Who can complain?
How the TREC complaint process works.

Read how you can reduce your chances of a complaint.

by Linda Bayless and Delle Lindquist  The Texas Real Estate Commission in 2003 saw 3,400 complaints against real estate licensees (salespersons and brokers). An even-higher number is expected this year. That may seem like a large number, but it’s really not bad given that there are about 100,000 active salesperson and broker licensees in Texas. More than half of the complaints are resolved without a hearing or are withdrawn by the people who filed them. A small percentage reach the stage of a formal hearing in front of the hearings officer, similar to a judge.

Even if you never expect to receive notice of a complaint against you, it helps to know what mechanisms are in place to regulate the real estate industry. Here is a summary of how the complaint process works, and what to expect and how to best prepare yourself in the event a complaint is filed against you. Of course, there is no foolproof way to prevent a complaint, but knowing how the process works can take some of the fear and uncertainty out of an already stressful situation.

Who checks out the complaint?
All complaints filed against licensees are handled by the TREC Enforcement Division, which consists of six staff attorneys, 10 investigators, and other support staff members. Generally, the state is divided into regions, with a separate attorney handling a caseload for each region. The Enforcement Division’s 10 investigators are positioned in various areas of the state: three in Houston, three in Dallas, two in Austin, one in San Antonio, and one for the remainder of Texas.

Anyone may file a complaint. The complaint must be in writing and signed by the person or persons making the complaint. The law does not permit TREC to investigate anonymous, telephone, e-mail, or unsigned complaints. The person filing does not have to be a party to the transaction. In fact, often complaints are received from people who had nothing to do with the transaction. As an example, adult children have filed a complaint on behalf of their elderly parents.

TREC classifies complaints in two ways: external and internal. External complaints are those that come from the public—the type that most people think of. Internal complaints are initiated by the agency. For example, the commission’s licensing division may file a complaint against a licensee who fails to complete MCE hours in a timely manner. Or, if a licensee leaves the “criminal” question blank on his license-renewal card, that will initiate an internal complaint. TREC also investigates a licensee who is convicted of a crime, a licensee who writes a bad check to the commission, or a licensee
who draws on the recovery fund as a result of a
court judgment.

What does TREC do when it receives a complaint?
Once the Enforcement Division receives a signed, written complaint, the complaint is reviewed by a legal assistant and the attorney assigned to the region from which the complaint came. This review determines whether the commission has jurisdiction over the alleged activity—does the activity involve a possible violation by the licensee of The Real Estate License Act (TRELA) or the Texas Real Estate Commission Rules? The commission often receives complaints about builders, mortgage brokers, title agents, and other entities over which it has no jurisdiction. If the complaint may involve a violation of TRELA or the TREC Rules, a copy of the complaint is mailed to the licensee and his sponsoring broker.

How does TREC investigate the complaint?
The Enforcement Division may determine that the issues involved in the complaint may be less egregious than most and might be settled without a full investigation. In this instance, if you were named, you would receive a letter, along with a copy of the complaint, requesting a written response to the accusations. At this time, you are known as a “respondent,” and the person filing the complaint is the “complainant.” Sometimes, your written response can help TREC resolve the matter. But in most instances, the complaint requires a more in-depth investigation, including interviews with witnesses, and is assigned to an investigator.

It is important to note that if a complaint is filed against a salesperson, TREC also opens a case against the sponsoring broker. Likewise, the commission also opens a case against the designated officer or designated manager of a corporate licensee. This is one reason why brokers should be aware of what their agents are doing—and how they are doing it.
The investigator will interview the complainant, you, and any witnesses with relevant information. The investigator also requests copies of relevant documents from all parties. It is important at this stage of the investigation for you to let the investigator know the names of anyone who can substantiate your version of events. You are always entitled to have your attorney present at the interview; however, you—not your attorney—must answer the questions asked by
the investigator.

The investigator gathers the facts and evidence—he does not make judgments about the information. Most of the investigators have been with the commission a long time and have heard just about every story imaginable. They know not to voice their opinions about the case to witnesses, respondents, or complainants.

After the investigator completes his interviews and gathers the best evidence available to him, he writes a report and submits it to TREC headquarters in Austin. The staff attorney for that region will review the report and make a determination on how to proceed with the case.

How does TREC determine what action to take?
The staff attorney reviews the report and supporting documents, then applies the facts and evidence to TRELA and the TREC Rules to determine if you did indeed violate the law. TRELA provides a range of disciplinary actions that can be taken, from the lowest form of discipline, an advisory letter, up to revocation of a license. Remember, though an advisory letter is the first level of discipline, it remains in your master file. If you commit a similar violation again, harsher discipline could be taken in future complaints against you.

If the staff attorney determines that a statute or rule has been violated and that the violation could be proven at a hearing using the evidence that was gathered, he will prepare and mail “original allegations” to you. These are exactly what their name implies—written allegations of your violations of the law, including specific facts and specific violations taken directly from the available evidence. You then have time to respond to the allegations.

If you agree with the allegations, there may be an opportunity for you to enter into an agreed order in which the terms of the disciplinary action are agreed to by you and the staff attorney. If you believe that the allegations are incorrect, you may choose to present your case before the hearings officer in a formal hearing. The Enforcement Division will likewise present its case against you. Both sides are entitled to call witnesses to support their positions. As always, you may either choose to represent yourself or have legal representation. The hearings are generally held in the city where the alleged activity occurred, but there are exceptions to that rule.

Do I have the right to an appeal?
After all evidence is presented by both sides, the hearings officer will publish a decision or “order” within 60 days. You will receive a copy in the mail. If the decision is adverse to you and you feel strongly that the hearings officer made an error, you may file a motion for rehearing within 20 days, requesting another hearing either before the hearings officer or before the TREC Commission members. A rehearing gives you the opportunity to present the same or additional evidence in your defense. If you again receive an adverse determination, your last resort in the process is to appeal the case to a district court in Travis County.

Most of the violations that licensees commit are listed in §1101.652 of TRELA, which can be found on the TREC Web site at www.trec.state.tx.us. Remember, TREC staff attorneys and legal assistants are available at 512/465-3960 to answer questions pertaining to TRELA or the TREC Rules. As a REALTOR® member, you also have access to the Texas Association of REALTORS® Legal Hotline at 800/873-9155.

There is no way to prevent a complaint being filed against you. Regrettably, even the most careful of licensees may become the subject of a complaint for any number of reasons. Follow the steps outlined above and try to understand that the procedure is not intended to hurt or embarrass you, but is designed to allow TREC to obtain the best evidence possible so that the commission may enforce the law in a way that is fair to all parties to the case.

Linda Bayless is the director of enforcement at the Texas Real Estate Commission and can be reached at linda.bayless@trec.state.tx.us. Della Lindquist is a staff attorney at the Texas Real Estate Commission and can be reached at della.lindquist@trec.state.tx.us.

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