Key Takeaways
- The Commission can investigate complaints, conduct audits, and impose discipline
- Violations include misrepresentation, trust account issues, failure to supervise, and unlicensed activity
- Disciplinary actions range from letters of warning to license revocation
- Licensees can request formal hearings
- Delaware has a Recovery Fund to compensate victims of licensee misconduct
Last updated: January 2026
Delaware License Law Violations and Discipline
The Delaware Real Estate Commission has authority to investigate and discipline licensees for violations of Delaware real estate law.
Types of Violations
Common Violations
| Category | Examples |
|---|---|
| Misrepresentation | False statements about property |
| Trust Account | Commingling, conversion, failure to deposit |
| Supervision | Inadequate oversight by broker |
| Disclosure | Failure to disclose material facts |
| Unlicensed Activity | Practicing without valid license |
| Fraud | Dishonest dealings |
| Incompetence | Failure to act with reasonable skill |
| Agency Violations | Disclosure issues, undisclosed conflicts |
Specific Prohibited Acts
Grounds for discipline include:
- Obtaining license by fraud or misrepresentation
- Conviction of felony or crime involving moral turpitude
- Making false promises or misrepresentations
- Acting for both parties without proper consent
- Commingling funds
- Failure to provide required documents
- Failure to supervise licensees
- Demonstrating unworthiness or incompetence
- Violating fair housing laws
- Violating Commission rules and regulations
Disciplinary Process
Investigation
The Commission initiates investigations based on:
- Consumer complaints
- Routine audits
- Referrals from other agencies
- Self-reporting
- Transaction reviews
Hearing Rights
Licensees facing discipline have rights to:
- Written notice of allegations
- Formal hearing
- Present evidence and testimony
- Legal representation
- Appeal decisions
Disciplinary Actions
Types of Discipline
| Action | Description |
|---|---|
| Letter of Warning | Informal warning |
| Consent Agreement | Negotiated settlement |
| Probation | License conditions |
| Suspension | Temporary loss of license |
| Revocation | Permanent loss of license |
| Denial | Refusal to issue license |
| Civil Penalty | Fine |
| Education | Required additional education |
Common Penalties
| Violation | Typical Action |
|---|---|
| First minor offense | Warning or education |
| Trust account violation | Suspension or revocation |
| Fraud/misrepresentation | Revocation |
| Failure to disclose | Suspension, education |
| Unlicensed activity | Penalty, injunction |
Recovery Fund
Delaware has a Recovery Fund to compensate victims of licensee misconduct:
| Feature | Detail |
|---|---|
| Maximum per transaction | Statutory limit |
| Maximum per licensee | Statutory limit |
| Source | Licensee fees |
| Requirement | Judgment against licensee |
Qualifying for Recovery
To receive funds:
- Obtain court judgment against licensee
- Show judgment cannot be collected
- File claim with Commission
- Meet all statutory requirements
Consequences of Fund Payment
If the Recovery Fund pays a claim:
- Licensee must repay the fund
- License is suspended until repayment
- Plus interest and costs
Avoiding Violations
Best practices:
- Know the law - Stay current on requirements
- Document everything - Keep complete records
- Disclose fully - When in doubt, disclose
- Handle funds properly - Follow trust account rules
- Supervise carefully - Brokers must oversee licensees
- Stay educated - Complete CE requirements
- Provide Agency Disclosure - At first substantive contact
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Test Your Knowledge
What happens to a Delaware licensee's license if the Recovery Fund pays a claim?
A
B
C
D
Test Your Knowledge
Which of the following is a common violation that can lead to license revocation in Delaware?
A
B
C
D