Nobody wants to be a tattle tale. It can be uncomfortable to report an agent to the Department of Safety and Professional Services (DSPS) or the local REALTOR^® association for bad behavior when you might have to work with that agent in future transactions or you are concerned the person will be spiteful or retaliate for the complaint. Remember, however, that Wis. Admin. Code REEB § 24.03(2)(b) says, “Licensees shall act to protect the public against fraud, misrepresentation and unethical practices.” The “shall” in that sentence means licensees must do this — not just when it is convenient or comfortable — but all the time. 

Does the obligation to protect the public against fraud, misrepresentation and unethical practices mean that a licensee’s first and only response to another agent’s bad behavior is to file a complaint? Of course not! A licensee may first try speaking with the agent who is engaging in behavior that either violates license law or the REALTOR^® Code of Ethics or both. If a friendly chat is not successful, the licensee or the licensee’s supervising broker may consider reaching out to the errant agent’s supervising broker for some assistance in stopping or correcting the bad behavior. When the WRA Legal Hotline receives a call from a member who is frustrated with another agent’s behavior, the suggestion may be to contact the agent’s supervising broker. But what happens when the bad agent is the supervising broker? In that case, or when informal discussions with the agent or the agent’s supervising broker are not sufficient to remedy the bad behavior, the obligation to protect the public from fraud, misrepresentation and unethical practices, the licensee might be left with no other choice but to file a complaint with the DSPS and/or the agent’s local REALTOR^® association. 

Who can file a DSPS complaint against an agent and for what can an agent receive DSPS discipline?

Anyone can file a complaint, and the burden of proof in a disciplinary proceeding is a preponderance of the evidence. Preponderance of the evidence means the greater weight of the evidence. The party with the stronger evidence, however slight the advantage may be, should win under a preponderance of the evidence standard.

While a person files a complaint with the DSPS, it is actually the Real Estate Examining Board (REEB) that issues the discipline. Agents can be disciplined for any violation of Wis. Stat. Chap. 452 Real Estate Practice or applicable administrative code provisions such as failing to give agency disclosure, incompetent drafting of contracts or missing a deadline in a transaction.

Actions for which a licensee can be disciplined

• Lying on an application, renewal form or in information furnished to the DSPS
• Making a misrepresentation in a transaction
• Lying to parties or other agents 
• Accepting payment for brokerage services from someone other than the agent’s firm
• Violating trust account rules
• Demonstrating incompetency
• Paying or offering to pay commission or valuable consideration to a non-licensed person for brokerage services or referrals
• Engaging in steering
• Engaging in fraud or dishonest dealings
• Violating any provision of Wis. Stat. Chap. 452 or any of the administrative code provisions promulgated under it, such as the REEB rules
• Failing to use approved forms
• Treating someone unequally on the basis of their membership in a protected class
• Being convicted of a crime that substantially relates to real estate

What are the steps in the DSPS complaint and subsequent disciplinary process?

First, a person makes a complaint to the DSPS. A person can use the online complaint form; or they can print the complaint form, complete it and then mail, fax or email it to the DSPS. Both the online complaint form and the printable form are available at dsps.wi.gov/Pages/SelfService/FileAComplaint.aspx. A person using the online complaint form must supply certain information such as the person’s name, address and email address. This might discourage a person from making a valid complaint because they do not want their name associated with the complaint. In that case, the person might choose to print the complaint form and complete it anonymously for submission to the DSPS. Obviously the DSPS may have a harder time investigating an anonymous complaint as it will be impossible to follow up with the person who made the complaint if additional information is needed. Some complaints, though, may be established sufficiently by evidence submitted with the complaint that the DSPS investigative staff has enough to pursue it. Something like an agent advertising without including the agent’s firm’s name, advertising property that is listed with another firm without the firm’s permission or a fair housing violation might be able to be supported sufficiently with documentation submitted with the complaint. In this case, the DSPS would not need to reach out to the person who made the complaint to pursue an investigation.

Once a complaint has been made, anonymously or otherwise, it is in the Intake stage. The Division of Legal Services and Compliance (DLSC) receives and processes complaints. Copies of the complaint and related information are then screened by the REEB screening panels and DLSC staff to determine if an investigation is warranted. Complaints that do not warrant investigation are closed. Complaints that appear to have merit or require further investigation are identified for investigative action, and a case is opened. If a complaint warrants investigation, it moves to the Investigation stage. The assigned DLSC investigator and attorney develop an investigative plan. Investigative staff gather necessary evidence and make contacts with witnesses as needed. It is important to remember that licensees shall respond to the DSPS and the REEB regarding any request for information within 30 days of the date of the request. This means that if the DSPS and/or the REEB contacts a licensee requesting information, the licensee must respond within 30 days of the request even if the licensee is not the subject of the underlying complaint. The REEB may reprimand a credential holder, or may deny, limit, suspend or revoke a credential if the credential holder fails to respond to the satisfaction of the REEB within 30 days of a request for information from the REEB. After collecting necessary information, an REEB member is consulted on issues requiring professional expertise. The results of the investigation are provided to and discussed with the case advisor. Cases that do not warrant professional discipline are closed.

Cases with violations proceed to the Legal Action stage. DLSC compliance attorneys review the results of the investigation and pursue disciplinary action when appropriate. Cases may resolve by means of stipulated agreements, informal settlement conferences or administrative warnings. The case advisor will be asked for assistance on matters involving professional expertise and for their opinion on appropriate case resolution. If no satisfactory resolution is available, the case proceeds to the Hearing stage, which is a formal legal proceeding. The DLSC attorney litigates the case before an administrative law judge (ALJ). The ALJ issues a proposed decision that is reviewed by the REEB or the DSPS. If a violation is found, discipline may be imposed. Disciplinary orders may include reprimand, limitation, suspension and revocation.

In addition, the DSPS can assess against a licensee a forfeiture of not more than $1,000 for each violation and require a licensee to successfully complete education or training, in addition to any education or training required for licensure or for renewal of a license under this chapter, as a condition of continued licensure or reinstatement of a license. Disciplinary orders are monitored for compliance by DLSC monitoring staff.

What is an administrative warning?

If the REEB determines there is evidence of misconduct by an agent, the REEB can close the investigation by issuing an administrative warning to the agent. An administrative warning can be issued when the REEB determines that no further action is warranted because the complaint involves a minor violation, and the issuance of an administrative warning protects the public by putting the agent on notice that any subsequent violations may result in disciplinary action. Administrative warnings do not constitute an adjudication of guilt or imposition of discipline and cannot be used as evidence that the credential holder is guilty. If there are subsequent allegations of misconduct, the administrative warning can be used in subsequent disciplinary proceedings as evidence that the agent had knowledge that the misconduct that was the basis for the administrative warning was contrary to law. A record of the issuance of an administrative warning is public, but the contents of the administrative warning are private and confidential.

Is there a statute of limitations for investigation by the REEB?

There is no statute of limitations for investigation of an agent by the REEB. There is a two-year statute of limitations on actions concerning an act or omission of a firm or a licensee associated with a firm, but that does not apply to disciplinary actions initiated by the REEB. 

Does a licensee who is the subject of a DSPS complaint have to pay for this process?

If the REEB orders a suspension, limitation or revocation of the credential; assesses a forfeiture; or reprimands the holder, the REEB may also assess all or part of the costs of the proceeding against the agent. The REEB may not restore, renew or otherwise issue a license to a person who owes costs related to a disciplinary proceeding until the agent has made payment for the costs, including interest.

What about seeking assistance from a local REALTOR^® association for an agent misbehaving?

A licensee who has encountered another agent’s bad behavior has some alternative or concurrent options if the agent is a REALTOR^® member. In addition to or instead of seeking correction from the DSPS, a licensee can seek assistance from the offending agent’s REALTOR^® association. REALTOR^® associations offer ombudsman services as well as mediation as alternatives or precursors to filing a complaint at the association. 

REALTOR^® ombudsman

An ombudsman is an impartial person who offers general information about real estate practice, license law, the Code of Ethics, and the ethics and arbitration hearing processes. The ombudsman responds to general questions about real estate practice, transaction details, ethical practices and enforcement issues. Participation in ombudsman services is voluntary. Any inquiries or information obtained via the ombuds process are subject to confidentiality. The ombudsman’s role is primarily one of communication and conciliation, not adjudication. An ombudsman does not determine whether ethics violations have occurred or who is entitled to compensation; rather the person anticipates, identifies and resolves misunderstandings and disagreements before matters ripen into formally filed arbitration requests or possible formal charges of unethical conduct.

REALTOR^® mediation

In the mediation process, disputing parties meet with a neutral mediator to reach a mutually agreeable solution or settlement of their dispute. The objective in mediation is for the parties to resolve the dispute and enter into a written mediation resolution agreement stating the terms of their settlement, thereby avoiding the need to arbitrate a matter or have an ethics hearing if there is an alleged violation of the Code of Ethics. Mediation may be used in contract disputes between REALTORS^® including procuring cause claims or referral fee disputes. In Wisconsin, mediation may also be used to resolve certain alleged Code of Ethics violations. However, if the alleged activity could be a violation of the public trust, the mediator would stop the mediation and the potential complainant has the choice to file a formal ethics complaint.

REALTOR^® ethics complaint process 

Any person, whether a member or not, having reason to believe a member is guilty of any conduct contrary to the Code of Ethics subject to disciplinary action, may file a complaint in writing. The person filing the complaint does so in their own name, dating and signing the complaint. The ethics complaint also will state the facts on which the complaint is based. 

The articles in the Code of Ethics are the specific obligations that can subject the member to disciplinary action. Any ethics complaint must cite an article since that is the standard by which REALTORS^®’ conduct is judged; a Standard of Practice may only be cited in support of a charge that an article was violated. The complaint must also include the date the complainant became aware there was a potential violation. 

Upon the submission of a complaint, association staff forward the complaint to a grievance committee, which reviews the complaint and any supporting evidence and documentation. The committee will review whether the complaint is in acceptable form, the correct parties are named and it was timely filed. The grievance committee also considers if the facts, if taken as true, could reflect a possible violation of the Code of Ethics. The grievance committee may forward a complaint, amend a complaint or dismiss it. If the complaint goes to a hearing, each party may prepare evidence and testimony and bring witnesses. The complainant has the burden of proof, by clear, strong and convincing evidence, to show the respondent has violated the Code of Ethics. The respondent will have the opportunity to defend their conduct with evidence, testimony and witnesses.

If a REALTOR^® is found in violation of the Code of Ethics as a result of the ethics hearing, the local association has several options relating to discipline. Discipline may consist of any or a combination of the following:

• Letter of warning or reprimand with a copy to be placed in the member’s file.
• Education including appropriate course or seminar specified by the hearing panel. 
• Appropriate and reasonable fine not to exceed $15,000. 
• Suspension of membership of the individual. 
• Expulsion from membership of the individual, with or without reinstatement privileges. 
• Suspension or termination of MLS rights and privileges.

What about arbitration? Is that part of the discussion when an agent is behaving badly?

Arbitration is used for settling certain contractual and non-contractual disputes, such as questions of compensation and procuring cause; it is not for addressing an agent behaving badly. Per Article 17 of the REALTOR^® Code of Ethics, REALTORS^® both have a duty and a privilege to arbitrate certain contractual and non-contractual disputes.

Article 17
In the event of contractual disputes or specific non-contractual disputes as defined in Standard of Practice 17-4 between REALTORS^® (principals) associated with different firms, arising out of their relationship as REALTORS^®, the REALTORS^® shall mediate the dispute if the Board requires its members to mediate. If the dispute is not resolved through mediation, or if mediation is not required, REALTORS^® shall submit the dispute to arbitration in accordance with the policies of the Board rather than litigate the matter. … The obligation to participate in mediation and arbitration contemplated by this Article includes the obligation of REALTORS^® (principals) to cause their firms to mediate and arbitrate and be bound by any resulting agreement or award. (Amended 1/12)

• Standard of Practice 17-1
  The filing of litigation and refusal to withdraw from it by REALTORS^® in an arbitrable matter constitutes a refusal to arbitrate. (Adopted 2/86)
• Standard of Practice 17-2
  … Article 17 does not require REALTORS^® to arbitrate in those circumstances when all parties to the dispute advise the Board in writing that they choose not to arbitrate before the Board. (Amended 1/12)

When an arbitrable issue arises, an arbitration request may be filed by either firm involved in the dispute. Generally, the firm requesting payment of the compensation files the request. However, it is also possible for the firm in possession of the funds to file the arbitration to keep the funds. In such a case, the arbitration panel would determine whether there is an obligation to pay or not. Requests for arbitration must be filed within 180 days after the closing of the transaction, if any, or within 180 days after the facts constituting the arbitrable matter could have been known in the exercise of reasonable diligence, whichever is later. 

Hopefully, this how-to guide for filing a complaint at the DSPS and/or local REALTOR^® association sits on your shelf and gathers dust because you never need to report another agent. There are times, though, when someone’s behavior requires correction. A licensee is encouraged to try the informal ways to address bad behavior by first reaching out to the agent’s supervising broker; but when that is not enough, know that both the DSPS and local REALTOR^® associations provide avenues to address these issues. And remember, an agent has a duty to protect the public from fraud, unethical practices and misrepresentation — meaning sometimes an agent may have to shine a light on another agent’s bad behavior by contacting the DSPS and/or the agent’s local REALTOR^® association. 

Jennifer Lindsley is Staff Attorney and Director of Training for the WRA.