License Violations and Regulatory Actions Overview

License violations fall into several categories: (1) practice violations (misrepresentation, fraud, unauthorized dual agency, failure to disclose material facts), (2) trust fund violations (commingling, conversion, failure to deposit, failure to reconcile), (3) licensing violations (practicing without a license, failing to supervise, unauthorized practice of law), (4) advertising violations (misleading advertising, failure to include broker identification), and (5) general misconduct (conduct unbecoming of a licensee, conviction of certain crimes).

Trust fund violations are consistently treated as the most serious category, often resulting in immediate suspension or revocation. Practice violations involving fraud or intentional misrepresentation also carry severe consequences. Advertising violations and minor licensing infractions may result in warnings or fines on a first offense but can escalate with repeated violations. All categories are taken seriously by state commissions and can affect a practitioner's ability to practice.

State regulatory complaints can be filed by consumers, other licensees, or initiated by the commission itself. The investigation process typically involves: receipt and review of the complaint, assignment to an investigator, preliminary investigation (document review, interviews, site visits), determination of probable cause, formal charges (if warranted), opportunity for informal resolution or consent order, formal hearing (if resolution is not reached), and commission decision.

Licensees who receive notice of a complaint should take it seriously and respond promptly. Failing to respond to commission inquiries can be treated as a separate violation and may result in default judgment. It is generally advisable to retain legal counsel before providing substantive responses, as statements made during the investigation can be used in subsequent proceedings.