4.3 Delaware License Law Violations and Discipline
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
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