4.2 License Law Violations & Discipline
Key Takeaways
- HIREC can investigate complaints, conduct hearings, and impose disciplinary actions
- Violations can result in license denial, suspension, revocation, or fines up to \$500 per violation
- Common violations include misrepresentation, commingling, unlicensed activity, and disclosure failures
- Practicing without a license is a criminal offense in Hawaii
- Licensees have due process rights including notice and hearing before disciplinary action
Last updated: January 2026
HIREC has authority to investigate complaints and take disciplinary action against licensees who violate Hawaii real estate license law (HRS Chapter 467).
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 |
| Inducing breach | Encouraging party to break existing contract |
Trust Account Violations
| Violation | Description |
|---|---|
| Commingling | Mixing client and broker funds |
| Conversion | Using client funds without authorization |
| Failure to deposit | Not depositing funds timely |
| Poor records | Inadequate documentation |
| Unauthorized disbursement | Releasing funds improperly |
Agency and Disclosure Violations
| Violation | Description |
|---|---|
| Undisclosed dual agency | Acting for both parties without consent |
| Failure to disclose | Not providing required disclosures |
| Breach of fiduciary duty | Violating duties to clients |
| Undisclosed interest | Failing to disclose personal interest |
| RECAD violations | Failing to provide required agency disclosure |
Unlicensed Activity
| Violation | Description |
|---|---|
| Practicing without license | Performing activities requiring a license |
| Practicing on expired license | Working after expiration |
| Aiding unlicensed practice | Helping unlicensed person practice |
| Paying unlicensed persons | Compensating unlicensed individuals |
Warning: Practicing real estate without a license is a criminal misdemeanor in Hawaii, punishable by fine and/or imprisonment.
Disciplinary Process
How Complaints Are Filed
- Consumer complaint filed with Real Estate Branch
- HIREC-initiated based on audit or investigation
- Other agency referral (law enforcement, other boards)
Investigation Process
| Step | Description |
|---|---|
| Complaint received | Filed with Real Estate Branch |
| Preliminary review | Staff reviews for jurisdiction |
| Investigation | Gather evidence, interview witnesses |
| Probable cause | HIREC determines if cause exists |
| Notice to licensee | If proceeding with action |
| Hearing | Formal proceeding |
| Decision | HIREC issues final order |
Due Process Rights
Licensees have the right to:
- Notice of specific charges
- Hearing before adverse action
- Representation by attorney
- Present evidence and witnesses
- Cross-examine witnesses
- Appeal unfavorable decisions
Disciplinary Actions
Available Penalties
| Action | Description |
|---|---|
| Reprimand | Formal warning on record |
| Fine | Up to $500 per violation for individuals |
| Probation | Supervised practice with conditions |
| Suspension | Temporary loss of license |
| Revocation | Permanent loss of license |
| Denial | Refuse to issue or renew license |
| Consent agreement | Negotiated settlement |
Aggravating Factors
| Factor | Impact |
|---|---|
| Prior violations | Harsher penalty |
| Consumer harm | More serious |
| Pattern of conduct | More serious |
| Financial loss | Affects penalty |
| Lack of cooperation | May increase penalty |
Mitigating Factors
| Factor | Impact |
|---|---|
| First offense | May reduce penalty |
| Cooperation | May reduce penalty |
| Remedial action | Shows good faith |
| Restitution | Compensating victims |
| Education | Additional training completed |
Specific Violations and Penalties
Grounds for Discipline Under HRS 467
Key violations that can result in discipline:
| Violation | Statutory Reference |
|---|---|
| Fraud or misrepresentation | HRS 467-14(1) |
| Material misstatement in application | HRS 467-14(2) |
| Conviction of crime | HRS 467-14(3) |
| Failure to account for funds | HRS 467-14(4) |
| Commingling | HRS 467-14(5) |
| Acting as dual agent without consent | HRS 467-14(6) |
| Accepting undisclosed compensation | HRS 467-14(7) |
| Violating license law or rules | HRS 467-14(8) |
Criminal Penalties
Some violations carry criminal penalties:
| Offense | Penalty |
|---|---|
| Practicing without license | Misdemeanor—fine and/or imprisonment |
| Fraud/theft | Felony depending on amount |
| False statements to HIREC | Misdemeanor |
Real Estate Recovery Fund Claims
When Claims Arise
The Recovery Fund pays when:
- Licensee commits fraud, misrepresentation, or dishonest dealing
- Consumer obtains court judgment
- Consumer cannot collect from licensee
- Consumer applies to HIREC
Limits
| Limit | Amount |
|---|---|
| Per transaction | $25,000 |
| Per licensee (aggregate) | $75,000 |
Effect on License
| Consequence | Details |
|---|---|
| Automatic suspension | Upon payment from fund |
| Repayment required | Must repay fund plus interest |
| No reinstatement | Until full repayment |
| Possible revocation | For repeat claims |
Avoiding Violations
Best Practices
| Practice | Benefit |
|---|---|
| Complete CE on time | Stay current on law changes |
| Document everything | Protect yourself in disputes |
| Use standard forms | Reduce errors |
| Maintain insurance | E&O coverage |
| Supervise properly | PBs especially |
| When in doubt, disclose | Better to over-disclose |
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Test Your Knowledge
What is the maximum fine HIREC can impose per violation for an individual licensee?
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Test Your Knowledge
Which action is a criminal offense in Hawaii?
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Test Your Knowledge
What happens to a licensee's license when the Recovery Fund pays a claim against them?
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Test Your Knowledge
What rights does a Hawaii licensee have before HIREC takes disciplinary action?
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