Key Takeaways
- LARA has authority to investigate complaints and take disciplinary action against licensees
- Common violations include trust account mishandling, failure to supervise, and misrepresentation
- Sanctions can include fines, probation, suspension, or revocation of license
- Licensees have the right to a hearing before an administrative law judge
- Criminal convictions can also result in license denial or discipline
Last updated: January 2026
Michigan License Law Violations and Discipline
LARA has authority to discipline licensees for violations of the Occupational Code and administrative rules.
Types of Violations
Common Violations
| Category | Examples |
|---|---|
| Trust Account | Failure to deposit timely, commingling, conversion |
| Supervision | Inadequate oversight of salespersons |
| Disclosure | Failure to disclose material facts |
| Misrepresentation | False statements about property or transaction |
| Advertising | Misleading ads, failure to identify broker |
| Unlicensed Activity | Practicing without valid license |
| Incompetence | Failure to provide competent service |
Specific Prohibited Acts
Under the Occupational Code, violations include:
- Fraud or misrepresentation in obtaining a license
- Dishonest or fraudulent dealings
- False advertising or misleading statements
- Failure to account for funds or documents
- Commingling of client and personal funds
- Splitting fees with unlicensed persons
- Failure to disclose interest in property
- Violating fair housing laws
- Conviction of crime involving moral turpitude
- Practicing while impaired by drugs or alcohol
Disciplinary Process
Investigation
LARA initiates investigations based on:
- Consumer complaints
- Referrals from other agencies
- Self-reporting by licensees
- Information from other licensees
Sanctions and Penalties
Available Sanctions
| Sanction | Description |
|---|---|
| Reprimand | Official warning on record |
| Fine | Monetary penalty |
| Probation | License remains active with conditions |
| Limitation | Restrictions on practice |
| Suspension | Temporary loss of license |
| Revocation | Permanent loss of license |
| Denial | Refusal to issue or renew license |
Factors Considered
When determining sanctions, LARA considers:
- Severity of the violation
- Prior disciplinary history
- Harm to consumers
- Willfulness of the conduct
- Cooperation with investigation
- Corrective actions taken
Hearing Rights
Licensees facing disciplinary action have rights to:
| Right | Description |
|---|---|
| Written notice | Notice of charges |
| Hearing | Before administrative law judge |
| Present evidence | Present case and witnesses |
| Legal representation | Right to attorney |
| Appeal | Appeal adverse decisions |
Criminal Violations
Certain violations may also be criminal offenses:
- Practicing without a license - Criminal penalty
- Trust fund conversion - Theft/embezzlement
- Fraud - Criminal fraud charges
- Forgery - Document forgery
Impact on License
Criminal convictions can result in:
- Denial of initial license application
- Disciplinary action against existing license
- Revocation for serious crimes
- Requirement to disclose on applications
Compliance Best Practices
To avoid disciplinary action:
- Maintain accurate records of all transactions
- Handle trust funds properly - deposit promptly, never commingle
- Provide adequate supervision if you're a broker
- Disclose material facts to all parties
- Use honest advertising that complies with regulations
- Complete continuing education on time
- Stay current on license law changes
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Test Your Knowledge
What happens if a Michigan licensee commingles trust funds with personal funds?
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D
Test Your Knowledge
What rights does a Michigan licensee have when facing disciplinary action?
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B
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D