4.2 License Law Violations & Discipline
Key Takeaways
- Grounds for discipline are listed in the License Act (Neb. Rev. Stat. 81-885.24) and include fraud, trust-account violations, and undisclosed dual agency
- Practicing real estate without a license - or on an expired license - is a criminal offense in Nebraska
- Before adverse action, a licensee is entitled to due process: notice of charges, a hearing, the right to counsel, to present evidence, and to appeal
- NREC sanctions range from reprimand and civil fine to probation, suspension, and revocation, and may include required education
- NREC adopted updated advertising regulations requiring truthful ads, clear licensee/brokerage identification, and compliant team names
NREC investigates complaints and disciplines licensees who violate the Nebraska Real Estate License Act. The statutory grounds for discipline are catalogued in Neb. Rev. Stat. 81-885.24; expect questions on what counts as a violation and what process protects the licensee.
Common Violations
Misrepresentation and fraud
| Violation | Description |
|---|---|
| Material misrepresentation | False statements about important facts |
| Omission | Failing to disclose a known material defect |
| Fraud | Intentional deception for 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 timely | Missing the 72-hour / next-banking-day rule |
| Poor records | Inadequate ledgers or documentation |
Agency and disclosure violations
| Violation | Description |
|---|---|
| Agency disclosure failure | Not providing the required disclosure timely |
| Undisclosed dual agency | Acting for both parties without written consent |
| Breach of fiduciary duty | Violating duties owed to a client |
| Undisclosed personal interest | Failing to disclose the licensee's own interest |
Unlicensed activity
| Violation | Description |
|---|---|
| Practicing without a license | Performing licensed activities unlicensed |
| Practicing on an expired license | Continuing to work after expiration |
| Paying unlicensed persons | Compensating unlicensed individuals for licensed acts |
Criminal exposure: Practicing real estate without a license - including on an expired license - is a criminal offense in Nebraska, separate from any administrative discipline.
The Disciplinary Process
Investigation
- A complaint is filed with NREC (or NREC initiates an investigation).
- NREC staff investigate - gathering documents, interviews, and audit results.
- NREC determines whether to proceed to formal action.
Hearing and due process
If NREC proceeds, the licensee is entitled to a fair process - the exam tests these due-process rights specifically:
| Right | Description |
|---|---|
| Notice | Written notice of the charges |
| Hearing | A formal hearing before adverse action |
| Counsel | The right to be represented by an attorney |
| Evidence | The right to present evidence and witnesses |
| Appeal | The right to appeal an unfavorable decision to court |
NREC holds subpoena power: it can compel testimony and document production, enforceable through the courts. The Commission issues a written decision, which the licensee may appeal.
Exam framing: A licensee facing discipline cannot be summarily stripped of a license. Notice and a hearing come first - revocation without due process is invalid.
Disciplinary Sanctions
NREC may impose, alone or in combination:
| Sanction | Description |
|---|---|
| Denial | Refuse to issue or renew a license |
| Reprimand | Formal written warning |
| Civil fine | Monetary penalty |
| Required education | Mandated remedial coursework |
| Probation | Conditional license with restrictions |
| Suspension | Temporary loss of license |
| Revocation | Permanent loss of license |
Factors that shape the penalty
| Factor | Effect |
|---|---|
| Severity of the violation | More serious conduct = harsher sanction |
| Prior disciplinary history | Repeat violations = stricter penalty |
| Harm to consumers | Greater harm = more serious response |
| Cooperation | Cooperation may mitigate |
| Rehabilitation | Remedial steps may reduce penalty |
Criminal Penalties
Some conduct triggers criminal prosecution in addition to license discipline:
| Conduct | Potential consequence |
|---|---|
| Practicing without/expired license | Criminal charges and fines |
| Fraud | Criminal prosecution |
| Conversion of trust funds | Criminal charges, possible imprisonment |
Advertising Regulation Updates
NREC has adopted updated advertising regulations. Core requirements:
| Requirement | Description |
|---|---|
| Truthfulness | All advertising must be truthful and not deceptive |
| Identification | The responsible licensee and brokerage must be identifiable |
| No misleading claims | No false or misleading statements |
| Team names | Team and group names must comply with NREC rules |
Advertising rules matter because the public relies on ads to choose representation; misleading ads (e.g., implying a salesperson is an independent broker) undermine the consumer protection that licensing exists to provide.
Consumer Protection and Remedies
Filing a complaint
Consumers may complain to NREC:
- Submit a written complaint.
- NREC reviews for jurisdiction.
- NREC investigates if warranted.
- NREC reaches a disposition - dismiss or proceed.
- NREC imposes discipline if appropriate.
Consumer remedies
| Remedy | Description |
|---|---|
| NREC complaint | Administrative action against the licensee |
| Civil lawsuit | The consumer may also sue the licensee |
| Damages | Recovery of actual damages |
| Attorney's fees | Recoverable in some statutory actions (e.g., disclosure claims) |
Administrative vs. civil action
It is important to distinguish the two tracks: an NREC complaint can lead to license discipline (reprimand, fine, suspension, revocation) but does not by itself put money back in the consumer's pocket. To recover damages, the consumer pursues a civil lawsuit (for example, the disclosure cause of action under 76-2,120, which must be filed within one year). The two tracks can proceed in parallel.
Putting it together: A licensee who converts earnest money could face (1) an NREC revocation, (2) criminal theft charges, and (3) a civil suit by the harmed party - three separate consequences from one act.
Which action is a criminal offense in Nebraska?
What rights does a Nebraska licensee have before NREC takes disciplinary action?
Which of the following is NOT a disciplinary action NREC can impose?
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