Maryland Business Litigation Lawyer Blog
Receiving a letter from the Maryland Real Estate Commission (MREC) notifying you of an investigation or proposed disciplinary action can be stressful. Understanding the process, however, can help protect your license and reputation. This article breaks down how the process works and explains why early legal counsel can make a significant difference.
How the Disciplinary Process Begins
MREC initiates disciplinary investigations after receiving written complaints involving:
- A licensed real estate broker
- A licensed associate real estate broker
- A licensed real estate salesperson; or
- An unlicensed employee of a licensed real estate broker (See Real Estate complaint form)
To be actionable, the complaint must involve conduct occurring in connection with a real estate transaction within the State of Maryland for the MREC to have jurisdiction. Md. Code Ann., Bus. Occ. & Prof. § 17-209
- Acting as a licensee while unlicensed
- Breach of fiduciary duties
- Fraud or misrepresentation in a transaction (subsections ( Code Ann., Bus. Occ. & Prof. § 17-322(b)(1))
- Failure to disclose material facts in a transaction (b)(4)
- Misleading advertising or failure to identify as a broker (b)(18)
- Paying or accepting commissions involving unlicensed individuals (b)(7), (21), (23))
- Improper inducement of parties under contract (b)(13))
- Discrimination based on race, religion, sex, handicap, familial status, or national origin (b)(16))
- Failure to account for trust money or to supervise team members properly (b)(22), (27), (34))
- Conviction of a felony or related misdemeanor (b)(24))
- Violations of Subtitle 5 (Trust Money), the Code of Ethics, or MREC regulations (b)(31)–(33)).
Reviewing the Complaint: What Happens Next
The disciplinary process begins when MREC receives a written complaint. The Commission reviews each complaint in the order received to determine whether it involves conduct by a licensed broker, associate broker, or salesperson in connection with a Maryland real estate transaction. If jurisdiction exists, MREC will take the following steps:
- Assign the case a number and send an acknowledgment letter to the complainant
- Forward copies of the complaint to each licensee named, along with a request for a written response
- Review the licensee’s response and the complaint file to determine whether the matter should be dismissed or investigated further
- Refer the case to a panel of Commissioners for a formal decision on whether to proceed with charges
Receiving “The Letter”: Notification of a Complaint
If the Maryland Real Estate Commission (MREC) decides to pursue disciplinary charges based on a complaint, you (as the licensee) will receive a notice letter outlining the allegations and a copy of the complaint. See Md. Code Ann., Bus. Occ. & Prof. § 17-324. This letter will notify you of the specific conduct under review, cite the potential legal or regulatory violations, and inform you of your right to submit a written response. You have a right to be represented by an attorney throughout the process, and your attorney can (and should) write a response for you. This may be an early opportunity to resolve the case in your favor and without any major licensing issues.
At this stage, the Commission may:
- Dismiss the complaint if the Commission determines that there is no violation.
- Impose administrative sanctions such as a reprimand, suspension, revocation, or fine up to $5,000 per violation without necessarily proceeding to a contested hearing if the licensee waives the right to contest. Code Ann., Bus. Occ. & Prof. § 17-322 (c)(1):
- Recommend formal charges.
- If the case is formally charged and the licensee challenges the case, the actual hearing will be delegated to the Office of Administrative Hearings (OAH) for a formal hearing before an Administrative Law Judge. See also Code Ann., State Gov’t § 10-205(a)
- In cases involving serious allegations, MREC may summarily suspend or restrict a license before the hearing. However, even in those situations, the licensee has a right to contest that emergency decision at a hearing. Md Code, Bus. Occ. & Prof. § 17‑328(d)(1).
The Administrative Hearing: Presenting Your Case
If the Maryland Real Estate Commission refers your case to the Office of Administrative Hearings (OAH), you will receive formal notice of the hearing date and location. Hearings are conducted before an Administrative Law Judge (ALJ), who is an independent decision-maker not affiliated with the Commission.
At the hearing, you (or your attorney) have the right to:
- Call witnesses on your behalf
- Cross-examine witnesses called by the State
- Present documents or exhibits supporting your defense
- Make opening and closing statements and legal arguments
(See Code Ann., State Gov’t § 10-213)
After the hearing, the Administrative Law Judge (ALJ) will issue either a final decision or a proposed decision for the Commission to review. You will receive a copy by mail with instructions on how to file exceptions or an appeal if you disagree with the outcome.
This proposed decision is sent to the Real Estate Commission for final review. The Commission is not bound by the ALJ’s recommendation but must provide written reasoning if it modifies or rejects the findings. The Commission will then issue a Final Order, which is mailed to all parties. (See Md. Code Ann., State Gov’t § 10-220).
Judicial Review: Appealing the Decision
If a complaint is dismissed, you have the right to file an appeal in the Circuit Court within 30 days of the date of the dismissal letter. See Md. Code Ann., State Gov’t § 10-201, et. seq. https://labor.maryland.gov/license/mrec/mreccompfaqs.shtml
Contact Kurt E. Nachtman and Silverman Thompson
If you’ve received a complaint or disciplinary notice from the Maryland Real Estate Commission, do not wait. Many licensees wait too long to seek legal help, which can limit their options later. An experienced attorney can:
- Help you draft a strong written response to the initial letter
- Clarify your rights and obligations under Maryland law
- Subpoena evidence and track down witnesses
- Find and retain expert witnesses to help improve your hearing with the ALJ
- Represent you in interviews, negotiations, or hearings
- Advocate for an early resolution or reduced sanction
- Preserve key issues for appeal
If you are facing investigation from the Maryland Real Estate Commission or have any questions surrounding MREC disciplinary procedures, do not hesitate to contact him at kurt@silvermanthompson.com or toll-free at 800.385.2243.