4.2 License Law Violations & Discipline
Key Takeaways
- LREC can investigate complaints, conduct hearings, and impose disciplinary actions
- Violations can result in license denial, suspension, revocation, or fines up to \$5,000 per violation
- Common violations include misrepresentation, commingling, unlicensed activity, and failure to disclose
- Practicing without a license is a criminal offense in Louisiana
- Licensees have due process rights including notice and hearing before disciplinary action
Last updated: January 2026
LREC has authority to investigate complaints and take disciplinary action against licensees who violate the Louisiana 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 |
| Conversion | Using client funds without authorization |
| Failure to deposit | Not depositing funds timely |
| Poor records | Inadequate documentation |
Agency and Disclosure Violations
| Violation | Description |
|---|---|
| Failure to disclose | Not providing Property Disclosure Document |
| Undisclosed dual agency | Acting for both parties without consent |
| Breach of fiduciary duty | Violating duties to clients |
| Undisclosed interest | Failing to disclose personal interest |
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 Louisiana—not just an administrative violation.
Disciplinary Process
Investigation
- Complaint filed with LREC (or LREC initiates investigation)
- Investigation conducted by LREC staff
- Evidence gathered (documents, interviews, audits)
- Determination made whether to proceed
Hearing Process
If LREC 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
Disciplinary Actions
LREC 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 | Up to $5,000 per violation |
| Probation | Conditional license with restrictions |
| Education | Required additional training |
Fine Schedule
| Violation Severity | Potential Fine |
|---|---|
| Minor violation | Up to $1,000 |
| Moderate violation | $1,000-$3,000 |
| Serious violation | $3,000-$5,000 |
| Multiple violations | Fines can accumulate |
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 |
Specific Louisiana Violations
Property Disclosure Violations
Louisiana requires the Property Disclosure Document:
| Violation | Consequence |
|---|---|
| Failure to provide disclosure | Fine, possible suspension |
| False information on disclosure | Fine, suspension, civil liability |
| Not providing before offer acceptance | Warning to fine |
Civil Law-Specific Issues
Louisiana's civil law creates unique violation scenarios:
| Issue | Description |
|---|---|
| Usufruct not disclosed | Failing to disclose usufruct rights |
| Servitude issues | Not disclosing known servitudes |
| Community property | Proceeding without both spouses' consent |
| Forced heirship | Not advising of forced heirship implications |
Advertising Violations
| Violation | Description |
|---|---|
| No broker identification | Ads must identify broker |
| False claims | Misleading property descriptions |
| Unauthorized use | Using LREC seal without permission |
| Blind ads | Failing to identify as real estate ad |
Reinstatement After Discipline
After Suspension
| Requirement | Description |
|---|---|
| Time served | Complete suspension period |
| CE completed | May need additional education |
| Fines paid | All fines and costs paid |
| Application | Apply for reinstatement |
After Revocation
| Requirement | Description |
|---|---|
| Waiting period | Typically 2-5 years minimum |
| Show rehabilitation | Demonstrate fitness |
| Retake exam | May need to pass exam again |
| Commission approval | LREC must approve |
Note: Revocation for fraud or conversion may result in permanent bar from licensure.
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Test Your Knowledge
What is the maximum fine LREC can impose per violation?
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Test Your Knowledge
Which action is a criminal offense in Louisiana?
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Test Your Knowledge
What rights does a Louisiana licensee have before LREC takes disciplinary action?
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Test Your Knowledge
Which Louisiana-specific violation relates to proceeding with a sale without proper authorization?
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