1.1 Hawaii Real Estate Commission (HREC)
Key Takeaways
- The Hawaii Real Estate Commission (HREC) sits inside the Professional and Vocational Licensing Division of the Department of Commerce and Consumer Affairs (DCCA)
- HREC has 9 members: at least 4 brokers, at least 2 salespersons, and 2 public members, with at least one member from each county (Hawaii, Honolulu, Maui, Kauai)
- Hawaii real estate license law is Hawaii Revised Statutes (HRS) Chapter 467; the implementing rules are Hawaii Administrative Rules (HAR) Title 16, Chapter 99
- The Real Estate Branch staff handle day-to-day licensing, exams, and complaint intake; HREC sets policy and decides discipline
- The Real Estate Recovery Fund pays victims up to $25,000 per transaction (HRS 467-16) and $50,000 aggregate per licensee (HRS 467-24)
The Hawaii Real Estate Commission
The Hawaii Real Estate Commission (HREC) is the state body that licenses and disciplines real estate brokers and salespersons. It is not a free-standing agency: it operates inside the Professional and Vocational Licensing (PVL) Division of the Department of Commerce and Consumer Affairs (DCCA). The state exam expects you to know this chain of authority, so memorize the order: DCCA -> PVL Division -> Real Estate Branch -> HREC.
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Commission Composition
Under HRS Chapter 467, the Governor appoints 9 commissioners (confirmed by the Senate) to staggered 4-year terms. The makeup is more specific than "7 industry + 2 public" — the statute sets minimum role and geographic quotas:
| Requirement | Rule |
|---|---|
| Total members | 9 |
| Brokers | At least 4 must be licensed brokers |
| Salespersons | At least 2 must be licensed salespersons |
| Public members | 2 (no real estate license) |
| County representation | At least one member from each of the 4 counties: Hawaii, Honolulu, Maui, Kauai |
The county-balance rule is a classic state-exam distractor. If a question says all members may come from Oahu, that is false — each county must be represented. A commissioner serving past a term holds over until a successor is appointed.
What HREC Does
| Function | Example |
|---|---|
| Licensing standards | Approve the 60-hour salesperson curriculum and the broker prerequisites |
| Examination | Approve the test vendor (PSI) and the content outline |
| Rulemaking | Adopt and amend HAR Title 16, Chapter 99 |
| Discipline | Find probable cause, hold hearings, issue final orders |
| Recovery Fund | Administer the Real Estate Recovery Fund and order repayment |
| Education | Set the 20-hour continuing education program and core course |
The Two-Layer Law
Hawaii real estate regulation is built on two stacked sources, and the exam tests which is which:
- HRS Chapter 467 — the statute. Passed by the Legislature. It defines who must be licensed, the duties of brokers and salespersons, prohibited acts, the Recovery Fund, and the range of penalties.
- HAR Title 16, Chapter 99 — the rules. Adopted by HREC under authority delegated by the statute. Rules fill in operational detail (advertising standards, trust-account handling, education specifics).
A related statute you must not confuse with 467 is HRS Chapter 514B, the Condominium Property Act. Hawaii's high condo density makes 514B fair game on the state portion, but it governs the condominium product, not licensing.
Quick contrast
| Citation | Governs |
|---|---|
| HRS Chapter 467 | Real estate licensing and licensee conduct |
| HAR Title 16, Ch. 99 | HREC's implementing rules |
| HRS Chapter 514B | Condominium associations and disclosures |
| HRS Chapter 521 | Residential Landlord-Tenant Code |
Common trap: Candidates pick HAR Ch. 99 when asked "where is the license law?" The law (statute) is HRS 467; Ch. 99 is the rules. Read whether the question asks for the statute or the administrative rule.
DCCA, PVL, and the Real Estate Branch
The DCCA is the umbrella state department for consumer protection and professional licensing. Within it, the PVL Division administers dozens of boards and commissions. The Real Estate Branch is the PVL staff unit dedicated to real estate; it is where applications, fees, and complaints physically land.
Keep the division of labor straight — the exam likes to swap "staff" duties with "commission" duties:
| Body | Role | Decides discipline? |
|---|---|---|
| DCCA | Parent department, consumer protection | No |
| PVL Division | Administers all licensing boards | No |
| Real Estate Branch | Processes applications, exams, fees, complaint intake, investigations | No — recommends only |
| HREC | Sets policy, finds probable cause, issues final orders | Yes |
So when a consumer files a complaint, the Real Estate Branch investigates and the Commission decides. Staff cannot revoke a license; only HREC can.
Disciplinary Powers and Penalties
HREC may impose a graduated range of sanctions, and the Commission may stack penalties (for example, a fine plus suspension). Two different fining tracks exist and the exam can test either: the general professional-licensing administrative fine under HRS 436B-21 reaches up to $1,000 per violation, while the Chapter 467 penalty provision (HRS 467-26) sets a ceiling of not more than $5,000 for each violation. When a question cites HRS 467-26 by number, the answer is $5,000; the $1,000 figure is the general 436B administrative-fine cap.
| Penalty | Effect |
|---|---|
| Reprimand | Formal warning placed in the licensee's record |
| Administrative fine | Up to $1,000 per violation (HRS 436B-21); chapter penalty up to $5,000 per violation (HRS 467-26) |
| Probation | Continued practice under stated conditions |
| Suspension | Temporary loss of the right to practice |
| Revocation | Permanent cancellation of the license |
| Denial / refusal to renew | Block a new or renewing applicant |
Grounds for Discipline
- Fraud, misrepresentation, or dishonest dealing in a transaction
- Commingling client funds with personal or brokerage funds; failure to account for trust money
- Conviction of a crime substantially related to fitness to practice (including moral turpitude)
- False, misleading, or unauthorized advertising
- Acting outside the scope of the license (e.g., a salesperson operating independently)
- Violating any provision of HRS 467 or HAR Ch. 99
The Real Estate Recovery Fund
The Real Estate Recovery Fund is a consumer-protection pool funded by licensee fees. A member of the public who wins a court judgment against a licensee for fraud, misrepresentation, or deceit in a real estate transaction — and cannot collect it — may petition the fund.
| Limit | Amount |
|---|---|
| Maximum per transaction (HRS 467-16) | $25,000 |
| Aggregate maximum per licensee (HRS 467-24) | $50,000 |
Exam-critical correction: The aggregate cap is $50,000 per licensee under HRS 467-24, not $75,000. The single-transaction cap is $25,000 under HRS 467-16. Expect both numbers to appear as answer choices.
The fund is a payer of last resort — the claimant must first exhaust efforts to collect from the licensee. When HREC pays a claim, the offending licensee's license is automatically suspended and stays suspended until the licensee repays the fund in full plus interest.
Common trap: The fund does not cover ordinary commission disputes or a broker's bad business judgment — only fraud-type wrongdoing reduced to a judgment.
Which statement about the composition of the Hawaii Real Estate Commission is correct?
A consumer who is defrauded by a licensee and obtains an uncollectible court judgment may recover from the Real Estate Recovery Fund up to what aggregate amount per licensee?
Where is Hawaii's real estate license LAW found, as distinct from the Commission's implementing rules?