What to do when FREC calls

A complaint, audit notice or investigator contact from the Florida Real Estate Commission (FREC) shouldn't be ignored, but licensees also should not rush into an immediate response, real estate attorney Danny Villazon told attendees at the recent Florida Real Estate Legal Summit.

“You must cooperate, but not immediately,” Villazon said. “Give yourself time to get information ready to formulate the response.”

FREC contact may begin with a letter notifying a brokerage that it has been selected for an audit or inspection. A licensee also may receive a copy of a complaint filed by a consumer, another licensee or an anonymous source. An investigation also may begin after a possible violation is discovered during an office inspection.

Once a case is opened, an investigator and case number are assigned. Villazon cautioned licensees not to assume the matter has ended based on a conversation with the investigator. A case remains open until the Department of Business and Professional Regulation (DBPR) provides written notice of its disposition.

Respond, but take time to prepare

Villazon emphasized that licensees pay close attention to a complaint. They generally have an opportunity to submit a written response, and investigators may provide an extension when additional time is needed.

Before responding, the licensee should review the allegations and gather the documents needed to address them. Villazon also recommended requesting the investigator’s report in writing. After receiving it, the licensee may submit a rebuttal or provide additional information if the report contains inaccuracies or leaves out important facts.

“Don’t ignore it,” Villazon said. “Don’t throw it in your desk.”

Failure to respond can lead to a default. Villazon described cases in which licensees did not receive notices because their addresses were not current with DBPR, failed to respond and later learned their licenses had been revoked.

Preserve the complete record

Documentation can play an important role in whether a case moves forward or is dismissed.

Villazon advised licensees and brokers to retain complete transaction files, including:

• All pages of fully executed contracts and listing agreements
• Escrow verification letters
• Rejected offers and evidence they were presented
• Inspection reports and disclosure records
• Emails, text messages and other communications
• Records showing deposits were made on time
• Written information supporting property descriptions and advertising claims

“My philosophy is, the more documentation, the better,” Villazon said.

He described a favorable outcome in which the attorney reviewing a case could dismiss it because the licensee had a complete file, documentation and a response addressing each allegation.

Brokers should control office contact

Villazon said brokerages should establish procedures before an investigator contacts or visits the office. Receptionists and sales associates should know who's authorized to respond and should not begin answering questions or offering information on the brokerage’s behalf.=

Villazon advised providing the records requested rather than volunteering unrelated information. He also said investigators generally will work with brokers to schedule an appointment if the proposed time is not practical.

A friendly investigator does not close the case

An investigator may be professional, helpful and reassuring, but Villazon warned that the investigator does not make the final decision about whether a case will be dismissed.

“He told me nothing to worry about,” Villazon said, describing what licensees sometimes tell him after speaking with an investigator. “And then you get the administrative complaint.”

After the investigation, the case is reviewed by an attorney. Possible outcomes include dismissal, dismissal with a letter of guidance or the filing of a formal administrative complaint. Minor violations also may result in a citation or, in limited circumstances, a confidential notice of noncompliance.

Villazon said licensees who are unsure how to proceed should ask their broker, team leader or an attorney familiar with FREC matters. The key is to take the communication seriously, preserve the records and prepare a thoughtful response rather than attempting to explain the situation immediately.

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