Responding to or Defending a Complaint before the North Carolina Real Estate Commission
No licensee ever wants to get a letter from the North Carolina Real Estate Commission. If you received a letter from the Commission concerning a violation of the Real Estate Commission Rules or License Laws, you may be uncertain about what to do next, what the procedures are and what the results may be.
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You may also be trying to decide whether you need to hire an attorney to assist you in responding to the Commission. Our firm regularly represents brokers like you in responding to the Commission and defending against allegations of misconduct. Representation at the inquiry stage is significantly less expensive than in a formal evidentiary public hearing; therefore, the investment in protecting your license and livelihood generally is more cost-effective in the earlier stages. Although a licensee has a right at any time in the process to be represented by legal counsel, our firm’s best opportunity to assist you in obtaining a favorable or acceptable outcome is in these early stages. We have a good working relationship with counsel for the Real Estate Commission and frequently can work out an acceptable resolution without the need for a formal hearing.
In the sections below, we attempt to address some of the questions you may have and explain the general process, procedures and possible results.
The NC Real Estate Commission – Composition and Disciplinary Authority
As background, the North Carolina Real Estate Commission is created as an agency of the State of North Carolina and consists of nine members, seven members that are appointed by the Governor and two that are appointed by the General Assembly. At least three members of the Commission are licensed real estate brokers and at least two represent the interests of the public at large. The Commission has the power to adopt and enforce rules and regulations, including the power to reprimand, censure suspend or revoke a real estate license.
Summary Suspension
If the Commission finds that the public health, safety, or welfare requires emergency action, it may summarily suspend a license without a hearing or opportunity for the licensee to be heard. A motion for summary suspension is presented to the Chairman of the Commission by its counsel and may be presented ex parte — without the licensee’s presence. The Commission must then schedule a hearing at the earliest practicable date on the merits of the charges, which will be set out in a notice of hearing. This will be served on the licensee as soon as possible. The summary suspension is not effective until it has been served on the licensee. A summarily suspended broker may petition the Commission to vacate the summary suspension order. If the Chairman of the Commission finds that the summary suspension order was issued in error or on insufficient factual grounds to justify the emergency action, the Chairman may vacate the order.
Responding to an Inquiry and Investigation
If you received a Letter of Inquiry from the Commission, this generally means the following has occurred: a complaint has been submitted to the Commission and reviewed by staff and legal counsel. You should have received an initial letter, along with a copy of the complaint, requesting a response to the allegations. The Letter of Inquiry sets forth the subject matter being investigated. You are required to respond, typically within 14 calendar days. You also are required to fully cooperate in connection with any inquiry the Commission makes.
In addition, the Commission may initiate cases if the staff has received information from different sources, including certificate renewals, government agencies, and the news media. Upon receipt of the information, the staff will review the information and determine whether a case should be opened. In this instance, you may receive a letter summarizing the case and requesting a response.
In drafting a response to an inquiry, it is important for you to include all information and documentation necessary to fairly and fully respond to the allegations. However, it is equally important for you to include only the pertinent information and documentation. We help our clients make these judgments and determinations from an objective standpoint and with knowledge and experience concerning the process in defending Commission matters. We regularly assist clients with written responses and are flexible in the amount of assistance we provide, ranging from preparing and signing responses on clients’ behalf to reviewing responses prepared by clients and having them submit the responses in their own names. We help shoulder the burden of defending against a complaint and dealing the accompanying stress.
After receiving the initial response, the Commission may send your reply back to the Complainant for a response. You should be aware before responding that the Complainant may see your response. The investigative process may require additional information or evidence from you, the Complainant or any related parties. Whether additional information and investigation is necessary and how much needs to be collected varies significantly depending on the type of case.
After it concludes the investigation or inquiry, the Commission may close the case if it finds the information does not substantiate a violation. However, if the Commission finds probable cause that a violation its law has occurred, the Commission may offer the licensee a Consent Order in settlement of the case or hold a formal hearing.
Settlement
If the Commission does not close the case, the Commission’s legal staff may propose a consent order to the broker. The Commission may approve or reject any proposal to dispose of the matter by consent or stipulation. We help our clients evaluate and determine whether they should accept a proposed Consent Order and negotiate the terms.
Public Formal Hearing
If a settlement cannot be reached or as directed by the Commission, the case will be scheduled for a formal public hearing. The broker or her legal counsel have the right to present evidence in defense, including calling witnesses and introducing exhibits, to make objections, to cross-examine any witness called, and to make a closing argument. Many brokers decide that they need to retain an attorney at the formal stage, if they have not done so already.
Possible Discipline and Outcomes of the Public Hearing
After a formal hearing, the Real Estate Commission may issue an order determining that there has been a violation and imposing discipline. N.C.G.S. 93A-6 allows the Commission to take the following actions in resolution of settlement or a hearing:
- Revoke the broker’s license permanently;
- Suspend the broker’s license for a specified period;
- Censure the broker; or
- Reprimand the broker.
Actions on Applications for Licensure
We also assist clients who seek to obtain broker’s licenses in both informal conferences and formal hearings before the Commission. Generally, if the Commission finds that the applicant has not fully met the requirements for licensure, it will defer action upon the application until the applicant is notified by letter. An applicant then must make a written request for a hearing to the Commission. This request must be made within sixty (60) days after service of this letter. If the applicant fails to request a hearing before the Commission within this time; or if a properly addressed letter is returned to the Commission undelivered, the applicant’s right to a hearing is considered waived and the application is deemed denied. However, if the request is timely made, the Commission will provide the applicant with a Notice of Hearing. The notice sets the hearing date where the applicant will have the opportunity to demonstrate that s/he has met the requisite requirements for licensure. Prior to the commencement of a formal hearing, an applicant who has been denied licensure will often have an opportunity for an informal character conference with members of the Commission.
Impact of Decision of Whether to Retain an Experienced Law Firm
If you have received a letter from the Commission or have a pending informal or formal hearing, you should consider retaining a law firm like ours that has experience representing licensees and applicants before the North Carolina Real Estate Commission. Disciplinary action could have a significant and permanent impact on your license, which also can substantially affect you financially and personally. Hiring an experienced law firm can be an investment in your future as a broker. Our general explanation of board procedures has a more detailed discussion of how we may be able to assist you in informal proceedings and formal proceedings.