Key Takeaways
- DBR can investigate complaints, conduct hearings, and impose disciplinary actions
- Violations can result in license denial, suspension, revocation, probation, or fines up to \$2,000 per violation
- Common violations include misrepresentation, commingling, unlicensed activity, and disclosure violations
- Practicing without a license is a criminal offense in Rhode Island
- Licensees have due process rights including notice and hearing before disciplinary action
License Law Violations & Discipline
The Rhode Island Department of Business Regulation (DBR) and Real Estate Commission have authority to investigate complaints and take disciplinary action against licensees who violate Rhode Island real estate law.
Common Violations
Misrepresentation and Fraud
| Violation | Description |
|---|---|
| Material misrepresentation | False statements about important facts |
| Omission | Failing to disclose known material defects |
| Fraud | Intentional deception for personal gain |
| False advertising | Misleading marketing or claims |
Escrow Account Violations
| Violation | Description |
|---|---|
| Commingling | Mixing client and broker funds |
| Unlawful appropriation | Using client funds without authorization |
| Failure to deposit promptly | Not depositing funds timely |
| Poor records | Inadequate documentation |
| Improper designation | Account not properly labeled |
Agency and Disclosure Violations
| Violation | Description |
|---|---|
| Disclosure violations | Failing to provide required disclosures |
| Undisclosed dual agency | Acting for both parties without consent |
| Breach of duty | Violating duties to clients |
| Undisclosed interest | Failing to disclose personal interest |
Unlicensed Activity
| Violation | Description |
|---|---|
| Practicing without license | Performing licensed activities without license |
| Practicing on expired license | Working after license expires |
| Aiding unlicensed activity | Helping unlicensed persons perform licensed acts |
Warning: Practicing real estate without a license is a criminal offense in Rhode Island.
Disciplinary Process
Investigation
- Complaint filed with DBR (or DBR initiates investigation)
- Investigation conducted by DBR staff
- Evidence gathered (documents, interviews, audits)
- Determination made whether to proceed with charges
Hearing Process
If DBR proceeds with disciplinary action:
| Step | Description |
|---|---|
| Notice | Licensee notified of charges |
| Opportunity to respond | Licensee can submit response |
| Hearing | Formal hearing if requested |
| Decision | DBR issues written decision |
| Appeal | Licensee may appeal to court |
Due Process Rights
Licensees have the right to:
- Notice of charges before adverse action
- Hearing before penalties imposed
- Representation by attorney
- Present evidence and witnesses
- Appeal unfavorable decisions
Important: Monetary penalties can only be imposed AFTER the opportunity for a hearing.
Disciplinary Actions
DBR may impose various sanctions:
| Action | Description |
|---|---|
| Denial | Refuse to issue license |
| Suspension | Temporary loss of license |
| Revocation | Permanent loss of license |
| Probation | Conditional license up to 1 year |
| Fine | Up to $2,000 per violation |
| Education | Required additional training |
| Reprimand | Formal warning |
Penalty Guidelines
| Violation Severity | Typical Penalty Range |
|---|---|
| Minor (first offense) | Warning to fine |
| Moderate | Fine, probation, suspension |
| Serious | Suspension to revocation |
| Criminal conduct | Revocation + criminal prosecution |
Specific Grounds for Discipline
Grounds Listed in Law
The following are grounds for disciplinary action:
| Ground | Description |
|---|---|
| Obtaining license by fraud | Misrepresentation in application |
| Conviction of crime | Felony or crime involving fraud |
| Gross negligence | Extreme carelessness |
| Incompetence | Lack of ability to perform |
| Violation of law | Breaking real estate laws |
| Breach of fiduciary duty | Violating duties to clients |
| Dishonest conduct | Fraudulent or dishonest dealings |
| Failure to account | Not properly handling funds |
| Discrimination | Fair housing violations |
E&O Insurance Violations
| Violation | Consequence |
|---|---|
| No E&O insurance | License suspension or denial |
| Lapse in coverage | Must immediately cease practicing |
| Failure to maintain | Disciplinary action |
Remember: All Rhode Island licensees must maintain E&O insurance ($50,000/$150,000).
Factors Considered in Discipline
| Factor | Impact |
|---|---|
| Severity of violation | More serious = harsher penalty |
| Prior history | Repeat violations = stricter |
| Consumer harm | Greater harm = more serious |
| Cooperation | Cooperation may reduce penalty |
| Remediation | Steps taken to fix issue |
| Intent | Intentional vs. negligent |
Criminal Penalties
Certain violations carry criminal penalties:
| Offense | Potential Consequences |
|---|---|
| Unlicensed practice | Criminal charges |
| Unlawful appropriation | Criminal charges per 11-41-11.1 |
| Fraud | Criminal charges |
Key Distinction: DBR imposes administrative penalties (fines, suspension, revocation). Criminal prosecution for crimes goes through the court system.
What is the maximum monetary penalty per violation that DBR can impose on a Rhode Island licensee?
What action is considered a criminal offense in Rhode Island?
What maximum probation period can DBR impose on a Rhode Island licensee?
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