4.2 License Law Violations & Discipline
Key Takeaways
- VREC can investigate complaints, conduct hearings, and impose disciplinary actions
- Violations can result in license denial, suspension, revocation, or fines
- Common violations include misrepresentation, commingling, unlicensed activity, and disclosure violations
- Practicing without a license is prohibited under Vermont law
- Licensees have due process rights including notice and hearing before disciplinary action
Last updated: January 2026
VREC has authority to investigate complaints and take disciplinary action against licensees who violate Vermont real estate law.
Common Violations
Misrepresentation and Fraud
| Violation | Description |
|---|---|
| Material misrepresentation | False statements about important facts |
| Omission | Failing to disclose known material facts |
| Fraud | Intentional deception for personal gain |
| False advertising | Misleading marketing or claims |
| Distributing inaccurate information | Knowingly providing false property information |
Trust Account Violations
| Violation | Description |
|---|---|
| Commingling | Mixing client and broker funds |
| Conversion | Using client funds without authorization |
| Failure to deposit | Not depositing funds within 5 banking days |
| Poor records | Inadequate documentation |
| Failure to notify | Not notifying VREC of new accounts |
Agency and Disclosure Violations
| Violation | Description |
|---|---|
| Mandatory Disclosure violations | Failing to provide required disclosures |
| Undisclosed dual agency | Acting for both parties without written consent |
| Breach of fiduciary duty | Violating duties to clients |
| Unfair treatment | Not treating all parties fairly |
Unlicensed Activity
| Violation | Description |
|---|---|
| Practicing without license | Performing activities requiring a license |
| Practicing on expired license | Continuing to work after expiration |
| Aiding unlicensed activity | Helping unlicensed persons perform licensed activities |
Warning: Practicing real estate without a license is a serious violation under Vermont law.
Disciplinary Process
Investigation
- Complaint filed with VREC (or VREC initiates investigation)
- Investigation conducted by OPR staff
- Evidence gathered (documents, interviews, audits)
- Determination made whether to proceed
Hearing Process
If VREC 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
VREC 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 | Monetary penalty |
| 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 |
| Rehabilitation | Remedial steps may help |
Grounds for Discipline
Vermont law specifies grounds for disciplinary action, including but not limited to:
Unprofessional Conduct
| Ground | Description |
|---|---|
| Incompetence | Lack of ability to practice safely |
| Negligence | Failure to exercise reasonable care |
| Misconduct | Behavior unbecoming a licensee |
Violations of Law
| Ground | Description |
|---|---|
| License law violations | Violating any provision of Chapter 41 |
| Rule violations | Violating VREC administrative rules |
| Criminal activity | Conviction of certain crimes |
| Other law violations | Violating federal or state laws |
Financial Misconduct
| Ground | Description |
|---|---|
| Trust fund violations | Commingling, conversion, improper handling |
| Failure to account | Not accounting for client funds |
| Dishonest dealing | Financial dishonesty in transactions |
Reporting Requirements
Licensees must report to VREC:
| Event | Reporting Requirement |
|---|---|
| Criminal conviction | Within specified timeframe |
| Disciplinary action in other states | Promptly |
| Material changes to application | As required |
Protection of the Public
The primary purpose of VREC discipline is public protection:
- Ensuring competent practitioners
- Maintaining professional standards
- Protecting consumers from harm
- Preserving integrity of the profession
Key Point: All VREC disciplinary actions are ultimately aimed at protecting the public.
Loading diagram...
Test Your Knowledge
What is the primary purpose of VREC disciplinary actions?
A
B
C
D
Test Your Knowledge
What rights does a Vermont licensee have before VREC takes disciplinary action?
A
B
C
D
Test Your Knowledge
Which of the following can VREC impose as a disciplinary action?
A
B
C
D
Congratulations!
You've completed this section
Continue exploring other exams