4.2 License Law Violations & Discipline
Key Takeaways
- OREA can investigate complaints, conduct hearings, and impose disciplinary actions
- Violations can result in license denial, suspension, revocation, or civil penalties
- Common violations include misrepresentation, trust account violations, and unlicensed activity
- Practicing without a license is a criminal offense in Oregon
- Licensees have due process rights including notice and hearing before disciplinary action
Last updated: January 2026
OREA has authority to investigate complaints and take disciplinary action against licensees who violate Oregon 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 principal broker funds |
| Conversion | Using client funds without authorization |
| Failure to deposit | Not depositing funds timely |
| Poor records | Inadequate documentation |
| Failure to reconcile | Not reconciling monthly |
| Late OREA notification | Not notifying within 10 days |
Agency and Disclosure Violations
| Violation | Description |
|---|---|
| Initial Agency Disclosure | Failing to provide pamphlet at first contact |
| Undisclosed dual agency | Acting for both parties without consent |
| Breach of fiduciary duty | Violating duties to clients |
| Property disclosure | Failing to disclose known defects |
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 Oregon.
Disciplinary Process
Investigation
- Complaint filed with OREA (or OREA initiates investigation)
- Investigation conducted by OREA staff
- Evidence gathered (documents, interviews, audits)
- Determination made whether to proceed
Hearing Process
If OREA proceeds with disciplinary action:
| Step | Description |
|---|---|
| Notice | Licensee notified of charges |
| Hearing | Formal hearing before administrative law judge |
| Evidence | Both sides present evidence |
| Decision | Written decision issued |
| Appeal | Licensee may appeal |
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
OREA may impose various sanctions:
| Action | Description |
|---|---|
| Denial | Refuse to issue license |
| Suspension | Temporary loss of license |
| Revocation | Permanent loss of license |
| Reprimand | Formal warning |
| Civil penalty | Monetary penalty up to $5,000 per violation |
| Probation | Conditional license with restrictions |
| Education | Required additional training |
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 |
| Remedial actions | Steps taken to fix problem |
Specific Oregon Violations
Advertising Violations
| Violation | Rule |
|---|---|
| No brokerage name | All ads must include licensed business name |
| False claims | Cannot make false or misleading claims |
| Unlicensed status | Cannot imply licensed status if not licensed |
| Team names | Must not mislead about nature of team |
Supervision Violations
Principal brokers can be disciplined for:
| Violation | Description |
|---|---|
| Inadequate supervision | Failing to properly supervise brokers |
| Training failures | Not ensuring brokers are properly trained |
| Trust account failures | Not maintaining proper trust accounts |
| Record keeping failures | Not maintaining required records |
Consumer Protection Violations
| Violation | Description |
|---|---|
| Failure to present offers | Not presenting all offers to client |
| Unauthorized practice | Acting outside scope of license |
| Fair housing violations | Discrimination in housing |
| Steering | Directing buyers to certain areas |
Criminal Violations
Some violations can result in criminal prosecution:
| Offense | Potential Penalty |
|---|---|
| Unlicensed practice | Criminal charges |
| Fraud | Criminal charges |
| Theft/conversion | Criminal charges |
| Forgery | Criminal charges |
Important: Criminal violations are prosecuted by county district attorneys or the Oregon Department of Justice, not OREA. OREA handles administrative discipline.
Complaint Process
How to File a Complaint
- Submit complaint to OREA (online or written)
- Provide details - who, what, when, where
- Include documentation if available
- OREA investigates within its jurisdiction
Time Limits
| Limit | Timeframe |
|---|---|
| Filing complaint | No specific limit, but sooner is better |
| OREA investigation | Must be completed within reasonable time |
| Statute of limitations | Varies by violation type |
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Test Your Knowledge
What is the maximum civil penalty OREA can impose per violation?
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Test Your Knowledge
Which action is a criminal offense in Oregon?
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Test Your Knowledge
What rights does an Oregon licensee have before OREA takes disciplinary action?
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Test Your Knowledge
Which of the following is NOT a disciplinary action OREA can impose?
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