Criminal penalties, unlicensed activity, and the Recovery Fund
FREC disciplines licenses. The criminal courts punish crimes. The Recovery Fund reimburses consumers. This lesson covers the second and third, plus how DBPR deals with people who have no license at all.
Criminal violations: 475.42
Fla. Stat. 475.42(1) lists prohibited acts. Among them:
- (a) Operating as a broker or sales associate without a valid, current active license
- (b) A sales associate operating as a broker, or working for anyone not registered as their employer
- (c) A broker employing an unlicensed person as a sales associate
- (d) A sales associate collecting money in a brokerage transaction except in the name of the employer and with the employer's express consent, or suing anyone other than their registered employer for a commission
- (f) Giving false affidavits or testimony before the commission
- (h) Obstructing or hindering enforcement of the chapter
- (n) Spreading false or misleading information to offer real property for sale or to induce someone to buy, lease or rent it
| Violation | Penalty |
|---|---|
| 475.42(1)(a): practicing without a valid, current active license | Felony of the third degree |
| Any other violation of 475.42(1), unless the chapter sets a different punishment | Misdemeanor of the second degree (475.42(2)) |
Under 475.42(2), a civil case, a criminal case and a license proceeding can all arise from the same facts, and none of them stays or controls the others. A licensee can be fined by FREC, sued by a customer and prosecuted for the same act. Any violation of 475.42 is also a ground for discipline under 475.25(1)(a).
Unlicensed activity: 455.228
For people practicing without any license, DBPR has separate tools under 455.228:
- The department may issue a cease and desist notice (455.228(1)).
- It may impose an administrative penalty of up to $5,000 per incident (455.228(1)).
- It may go to circuit court for an injunction and a civil penalty of $500 to $5,000 for each offense (455.228(2)).
- It may issue a citation with a fine of $500 to $5,000. The subject has 30 days to dispute it before it becomes a final order (455.228(3)(a)). Each day the activity continues after a citation is a separate violation (455.228(3)(b)).
Cases against unlicensed persons are not covered by the 455.225(10) confidentiality.
The Florida Real Estate Recovery Fund
The Recovery Fund is a separate account in the Professional Regulation Trust Fund (475.482). It reimburses people who obtain a court judgment for monetary damages caused by a licensee's violation of 475.25 or 475.42 in a real estate brokerage transaction in Florida. The licensee must have held a current, valid, active license at the time, must not have been a party to the deal, and must have been acting solely as a licensee.
Funding (475.482(3)-(4)): $1.50 per year on sales associate licenses, $3.50 per year on broker licenses, and all fines FREC collects. The special fees stop when the fund exceeds $1 million and resume only if it falls below $500,000.
| Rule | Detail |
|---|---|
| Cap per transaction | $50,000 in total (475.484(3)) |
| Cap per licensee | $150,000 in total (475.484(4)) |
| Claim deadline | Within 2 years of the act or its discovery, and never more than 4 years after the act (475.483(1)(c)) |
| Effect on the licensee | License automatically suspended on the date of payment; not reinstated until the fund is repaid in full, plus interest (475.484(7)) |
Not eligible (475.483(2)): the judgment debtor's spouse; a licensee who acted as a single agent or transaction broker in the transaction; claims where the licensee was dealing for their own account or not acting as a licensee; claims against a licensee without an active license; and judgments against a brokerage entity rather than an individual.
The claimant must also have tried to collect the judgment first, for example by having a writ of execution issued and finding no assets to levy on (475.483(1)(d)).