4.2 Maryland License Law Violations and Discipline
Key Takeaways
- Violations of Maryland license law can result in fines, suspension, or revocation
- Civil penalties may be up to \$25,000 per violation
- Common violations include trust account mishandling, failure to supervise, and misrepresentation
- The Real Estate Commission investigates complaints and conducts audits
- Licensees have the right to a hearing before disciplinary action is taken
Last updated: January 2026
The Maryland Real Estate Commission has authority to discipline licensees for violations of the Real Estate Brokers Act and Commission regulations.
Types of Violations
Common Violations
| Category | Examples |
|---|---|
| Trust Account | Failure to deposit timely, commingling, conversion |
| Supervision | Inadequate oversight of salespersons |
| Disclosure | Failure to disclose material facts |
| Misrepresentation | False statements about property or transaction |
| Advertising | Misleading ads, failure to identify broker |
| Unlicensed Activity | Practicing without valid license |
| Agency | Failure to provide required disclosures |
Specific Prohibited Acts
Under Maryland law, violations include:
- Fraud or misrepresentation in obtaining a license
- Dishonest or fraudulent dealings
- False advertising or misleading statements
- Failure to account for funds or documents
- Commingling of client and personal funds
- Splitting fees with unlicensed persons
- Failure to disclose interest in property
- Violating fair housing laws
- Conviction of crime involving moral turpitude
- Practicing while impaired by drugs or alcohol
Disciplinary Process
Investigation
MREC initiates investigations based on:
- Consumer complaints
- Routine audits
- Referrals from other agencies
- Self-reporting by licensees
Resolution Options
| Severity | MREC Action |
|---|---|
| Minor/Technical | Letter of warning or education |
| Moderate | Fine and/or probation |
| Serious | Suspension |
| Severe | License revocation |
Penalties and Sanctions
Civil Penalties
| Violation Type | Maximum Penalty |
|---|---|
| Per violation | $25,000 |
| Multiple violations | Cumulative penalties possible |
Important: Maryland's $25,000 maximum penalty per violation is higher than many other states.
Other Sanctions
| Sanction | Description |
|---|---|
| Probation | License remains active with conditions |
| Suspension | Temporary loss of license |
| Revocation | Permanent loss of license |
| Denial | Refusal to issue or renew license |
| Education | Required completion of courses |
| Audit | Required periodic trust account audits |
Hearing Rights
Licensees facing disciplinary action have the right to:
- Written notice of charges
- Formal hearing before the Commission
- Present evidence and witnesses
- Legal representation
- Appeal adverse decisions
Real Estate Guaranty Fund
Maryland maintains a Real Estate Guaranty Fund to compensate victims of licensee misconduct:
| Feature | Detail |
|---|---|
| Maximum per transaction | Varies |
| Source of funds | Licensee contributions |
| Condition | Licensee must be unable to pay judgment |
| Effect on License | Suspension until fund is reimbursed |
How the Guaranty Fund Works
- Consumer obtains judgment against licensee
- Licensee fails to pay judgment
- Consumer applies to Guaranty Fund
- Fund pays consumer (subject to limits)
- Licensee's license suspended until fund reimbursed
Grounds for Automatic Denial or Revocation
Certain offenses may result in automatic license action:
| Offense | Action |
|---|---|
| Felony conviction (certain types) | Denial or revocation |
| Fraud in obtaining license | Revocation |
| Practicing while suspended | Additional penalties |
| Failure to reimburse Guaranty Fund | Automatic suspension |
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Test Your Knowledge
What is the maximum civil penalty per violation that the Maryland Real Estate Commission can impose?
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Test Your Knowledge
What happens if the Real Estate Guaranty Fund pays a claim against a licensee?
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