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Unit 6: Violations & Penalties

Violations of License Law, Penalties, and Procedures

6
3 exam questionsLow Priority
License violations, disciplinary actions, and penalties.

Quick Explanation

5 min read

License violations can result in fines, suspension, or revocation. The most serious violations involve fraud, misrepresentation, and conversion of funds. FREC can impose fines up to $5,000 per violation.

Key Points — What Matters for the Exam

1
Misrepresentation = false statement of fact inducing someone to contract
2
Conversion = unauthorized use of client funds (criminal charge possible)
3
Commingling = mixing personal and client funds (serious violation)
4
Culpable negligence = reckless disregard for client's interests
5
FREC fine: up to $5,000 per violation
6
License can be: reprimanded, fined, suspended, or revoked

Memory Trick

The 3 C's of serious violations: Conversion, Commingling, Culpable negligence. Any of these can cost you your license.

Common Trap Answers — Don't Fall For These

Conversion is more serious than commingling — can result in criminal charges
Misrepresentation can be fraudulent (intentional) or negligent (careless)