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Procuring a real estate license by fraud or misrepresentation

May 20th, 2015 | By | Category: Real Estate Broker Law

Real Estate Accusations & Order’s of Suspension

statement of issues lawyer

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Real Estate Licensing Essentials

Procure real estate license by fraud
The above section comes from the DRE guide to real estate license applicants in the State of California 

Introduction

One thing that can come back to bite a broker in the bottom is procuring a real estate license (broker or salesperson) by fraud or misrepresentation.  This can occur, for example, when a person fails to disclose prior criminal convictions on a licensing application.  This blog discusses this topic most brokers hope they will never have to deal with.

Disclosure of past criminal convictions

A variety of Department of Real Estate (now the “BRE”) documents ask a licensee or new hopeful whether or not they have EVER been convicted of a felony or misdemeanor.  If the applicant checks the “NO” box they better be right.  Failure to be honest, candid and up-front about a prior criminal conviction can have devastating effects on the real estate licensee or applicant.

Intentional licensing fraud can lead to license suspension

When you lie (or “accidentally” forget) or fail to fill out the forms as requested (and which is usually spelled out by the “instruction” sheets that accompany most DRE forms) you run the risk of IMMEDIATE LICENSE SUSPENSION if the BRE or its lawyers learn about the fraud or misrepresentation.  Even if you are technically innocent, a missed box not checked or a “NO” when there should have been a “YES” can prove to be a very costly mistake and put your real estate livelihood at risk.

What can happen for fraud, deceit or misrepresentation allegations?

Here is what you COULD be looking at in these types of cases:
1.  You receive a letter from the BRE informing you that your real estate licensing rights have been suspended or terminated (this could come in the form of a desist and refrain notice).  This “order of suspension” would be deemed effective immediately.
2.  If so, you must immediately suspend all licensing real estate activity, which if you are the sole broker, means that your pipeline of deals must be given to someone else to close
3.  The BRE need only file a “statement of issues” (as opposed to a accusation)  to set the hearing.  The notice is then served on the licensee by registered mail or sent certified.
4.  The license holder, once served, then has a right to request a formal hearing IF MADE WITHIN 30 days.
Attorney Steve Tip:  If you are served with a suspension order or accusation, do not mess around.  This is no time to represent yourself, your license is on the line.  Call us IMMEDIATELY so we can assess your legal rights and respond to the notices.
5.  The administrative hearing must proceed within an additional 30 days (unless a request for a continuance is granted)
6.  Administrative law judge issues a proposed decision
7.  The commissioner then decides whether to adopt, amend, or modify the proposed decision
8.  Requests for reconsideration can be made or a writ filed in the Superior Court

We can help you sort through these issues if you are facing the loss of your license.

Are there statutes of limitations that apply to wrongful procurement of a license cases?

My research on this issues indicates that there MIGHT NOT BE a statute of limitations on this particular issue.  We can argue several statutes, but it may come down to how the issue was raised in your case, and how the BRE handles it.  Here are two code sections that need to be closely examined.
First, the 10 year bar statute which reads:

B& P § 10101. Accusation; limitation
“The accusation provided for by Section 11503 of the Government Code shall be filed not later than three years from the occurrence of the alleged grounds for disciplinary action unless the acts or omissions with which the licensee is charged involves fraud, misrepresentation or a false promise in which case the accusation shall be filed within one year after the date of discovery by the aggrieved party of the fraud, misrepresentation or false promise or within three years after the occurrence thereof, whichever is later, except that in no case shall an accusation be filed later than 10 years from the occurrence of the alleged grounds for disciplinary action.
This code section appears to deal with “accusations” but, as mentioned above, no accusation is required to be filed.  A “statement of issues” does the trick.  Contrast this with California Business & Professions Code section 2230.5 which reads:

§ 2230.5. Limitation of action; revocation, suspension, limitation, or condition of a right, authority, license or privilege; accusation; contents; verification
(a) Except as provided in subdivisions (b), (c), and (e), any accusation filed against a licensee pursuant to Section 11503 of the Government Code shall be filed within three years after the board, or a division thereof, discovers the act or omission alleged as the ground for disciplinary action, or within seven years after the act or omission alleged as the ground for disciplinary action occurs, whichever occurs first.
(b) An accusation filed against a licensee pursuant to Section 11503 of the Government Code alleging the procurement of a license by fraud or misrepresentation is not subject to the limitation provided for by subdivision (a).
This section seems to address our problem outlined above.  If a statement of issues is filed (as opposed to an accusation), then there MIGHT NOT BE A STATUTE OF LIMITATIONS.  Consult with real estate counsel.

We are real estate lawyers

If you are facing legal problems with the Arizona Department of Real Estate or California Bureau of Real Estate (“CalBRE”) contact us to discuss your case.  We have a strong history of protecting real estate licenses and negotiating deals with licensing authorities.  We can be reached at (877) 276-5084 or fill out the contact form below.  We offer flexible legal fees and tenacious legal representation.  When you are facing a administrative hearing in front of the OAH (Office of Administrative Hearings) you want to be there with a lawyer that can tell your story while challenging their personal attack against you.  We are here to help you.  Please fill out the form below for more information.

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