4.3 Indiana License Law Violations and Discipline
Key Takeaways
- The Indiana Real Estate Commission can suspend, revoke, or refuse to renew licenses for violations
- Common violations include trust account mishandling, misrepresentation, and failure to supervise
- Licensees can face significant fines per violation
- The Real Estate Recovery Fund protects consumers from licensee misconduct
- Licensees have the right to a hearing before disciplinary action is final
Last updated: January 2026
The Indiana Real Estate Commission has authority to discipline licensees for violations of the Real Estate License Law.
Types of Violations
Common Violations
| Category | Examples |
|---|---|
| Trust Account | Failure to deposit, commingling, conversion |
| Supervision | Inadequate oversight of affiliated brokers |
| Disclosure | Failure to disclose material facts |
| Misrepresentation | False statements |
| Advertising | Misleading ads, failure to identify broker |
| Unlicensed Activity | Practicing without valid license |
| Incompetence | Failure to provide competent service |
Specific Prohibited Acts (IC 25-34.1-8)
Indiana law prohibits:
- Fraud or misrepresentation in obtaining license
- Dishonest or fraudulent dealings
- False advertising or misleading statements
- Failure to account for funds or documents
- Commingling client and personal funds
- Splitting fees with unlicensed persons
- Failure to disclose interest in property
- Violating fair housing laws
- Conviction of felony or crime of moral turpitude
- Practicing while impaired by drugs/alcohol
- Failing to provide agency disclosure
- Violating Indiana license law or rules
Disciplinary Process
Investigation
The Commission investigates complaints from:
- Consumers
- Other licensees
- Routine audits
- Referrals from other agencies
Sanctions and Penalties
Types of Sanctions
| Sanction | Description |
|---|---|
| Warning | Written notice of violation |
| Fine | Per violation |
| Education | Required completion of courses |
| Probation | License active with conditions |
| Suspension | Temporary loss of license |
| Revocation | Permanent loss of license |
| Denial | Refusal to issue/renew license |
Hearing Rights
Licensees facing discipline have the right to:
- Written notice of charges
- Administrative hearing
- Present evidence and witnesses
- Legal representation
- Appeal adverse decisions
Real Estate Recovery Fund
The Indiana Real Estate Recovery Fund compensates consumers harmed by licensee misconduct.
Fund Details
| Feature | Detail |
|---|---|
| Maximum per transaction | $15,000 |
| Maximum per licensee | Limited (total from all claims) |
| Source | Licensee fees |
| Requirement | Judgment against licensee |
| Collection | Exhausted other remedies |
Effect on License
If the Recovery Fund pays a claim:
- Licensee's license is suspended
- Must reimburse fund plus interest
- License not reinstated until repaid
Commission Audits
The Commission may audit broker trust accounts:
| Trigger | Action |
|---|---|
| Complaint | Investigation initiated |
| Random audit | Routine oversight |
| License renewal | May trigger review |
| Deficiency found | Disciplinary process |
Audit Requirements
Brokers must maintain:
- Current bank statements
- Monthly reconciliations
- Transaction records
- Deposit/disbursement logs
- All records for 5 years
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Test Your Knowledge
What is the maximum payout from the Indiana Real Estate Recovery Fund per transaction?
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Test Your Knowledge
What happens to a licensee's license if the Recovery Fund pays a claim against them?
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D