4.2 License Law Violations & Discipline
Key Takeaways
- WVREC may discipline licensees for fraud, misrepresentation, trust-account violations, agency-disclosure failures, and unlicensed activity under WV Code §30-40-19
- Practicing real estate without a license, or after expiration, is a serious violation and can be a criminal offense in West Virginia
- Before adverse action a licensee is entitled to due process: notice of charges, a hearing, counsel, the chance to present and cross-examine evidence, and an appeal to court
- Sanctions range from denial, censure, fines, probation, and required education to suspension and permanent revocation
- Licensees must promptly report criminal convictions and out-of-state disciplinary actions; failing to report is itself a violation
WVREC has statutory authority to investigate complaints and discipline licensees who violate the West Virginia Real Estate License Act. The grounds for refusal, suspension, or revocation are set out in WV Code §30-40-19.
Common Violations
Misrepresentation and Fraud
| Violation | Description |
|---|---|
| Material misrepresentation | False statements about important facts |
| Omission/concealment | Hiding 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 | Holding funds rather than depositing |
| Inadequate records | Missing ledgers or reconciliations |
Agency and Disclosure Violations
| Violation | Description |
|---|---|
| Disclosure failure | Not delivering the required agency disclosure |
| Undisclosed dual agency | Acting for both sides without consent |
| Breach of fiduciary duty | Violating duties owed to a client |
| Undisclosed personal interest | Failing to disclose self-dealing |
Unlicensed Activity
| Violation | Description |
|---|---|
| Practicing without a license | Performing licensed acts with no license |
| Acting on an expired license | Continuing to work after June 30 expiration |
| Paying unlicensed persons | Compensating the unlicensed for licensed work |
| Aiding unlicensed activity | Helping someone practice without a license |
Warning: Practicing real estate without a license in West Virginia is a criminal offense, separate from any administrative discipline. A broker who shares commissions with an unlicensed person for performing licensed activity also violates the Act — referral compensation can flow only to licensees (or to the principals themselves).
Statutory Grounds for Discipline
| Ground | Examples |
|---|---|
| License obtained by fraud | False statements on the application |
| Criminal conviction | Felony or a crime involving fraud or dishonesty |
| Incompetence | Lack of the knowledge or skill to practice safely |
| Untrustworthiness/bad faith | A pattern of dishonest dealing |
| Violating the License Act | Any breach of WV Code §30-40 |
| Violating Commission rules | Breach of the Title 174 legislative rules |
Due Process — The Disciplinary Path
WVREC cannot strip a license arbitrarily. The process follows a predictable, legally required path:
- Complaint is filed by a consumer or initiated by the Commission.
- Investigation by WVREC staff — documents, interviews, and audits.
- Determination whether the evidence warrants formal charges.
- Notice and hearing if the Commission proceeds.
- Written decision by the Commission.
- Appeal to court available to the licensee.
The Licensee’s Rights
Before the Commission takes adverse action, a licensee is entitled to:
- Notice of the specific charges;
- a hearing before the Commission;
- representation by counsel;
- the opportunity to present evidence and witnesses;
- the right to cross-examine opposing witnesses; and
- the right to appeal an unfavorable decision to court.
Exam point: These due-process protections mean the Commission generally cannot summarily revoke a license without notice and an opportunity to be heard. The hearing-then-decision-then-appeal sequence is frequently tested.
Sanctions the Commission Can Impose
| Sanction | Description |
|---|---|
| Denial | Refuse to issue or renew a license |
| Censure/reprimand | Formal rebuke on the record |
| Fine | Monetary penalty (paid to General Revenue) |
| Probation | Conditional license with restrictions/monitoring |
| Required education | Additional coursework as a condition |
| Cease and desist | Order to stop specific conduct |
| Suspension | Temporary loss of the license |
| Revocation | Permanent loss of the license |
Factors That Shape the Penalty
| Factor | Effect |
|---|---|
| Severity of the violation | More serious conduct → harsher sanction |
| Prior disciplinary history | Repeat offenders → stricter treatment |
| Harm to consumers | Real consumer loss → more serious |
| Intent | Intentional acts punished more than negligence |
| Cooperation | Cooperation can mitigate |
| Rehabilitation/remediation | Corrective steps can reduce the sanction |
Note the difference between suspension (temporary; the license can be reinstated after the period and any conditions) and revocation (permanent; reinstatement, if available at all, requires reapplication after a Commission-specified period and may require re-examination).
Reinstatement and Reporting Duties
Reinstatement
| Situation | Path back |
|---|---|
| After a suspension | Apply for reinstatement once the suspension period and conditions are met |
| After a revocation | Apply only after the period the Commission specifies; may require new education and re-examination |
| Either case | Reinstatement is discretionary with the Commission |
Mandatory Reporting
Licensees must promptly report certain events to WVREC:
| Event | When |
|---|---|
| Criminal conviction | Promptly after the conviction |
| Disciplinary action in another state | Promptly |
| Civil judgment related to real estate practice | As required by rule |
Trap: Failing to report a required event is itself a separate violation. A licensee who is disciplined in another state and stays quiet about it in West Virginia has committed two violations — the underlying conduct and the failure to report.
Broker Supervisory Liability
Because a broker is responsible for supervising affiliated salespersons and associate brokers, a broker can be disciplined for failing to supervise even when the underlying misconduct was the salesperson’s. This is why brokerages maintain written policies, trust-account controls, and training — the supervising broker’s license is on the line for the office’s compliance.
Which activity is a criminal offense in West Virginia, not merely an administrative violation?
Before WVREC takes adverse disciplinary action, a licensee is entitled to all of the following EXCEPT:
Which of the following is NOT a disciplinary action WVREC can impose?
A West Virginia licensee disciplined in another state says nothing about it to WVREC. What is the consequence?