You worked hard to get your California real estate license and build your career. A Department of Real Estate investigation can jeopardize all of this. Understanding the reasons for these investigations can help you avoid them or assist your Department of Real Estate investigation lawyer in presenting your defenses.
Being Convicted of a Crime
Real estate licensees are required to report criminal convictions on their license applications. The application instructions advise an agent to disclose all convictions, regardless of when they occurred or whether they were later expunged.
If the department learns of a conviction that was left off of your application, it can investigate and impose discipline for a lack of candor even if the conviction is not relevant to your licensure.
If a criminal conviction occurs after license issuance, the department can impose discipline for any crime substantially related to any of the following with respect to your real estate license:
- Qualifications
- Functions
- Duties
Thus, a conviction for theft or fraud might be grounds for an investigation, even if you were not accused of defrauding a client, because any theft might reflect on your fitness to handle client funds.
In either case, a Department of Real Estate investigation lawyer can help you explain how your convictions do not violate the license regulations.
Making a Misrepresentation
Making any substantial misrepresentation while performing your duties on or about a property can provide the basis for license discipline. A Department of Real Estate investigation lawyer can raise the following defenses in these cases:
- You did not lie because you had a good-faith basis for your statement
- There was no misrepresentation because you expressed an opinion, not a fact
- Any misrepresentation was insubstantial
- Any misrepresentation was made outside the performance of your duties
This rule can also be used when a license holder fails to disclose a material fact during a transaction.
Using Unlicensed Individuals
Running a real estate firm is burdensome. However, you can only delegate certain functions to employees or contractors who hold a real estate license. This rule applies even if you supervise the work and review it for accuracy before it reaches the client or the other party.
The department can investigate if someone accuses your firm of using unlicensed individuals to perform activities that require a license. A license defense attorney can raise many defenses, including asserting that the unlicensed person only performed clerical or administrative functions and not the core functions reserved for licensees.
Failing to Supervise Activities
Brokers are required to supervise the activities of their firms and the salespeople working for them. When a license holder fails to supervise their employees or the acts performed in their firm’s name, the department may investigate to determine whether any rules were broken or not.
These investigations often start when the department investigates the activities of someone in your law firm. If you admit you were aware of their activities, the department may discipline you for being complicit in the worker’s rule violation.
If you defend yourself by saying you were unaware of their activities, you might face discipline for a supervision violation. Thus, you are caught in a catch-22.
A Department of Real Estate investigation lawyer works with you to devise a defense to try to steer clear of both these outcomes. For example, your attorney might assert that you actively supervised the employee, but they misled you about their activities.
Acting Negligently or Incompetently
The department can investigate if a client, counterparty, or colleague files a complaint against an agent alleging negligence or incompetence. Negligence means that you knew or should have known that your acts as a broker or licensee could violate the rules. Incompetence usually means that you lacked the knowledge or skills required to perform a licensed function.
Again, these real estate agent investigations can place you in a difficult position. The department can assert that you negligently or incompetently performed a function when you admit you were unaware of the applicable rule. If you were aware of the rule, the department can discipline you for knowingly violating it.
Your attorney can defend you by relying on the negligence standard. You do not need to perform perfectly to avoid negligence. Instead, acting with the care of a reasonable professional in the same situation will be enough to disprove negligence or incompetence, even if the result was imperfect.
Trust Fund Violations
Trust fund violations can include using careless accounting methods, commingling funds, or taking funds from the trust account before a transaction is completed. Violating the trust fund is a serious offense because it implies that a licensee stole from clients. An attorney is often critical to these cases because your license may be revoked for trust fund violations.
Protecting Yourself During License Investigations or Formal Complaints
You have the right to a fair hearing when accused of a license violation. A Department of Real Estate defense lawyer can protect your rights and present a defense tailored to your situation. Contact us to discuss the accusation and the defenses we can assert.
