Chapter 2: Real Estate License Law and Qualifications for Licensure

Question 1

What is the purpose of the Florida Real Estate License Law

Answer 1

to protect the public. The Department is essentially a consumer protection agency.

Question 2

Caveat Emptor

Answer 2

before statutory law existed, means, “let the buyer beware.” It was “buyer beware” on property defects that rendered the property unfit for ordinary purposes.

Question 3

The Commission

Answer 3

The Florida Real Estate Commission (FREC)

Question 4

The Department

Answer 4

The Department of Business and Professional Regulation (DBPR)

Question 5

The Division

Answer 5

The Division of Real Estate (DRE)

Question 6

Persons Who are Required to be Licensed

Answer 6

A Florida real estate license is required when anyone performs a service that is specified under F.S. 475 and when the following 4 conditions are simultaneously present, unless that individual is otherwise exempt under the law.

1. Performing a service of real estate
2. In the state of Florida
3. For another
4. For compensation

Question 7

Statutory Services of Real Estate

Answer 7

F.S.475.01 specifies the real estate services shown below that require those who perform such services to possess a current and valid Florida real estate license.

A BAR SALE (Appraising, Buying, Auctioning, Renting, Selling, Advertising, Leasing, Exchanging)

Question 8

By-bidders

Answer 8

using by-bidders to drive up the price of property that is being auctioned with no intention of buying is illegal. Is a violation of the real estate license law and other laws that deal with fraudulent or deceptive practices.

Question 9

Individuals who are exempt from licensure

Answer 9

1. attorneys & accountants
2. appraisers
3. business organizations
4. court appointees
5. salaried employees
6. other individuals

Question 10

Attorneys-in-fact

Answer 10

any person acting for the purpose of the execution of contracts or conveyances only is exempt. They are granted authority under a power of attorney to act for others in some capacity, such as signing documents

Question 11

Attorneys at law

Answer 11

may perform legal services on behalf of their clients without a real estate license. They may prepare documents, handle closings, and give legal advice. However they may not perform services of real estate for compensation, receive sales commissions or referral fees without a real estate license.

Question 12

Certified public accountants

Answer 12

may perform accounting services on behalf of their clients; they may prepare documents and handle closings. They may not perform services of real estate for compensation, receive sales commissions….etc.

Question 13

Partners in a partnership

Answer 13

who perform real estate services for the partnership are dealing for themselves, as well as for the other partner(s). If each partner receives a pro rata share of profit based on his or her ownership interest in the partnership, no real estate license is required for any of the partners. However, if a partner or partners receive a share of profit in excess of their ownership interest in the partnership, all partners are in violation of the license law.

Question 14

Corporations

Answer 14

that sell, exchange, or lease their own real property don’t need a license.

Question 15

Timeshare exchange companies

Answer 15

are exempt from licensure to the extent that the exchange company is engaged in exchange program activities as described in, and complies with F.S. 721.18, the Florida Timeshare Act.

Question 16

Court Appointees

Answer 16

are persons who are appointed by a court of law to perform services of real estate. They may do so for a fee or salary but not for a commission.
o	Trustees
o	Receivers
o	Masters in chancery
o	Court-appointed appraisers

Question 17

Salaried Employees

Answer 17

who are employed by the following entities or of individuals, partnerships, or corporations who own real estate may perform real estate services on behalf of their employers without being licensed.
o Government agencies
o Railroads
o Rural electric cooperatives
o Public utilities
o Salried employees of an owner, or of a registered broker for an owner, of an apartment community who work in an onsite rental office of the apartment community in a leasing capacity are exempt. A tenant in an apartment community may receive up to $50 cash, personal property, or credit toward rent for the referral of a new tenant for the same complex.
o Salaried managers of condominium or cooperative apartment complexes are exempt when renting individual units within such condominium or cooperative apartment complex if rentals arranged by the person are for periods no greater than one year.

Question 18

Other individuals who do not need real estate license

Answer 18

o Individuals may buy, sell, or perform services of real estate for themselves without having a real estate license.
o Persons who deal strictly in personal property transactions. As an example, mortgages are personal property.
o Cemetery lot salespersons
o Renting of a mobile home lot or recreational lot
o Owners of one or more timeshare periods
o Radio, television or cable enterprise employees may perform real estate services on behalf of the employer.
o Any person or other entity that rents, or advertises for tent, transient occupancy of public lodging establishments such as hotels, motels, and rooming houses.
o Dealers registered under the Securities and Exchange Act of 1934, this exemption applies whether stock or assets of the business enterprise are purchased or sold. The exemption does not apply to a sale, exchange, purchase or rental of land, buildings, fixtures, or other improvements to the land that is not made in connection with the sale, exchange, purchase, or rental of a business enterprise.

Question 19

Sales associate

Answer 19

must be employed by a real estate broker or owner-developer to practice. Must apply for and complete all pre-license requirements to obtain initial license. Must also complete all post-license requirements prior to their initial license expiration in order to keep their sales associate license and continue practicing real estate. After that, ongoing biennial (every two years) continuing education requirements must be met to maintain a sales associate license.

Question 20

Broker

Answer 20

a broker is a person who performs services of real estate as an agent for another, who is compensated for those services, either directly or indirectly. A broker must maintain an office and may hire sales associates or broker associates to perform services of real estate on his or her behalf. Sales associates and broker associates receiver their compensation from their employing broker, and are never compensated directly by the customer. Broker applicants must complete all broker pre-license requirements. A licensed sales associate who wishes to apply to be a broker must have been employed under one or more actively licensed brokers for at least 24 months within the preceding 5 years before becoming eligible to take the state broker exam. Ongoing biennial continuing education requirements must be met to maintain a broker’s license.

Question 21

Broker Associate

Answer 21

an applicant for a broker’s license may choose to continue employment in a sales associate capacity with a current employer subsequent to passing the state broker examination. If so the applicant will be registered as a broker associate after passing the broker examination. A broker associate is qualified to receive a broker’s license but chooses instead to be employed under the direction, control, and management of an actively licensed broker or owner-developer. In this capacity, the broker associate acts as a sales associate, not as a broker.

An applicant for a Florida real estate license is not required to be a resident of the state of Florida, or to be a citizen of the United States

Question 22

Pre-licensing

Answer 22

• Complete the required sales associate or broker pre-license education and pass the pre-license course final exam with a score of 70% or higher.
• Submit an application for the state exam, along with payment of a fee for the initial license.
• Submit electronic fingerprints that will be used in a background check to determine any criminal history.
• Pass the state examination with a score of 75% or higher (to obtain an inactive license)
• Obtain employment and file employment information

Question 23

Post-licensing (for the first renewal)

Answer 23

• Complete the required sales associate or broker post-license education and pass the post-license course final exam
• Pay a renewal fee

Question 24

Continuing Education (CE) (every 2 years)

Answer 24

must be completed for all subsequent two year renewal periods following the first renewal. To complete this the candidate must:
• Complete the required 14-hour continuing education.
• Pay a renewal fee.

Question 25

Mutual Recognition (not reciprocity)

Answer 25

the state of Florida has entered into contractual agreements, referred to as mutual recognition, with a limited number of states that recognize the similarity in the content of their mutual educational and experience requirements for real estate licensing. Mutual recognition applies to specific states and is not the same as reciprocity, which would allow for licensees from one state to practice in another state. Florida does not have reciprocity with any other state with regard to real estate licensing.

Question 26

Mutual recognition states

Answer 26

Alabama, Arkansas, Connecticut, Georgia, Illinois, Mississippi, Nebraska, and Rhode Island. A qualifying nonresident of Florida who has been actively licensed in another state who wishes to become licensed in Florida, and resides in a state with which Florida has entered into a mutual recognition agreement, may bypass the pre-licensing requirements. Instead the may apply and take a 40-question law examination. A score of 75% or higher (answering 30 questions or more correctly) qualifies the individual for an initial Florida license that is equivalent to their out-of-state license (i.e. brokers licensed as brokers; sales associates licensed as sales associates). They may submit a certification of license history from the state where he or she is claiming mutual recognition.

Question 27

Florida residency

Answer 27

is defined as anyone who has resided in the state four months or more during the previous year, or who presently resides in Florida with the intent to reside continuously for a period of four months or more months. Residency can include a recreational vehicle, hotel, rental unit, or any temporary or permanent location in Florida.

Question 28

Fee waiver program for unlicensed military veterans and their spouses

Answer 28

- The Department has the ability to waive the initial licensing fee, the initial application fee, and the initial unlicensed activity fee for military veterans and their spouses at the time of discharge who apply to the Department for a state professional license. Military licensees can keep their license in good standing without renewing or paying dues or fees for a period of two years after discharge from active duty as ling as they do not engage in real estate activities during this time. Spouses, while married to active duty military members stationed outside of Florida, and for a period of two years after the military member is discharged from active duty, are exempt from license renewal requirements, provided they do not engage in real estate activities.

Question 29

Professional License for active duty service members or spouses

Answer 29

The Department will issue a professional license to applicants who are or were active duty members of the armed forces of the United States. Former military members must have received an honorable discharge. A professional license will also be issued to a spouse or to one who was married at any time to the member during any period of active duty, or to a surviving spouse who was married to the active duty member at the time of their death.

Question 30

Applying for an initial Real Estate License

Answer 30

* Completed application * Fee payment * Electronic fingerprints * Supporting documentation- documentation must be provided that pertains to background issues listed on the application, if applicable. Criminal convictions, other than minor traffic infractions, must also be disclosed. Failure to answer honestly may result in disciplinary action, which might include the denial or revocation of licensure.

Question 31

Application Approval or Denial

Answer 31

The Department has 30 days in which to review an applicant’s application for errors or omissions. The application will be approved or denied within 90 days after receipt of the completed application. Once an applicant has been approved, the applicant must pass the state exam within 2 years. Failure to do so will require the applicant to file a new application with the Department. If an application is denied you will receive notification for the reasons for denial and advise the applicant that he or she has 21 days from the date of receipt to request a formal hearing before and administrative law judge.

Question 32

Pre-License Education Requirements

Answer 32

Classroom Instruction Distance Learning Any broker or sales associate who fails the pre-license end-of-course final examination may take an alternate examination after waiting a minimum of 30 days, without having to take the entire course over again. The retest must be completed within one year of the original examination. Failing the alternate exam requires that the student repeat the entire course. A student may bypass the 30-day wait period by retaking the entire course from the beginning.

Question 33

Pre-License Education Requirements score

Answer 33

A score of 70% or higher is required to pass the timed 100 question, pre-license end-of-course final examination. Upon passing, the student will receive a certificate of completion, which is required to take the state exam. The certificate is valid for two years from the date of issue. An applicant must present the Certificate of Completion to the exam vendor at the time of the scheduled state examination.

Question 34

Sales Associates (FREC 1) Pre-license requirements

Answer 34

• 63 hours FREC 1 course. 70% or higher to pass

Question 35

Brokers (FREC 2) Pre-license requirements

Answer 35

• 72 hours FREC 2 course. 70% or higher to pass

Question 36

Passing the State License Exam

Answer 36

After completing the pre-license education requirements and obtaining a course of Certificate of Completion, the applicant must contact the testing service to schedule an appointment to take the state exam. The exam is comprised of 100 questions; 45 regarding real estate license law; 45 regarding real estate principles and practices; and 10 regarding real estate mathematics. The state exam is a pass or fail only exam. Successful completion is achieved by scoring at least 75% (answering at least 75 out of 100 questions correctly). Exam results are provided immediately upon exam completion

Question 37

If applicant passes state license exam

Answer 37

the Department will send a letter that includes the applicant’s photo indicating that the applicant has successfully passed the exam. The score will not be provided. After passing the applicant has achieved the status of an inactive licensed sales associate. To obtain an active license, the licensee must be employed under the direction of an active broker and register this information with the Department.

Question 38

If an applicant fails the state exam

Answer 38

the Department will send a letter that includes the applicant’s photo and provides a breakdown of the exam score by category: law, principles and practices, and math. Cumulatively, the total score was less than the required 75% to pass the exam. The applicant must wait at least 24 hours before reapplying to take another exam. o An appointment can be scheduled with the testing service so the applicant can review the questions that were answered incorrectly. A fee is charged for the review and cannot be conducted on the same day as a retest.

Question 39

Employment by a broker

Answer 39

- When employed by and licensed under a broker, a sales associate or broker associate acts as the broker’s agent in performing services of real estate. - A sales associate or broker associate can only work for one broker at a time

Question 40

Employment by an owner-developer

Answer 40

- an owner-developer is an individual or entity that is in the business of buying, owning, and/or developing real estate. The owner-developer is registered with the Department but receives no real estate license. - When employed by and licensed under an owner-developer, a sales associate acts as the employer’s agent in performing services and can perform services for compensation only with regard to property belonging to the owner-developer. - Can hire unlicensed sales persons to sell property they own, as long as they are paid a salary. The an owner-developer pays commissions or transaction-based fees, they must hire licensed sales associates.

Question 41

File paperwork to prove employment

Answer 41

The specific form is titled Change of Status for Sales Associates and Broker Sales Associates Form #DBPR RE 11. Once the form is received, the applicant is considered to be actively licensed and may immediately begin practicing real estate. The actual license will be mailed by the Department to the licensee’s home address, usually within two to three weeks.

Question 42

Prima Facie Evidence

Answer 42

Possession of a current and valid real estate license by the individual named on the license is considered to be prima facie evidence in court that the holder is a licensee. Prima facie evidence is sufficient proof of a claim in the absence of further evidence to the contrary. Possession of the license is sufficient proof that the holder is a licensed real estate professional, in the absence of further evidence to the contrary.

Question 43

Post-License (First Renewal) Requirements

Answer 43

All licensees, whether active or inactive must complete a commission prescribed post licensing course prior to the first renewal expiry following initial licensure. The course must be taken at an accredited university, college, community college, area technical center in Florida, or registered real estate school. Licensees with a 4 year degree in real estate from an accredited college or university are exempt from the post-license education requirements. As with pre-licensing, the post-license course may be completed online. When completed in classroom, attendance is mandatory. A classroom student who misses more than 10% of the instruction may not take the end-of-course final exam. A student who makes up the missed hours can take the missed final within 30 days of the original exam.

Question 44

Sales Associate First Renewal

Answer 44

- 45 hour post license course prior to the expiration date of his or her initial license period, - The license of a sales associate who fails to complete this requirement will become void and the licensee will be out of business.

Question 45

Broker First Renewal

Answer 45

- A broker must complete one or more courses that totals 60 hours of post-license education prior to the expiration date of his or her initial license period. - The license of a broker who fails to complete this requirement will become void and the licensee will be out of business. The licensee may revert to an active sales associate by taking a 14 hour continuing education course during the 6 months immediately following expiration of the broker’s license, submit proof of completion, and request an active sales associate’s license. To be licensed as a broker again, the licensee would be required to complete the 72-hour broker’s pre-license educational course and pass another state examination.

Question 46

Licensees of both sales and broker associates must

Answer 46

pass post licensure course with 75% or higher, get completion certificate, pay state renewal fee, no state exam, and course provider reports completion to DBPR.

Question 47

Continuing Education (CE) Biennial Renewal Requirements

Answer 47

All active and inactive licensees, whether broker or sales associates, must complete 14 hours of commission-approved instruction and pay a renewal fee during each license 2-year renewal period, excluding the first renewal period of their current license. If the CE requirement is not met within the renewal deadline, the license status will be changed to involuntary inactive status. Actively licensed Florida attorneys who are in good standing with the Florida Bar are exempt from the continuing education requirements. CE completed in classroom, the licensees must attend a minimum of 90% of each classroom hours for successful completion of this course. There is no end-of-course examination When CE is completed by distance learning, the student must pass a 30-question end-of-course examination with a score of 80% or higher. Answering 24 out of 30 questions correctly)