Licensed real estate brokers are subject to discipline by the Department of Real Estate (DRE). Various statutes set forth the grounds under which discipline can be imposed. California Business and Professions Code Section 10176 sets forth some of the grounds for discipline. These include, but are not limited to the following.

Misrepresentations or false promises

A licensed professional is subject to discipline for making substantial misrepresentations, BP 10176(a), or false promises. BP 10176(b). In addition to being liable for personal misbehavior, he or is also subject to discipline for continuing and flagrant course of misrepresentations through agents or salespersons. BP 10176(c).

Conflicts of interest

Discipline may be imposed for several different types of conflicts of interest. First, discipline may be imposed if a licensed professional knowingly acts for more than one party in a transaction without the consent of all parties. BP 10176(d). Second, discipline may be imposed for commingling the professional’s own property with property entrusted to him or her. BP 10176(e).

Improper fee agreements

There are at least three types of improper fee agreements, which may subject a broker to discipline. First, a broker may not claim a commission under an exclusive brokerage agreement, unless it has a clearly stated termination date. BP 10176(f). Second, a broker may not be paid secret compensation, which is not disclosed to his or her principal. BP 10176(g). Third, a broker may not be given an option to purchase a property, in a transaction in which he or she is involved as a broker, without full disclosure to his or her principal of the profit made by the broker at the time that the option is exercised. BP 10176(h).

Fraud or dishonest dealing

The most open-ended provision of BP 10176 is 10176(i), which provides that a broker may be disciplined for: “Any other conduct, whether of the same or a different character than specified in this section, which constitutes fraud or dishonest dealing.”

Acting without a listing

A broker is subject to discipline if he or she persuades a prospective buyer of a property to agree to pay him or her a commission for the purchase of the property, before the owner of the property has agreed to employ the broker. BP 10176(j).

Mortgage broker issues

A mortgage broker is subject to discipline under BP 10176 for at least two offenses. First, he or she is subject to discipline for failing to disburse funds in accordance with a commitment to make a mortgage loan, when the broker has said that he or she is either the lender or authorized to speak for the lender. BP 10176(k). Second, a mortgage broker is subject to discipline if he or she delays the disbursement of mortgage funds in order to increase his or her fees or other compensation. BP 10176(l).