For many people, owning real estate in Hawaii is a cherished dream. Hawaii's real estate brokers, salespersons, and other professionals make this dream a reality in one of the country's most competitive real estate markets. However, real estate professionals in Hawaii are strictly regulated, and it is comparatively easy to make a mistake and find your license on the line. Although receiving notice of a complaint from the Hawaii Real Estate Commission is frightening, keeping a cool head and taking immediate action is vital.
The Lento Law Firm Professional License Defense Team understands how hard it is to become a real estate professional in Hawaii and how devastating the loss of a license can be to your life and family. We have a proven track record of successfully defending licenses, including real estate licenses. Our experienced license defense attorneys will act to protect and preserve your professional reputation and business. Complete our online form or call our offices today at 888.535.3686 to arrange a confidential consultation.
The Hawaii Real Estate Commission
The Hawaii Real Estate Commission is a nine-member panel appointed by the Governor and confirmed by the State Senate. The Hawaii Real Estate Commission has the power to:
- Grant licenses to real estate brokers and salespeople.
- Make rules to regulate brokers and salespeople.
- Inspect the records of trust funds to ensure financial accountability.
- Suspend or revoke licenses of brokers or salespeople.
- Fine licensees for violations of laws and regulations.
- Administer the Real Estate Recovery Fund.
- Order restitution in some cases.
Additionally, the Real Estate Commission may intervene in court cases involving the Real Estate Recovery Fund.
Common Issues Facing Real Estate Professionals in Hawaii
Hawaii's brokers, salespersons, and other real estate professionals may be disciplined for violating professional standards and rules. Common issues involved in disciplinary proceedings include:
- Fraud or dishonesty.
- Misrepresentations concerning real estate.
- False advertising or publication of false representations
- Acting for more than one party in a real estate transaction without the knowledge and written consent of the parties or collecting commissions from both parties.
- Violations of the broker/licensee relationship, including acting as a salesperson for a broker to which the salesperson is not licensed.
- Failing to account for and properly handle funds belonging to other parties.
- Permitting unlicensed individuals to actively participate in the brokerage or sale of real estate.
- Violating rules concerning brokers and brokerage relationships or failing to disclose these relationships in contracts for real estate.
- Being “adjudicated insane or incompetent.”
- Commingling personal funds of principal and licensee.
- Failing to ascertain and disclose all material facts concerning transactions to avoid error or misrepresentation.
- Disclosing license exam questions to future takers of the exam if the licensee gains a benefit.
- Failing to maintain a reputation and record of competency, honesty, truthfulness, financial integrity, and fair dealing.
- Conviction of a crime involving fraud or dishonesty.
- Professional incompetence.
- Failing to supervise salespeople properly.
In determining if a violation has occurred, the Real Estate Commission will consider whether a real estate professional relied in good faith on information from third parties.
Discipline For Failing to Disclose in Hawaii
Brokers and salespeople have duties to disclose in Hawaii, and failure to disclose is often an issue for discipline. This failure to disclose may involve:
- Providing false or misleading information concerning a property.
- Failing to disclose known defects to buyers
- Publishing or providing misleading photos or property descriptions.
- Misrepresenting the seller's asking price.
- Providing false or inaccurate information about the terms of a sale.
- Failing to report or disclose conflicts of interest.
When a buyer or seller is disappointed after the sale, they may file a complaint with the Real Estate Commission, maintaining that they were misled. Brokers and salespeople should take these types of complaints very seriously because they can result in license suspension, revocation, or restitution damages. The Lento Law Firm represents real estate professionals accused of failure to disclose a transaction in Hawaii.
Duty to Report Criminal Conviction in Hawaii
Real estate license holders must report criminal convictions if they relate to the license or vocation. For real estate professionals, any crime involving fraud, dishonesty, or financial violations must be reported. A review of pending actions before the Real Estate Commission shows that it considers issues of substance abuse, including drunk driving, to be reportable offenses. Sometimes, a broker or salesperson may be faced with reporting a minor conviction and decide not to report it. Licensing agencies will discipline licensees for failing to report offenses, even if those offenses cannot form the basis of discipline. As a result, any licensee with questions on whether they have a duty to report a conviction should consult an experienced license defense attorney. The Lento Law Firm can advise you on whether you have a duty to report a criminal arrest or conviction and how to do it in a way that will minimize issues.
Real Estate License Discipline Process in Hawaii
The Hawaii Department of Commerce and Consumer Affairs (DCCA) handles complaints and disciplinary actions against brokers, salespersons, and other real estate professionals. The process of discipline typically involves the following:
- Complaint: In Hawaii, the DCCA Regulated Industries Complaints Office (RICO) receives complaints from clients, the public, regulatory offices, colleagues, or others regarding real estate brokers, salespeople, and property managers. RICO will determine if the complaint is properly before the DCCA or is worthy of investigation.
- Investigation: If RICO determines that the complaint should be investigated, it will refer the complaint to DCCA's Investigative Division. The Investigative Division will interview witnesses and review documents and other evidence to determine if a violation occurred. No real estate professional should provide a statement or be interviewed until they have spoken with an experienced license defense attorney. The Lento Law Firm can advise any real estate professional being investigated by the DCCA. The Lento Law Firm can often handle complaints through negotiation and agreement at this point, so the complaint will not go any further.
- Report to the Commission: When the Investigative Division has completed its investigation, it will forward a Report to the Real Estate Commission. At this point, the parties often schedule a settlement conference to try to handle the matter informally. No real estate professional should attend any settlement conference without an experienced attorney.
- Hearing: If necessary, the Real Estate Commission will conduct a hearing to receive all evidence, which may involve witnesses testifying, other documents, or electronic evidence. Presenting this evidence is challenging for a layperson without the assistance of counsel. Having an experienced attorney on your side at this point is essential.
- Decision and Order: The Real Estate Commission will then decide on the issues and the appropriate disciplinary action.
- Appeal: If the Commission's determination is not in your favor, you will have the right to appeal to the First Circuit Court of Hawaii. The period for appeal is short, so call the Lento Law Firm as quickly as possible if you have an adverse decision of the Commission.
Potential Disciplinary Actions in Hawaii
The Hawaii Real Estate Commission may discipline brokers, salespersons, and other real estate professionals in the state. Potential discipline includes:
- Formal Reprimand
The Commission may reprimand a real estate professional or put them on probation.
- Continuing Education
The Commission may order a broker, salesperson, or other real estate professional to take classes or engage in other continuing education.
- Fines
The Commission may fine the broker, salesperson, or other real estate professional up to $5,000 per occurrence.
- Initial License Denial
The Commission may deny the application for a license because of the background check or other issues. The Lento Law Firm represents applicants denied a real estate license in Hawaii.
- Suspension of License.
The Commission may suspend a real estate professional's license for a period of time or until conditions are met to reactivate it. The Lento Law Firm represents individuals who wish to reactivate their licenses after a period of suspension. This process can be long, involved, and difficult, and no real estate professional should begin it without legal help.
- Revocation of License.
A license revocation means that the holder loses it and must begin the licensing process again. In Hawaii, a licensee must typically wait at least five years before reapplying for a real estate license, and former brokers must reapply as salespersons.
- Restitution
The Hawaii Real Estate Commission may order a licensee to provide restitution to a complaining party in the disciplinary action process. Needless to say, an order for restitution can be costly.
Beyond these formal actions, a disciplinary complaint before the Hawaii Real Estate Commission can lead to loss of business and employment and damage your reputation. The Lento Law Firm is here to provide support and advice to avoid or limit damage to your reputation and livelihood.
Reinstatement of License
The Hawaii Real Estate Commission may not suspend a licensee for more than five years. If a licensee is suspended for a set period, they must apply for reinstatement within 30 days of the end of the suspension period. If they do not reapply, their license is forfeited or revoked. If a suspension requires a condition to be met, the licensee will need to reapply and provide proof that the condition has been met.
If the Hawaii Real Estate Commission revokes a license, the licensee cannot reapply for a license for at least five years. While the reinstatement of a license is never assured, the licensee can take steps to make it more likely. They should ensure they have completed continuing education, paid all fines, and taken steps to rectify the issues that led to the suspension. Call the Lento Law Firm for assistance if you seek reinstatement of your broker or salesperson license before the Hawaii Real Estate Commission.
RICO Complaints and Commission Discipline 2023
In its Annual Report for 2023, the Real Estate Commission published summaries of complaints and outcomes for licensees.
The five most common Chapter 467 (Real Estate Professional Laws) complaints made to RICO in 2023 concerning real estate brokers and salespersons were:
- Violating multiple laws and regulations.
- Brokers failing to have direct supervision of firms and licensees.
- Advertising or acting as a real estate professional without a license.
- Making misrepresentations regarding real estate.
- Failing to account for monies belonging to other parties.
The five most common Chapter 99 (Administrative Rule) complaints made to RICO in 2023 were:
- Failing to protect the public against fraud or misrepresentation.
- Failure to put relevant real estate contractual terms in writing.
- Failure to designate a temporary broker during an absence.
- Failure to properly state brokerage name in advertising.
- Failure to retain brokerage records.
In 2023 alone, the Real Estate Commission revoked the licenses of four brokers or salespersons and imposed 20 significant fines totaling over $50,000.00. These figures do not reflect any brokers or salespersons who voluntarily surrendered licenses.
How Our Skilled Professional License Defense Team Can Help
If you face discipline by the Hawaii Real Estate Commission, considering the possible sanctions they might order can be frightening and overwhelming. Disciplinary proceedings are difficult and frustrating, but you are not alone. Although it is difficult to make decisions right now, the best decision you can make is to find legal assistance. With the right legal team, you can work for the best possible result and regain your peace of mind. Hawaii has tough real estate laws and regulations, but you can have a tough legal team on your side.
The Lento Law Firm Professional License Defense Team is here to provide advice and support as you navigate this difficult process. We have a proven track record of successful license defense. Let us work to protect your broker, salesperson, or other real estate professional license and your career. Don't let all your hard work over many years go to waste. We can help, so call us today. Complete our online form or call our offices at 888.535.3686 to arrange a confidential consultation.
