A real estate license is every practitioner's lodestar. Nonetheless, thousands of real estate professionals, including sales associates and brokers, lose their licenses each year. Some are wrongdoers; others are incompetent. Still, other ex-licensees are victims of circumstance. Don't be one of them. You can avoid these problems by being more professional and transparent, documenting your actions, and keeping more thorough records.
If you face threats to your Colorado professional real estate license, do not try to navigate this alone. Talk to an experienced Lento Law Firm professional license defense attorney who can offer wise counsel and help you quickly prepare an effective strategy. Contact our Professional License Defense Team at the Lento Law Firm online or by calling 888 535-3686.
Financial mistakes are among the fastest routes to losing your real estate license. Sloppy bookkeeping, money shuffling, and “borrowing” are red flags. Brokers should avoid deducting any commissions or expenses until after a transaction closes. Licensees can also stumble into trouble through sloppy bookkeeping. This is particularly a problem with property managers, who are charged with more complex accounting than a typical broker.
Misrepresentation, embellishment, obfuscation, and omissions can lead to license suspension. Disclosure—or the lack thereof—is a common offense leading to lawsuits against licensees. According to various sources, the most common misrepresentation offenses are in property conditions and environmental disclosures.
Different states place different levels of responsibility on the licensee's shoulders, and licensees need to learn how much disclosure they must offer. The simplest solution is “When in doubt, disclose and do it in writing.” When licensees don't disclose their true relationship to a transaction, it usually leads to license revocation.
The fine art of mortgage fraud lies at the intersection of stealing and lying. This crime is so commonly committed that many people—borrowers, mortgage brokers, appraisers, and real estate practitioners alike—don't realize it's illegal. The basis of mortgage fraud is when a lender is tricked into lending too much money against overvalued property. Sometimes, a buyer is short of cash for the downpayment, and the real estate professional reworks the deal so the buyer borrows extra beyond the cost of the house itself to cover the down payment
Even if you don't lose your license—and you weren't aware that you were participating in mortgage fraud—the results can be almost as bad. The U.S. Department of Housing and Urban Development is known to stop dealing with licensees simply because they were implicated in mortgage fraud.
The Colorado Division of Real Estate (DRE) is the government body that licenses and regulates real estate brokers in Colorado:
- What the DRE does. The DRE licenses, regulates, and enforces real estate professionals to protect consumers and promote a fair and competitive business environment.
- Who the DRE regulates. The DRE regulates real estate brokers, appraisers, mortgage brokers, and community association managers.
- How the DRE disciplines brokers. The DRE can take disciplinary action against brokers, including:
- Admonishment, which is a warning to follow the real estate law
- Censure, which is a public scolding that stays on the broker's record
- Suspension, which prevents the broker from performing some or all activities that require a license
- Revocation, which is the complete loss of a license
Problems that Licensed Colorado Real Estate Brokers May Face
Licensed real estate agents in Colorado may face a variety of problems, including:
- Claims against real estate brokers. Claims can include failure to disclose material facts about a home, construction defects, soil problems, etc.
- Misrepresentation. Clients may complain that a real estate agent provided inaccurate information about a property, failed to disclose pertinent details, or offered misleading descriptions.
- Unethical behaviors. These include dual agency without disclosure, misrepresenting or concealing property flaws, manipulating property photos or descriptions, and high-pressure sales tactics.
- Communication. Failing to communicate with clients properly is a common mistake.
- Title issues. Problems with property titles can threaten ownership rights and must be addressed before closing.
How Identity Theft Can Threaten Your Professional Real Estate License
As a licensed Colorado real estate professional, you are a potential target for identity thieves. They have many methods for stealing your identifying information, including credit card numbers, addresses, and Social Security Numbers. If your identity is stolen, you may be concerned about how this incident could impact your professional license. Could your license be at risk because your identity was stolen?
Identity theft happens when a thief steals your personal information without your knowledge to commit fraud or theft. Knowing how to guard your personal information is your first defense against identity theft. Identity theft is often a silent crime. Experienced identity thieves may use your information for months—even years—while you remain unaware.
Identity theft can indirectly affect a real estate license in Colorado through a criminal record generated in the thief's name:
- Fake ID: If a thief uses your identity to create a fake ID and is arrested, the criminal record will appear on your background check when you apply for your license.
- Law enforcement investigation: If law enforcement reports the conviction to your licensing board, they may investigate and suspend or revoke your license.
Identity theft can also affect real estate agents in other ways, including:
- Fake listings: Fraudsters may use your name, photograph, and listings to attract buyers or contact prospects. They may also attach your name and image to a fake listing for a property not for sale.
- License and name used fraudulently: Scammers may use your name and license number on their websites to fraudulently sell real estate. You can search for your name and license number to see if they're being used without your permission.
In Colorado, identity theft can significantly impact your professional real estate license by potentially leading to a license suspension or denial if fraudulent activity appears on your background check, especially if it involves acts of dishonesty, misrepresentation, or criminal behavior that can be considered relevant to your ability to practice real estate ethically. Even if you were the victim of identity theft, you need to clear your record to maintain your license actively.
Key points about identity theft and your Colorado real estate license:
- Background checks: When applying for a real estate license in Colorado, you will undergo a background check that includes fingerprint analysis, potentially revealing any criminal activity associated with your stolen identity, even if you were not the perpetrator.
- Dishonesty concerns: Any fraudulent activity, even if due to identity theft, can be viewed as a sign of dishonesty, a serious problem for the licensing board when assessing your fitness to practice real estate.
- Reporting requirements: If you become a victim of identity theft, you must immediately report it to the Colorado DRE to mitigate potential license damage.
- Investigative process: If suspicious activity is discovered on your background check, the licensing board may investigate to determine the validity of the claims.
- Potential consequences: Depending on the severity of the fraudulent activity and your ability to prove your innocence, the consequences could include license suspension, probation, or revocation.
Colorado Investigation Process for Licensed Real Estate Professionals
The investigation process for licensed real estate professionals in Colorado involves:
- Complaint. A written complaint is filed with the Colorado Real Estate Commission, part of the Colorado Department of Regulatory Agencies (DORA).
- Investigation. An impartial investigator reviews the complaint and response, interviews witnesses, and obtains relevant documents.
- Report. The investigator prepares a written report with exhibits and presents it to the appropriate board or commission.
- Disciplinary action. The board or commission determines whether license law violations exist and whether to pursue disciplinary action.
- Settlement or litigation. If disciplinary action is ordered, the case may be referred to the Expedited Settlement Program (ESP) for settlement or to the Office of the Attorney General for litigation.
- Hearing. If the complaint is severe enough to warrant disciplinary action, a hearing is held before an administrative law judge. The judge makes an initial decision, including revocation, suspension, censure, fines, or probation.
The investigator's role is to gather facts and present them to the board or commission, not to make recommendations or draw conclusions. The DRE aims to complete investigations within 240 days, but some complaints take longer.
Due Process for a Colorado Real Estate Investigation
- Complaints must be submitted in writing.
- Although you can reference a brokerage or company in your complaint, the DRE investigates and disciplines individual licensees.
- If the complaint is not against a licensed individual, you may submit one if the individual was involved in an unlicensed practice.
- The DRE does accept anonymous complaints, which should be as thorough as possible, including information about the licensee and the alleged misconduct.
- Once a complaint is assigned for investigation, the DRE notifies the respondent, the licensee against whom the complaint was filed, that a complaint has been submitted.
- The regulation requires the respondent to submit a response and supporting documentation to the DRE. The investigator then conducts witness interviews and gathers relevant evidence.
- Following an investigation's completion, the complaint is dismissed if there are no license law violations. If there appear to be violations, the findings are presented to the appropriate regulatory board or commission for a disciplinary determination.
Consequences of a Colorado Real Estate Investigation
The consequences of a Colorado real estate investigation include:
- No action: The complaint is dismissed if no license law violations are found.
- Disciplinary action: The appropriate regulatory board or commission will determine discipline if violations are found, including:
- Fines
- Probation
- Suspension
- Revocation
- Public censure
- Letters of admonition
- Coursework
- Practice restrictions
- License downgrade
- Litigation: If the case cannot be resolved through the Expedited Settlement Program, it is referred to the Office of the Attorney General for litigation.
What Happens If You Lose Your Colorado Professional Real Estate License?
If you lose your Colorado real estate license, it can be revoked, suspended, or you may be criminally prosecuted:
- Revocation. A revoked license permanently ends your ability to operate, usually due to severe violations or failure to disclose legal actions.
- Suspension. A suspended license temporarily prevents you from conducting business until you meet certain conditions, such as completing education.
- Criminal prosecution. Acting as a real estate agent without a valid license is a Class 2 misdemeanor in Colorado, resulting in up to 120 days in jail and up to $750 in fines.
- License becomes inactive. If you don't renew your license by January 31st after it expires, it becomes inactive, and you can't legally practice.
Why Hire a Lento Law Firm Professional License Defense Attorney
Colorado DRE rules can be intricate, and an attorney must interpret them accurately to identify potential defenses and legal strategies. A Lento Law Firm professional license defense attorney with experience in real estate licensing matters can efficiently navigate the formal complaint process, including hearings and appeals. If the complaint involves potential license suspension or revocation, our attorneys can advocate strongly to minimize the impact on your ability to practice real estate.
Our Lento Law Firm attorneys know Colorado's threats to real estate professional licenses are more than administrative matters. Our attorneys help real estate brokers who are under investigation by The DRE:
- Responding to a complaint:Attorneys can help brokers respond to a complaint before the deadline.
- Defending against allegations: Attorneys can help brokers defend against misconduct allegations.
- Obtaining a favorable outcome: Attorneys can aim to help brokers obtain a favorable outcome, which may be less costly at the inquiry stage than at a formal hearing.
- Working out a resolution: The Lento Law Firm has a good working relationship with The DRE and can often work out a resolution without a formal hearing. Brokers can discuss their situation with a Lento Law Firm professional license defense attorney to decide whether to obtain legal representation.
Our Lento Law Firm Professional License Defense Team Can Help You
If you face threats to your Colorado professional real estate license, do not try to navigate this alone. Talk to an experienced Lento Law Firm professional license defense attorney who can offer wise counsel and help you quickly prepare an effective strategy. Contact our Professional License Defense Team at the Lento Law Firm online or by calling 888 535-3686.
