CASE LAW UPDATE 2014What are the most common causes of discipline by the commission?

The 3 big No-Nos• 1.TRUST ACCOUNT PROBLEMS

The 3 big No-Nos• 1.TRUST ACCOUNT PROBLEMS

• 2. LACK OF BIC SUPERVISION

The 3 big No-Nos• 1.TRUST ACCOUNT PROBLEMS

• 2. LACK OF BIC SUPERVISION

• 3. MISREPRESENTATIONS/OMISSIONS

TRUST ACCOUNT PROBLEMS

• TAKE MY LICENSE, PLEASE!

The Easiest Trust Account Cases

• - NSF Checks• - Numerous Checks to the broker• - The “Confession”

THE TRUST ACCOUNT DEBIT CARD DEBACLE:

Why is a debit card not a good idea?

Why is a debit card not a good idea?• - no audit trail or proof of purpose

Why is a debit card not a good idea?• - no audit trail or proof of purchase

• - it’s easier to forget to record the withdrawal than to forget to record a check written while sitting in the office

Why is a debit card not a good idea?• - no audit trail or proof of purchase

• - it’s easier to forget to record the withdrawal than to forget to record a check written while sitting in the office

•- TEMPTATION

Debit cards lead to questions:

QUESTIONS LIKE…

Why does a broker go to Victoria Secret?

Why does a broker go to Victoria Secret?

• She’s probably just staging!

You don’t go to a nail salon for staging!

My least favorite TA cases

•EMBEZZLEMENT!

WHO IS THE EMBEZZLER?

WHO IS THE EMBEZZLER?

The 3 big No-Nos• 1.TRUST ACCOUNT PROBLEMS

• 2. LACK OF BIC SUPERVISION

Rule A.0110:• A BIC is responsible for:

(1) the retention of current license renewal pocket cards by all brokers employed at the office for which he or she is broker-in-charge; the proper display of licenses at such office…

Rule A.0110:• A BIC is responsible for:…• (2) the proper notification to the Commission of any

change of business address or trade name of the firm and the registration of any assumed business name adopted by the firm for its use;

Rule A.0110:• A BIC is responsible for:…• (3) the proper conduct of advertising by or in the name

of the firm at such office;

Rule A.0110:• A BIC is responsible for:…• (4) the proper maintenance of the trust or escrow

account and records pertaining thereto;

Rule A.0110:• A BIC is responsible for:…• (5) the proper retention and maintenance of

transaction records;

Rule A.0110:• A BIC is responsible for:…• (6) the proper supervision of provisional brokers …

Rule A.0110:• A BIC is responsible for:…• (7) the proper supervision of all brokers employed at

the office for which he or she is broker-in-charge with respect to adherence to agency agreement and disclosure requirements.

IN OTHER WORDSBeing BIC is more than filling out a form

Recent Cases• - The BIC who allowed the provisional broker to handle

the “property management side” – active one year suspension

• - The BIC who allowed the provisional broker to handle the “property management side” leading to a $100,000 TA shortage - revocation

• the “failure to reconcile” trust account cases ranging - from reprimand to revocation depending on severity and extent of loss

Recent Cases• The “Ghost Broker”

• this person may be last seen filling out the BIC designation

• Also shows up to collect his or her paycheck

Misrepresentation

What’s a Material Fact?

• Facts about the property itself. Leaky Roof?

• Facts relating to the area around the property. Highway Coming?

• Facts relating to a party’s ability to close. Title Defect?

• Facts known to be

important to a party. Planning a Pool?

Types of Misrepresentation

1. Willful Misrepresentation

2. Negligent Misrepresentation

3. Willful Omission

4. Negligent Omission

5. False Promise

Common Cases

Septic Permit = bedroom count

Highway Disclosure?

Recent Cases

x

= Revocation