Real estate agents occasionally get into disputes over minor issues of business practice. This article will help agents discern petty grievances from scenarios that warrant further action.

Disputes between real estate agents

In the course of California real estate transactions, circumstances may arise which compel a real estate agent to file a complaint against a fellow agent. Whether action is taken against the offending real estate agent depends on the type of complaint filed.

The California Bureau of Real Estate (CalBRE) accepts written complaints against licensees who commit fraud or mislead clients.

CalBRE is able to suspend or revoke a license for actions which violate real estate law.

Common complaints which lead to CalBRE disciplinary action against real estate agents include:

  • trust fund mishandling;
  • nondisclosure of material facts and conflicts of interest;
  • failure to present a buyer’s offer;
  • unauthorized use of a fictitious business name; and
  • improper recordkeeping and documentation practices.

Complaints against violators of real estate law are encouraged by the CalBRE, as they may lead to disciplinary action against guilty agents. [California Bureau of Real Estate Bulletin, Winter 2012]

How to file a complaint

The fastest way to submit a complaint to the CalBRE is to file it online. The CalBRE’s online complaint system allows a complainant to easily submit the details of their complaint, including the violator’s information and relevant transaction documents.

Also, a handwritten complaint may be submitted either by mail or hand delivery. To file a handwritten complaint, a consumer or agent needs to fill out a Licensing/Subdivider Complaint form and submit it to the CalBRE. [See RE 519]

When filing a complaint against a licensee, the burden of proof for the violation rests with the complainant. For example, the CalBRE’s online complaint system requires:

  • a list of transaction dates;
  • uploaded documents supporting the complaint, such as listing agreements and receipts; and
  • addresses of the business(es) and properties involved.

For example, an agent hears of a client looking for a home and refers a fellow agent to the client. The two agents agree that the agent who referred the client will receive a small finder’s fee after the transaction closes if the clients purchase a home.

However, the agents do not document their agreement. Instead, they seal the agreement with a handshake.

The client later purchases a home, but the agent who promised a finder’s fee does not honor the agreement. The neglected agent files a complaint, but is unable to back up the complaint since they never documented the agreement.

In this case, the failure to honor a finder’s fee agreement might have constituted a veritable complaint if the agents had documented the agreement. However, since the agents did not create documentation of the agreement, there is no proof to support the complaint.

When the complaint is received, the CalBRE notifies the complainant of the investigator’s name who is looking into the violation. Once the investigation is complete, the complainant is notified of the results.

Investigations of real estate violations are lengthy, burdensome processes. Thus, the CalBRE also provides complaint resolution assistance to consumers who believe their complaints may be worked out with the licensee with the help of a mediator. Most of the issues resolved through the Complaint Resolution Program are addressed before the transaction in question is closed – thus saving the complainant, the licensee and the CalBRE considerable time and stress.

Ethical complaints

On the other hand, ethical violations, while justified, may not lead to disciplinary action unless they also involve a violation of real estate law. Members of a real estate trade union may be subject to minor fines or expulsion from the union for an ethical violation of the union’s standards. However, as membership in a trade union is in no way a requirement for practicing real estate, ethics codes do little, if anything, to dissuade violators.

For example, a broker files a complaint against another broker for “poaching” one of their employed sales agents. The sales agent switched brokerages after the second broker offered a higher fee split arrangement than the agent was receiving from the first broker.

Although some brokers consider agent poaching an ethical issue, it does not violate real estate law – and thus the second broker is not punished due to the complaint.

Despite the ethical complaint’s lack of disciplinary power, it still represents a justifiable issue one licensee may have with another licensee. Unlike an ethical complaint, frivolous complaints have no ground either in real estate law or ethical business practices.

Frivolous complaints

Some agents use frivolous complaints to try and smite other agents whom they don’t like or against whom they compete for business. Frivolous complaints are easily distinguishable from legal and ethical complaints and include:

  • unprofessionalism;
  • tardiness; and
  • failure to honor undocumented agreements.

Frivolous complaints have no basis in real estate law, and usually are not critical enough to concern even ethical issues.

Consider a listing agent who is extremely unreliable and uncommunicative. A buyer’s agent attempting to negotiate a purchase is frustrated by the listing agent’s tardiness to appointments, delays in returning phone calls, and overall unprofessionalism. The buyer is unhappy with the sporadic progress on the transaction and blames the buyer’s agent.

The buyer’s agent, upset that the listing agent is making them look bad to their client, files a complaint against the listing agent.

However, there is no legal violation committed by the listing agent. The listing agent still adheres to the legal requirements for transaction procedures – just at a slower rate than the buyer’s agent expected. The buyer’s agent is only able to claim they don’t like the way the listing agent conducts business, as it negatively affects the buyer’s opinion.

Without evidence of a legal violation, the CalBRE is unable to exact any repercussions against the listing agent. The buyer’s agent is best served by simply avoiding that listing agent in any future transactions.

The moral of the story is this: don’t be petty. Save your complaints for licensees whose violations of real estate law negatively affect their clients and the honesty expected of the real estate industry. If you do have a legitimate complaint about a legal violation, do your part to help the CalBRE resolve the issue – your complaint might prevent an unsuspecting member of the public from harm.