Florida lawmakers consider bill that would eliminate real estate’s regulatory board

The future of the Florida Real Estate Commission is in the hands of lawmakers.

FREC, which oversees real estate agents, brokers and brokerages, could be eliminated under proposed legislation aimed at de-regulating industries such as real estate. House Bill 1461 calls for the repeal of FREC, among other boards and commissions that fall under the Department of Business and Professional Regulation’s purview.

The proposed law would also eliminate the Regulatory Council of Community Association Managers; Florida Building Code Administrators and Inspectors Board; Board of Professional Engineers; Board of Architecture and Interior Design; Construction Industry Licensing Board; and Electrical Contractors’ Licensing Board.

The bill is moving through the Florida House of Representatives. An identical sister bill is not yet being considered by the Senate.

FREC, composed of a seven-person commission appointed by the governor and confirmed by the Senate, adjudicates complaints filed against agents and brokers that the state decides to investigate. It was created in 1925.

Thousands of complaints are submitted to the state each year regarding real estate agents and brokers; only a percentage of those are typically deemed “legally sufficient,” which means that the licensee is being accused of violating state law.

Many consumers and real estate agents believe that their local Realtors’ association, such as the Miami Association of Realtors, plays a role in regulating licensees because the trade organizations handle ethics violations and arbitration issues. But the Department of Business and Professional Regulation, based on FREC’s determinations, is the only government authority that can revoke a broker or real estate agent’s license, or issue fines or suspensions.

“The threat of the loss of licensing is a powerful deterrent,” said Mike Pappas, CEO of the Miami-based Keyes Company. “Is it hard to lose your license? Probably. Do people lose their licenses? Yes.”

Pappas acknowledged the “real value in managing our industry.”

“We’re in a movement of becoming more efficient, but we don’t want to overstep the values,” he said.

Some agents and consumers are critical of the regulatory process in Florida because it is slow and does not employ enough investigators, not because they are looking for less regulation.

Patti Fitzgerald, a member of FREC’s board and a past chair, described the process by which complaints are investigated. Complaints first go through an investigator, then DBPR’s legal team, then a probable cause panel. At that point, the panel will either dismiss a complaint, give notice to the agent or broker with a letter of guidance, or introduce the complaint to the commission, which could then fine the agent or broker, or rescind or suspend their license.

“Our duty as real estate commissioners is to protect the consumer,” said Fitzgerald, a broker associate manager with Keyes’ Illustrated Properties. “Without that protection, I don’t know what our business will look like.”

As written, HB 1461 doesn’t state who within DBPR would handle regulation and enforcement if FREC is eliminated. The original version of the bill filed in late February did not propose eliminating boards and commissions such as FREC. Amendments added in early April included abolishing these boards.

Trade groups are speaking out in opposition to the legislation.

Margy Grant, CEO of Florida Realtors, opposed HB 1461 at a House committee meeting this month. “Eliminating FREC would have a significant negative impact on both consumer protection and Florida’s real estate industry, which is a major economic driver within our state,” Grant said, calling it “too big a risk to take.”

Real estate, she said, “involves legal responsibilities, public trust and potentially significant risks to consumers who are often making the largest financial investment of their life.”

Jason Haber, co-founder of the American Real Estate Association and an agent with Compass, said he’s encouraging agents to contact their state representatives to vote against the bill.

Abolishing FREC, he said, could be “catastrophic for our industry” and weaken the housing market by removing consumer protections.

“Who is going to step in and call balls and strikes?” Haber said. “This is like being in the middle of the game and pulling the referee out.”

Residential

South Florida

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