Key Takeaways
- NDREC can investigate complaints, conduct hearings, and impose disciplinary actions
- Violations can result in license denial, suspension, revocation, or fines
- Common violations include misrepresentation, commingling, unlicensed activity, and disclosure violations
- Practicing without a license is a criminal offense in North Dakota
- Licensees have due process rights including notice and hearing before disciplinary action
Last updated: January 2026
License Law Violations & Discipline
NDREC has authority to investigate complaints and take disciplinary action against licensees who violate the North Dakota Real Estate License Law.
Common Violations
Misrepresentation and Fraud
| Violation | Description |
|---|---|
| Material misrepresentation | False statements about important facts |
| Omission | Failing to disclose known material defects |
| Fraud | Intentional deception for personal gain |
| False advertising | Misleading marketing or claims |
Trust Account Violations
| Violation | Description |
|---|---|
| Commingling | Mixing client and broker funds (over $500) |
| Conversion | Using client funds without authorization |
| Failure to deposit | Not depositing funds within 24 hours |
| Poor records | Inadequate documentation |
| Failure to notify | Not reporting account changes to NDREC |
Agency and Disclosure Violations
| Violation | Description |
|---|---|
| Disclosure violations | Failing to provide required agency disclosure |
| Undisclosed dual agency | Acting for both parties without consent |
| Breach of fiduciary duty | Violating duties to clients |
| Undisclosed interest | Failing to disclose personal interest |
| Property disclosure failures | Not disclosing material facts |
Unlicensed Activity
| Violation | Description |
|---|---|
| Practicing without license | Performing activities requiring a license |
| Practicing on expired license | Continuing to work after expiration |
| Paying unlicensed persons | Compensating unlicensed individuals for licensed activities |
Warning: Practicing real estate without a license is a criminal offense in North Dakota.
Other Violations
| Violation | Description |
|---|---|
| Failure to supervise | Broker not supervising salespersons |
| Advertising violations | Improper or misleading ads |
| Fee violations | Improper handling of commissions |
| Education violations | Failure to complete required CE |
Disciplinary Process
Investigation
- Complaint filed with NDREC (or NDREC initiates investigation)
- Investigation conducted by NDREC staff
- Evidence gathered (documents, interviews, audits)
- Determination made whether to proceed
Hearing Process
If NDREC proceeds with disciplinary action:
| Step | Description |
|---|---|
| Notice | Licensee notified of charges |
| Hearing | Formal hearing before Commission |
| Evidence | Both sides present evidence |
| Decision | Commission issues written decision |
| Appeal | Licensee may appeal to court |
Due Process Rights
Licensees have the right to:
- Notice of charges
- Hearing before adverse action
- Representation by attorney
- Present evidence and witnesses
- Appeal unfavorable decisions to district court
Disciplinary Actions
NDREC may impose various sanctions:
| Action | Description |
|---|---|
| Denial | Refuse to issue license |
| Suspension | Temporary loss of license |
| Revocation | Permanent loss of license |
| Reprimand | Formal warning |
| Fine | Monetary penalty |
| Probation | Conditional license with restrictions |
| Education | Required additional training |
| Conditions | Specific requirements to maintain license |
Factors Considered
| Factor | Impact |
|---|---|
| Severity of violation | More serious = harsher penalty |
| Prior disciplinary history | Repeat violations = stricter |
| Harm to consumers | Consumer damage = more serious |
| Cooperation | Cooperation may reduce penalty |
| Rehabilitation | Remedial steps may help |
Recovery Fund Claims
When the Recovery Fund pays a claim:
| Consequence | Details |
|---|---|
| License status | Automatically suspended |
| Reinstatement | Must repay fund in full |
| Interest | May be required |
| Additional penalties | May apply |
Reporting Requirements
Licensees must report to NDREC:
| Event | Timing |
|---|---|
| Criminal conviction | Promptly |
| Civil judgment (real estate related) | Promptly |
| Disciplinary action in other states | Promptly |
| Change of address | Within 10 days |
| Trust account changes | Within 10 days |
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Test Your Knowledge
Which action is a criminal offense in North Dakota?
A
B
C
D
Test Your Knowledge
What happens to a licensee's license when the Recovery Fund pays a claim against them?
A
B
C
D
Test Your Knowledge
What rights does a North Dakota licensee have before NDREC takes disciplinary action?
A
B
C
D
Test Your Knowledge
Which of the following is NOT a disciplinary action NDREC can impose?
A
B
C
D