4.2 License Law Violations
Key Takeaways
- Section 339.100 RSMo lists the causes for discipline: misrepresentation, fraud, commingling/conversion, undisclosed dual agency, and more
- MREC may impose a civil penalty under RSMo 339.205 of up to $2,500 per offense (each day of a continued violation is a separate offense, $25,000 maximum), plus suspension, revocation, probation, or censure
- Paying a commission or valuable consideration to an unlicensed person is a specific statutory violation
- Fair-housing violations (steering, blockbusting, redlining) are both federal violations and grounds for MREC discipline
- Conviction of a felony or a crime involving fraud/moral turpitude can support denial, suspension, or revocation
The Statutory Source: Section 339.100 RSMo
Missouri license-law violations are not vague — they are enumerated in Section 339.100, RSMo. The exam expects you to recognize the named causes for discipline rather than guess. After investigating, MREC files a complaint and the matter is heard by the Administrative Hearing Commission (AHC); only after the AHC finds cause may MREC impose discipline.
Frequently tested named causes
| Cause for Discipline (339.100) | Plain-language meaning |
|---|---|
| Substantial misrepresentation | Materially false statement about a property or transaction |
| Making a false promise likely to influence | Promising results you cannot deliver |
| Acting for more than one party without all parties' knowledge | Undisclosed dual agency |
| Paying a commission to an unlicensed person | Splitting fees with non-licensees |
| Failing to account for or remit money belonging to others | Trust-account commingling/conversion |
| Guaranteeing future profits from resale | Promising appreciation |
| Untrustworthiness, bad faith, dishonesty, or fraud | Catch-all integrity violations |
Trap: Paying a referral fee or commission to an unlicensed person is a specific statutory violation — even a friendly "thank-you" payment for sending a buyer is prohibited. A licensee may only be paid by, or through, their own broker.
Fair Housing, Unlicensed Activity, and the Penalties
Fair-housing violations
Discrimination in a real estate transaction violates the federal Fair Housing Act (race, color, religion, national origin, sex, familial status, and disability) and is independently grounds for MREC discipline. Memorize the three named practices:
- Steering — directing buyers toward or away from neighborhoods based on a protected class.
- Blockbusting — inducing panic selling by suggesting a protected group is moving in.
- Redlining — a lender or insurer denying services to entire geographic areas.
Unlicensed activity
Performing licensed acts for compensation without a current, valid Missouri license is itself a cause for discipline, and a broker who aids or employs an unlicensed person performing those acts is also liable. Licensed acts include listing, negotiating, showing for compensation, and collecting rent for others.
The penalty menu
When the AHC finds cause, MREC may impose the following. Note the exact monetary cap — it is a favorite exam number.
| Sanction | Effect |
|---|---|
| Censure / reprimand | Formal public criticism, license intact |
| Probation | License retained under conditions (monitoring, education) |
| Suspension | Temporary loss of license for a set period |
| Revocation | License taken away (most severe) |
| Civil penalty | Up to $2,500 per offense (Section 339.205); each day of a continued violation is a separate offense, capped at $25,000 |
Trap: Revocation is the most severe sanction but is not always "permanent forever" — Missouri may allow reapplication after a period; the exam contrasts it with suspension, which is temporary by definition. The $2,500 figure is per offense, so multiple violations stack toward the $25,000 cap. Note the citations the exam may test: the grounds for discipline are in Section 339.100, but the civil penalty authority is Section 339.205.
Disclosure Duties, Supervision, and the Unauthorized Practice of Law
Failure to disclose material facts
Missouri licensees owe an affirmative duty to disclose known material defects that are not readily observable. "Material" means a fact that would affect a reasonable buyer's decision or the price — a leaking roof, a cracked foundation, prior flooding, or a non-permitted addition. Concealing such a defect, or making a statement that is technically true but misleading by omission, is substantial misrepresentation under Section 339.100. Note that stigmatizing conditions (such as a death on the property) are treated differently under Missouri law and are generally not required disclosures.
Broker failure to supervise
A Missouri broker is responsible for the acts of the licensees and unlicensed staff in the brokerage. "Failure to supervise" is its own cause for discipline: if an agent commingles funds, runs a blind ad, or commits a fair-housing violation, the supervising broker can be disciplined for inadequate oversight even if the broker did not personally commit the act. This is why brokers must have written policies, review advertising, and monitor escrow handling.
Unauthorized practice of law
Licensees may complete approved, standard fill-in-the-blank forms but may not draft custom legal documents, add complex contingencies that effectively amount to legal drafting, or give legal advice. Crossing that line is both a license violation and the unauthorized practice of law.
| Conduct | Status |
|---|---|
| Filling in price/dates on an approved contract form | Allowed |
| Drafting a custom lease-option clause from scratch | Unauthorized practice of law |
| Advising a client on the legal effect of a lien | Unauthorized practice of law |
| Recommending the client consult an attorney | Required best practice |
Criminal conduct and the application
A conviction for a felony or a crime involving fraud, dishonesty, or moral turpitude is grounds to deny, suspend, or revoke a license, and applicants must disclose criminal history. Failing to disclose a conviction on a renewal or application is itself a separate violation — the cover-up is treated as seriously as the underlying offense.
Trap: "The broker wasn't there, so only the agent is liable" is wrong — failure to supervise makes the broker answerable for the brokerage's conduct.
An agent pays a $500 'thank-you' to an unlicensed friend who referred a buyer that closed. Under Missouri law, this is:
What is the maximum civil penalty MREC may impose per offense under RSMo 339.205?