“HOW TO LOSE YOUR LICENSE (or NOT ! )”
 Describe the agency’s regulatory authority over real estate
professionals “DBR”
 Provide broad overview of the current laws and regulations
governing the licensing of real estate brokers and
salespersons
 Highlight some recent changes in the laws and regulations
 Show you what NOT to do in your professional practice
 Explain what DBR can do if you run afoul of the law
 Answer your questions
So, what is the Rhode Island Department of Business Regulation
and
Why do you need to know about it?
• State agency - established by the Rhode Island
General Assembly in 1939 and organized under Title
42 of the Rhode Island General Laws.
• DBR’s primary function is the regulation and licensing
of designated businesses and professions, both
companies and individuals.
REAL ESTATE PROFESSIONALS
Salespersons and Brokers
DBR issues licenses,
regulates license-holders,
makes law. . .
 Receives and investigates complaints from
members of the public and other agencies
 Conducts administrative hearings involving
issuances, suspensions or revocations
 Presents and monitors legislation introduced at
the General Assembly related to the
businesses we license
 Controls “E-Licensing” program
DBR ONLINE
 Our website: www.dbr.ri.gov
 All information related to the agency, licensing
information, enforcement actions, and
laws/regulations which we enforce
 Links to E-Licensing for new licenses and
renewals
RHODE ISLAND GENERAL LAWS
 Title 5, Chapter 20.5 - Real Estate Brokers and Salespersons
 Title 5, Chapter 20.6 - Agency Relationships
 Title 5, Chapter 20.8 – Real Estate Sales Disclosures
 These are not the only laws – but the most commonly cited for
licensing and regulatory issues.
IS IT A LAW OR A REGULATION . . . .
and what’s the difference???
1. Rhode Island General Laws – Title 5, Chapter 20.5
• Enacted by the General Assembly (House of Reps and
State Senate) and Governor approval
• Confers to DBR the power to make rules and regulations
• Can be revised or amended once a year
2. Commercial Licensing Regulation 11
• Issued by the Dept. of Business Regulation
• Drafted by DBR and finalized after public hearing
• Periodically revised –
most recent revisions effective October 3, 2013
Some recent (October 1, 2013) changes . . . .

Chapter 20.6 - Agency Relationships
Amended to:
• More specifically define the roles of transaction coordinators and
transaction facilitators as being non-neutral;
• To adjust the time when a consumer must be presented with the
Mandatory Relationship Disclosure form.

Commercial Licensing Regulation 11
Amended to:
• Clarify rules relating to pre-licensing education, which must be
completed in a classroom setting;
• To correct a discrepancy between the regulation and R.I. Gen. Laws
regarding the length of time a broker may hold disputed deposit funds;
• Create procedural guidelines for the approval of real estate schools and
instructors, with the intent to insure high ethical and professional
standards for the education of real estate professionals.
How to lose your real estate license in
36 easy steps - The “Bad Acts” Law
R.I. Gen. Laws § 5-20.5-14
Somebody filed a complaint against me –
now what??
1. Don’t panic – anyone can file a complaint for any reason. If it
has no merit, it will likely be dismissed. Let the process take its
course.
2. Find ALL records relating to the transaction and copy them:
• Emails
• MSL forms
• Phone records
• Your notes
• Your appointment book
• Bank records – check images, deposit slips, statements
3. Write a detailed description of the entire transaction,
from the minute you first spoke to the client to the
present day.
4. Send your response with all relevant documents.
5. Don’t waste time! You have 15 days to respond.
Ignoring it will not make it go away, and may result in an
additional violation.*
6. Follow-up your response with a phone call.
MOST COMMON VIOLATIONS
1. Substantial misrepresentations in transactions
2. Mishandling funds/commingling
3. Failure to disclose
4. Principal broker – failure to supervise
5. Written agreements/forms/contracts
6. Escrow accounts
7. Improper handling of disputed deposit funds
8. Failure to respond to DBR requests
9. Failure to report affiliation or address changes
10. Misleading advertising
Common Misrepresentations
Seller will not
accept any offer
lower than the
asking price
There’s never
been a mold
problem in this
house
It’s okay to make
the deposit check
payable to me
This is not a
short sale
I took my C.E.
classes
The seller is the sole
owner of the property
I brought your offer to
the Seller and it was
rejected
There are two other offers
pending
MISHANDLING FUNDS
As Salesperson:
• Accepting funds from anyone other than Broker
• Turning over deposit monies to anyone other than a Broker
• Managing a real estate brokerage and accounts
As Principal Broker:
• Paying any commission to an unlicensed party
• Not maintaining a separate escrow account
• Doing anything with deposit monies other than placing them in an escrow
account maintained by you or your office
• Converting any monies in escrow account to your own use.
• Paying escrowed funds to any party without insuring who the rightful
owner is. (As in a failed transaction)
• Failing to transmit disputed deposit monies to General Treasurer
MORE ABOUT ESCROW
Each real estate firm must have a segregated account,
maintained by the principal broker, for the purpose of holding
client funds such as deposits.
 All commissions must be issued from these accounts
 No commingling of personal or business funds
 Commissions may only be paid to a listing brokerage when
they have been earned (at or after closing)
 Records must be kept for three years, and must be made
readily available on demand by the Department
DISPUTED DEPOSITS
 Usually in failed transactions, seller and buyer
disagree about whether deposit may be retained or refunded
 NOT up to the Broker to decide who gets the money! This is a
breach of contract issue which will be determined either by a
Court or by agreement of parties
 DBR will not get involved in deposit returns, unless a violation
has occurred
 When ownership of escrowed deposit funds is in dispute for 6
months, the principal broker has the responsibility of
transferring those funds to the Office of the General
Treasurer.
 30 days before funds are sent to the State, a notice must be
sent to all parties by broker of intent to transfer funds
 Forms are on last pages of Regulation 11, and on website
PRINCIPAL BROKER RESPONSIBILITIES
BE AWARE:
If a complaint if filed against a salesperson or broker
affiliate of a brokerage, the Principal Broker will be added
to the complaint by the Department.
• MUST exercise adequate supervision over the activities of
affiliated salespersons in each transaction
• MUST notify DBR in writing of changes in affiliations
• MUST verify that each affiliate has license in good standing
• MUST retain and maintain all records of all transactions
• MUST maintain escrow accounts
ANOTHER BIGGIE “The Contracts”
1. Listing agreements MUST
be in writing
contain a specific description of the property
 contain all of the terms of the sale, including
commission to be paid
be signed by all parties concerned
2. ALL contracts MUST
Be given to all signatories at the time of
execution.
3. Written offers to purchase MUST
 Contain all essential terms, including
contingencies
AGENCY RELATIONSHIPS
“The Mandatory Form”







Benefits all parties
Residential transactions only
Defines a licensee’s duties and obligations
Give consumers choice
Protects licensees by alleviating conflicts
Failure to use in every transaction is a violation
– one of the “Bad Acts”
Statute and the form changed in August 2013
DISCLOSURES
~
Tell it if you know it!
1. “Psychologically impacted property”
•
Homicide, suicide, HIV-infected occupant, haunting
•
NOT considered to be material facts
•
No disclosure required in some cases; however, that is
not a license to make misrepresentations.
2. Sellers and agents not liable for non-disclosure if no personal
knowledge, and when “reasonable care” was used to learn
information.
3. Buyer’s Right to Inspection
10 days unless parties agree to a different time period
“ANY CONDUCT IN A REAL ESTATE TRANSACTION
WHICH DEMONSTRATES BAD FAITH, DISHONESTY,
UNTRUSTWORTHINESS OR INCOMPETENCE”



Alleged in nearly all complaints
Very low standard of proof
Remember, it’s all about character
THE ADMINISTRATIVE ENFORCEMENT PROCESS
I.
Complaint received by DBR Real Estate Section
A. Investigation
B. Copy sent to Licensee, Response Requested
II.
Probable cause is found or not found
A. Not found? Dismissed.
B. Found? Consent Agreement or Hearing held.
III. Complaint Hearing v. Departmental Prosecution
A. Complaint hearing – where “he said, she said” is only evidence
B. DBR has reasonable cause to believe violations have occurred
“ prosecution or Departmental hearing “
IV.
Emergency Revocation or Suspension
A. Risk of harm to public – most egregious violations
1. Department acts first, has hearing later
PENALTIES
DBR Director may impose:
1.
An administrative penalty (fine) of up to $1,000 for
each violation;
2. Suspension of license for period of time;
3. Revocation of license (permanent);
4. Deny license application or issue license with conditions.
DBR DOES NOT HAVE THE AUTHORITY TO MAKE FINANCIAL
AWARDS TO ANY PARTY – but may make payments between
parties part of an Agreement to settle.
DBR Hearings and Decisions are Public
Be cautious – your reputation
dictates the success of your business.
~
You can appeal a Decision, but you
can never
“unring the bell”.