Chapter 4
Investigations and Disciplinary Procedures
INTRODUCTION
Georgia’s real estate license law provides that: “The Commission may, upon its own motion, and shall, upon the sworn written request of any person, investigate the actions of any applicant for licensure, licensee, or real estate courses and instructors approved by the Commission.” The law limits the Commission’s investigative authority solely to issues related to the real estate license law.
The Commission’s investigations do not determine whether a violation of any other area of the law has occurred. For example, the Commission cannot settle such issues as disputes regarding earnest money, repairs to property, or payments of commissions or fees to licensees. The law of contracts controls these issues. If the parties cannot resolve such issues themselves, they can consult an attorney or seek relief in the small claims court or superior court of their county.
Persons who file a request for investigation with the Commission and who have suffered a financial loss should not wait for the results of a Commission investigation before taking other action or consulting an attorney. The Commission has no power to force a licensee to compensate another for a financial loss. The law allows the Commission only to reprimand, suspend, or revoke a license and/or impose fines, education requirements, and/or require reports from an independent accountant on the status of the licensee’s trust account.
The Commission may only investigate licensees or unlicensed persons performing the acts of a broker. It cannot take action against an unlicensed individual who may be an owner or builder acting as a principal on his or her own property.
BASIC FACTS REGARDING INVESTIGATIONS BY THE COMMISSION
The following are basic facts regarding Commission investigations:
| (a) | When the Commission initiates an investigation, it is not implying that the Commission believes a violation of the license law has occurred or that it is charging a licensee with a violation. Only after reviewing the results of an investigation might the Commission allege that a violation has occurred and bring charges against a licensee. In that circumstance, only the Commission, not the person who requested the investigation, is the Complainant in the matter. | |
| (b) | The investigator keeps all information that he or she gathers confidential. | |
| (c) | The investigator reports the facts gathered in the investigation but not the names of the party or parties involved. In this way the Commission makes a decision based only upon the merits of the evidence. | |
| (d) | Unless the Commission orders a formal hearing, the name of the person requesting the investigation and all other materials in the investigative file remain confidential and closed to public inquiry. |
THE INVESTIGATION AND THE REPORT
Upon receipt of a sworn, written request for investigation, the Director of Investigations reviews the request and may contact the person making the request to clarify the nature of the issues involved. Then the Director assigns the case to an investigator. Depending upon the backlog of requests for investigation, several weeks could elapse between the receipt of the request and the assignment of the case. Although the Director normally assigns cases on a “first come, first served” basis, certain cases have priority—those involving applications for licensure and for renewal of licensure and those which involve apparent and imminent harm to the public. The investigator assigned to the case begins the investigative process by contacting the party requesting the investigation. Then the investigator contacts other persons who may have information about the case and to gather other appropriate evidence.
If a licensee’s activities become the subject of an investigation, he or she may expect the following procedures to occur. The investigator assigned to the case will contact the licensee to set an appointment at a mutually convenient time with sufficient uninterrupted time to discuss the case. If the conference reveals the need for further meetings, the licensee and investigator will set another time reasonably convenient to both. Upon contacting a licensee, the investigator will try to indicate what, if any, documentary material the licensee will need to have at the conference. The licensee should make every effort to make that material available or to be able to help the investigator obtain it. If the investigator asks for copies of any documents and the licensee supplies the copies, the Commission will pay a reasonable cost for those copies if the licensee gives the investigator a written receipt or invoice of the cost along with the licensee’s tax identification number. If the investigator must take the originals to another place for copying, the licensee should ask the investigator for a receipt detailing all originals the investigator takes. A licensee must produce documents related to a real estate transaction that might normally be kept in an office file (for example, listing contracts, sales contracts, closing statements, leases, and management agreements) and any documents related to an escrow account that the law requires brokers to maintain. If a licensee has any doubt about giving any document to an investigator, he or she may consult his or her broker or legal counsel before turning over the document.
Once the investigator has completed the investigation, the Director of Investigations reviews it for thoroughness. Then, the investigator presents the results of the complete investigation to the Real Estate Commissioner or Deputy Real Estate Commissioner. The investigator makes this report without using names. The typical report involves the investigator’s identifying the party who requested the investigation by his or her role in the transaction and summarizing the general nature of the problem. For example, “A purchaser alleges that the selling agent made misrepresentations concerning the amount of the monthly payment on a loan assumption.” The investigator then recites the facts discovered in the investigation.
THE ROLE OF THE REAL ESTATE COMMISSIONER IN THE INVESTIGATION PROCESS
After hearing the investigation report from the investigator, the Real Estate Commissioner evaluates the facts. The Commission has directed that the Commissioner then take one of four options:
| (a) | require further investigation; | |
| (b) | refer the case directly to the Attorney General’s office if it appears that a substantive violation of the license law has occurred with a request that that office initiate appropriate proceedings to begin the disciplinary action process; | |
| (c) | recommend that the Commission close the case if the facts clearly show no license law violations; or | |
| (d) | refer the case to the Commission for it to determine an appropriate course of action. |
THE REAL ESTATE COMMISSION AND THE INVESTIGATION REPORT
When the Real Estate Commissioner refers a case to the Commission, the investigator who handled the case follows the same procedures in making the report to the Commission. The investigator summarizes the case using no names, but identifies the parties only as the Requester and the Respondent. Based on the facts presented, the Commission decides whether to investigate the case further, to close it, or to send it to the Attorney General’s office with a request that office take appropriate steps to begin the formal disciplinary process. If the Commission decides to go forward with the investigative case, the Commission becomes the Requester in the matter.
That disciplinary process may take either of two courses. First, if the evidence indicates that a violation occurred but there does not appear to have been any significant harm to the public, the Commission may offer to settle the matter with the licensee without holding a hearing. It presents the licensee with a “Consent Order” which sets forth the alleged violation or violations and a proposed sanction (usually a reprimand, a fine, required education, or some combination of those options). If the licensee agrees with the Commission’s proposal, he or she signs the order and that concludes the matter. If the licensee disagrees with the proposal, he or she may (1) suggest an alternate settlement for the Commission to consider, (2) present additional evidence designed to refute the Commission’s finding, or (3) request a formal hearing before an Administrative Law Judge (ALJ).
If the Commission believes that an apparent violation has resulted in significant harm to the public, or that the apparent violation demonstrates that the licensee is incompetence to act as a licensee, or that the apparent violation reflects that the licensee has a callous disregard for the requirements of the license law, the Commission may elect to forward the investigative file to the Attorney General’s office with a request for a formal hearing.
When a case is sent to the Attorney General’s office, the Assistant Attorney General assigned to the Commission evaluates the case for the legal sufficiency of evidence. If the Attorney General’s office finds the evidence lacking, it returns the case to the Commission for the Commission’s staff to investigate further or for the Commission to decide whether to pursue the matter further.
THE HEARING PROCESS
If the Attorney General’s office finds the evidence legally sufficient, that office prepares either (1) a proposed consent settlement for review and approval by the Commission or (2) a Notice of Hearing. In a consent settlement, the Commission does not hold a hearing to determine specific findings of fact and conclusions of law. Instead, the licensee (Respondent) and the Commission agree on specific findings of fact, on specific conclusions of law, and on a sanction for the Commission to impose without holding a hearing. The sanction may be a reprimand, suspension, or revocation or any other settlement to which the parties may agree; for example, requiring further education for the licensee or a fine. Of course, in seeking a consent settlement, as at any other time in the process, the Respondent may present such compelling evidence of no violation that the Commission might agree to a dismissal of the charges.
If the parties do not enter into a consent settlement, the Attorney General’s office prepares a Notice of Hearing that sets forth the findings of facts and allegations of license law violations that the Commission is making. The Notice also states the Respondent’s rights a) to present any relevant evidence, b) to be represented by counsel at the Respondent’s expense, and c) to subpoena witnesses and documentary evidence. When the Assistant Attorney General files the Notice with the Office of State Administrative Hearings, the Chief Administrative Law Judge sets the date and time for the hearing and executes the Notice. The Office of State Administrative Hearings then delivers that Notice to the Respondent.
Following the filing of a Notice of Hearing and prior to the date set for the hearing, either party may file a Motion for Summary Determination with the Administrative Law Judge (ALJ) scheduled to hold the hearing. The granting of “Summary Determination” means that the ALJ has determined that there is no genuine dispute about the material facts in a case and imposes a decision without hearing witnesses and evidence. The party that does not make the Motion for Summary Determination has the opportunity to make a written response objecting to Summary Determination and calling for a hearing. After reviewing the positions of both parties on Summary Determination, the ALJ may elect to grant the Motion for Summary Determination and issue a preliminary decision without holding a formal hearing to hear the testimony of witnesses and receive evidence. Of course, the ALJ may also deny the Motion for Summary Determination and hold a formal hearing as scheduled. Regardless of which decision the ALJ makes, the Respondent my elect to appeal the decision to the full Commission.
Whenever it becomes necessary to hold a hearing, an ALJ from the Office of State Administrative Hearings conducts the hearing and writes a report which includes (1) a statement of the facts in the case, (2) what laws, if any, the licensee violated, and (3) either a sanction (for example, a reprimand or a revocation) if the ALJ found a violation of the law or a dismissal of the charges if the ALJ found no violation of the license law. If the Respondent disagrees with the ALJ’s proposed decision, the Respondent then has the right to appear before the Commission to make a thirty‑minute (or such longer time as the Commission may allow) oral presentation and present written briefs. After hearing this presentation, the Commission makes a Final Decision. If the Respondent does not ask the Commission to review the decision within thirty days of the ALJ’s rendering that decision, the decision becomes final. Within thirty days of the ALJ’s Decision, the Commission may also request to review that decision when it disagrees with the ALJ’s findings or the recommended sanction. If the Commission alters the ALJ’s Decision adversely to the Respondent, it must state precisely its reasons for doing so and afford the Respondent the opportunity to present objections to the Commission’s actions. If dissatisfied with the Commission’s final decision, the Respondent may appeal to the courts.
The full process can take several months, even years, to complete; but the Commission disposes of most cases within a few months. The General Assembly established this process for all state regulatory agencies to follow to help insure due process rights for any individual against whom the state brings such an administrative action. When the hearing process ends, anyone may request to see copies of the public records in a case, the Notice of Hearing, the ALJ’s Initial Decision, and the Final Order. These documents are available for review in the Commission’s office at no charge. Upon written request, the public may purchase copies of these public documents. Closed investigative files (that is, cases which did not result in the Commission’s bringing formal charges) remain confidential by law and are not available to the public.
SUSPENSION OF THE LICENSE OF A COMMUNITY ASSOCIATION MANAGER, SALESPERSON, OR ASSOCIATE BROKER
If the Commission decides to suspend the license of a community association manager, salesperson, or associate broker, or if suspension is the agreement reached between the Commission and the licensee in a consent settlement, the licensee:
| (a) | must return the wall certificate and pocket card to the Commission for the period of suspension specified in the Commission’s order; | ||
| (b) | may not perform any of the acts of a real estate licensee during the period of the suspension, for example, the licensee may NOT, among other things: | ||
| (1) | receive payment from the broker for referring prospects to the broker or other licensees during the period of suspension, | ||
| (2) | place name on “for sale” signs or other advertising, | ||
| (3) | attend closings on sales under contract but not closed at the time the suspension takes effect, | ||
| (4) | solicit new listings, | ||
| (5) | continue to service listings or prospects obtained prior to the suspension, or | ||
| (6) | participate in managing a community association; | ||
| (c) | should report and review with the broker all work in progress at the time the suspension begins so that the broker can reassign that work to other licensees; | ||
| (d) | may receive from the broker any fees earned for work begun prior to the suspension; and | ||
| (e) | may resume all activities of a real estate licensee when the suspension ends provided: | ||
| (1) | the licensee has completed any education or other actions the final order required during the period of suspension; | ||
| (2) | a broker has agreed to affiliate the licensee, and | ||
| (3) | the licensee has paid the Commission any fees due. | ||
SUSPENSION OF THE LICENSE OF A BROKER OF A SOLE PROPRIETORSHIP
If the Commission decides to suspend the license of the broker of a sole proprietorship, or if suspension is the agreement reached between the Commission and the licensee in a consent settlement, the licensee:
| (a) | must return his or her wall certificate and pocket card and those of any affiliated licensees to the Commission; | ||
| (b) | must sign releases for all licensees affiliated with him or her so they may transfer to a new company or place their licenses on inactive status; failure to do so would result in the suspension of the affiliates’ licenses for the period of the broker’s suspension; | ||
| (c) | may not do any of the acts of a real estate licensee during the period of the suspension; | ||
| (d) | must close his or her office for the duration of the suspension and may not allow any advertising that represents to the public that the broker is actively licensed; | ||
| (e) | must notify all persons who have brokerage engagements with the firm that their engagements are canceled effective the date of the suspension; | ||
| (f) | must handle any sales under contract but not closed in a manner agreed to by the Commission, and the broker may receive any payment duefor work done on those transactions prior to the beginning of the suspension; and | ||
| (g) | may resume all activities of a real estate licensee when the suspension ends provided: | ||
| (1) | the broker has completed any education or actions the final order required during the period of suspension, | ||
| (2) | the broker has notified the Commission in writing of the address at which he or she will conduct business or has filed a transfer form with the Real Estate Commission if he or she plans to close the old firm and affiliate with another firm as an associate broker, and | ||
| (3) | the broker has paid the Commission any fees due. | ||
SUSPENSION OF THE LICENSE OF A QUALIFYING BROKER OF A PARTNERSHIP, A LIMITED LIABILITY COMPANY, OR A CORPORATION
If the Commission decides to suspend the license of the qualifying broker of a partnership, limited liability company, or corporation, or if suspension is the agreement reached between the Commission and the licensee in a consent settlement, the licensee:
| (a) | must return the licensee’s wall certificate and pocket card to the Commission; | |
| (b) | may not do any of the acts of a real estate licensee during the period of the suspension, although the qualifying broker may receive payment due for work done on transactions prior to the onset of the suspension; | |
| (c) | must return the wall certificate of the partnership, limited liability company, or the corporation and the wall certificates and pocket cards of any licensees affiliated with the partnership, limited liability company, or corporation to the Commission; however, if the corporation or limited liability company immediately designates a new qualifying broker to replace the suspended qualifying broker, the corporation or limited liability company may continue to operate and retain its wall certificate and the wall certificates and pocket cards of other licensees affiliated with it; | |
| (d) | must sign releases for all licensees affiliated with the partnership or corporation so that they may transfer to a new company or place their licenses on inactive status if the partnership, limited liability company, or corporation will not continue to operate. |
If the partnership, limited liability company, or corporation does not take one of the options outlined in (c) or (d) above, its license and those of all licensees affiliated with it shall be suspended for the period the qualifying broker is suspended. If the license of the partnership, limited liability company, or corporation becomes suspended, it must:
| (a) | close its office for the duration of the suspension and may not allow any advertising that represents to the public that it is actively licensed, | ||
| (b) | notify all persons that have brokerage engagements with it that their engagements are canceled effective the date of the suspension, and | ||
| (c) | handle any sales under contract but not closed in a manner agreed to by the Commission, and it may receive payment due for work done on those transactions begun prior to the beginning of the suspension; and | ||
| (d) | may resume all activities of a real estate licensee when the suspension ends provided: | ||
| (1) | the qualifying broker has completed any education or actions required during the period of suspension, | ||
| (2) | the qualifying broker has notified the Commission in writing of the address at which the firm will conduct business or filed a transfer form with the Commission if he or she plans to become affiliated with a firm as an associate broker, and | ||
| (3) | the qualifying broker has paid the Commission any fees due. | ||
SUSPENSION OF THE LICENSE OF A PARTNERSHIP, LIMITED LIABILITY COMPANY, OR A CORPORATION
If the Commission decides to suspend the license of a partnership, a limited liability company or a corporation, or if suspension is the agreement reached between the Commission and the partnership, limited liability company or corporation in a consent settlement, the partnership, limited liability company or corporation:
| (a) | must return its wall certificate and the wall certificates and pocket cards of its qualifying broker and its affiliated licensees to the Commission; | ||
| (b) | must cause its qualifying broker to sign releases for all licensees affiliated with it so they may transfer to a new company or place their licenses on inactive status; failure to do so would result in the suspension of affiliated licensees for the period of the partnership’s or corporation’s suspension; | ||
| (c) | may not do any of the acts of a real estate licensee during the period of the suspension; | ||
| (d) | must close its offices for the duration of the suspension and may not allow any advertising that represents to the public that it is actively licensed; | ||
| (e) | must notify all persons who have brokerage engagements with the firm that their engagements are canceled effective the date of the suspension; | ||
| (f) | must handle any sales under contract but not closed in a manner agreed to by the Commission, although the firm may receive payment due for work done on those transactions begun prior to the beginning of the suspension; and | ||
| (g) | may resume all activities of a real estate licensee when the suspension ends provided: | ||
| (1) | the partnership, limited liability company, or corporation has completed any actions the final order required it to complete during the period of suspension, | ||
| (2) | it designates a qualifying broker whose license is active and not under a suspension, | ||
| (3) | it has notified the Commission in writing of the address at which it will conduct business, and | ||
| (4) | it pays the Commission any fees due. | ||
REVOCATION OF THE LICENSE OF A COMMUNITY ASSOCIATION MANAGER, SALESPERSON, OR ASSOCIATE BROKER
If the Commission revokes the license of a community association manager, salesperson, or associate broker, or if revocation is the agreement reached between the commission and the licensee in a consent settlement, the licensee:
| (a) | must return the licensee’s wall certificate and pocket card to the Real Estate Commission; | |
| (b) | may not do any of the acts of a real estate licensee after the effective date of the revocation; | |
| (c) | should review with the broker all work in progress at the time the revocation becomes effective so that the broker can reassign that work to other licensees; | |
| (d) | may receive from the broker any fees earned for work begun prior to the revocation. |
REVOCATION OF LICENSE OF THE BROKER OF A SOLE PROPRIETORSHIP
If the Commission revokes the license of the broker of a sole proprietorship, or if revocation is the agreement reached between the commission and the broker in a consent settlement, the licensee:
| (a) | must return his or her wall certificate and pocket card and those of any licensees affiliated with him/her to the Commission; | |
| (b) | must sign releases for all licensees affiliated with him/her so they may transfer to a new company or place their licenses on inactive status; | |
| (c) | may not do any of the acts of a real estate licensee after the effective date of the revocation; | |
| (d) | must notify all persons who have brokerage engagements with the firm that their engagements are canceled effective the date of the revocation; and | |
| (e) | must handle any sales under contract but not closed in a way agreed to by the Commission, and the broker may receive payment due for work done on transactions begun prior to the effective date of the revocation. |
REVOCATION OF THE LICENSE OF THE QUALIFYING BROKER OF A PARTNERSHIP, LIMITED LIABILITY COMPANY, OR CORPORATION
If the Commission decides to revoke the license of the qualifying broker of a partnership, limited liability company, or corporation, or if the Commission and the licensee agree to revocation in a consent settlement, the licensee:
| (a) | must return the licensee’s wall certificate and pocket card to the Commission; | |
| (b) | may not do any of the acts of a real estate licensee after the effective date of the revocation, although the qualifying broker may receive payment for work done on transactions begun prior to the effective date of the revocation; | |
| (c) | must return the wall certificate of the partnership or the corporation and the wall certificates and pocket cards of any licensees affiliated with it to the Commission; however, if the corporation designates a new qualifying broker to replace the qualifying broker whose license is revoked, the corporation may continue to operate and retain its wall certificate and the wall certificates and pocket cards of other licensees affiliated with it; and | |
| (d) | must sign releases for all licensees affiliated with the partnership or corporation so that they may transfer to a new company or place their licenses on inactive status if the partnership, limited liability company, or corporation will not continue to operate. |
If the partnership, limited liability company, or corporation does not take the option outlined in (c) above, it may not continue to operate. In that event it must:
| (a) | close its office and not allow any advertising that represents to the public that it is actively licensed, | |
| (b) | notify all persons that have brokerage engagements with it that their engagements are canceled effective the date of the revocation of the qualifying broker’s license, and | |
| (c) | handle any sales under contract but not closed in a manner agreed to by the Real Estate Commission, and it may receive payment due for work done on the sales contracts entered into prior to the revocation of a qualifying broker’s license. |
REVOCATION OF THE LICENSE OF A PARTNERSHIP, LIMITED LIABILITY COMPANY, OR CORPORATION
If the Commission decides to revoke the license of a partnership or corporation, or if revocation is the agreement reached between the Commission and the licensee in a consent settlement, the partnership or corporation must:
| (a) | must return its wall certificate and the wall certificates and pocket cards of its qualifying broker and its affiliated licensees to the Commission; | |
| (b) | must cause its qualifying broker to sign releases for all licensees affiliated with it so that they may transfer to a new company or place their licenses on inactive status; | |
| (c) | may not do any of the acts of a real estate licensee after the effective date of its revocation; | |
| (d) | must notify all persons that have brokerage engagements with the firm that their engagements are canceled effective the date of the revocation; and | |
| (e) | must handle any sales under contract but not closed in a manner agreed to by the Real Estate Commission, and the firm may receive payment due for work done on those transactions begun prior to the effective date of the revocation. |
(c) Copyright 2006 Georgia Real Estate Commission and Appraisers Board. All rights reserved.