The Road Ahead: After the Investigation

Part Two of an in-depth Five-Part series on the Complaint and Disciplinary Process in Regulatory Affairs. See Part One “Navigating Complaints:  A How-to Guide” from the August 2024 eBulletin.  

In Part One of our series, we explored the complaint and investigative process in Regulatory Affairs.  In Part Two, we shift our focus to an examination of what happens once an investigation is complete.  

Once an investigation is complete, Commission staff conduct a thorough review of the evidence obtained in order to make a determination as to the appropriate course of action in a case.  If there is sufficient evidence of the violation of the Real Estate License Law (NCGS 93A) or Commission rules (NCAC 58A), the case is assessed to determine if it meets the legal standard for “probable cause.” Probable cause exists when there is sufficient evidence to cause a reasonably prudent person to believe that a violation of the License Law and/or Commission rules has occurred.   

If there is a lack of sufficient evidence that there has been a violation, the case is closed without further action. Sufficient evidence means evidence that supports a violation and is admissible in an administrative hearing. A Commission staff attorney reviews all cases once they are complete to make this assessment.   A case also may be closed without action when the investigation reveals a lack of jurisdiction. A case that is closed without action does not constitute a disciplinary action.  It also does not necessarily mean the broker used best practices in the situation. 

A case may be closed with a warning to the respondent when there is an alleged violation, but the misconduct is technical in nature or a minor deviation and does not warrant further action. A closing letter is issued that cautions the respondent from taking similar action in the future and reminds the respondent of the relevant law and/or rules applicable to the conduct. The closing letter containing the warning remains permanently in the licensee’s record but does not constitute a disciplinary action.    

When it appears that there may be probable cause to warrant disciplinary action, the case undergoes more in-depth consideration. After the investigation is complete, the case is brought to the entire legal team and the Executive Director for review and discussion. The case is then presented to the Commission for its determination of probable cause with a recommendation from the Executive Director to either order a hearing or close the case with a warning, or simply close the matter without action.   

Only the Commission members themselves can order a hearing against a respondent (or direct staff to pursue injunctions against respondents practicing real estate brokerage without a license). The Commission receives a summary of the allegations and evidence produced during the course of the investigation.  To ensure impartiality and fairness and avoid conflicts of interest, this summary is anonymous.  Commission members who may have prior knowledge of a respondent are recused from the consideration of the case.  If the Commission finds probable cause in a case, the Commission may order a hearing, or issue a formal “close and warn” letter. A closing letter that cautions the respondent(s) is not a disciplinary action.  If the Commission does not find probable cause, the case is closed without further action.   

After the Commission makes a determination as to probable cause, a case status report (CSR) is sent to the respondent and complaining witness. The CSR informs the recipient of the Commission’s decision. Most importantly, the CSR and accompanying letter informs respondents against whom a hearing is called of the next steps in the regulatory process and the respondent’s rights by explaining:   

1. what a notice of hearing is and its timing requirement;   
2. that hearings are conducted in accordance with Article 3A, Chapter 150B of the North Carolina General Statutes;   
3. the respondent’s right to consult and/or retain a private attorney, the duties of a staff attorney and attorney from the Attorney General’s Office, and how to postpone or continue the hearing from its original set date;   
4. the hearing process, its procedures, and information regarding settlements;   
5. that the Commission cannot resolve civil disputes between private parties, and any aggrieved parties should consult with a private attorney as to such other remedies;   
6. how the Commission renders its decision, provides notice, and the respondent’s right to appeal the Commission’s decision;   
7. that the actions taken by the Commission are a matter of public record, and how disciplinary actions are published; and  
8. how the respondent may communicate with the assigned staff attorney.  

Commission staff strongly encourage a respondent to seek the advice of a private attorney. Staff attorneys can provide information to respondents on procedural aspects of a case; however, they cannot give legal advice to respondents.  

Voluntary Surrender  

A respondent may ask to voluntarily surrender the respondent’s license for a specified or permanent period without the need for a hearing. The staff attorney assigned to handle the case must consider requests for a voluntary surrender on a case-by-case basis; there are situations when it is not appropriate. If it is appropriate and a respondent consents to a voluntary surrender, the respondent does not expressly admit or deny misconduct and surrenders any renewal or reinstatement right the respondent may possess. This arrangement is reflected in writing and is referred to as a Consent to Voluntary Surrender (CVS).  The CVS must be signed by the respondent, and if applicable by the respondent’s attorney and must be presented to and approved by the Commission before it is effective.   To learn more about the complaint process or to file a complaint, go to the Commission’s website, or contact Regulatory Affairs at RA@ncrec.gov or 919-719-9180.