The situation is all too familiar: a busy real estate broker has failed to monitor one of their sales associates properly. The sales associate has taken money from a client and accidentally placed it in their own bank account. They either do not know or forgot the full requirements to properly escrow funds with their broker. The transaction has failed, and now the prospective buyer is asking for their money back. The problem is that the sales associate has been sloppy and accidentally used those funds to pay off unexpected expenses on their personal credit card. The broker now has to come to terms with the fact that they must answer for their associate’s mistake in front of the Florida Real Estate Commission, or “FREC,” a subsection of the Department of Business and Professional Regulation (DBPR), known henceforth as “the Department.”
The Broker’s Dilemma
The broker in this situation has a choice. They can try to make a legal argument regarding their responsibility and role. However, this scenario is not one where the broker would traditionally have a strong legal argument in the eyes of the FREC, as the statutes and case law are fairly clear in outlining a broker’s duty to supervise. Similarly, the broker can attempt to persuade the FREC of their innocence in the matter during an informal hearing. However, it is unlikely that the FREC will have much mercy in such a situation. The FREC’s members are frustrated and embarrassed by the frequency with which they are presented with excuses regarding unsupervised sales associates. Instances of inadequate supervision are viewed as a blight upon the industry. Accordingly, many of the FREC’s members take excuses regarding them as a personal affront. Because of this, the broker’s best course of action is to seek a settlement with the Department’s prosecutor, to be presented directly to the FREC.
The Settlement Process
Solving a case through a settlement and settlement stipulation can be one of the strongest tools that a real estate licensee can use when dealing with a disciplinary action concerning their license. The settlement process can be relatively quick. When a licensee receives an administrative complaint against their license, the licensee or their counsel may contact the Department’s prosecutor directly to negotiate the terms of the settlement. Once the parties have agreed to terms, these proposed terms are memorialized in a written settlement stipulation. This stipulation is presented before the FREC at a public meeting by the Department’s prosecutor, who will prepare a short presentation and will share the responsibility with the licensee of explaining the terms of the settlement and why it is proper to the FREC’s members. The FREC has the ability to accept the settlement, reject the settlement, or to offer a licensee who attends the meeting with amended terms of settlement. Examples of amended terms might include requiring the licensee to attend FREC meetings, an adjustment in the amount of an administrative fine, or requiring the licensee to complete a pertinent continuing education course.
Settlement and the Department’s Prosecutor
Because the Department’s prosecutor has heavy involvement in the settlement process, a licensee who agrees to a settlement can utilize the trust and ongoing relationship between the prosecutor and the FREC’s members. This is extremely valuable, as the Department’s prosecutor interacts with the FREC’s members on a monthly basis and places their credibility on the line with each settlement that they put forward. On the other hand, a given licensee’s only interactions with the FREC may occur when they pay their licensing fees and engage in other administrative tasks to keep their license active. The Department’s prosecutor also has institutional knowledge of the disciplinary terms that the FREC will find acceptable. Thus, the terms that they propose are more likely to be viewed favorably by the FREC than a penalty that a licensee unilaterally proposes. Additionally, the prosecutor can insert terms into the settlement agreement, including the ability to pay an administrative fine over an extended period of time, which would not be present in a standard order.
Protecting Your Real Estate License and Reputation in Florida
As a real estate licensee, your license is your livelihood. A complaint against your license has serious consequences, and a proper response is vital to keeping your business. Although your first instinct may be to vigorously fight any complaint, the best outcome may lie in settling the case. Jimerson Birr’s real estate attorneys have extensive experience with the FREC and its prosecutors and will work to create a reasonable settlement when it is appropriate. This will save you time and provide you with peace of mind. Contact Jimerson Birr today to have us find a solution for your real estate licensing dispute!