When you are studying for the real estate exam — and when you begin your career as a real estate agent or real estate salesperson — it is imperative that you pay close attention to the rules and regulations in your particular state. While there are certainly many similarities across jurisdictions, there are also some variations in rules and procedures in each state. As a simple example, using a net listing agreement, which is permitted in some states, is a serious violation in other states — it could even lead to a real estate professional facing administrative discipline.

Real World Examples of Administrative Discipline

In the real world, administrative discipline comes in a wide range of different forms. Consider some real world examples: In January of 2019, the California Department of Real Estate (CDRE) took enforcement action against a Sacramento-based real estate broker who was accused of negligence in performing licensed acts and violation of state real estate law. The real estate professional’s license to practice was revoked by the CDRE. In December of 2018, the Maryland Real Estate Commission (MREC) reprimanded a licensed real estate agent and fined her $3,000 for allegedly mishandling a client’s funds. In January of 2019, the Texas Real Estate Commission (TREC) reprimanded a real estate agent and suspended his license for 30 days after it was determined that he failed to perform an adequate inspection of a property’s foundation on behalf of a buyer.

Administrative Discipline: What are the Possible Sanctions?

Should a real estate agent or real estate salesperson face administrative discipline, a number of different sanctions are possible. As a general matter, the administrative penalties that a real estate professional will be subject to can vary dramatically. The more egregious the nature of the underlying allegations, the more severe the possible penalties. Of course, in any case, a real estate agent may face an administrative complaint, but they could be subject to no penalties at all. Indeed, they could be fully exonerated, no further administrative action may be required, and all references to the case could even be expunged in official documents. Some of the most common examples of administrative penalties include:

• Censure/Reprimand: In some cases, a real estate professional could be publicly censured or publicly reprimanded for alleged misconduct. While censure/reprimand could be the only sanction issued by a regulator, these penalties often come in conjunction with other administrative enforcement action.
• Civil Fines: Real estate commissions across the states have the legal authority to levy financial penalties against real estate professionals. A real estate agent or real estate salesperson could potentially be fined by their state’s commission through an administrative proceeding. The failure to pay a civil fine will usually lead to the suspension or revocation of a real estate license.
• Suspension: A real estate professional could have their license temporarily suspended. Generally, there are two types of suspension: definite and indefinite. If a real estate agent is suspended for a defined period — for example, if they are suspended for 30 days — then their real estate license will automatically be reinstated once the suspension period ends.
• Revocation: Real estate brokers could also face a license revocation, which is much harsher than a suspension. In most cases, a real estate license will only be revoked in an administrative disciplinary proceeding if there is compelling evidence that there was serious misconduct on the part of the agent.

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