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 readLicense 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 contract2
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 interests5
FREC fine: up to $5,000 per violation6
License can be: reprimanded, fined, suspended, or revokedMemory 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)