Chapter 5 (Real Estate Brokerage Operations) Flashcards
Brokerage Offices
All active Florida real estate brokers are required to have an office and to register the office with the Department of Business and Professional Regulation (DBPR).
A broker’s office must consist of at least one enclosed room in a building of stationary construction that will provide privacy to conduct negotiations and closings of real estate transactions.
The broker’s books, records, and real estate transaction files are to be kept in the office.
Florida law does not require the broker to have a telephone, desk, business checking account, or an escrow account.
If local zoning permits, the broker’s office may be in the broker’s residence, provided the required sign is displayed properly.
A broker may have an office or offices in another state, provided the broker agrees in writing to cooperate with any investigation initiated under Chapter 475, F.S.
Sales associates are not permitted to open offices of their own.
They must be registered from and work out of an office maintained and registered in the name of their employer.
Branch Offices
If a broker desires to conduct business from additional locations, the broker must register each additional location as a branch office and pay the appropriate registration fees.
The Florida Real Estate Commission (FREC) may insist that a broker open and register a branch office whenever the FREC decides that the business conducted at a place other than the principal office is of such a nature that the public interest requires registration of a branch office.
Further, any office will be considered a branch office if the advertising of a broker, who has a principal office elsewhere, is such that it leads the public to believe that the office of concern is owned or operated by the broker in question.
A temporary shelter in a subdivision being sold by a broker is not a branch office if the shelter is intended only for the protection of customers and sales associates.
But if sales associates are assigned there, necessary sales supplies are on hand, and sale transactions are concluded there, then the temporary structure must be registered as a branch office.
In short, the permanence, use, and character of activities customarily conducted at the office or shelter determine whether it must be registered.
Registrations issued to branch offices are not transferable.
To illustrate, suppose a broker decides to close one branch office and open a new branch office at a different location.
Even though these actions may take place at the same time, the registration of the closed office may not be transferred to another office.
The new location must be registered and the fee paid.
A broker may reopen a branch office in the same location during the same license period by requesting a reissue of the branch office license without paying an additional fee.
Sales associates are assigned to a new subdivision under construction.
The associates work in a model center.
Sales transactions are conducted in the model center.
The broker is required to register the model center as a branch office.
Office Signs
Active real estate brokers must display an official sign on either the exterior or interior of the entrance to their principal office and all branch offices. The sign(s) must be easily observed and read by anyone entering the office. The sign must contain the following information:
- Trade name (if one is used)
- Broker’s name
- The words, “Licensed Real Estate Broker” or “Lic. Real Estate Broker”
The registered trade name is Little Mo Realty, the broker’s name is Murl H. Crawford, and the required wording “Licensed Real Estate Broker” appears on the sign.
The names of the sales associates and broker associates are not required on the entrance sign.
However, if the associates’ names appear on the sign, the names must be below the name of the broker(s) and the appropriate title, sales associate or broker associate, must appear next to each associate’s name.
A line or observable space must separate the names of the real estate brokers from the names of the sales associates or broker associates.
If the brokerage entity is a partnership, corporation, limited liability company (LLC), or limited liability partnership, the sign must contain the following information (see below):
Name of the firm or corporation (or trade name, if one is used)
Name of at least one active broker
The words, “Licensed Real Estate Broker” or “Lic. Real Estate Broker”
False Advertising
A person may not disseminate or cause to be disseminated by any means any false or misleading information for the purpose of offering for sale, or for the purpose of causing or inducing any other person to purchase, lease, or rent, real estate located in the state or for the purpose of causing or inducing any other person to acquire an interest in the title to real estate located in the state.
Advertising
Anyone who advertises or represents that they are providing real estate services is acting as a real estate broker.
Therefore, advertising is considered under Florida law to be a broker activity.
All advertising must be in the name of the brokerage and under the supervision of the broker.
Sales associates may not advertise real estate services in their own names.
The broker is accountable for all advertising, regardless of who actually prepares the advertisement.
Publication of false or misleading information by means of radio, television, or written matter for the purpose of inducing someone to buy, lease, rent, or acquire an interest in title to real property is illegal.
If a sales associate prepares a misleading ad, both the broker and the sales associate can be disciplined.
Advertising includes letterhead stationery and flyers, business cards, yard signs and billboards, newspaper and magazine ads, internet, radio and television, promotional materials, and so forth.
All advertising must be worded so that reasonable people will know that they are dealing with a real estate licensee.
A licensee may not advertise real estate services in such a way as to mislead the public that the offer is being made by a private individual rather than a real estate licensee.
Advertisements must clearly reveal the licensed name of the brokerage firm.
Advertisements that fail to disclose the license name of the brokerage firm are blind advertisements.
For example, an advertisement that provides only a post office box number, telephone number, and/or street address is a blind ad and is prohibited.
If sales associates create promotional materials, such as refrigerator magnets and notepads, they must include the licensed name of the brokerage firm on them.
Licensees may insert their personal names in ads provided they include their last name as registered with the DBPR.
Advertisements created by sales associates must be supervised directly by their broker.
Sales associates and their brokers should review advertisements for accuracy and also make certain the ad is canceled when, due to sale or listing expiration, the property is no longer on the market.
Licensees may indicate their nickname on business cards and in advertisements but only if their legal name as registered with the DBPR is also indicated (for example, Robert “Bob” Smith).
Sales associates may indicate their after-hours phone number and/or address on their business cards provided the card also includes the name of the brokerage firm.
FREC does not require that the brokerage firm’s phone number or address be included in ads.
Blind Advertisement
An advertisement that provides only a telephone number, a post office box, and/or an address without the licensed name of the brokerage firm.
Advertising Key Concepts (1 of 2)
All advertisements must include the name of the brokerage firm.
If a licensee inserts a personal name in the ad, the licensee’s last name as registered with the DBPR must also be included.
Licensees may use their nickname in advertisements provided they also include their legal name as registered with the DBPR.
The brokerage firm’s address and phone number are not required to be included in the advertisement (note the exception regarding internet advertisement, as discussed later).
FREC rules mandate that real estate advertisements must not be fraudulent, false, deceptive, or misleading. Licensees must take care when constructing real estate advertisements to make certain they are not misleading. Take a look at the example of an advertisement below. Is this ad misleading?
“Spacious 4BR, 3BA home in Crystal Pines Subdivision. New roof July 2013. Home is on wooded lot. Call Alfonzo “Fonzie” Lombardi, Excellent Realty, 333-222-4444.”
Is the phone number in the above example Alfonzo’s direct number or that of the brokerage firm?
If the phone number of the licensee appears directly below the company name (or directly next to it), it gives the appearance that it is the brokerage phone number.
To prevent someone from considering this ad to be misleading, the licensee, after identifying the brokerage, should make clear that the phone number is the licensee’s personal number and not the brokerage firm’s main business number.
It is recommended that when using only the licensee’s phone number in the ad the word direct, cell, or something similar be inserted adjacent to the phone number.
Doing so informs the public that the number is not the brokerage phone number, but that of the licensee.
Therefore, a better constructed advertisement follows:
“Spacious 4BR, 3BA home in Crystal Pines Subdivision. New roof July 2013. Home is on wooded lot. Excellent Realty. Call Alfonzo “Fonzie” Lombardi, (mobile) 333-222-4444.”
Advertising Key Concepts (2 of 2)
Internet Sites
When advertising on an internet site, the name of the brokerage firm must appear adjacent to or immediately above or below the point of contact information.
Point of contact information refers to any means by which to contact the brokerage firm or individual licensee, including mailing address(es), physical street address(es), email address(es), telephone number(s), or facsimile (fax) telephone number(s).
The rules regarding advertising real property do not prevent real estate licensees from selling their own property.
Real estate licensees who own property and are selling the property “by owner” may place their own classified advertisements.
Licensees may include their personal contact information in the ads, such as the home phone number and street address of the property.
It is not necessary for a licensee to indicate in the advertisement that the seller is a real estate licensee.
However, because a licensee has superior knowledge and expertise in real estate, to reduce liability the “by owner” licensee-seller should disclose prior to entering into serious negotiations that the seller is a real estate licensee.
Disclosure of this fact should also be documented in the sale contract. Such disclosure is mandated in the National Association of REALTORS® Standards of Practice.
NAR requires that member REALTORS® who advertise unlisted real property for sale or lease in which they have an ownership interest disclose their status as owners (or landlords) and as REALTORS®.
Licensees considering selling property that they own “by owner” should first consult with their broker and review the office policy manual. Some brokers expect the licensee to list the property through the brokerage office.
Telephone Solicitation (1 of 2)
- Telemarketing is defined as the use of the telephone as a marketing tool to solicit services directly to the public.
- Telemarketing is regulated by state and federal law.
- The Telephone Consumer Protection Act of 1991 (TCPA) is a federal law concerning telephone solicitations.
A telephone solicitation is defined as the initiation of a telephone call for the purpose of encouraging the purchase of, or investment in, property, goods, or services.
The TCPA established a National Do Not Call Registry for consumers who wish to avoid telemarketing calls.
Consumers at no charge may request to be on the list.
Telemarketers must first search the national registry before making telemarketing calls.
*Calls are restricted to the hours of 8:00 am to 9:00 pm.
The federal law covers both interstate (between states) and intrastate (within state) telemarketing calls.
The law exempts
(1) political solicitations;
(2) telephone surveys (callers purporting to take a survey, but who also offer to sell goods or services, must comply with the do-not-call registry); and
(3) charitable solicitations.
Violators of the federal law may be fined up to $11,000 for each illegal call.
Florida’s telemarketing law is administered through the Department of Agriculture and Consumer Services.
Florida maintains a no sales solicitation calls registry for consumers. Florida has made its registry part of the National Do Not Call Registry.
Violators of Florida’s Telemarketing Act may be fined $10,000 per call.
A major difference between the state and federal telemarketing laws is that the Florida law exempts real estate licensees who solicit listings in response to a “For Sale” yard sign (see below).
However, the federal law does not exempt calls to For Sale By Owners (FSBOs).
The Federal Communications Commission (FCC) recently ruled that under the federal law, real estate sales associates may not call FSBOs and homeowners with expired listings to solicit for listings if the owners’ names are listed on the National Do Not Call Registry, even if the homeowner’s telephone number appears on a yard sign or in a newspaper advertisement.
The federal law provides the following exceptions:
A sales associate representing a potential buyer may call the FSBO seller, but only if the associate has an actual buyer interested in the property and to negotiate a sale.
A sales associate may contact individuals with whom the associate has had an established business relationship, even if those customers’ numbers are on the national registry.
For example, the company that previously listed a property may contact the former customer to solicit new business for up to 18 months after the business transaction has been concluded.
Sales associates may contact a customer for three months after a business inquiry or application (such as a customer who registered at an open house or a FSBO seller who requested information from a sales associate).
If a sales associate calls a FSBO or an expired listing under the exceptions listed above and the homeowner requests not to be called, the sales associate must comply.
Telemarketers must state their names, the business name, and the business telephone number.
Telemarketers may not block their phone numbers.
Businesses that use telemarketing must develop and adhere to written procedures regarding the firms’ calling policies. Businesses must advise and train their personnel and independent contractors engaged in telephone solicitation regarding do-not-call list maintenance and procedures.
Real estate companies that wish to use telemarketing in their business strategy must obtain the list of phone numbers in the registry.
Licensees must search the national registry at least quarterly and delete from their call lists the phone numbers of consumers who have registered.
Sales associates beware: even though the state law exempts real estate licensees for the purpose of soliciting for listings, the federal law does not.
Don’t end up in a federal court; know the law before telemarketing for business!
Telephone Solicitation (2 of 2) Fax Solicitations
Fax Solicitations
FCC rules mandate that it is unlawful to send unsolicited advertisements to a residential or business fax machine without the recipient’s prior express invitation or permission.
The four requirements a sender must meet before sending an unsolicited advertising fax to a consumer are summarized below:
- Sender must have an established business relationship with the recipient or written consent from the recipient prior to sending unsolicited advertising faxes.
- Sender must have received the recipient’s fax number voluntarily from the recipient in the context of the established business relationship.
- Sender must clearly state on the first page of the advertisement that the recipient has the right to opt-out of receiving future unsolicited advertising faxes.
- Sender must honor opt-outs received from recipients within 30 days of receipt.
Escrow or Trust Accounts
Typically, when a buyer makes an offer on real property, the buyer includes with the offer a deposit to show good faith that the buyer is serious about purchasing the property.
A deposit is a sum of money, or its equivalent, delivered to a real estate licensee as earnest money or a payment, or partial payment in connection with a real estate transaction.
Such deposits are also called good-faith deposits or binder deposits.
An escrow account is an account for the deposit of money a disinterested third party (for example, the broker) holds in trust for others; hence the term trust funds.
Trust funds include cash, checks, money orders, and items that can be converted into cash such as deeds and personal property.
In addition to earnest money deposits, brokers hold in trust for others money associated with leasing property, such as rent deposits and security deposits.
Brokers are not required to keep earnest money deposits separate from rental deposits.
However, tracking trust funds is easier when separate escrow accounts are established for funds associated with sales and funds associated with rentals.
Earnest Money
Money given as good faith to accompany an offer to purchase or lease real property.
Deposit
A sum of money, or its equivalent, delivered to a real estate licensee as earnest money, payment, or partial payment in connection with a real estate transaction.
Escrow Account
An account for the deposit of money held by a third party in trust for another for safekeeping.
Trust Funds
Cash, checks, money orders, or other items that can be converted to cash and that are held by a third party in connection with a real estate transaction.
“Immediately” Defined
Florida real estate license law mandates the time frame for depositing escrow funds.
Sales associates who receive a binder deposit from a customer or principal must deliver it to their broker-employer no later than the end of the next business day.
When a sales associate or an employee (such as a receptionist) of the brokerage company accepts funds on behalf of the brokerage company, the broker is accountable for those funds.
Therefore it is extremely important that brokers train their personnel regarding the importance of turning over all earnest money in a timely manner.
Brokers must place trust funds into an escrow account immediately, which means no later than the end of the third business day after their sales associate (or an employee of their brokerage company) has received it (see below).
The first day of the three-business-day time period coincides with the day that the sales associate must turn over the deposit to the broker.
Assume a sales associate receives a deposit from a prospective buyer on a Tuesday (no legal holidays are involved).
The sales associate has until the end of the next business day (Wednesday) to deliver the deposit to the broker.
The broker has until the end of the third business day (Friday) to deposit the funds.
The three-business-day time period for the broker to deposit the funds begins on the day the sales associate is required to deliver the funds to the broker.
(In this example, the first day of the three-business-day period is Wednesday.)
Now assume that the sales associate receives a deposit from a prospective buyer in the brokerage office on Tuesday (no legal holidays are involved) and the sales associate turns the check over to the broker that same day (Tuesday).
When must the broker deposit the funds into the escrow account?
The day of receipt of the escrow deposit was Tuesday.
The broker must deposit the funds by the end of business on the third business day after the brokerage received the funds.
The three business days are Wednesday, Thursday, and Friday.
Therefore, the broker has until the end of the third business day (Friday) to deposit the funds.
So the fact that the sales associate delivered the escrow check to the broker on Tuesday rather than waiting until
Wednesday made no difference regarding when the broker was required to deposit the funds.
When computing the day for the broker to deposit the funds, the day the buyer (or lessee if this is a rent deposit) gives the funds to the brokerage is not counted in the broker’s days.
The first day of the three-business-day time period always begins on the business day after the check is given to the brokerage.
Keep in mind that a broker does not have to wait until the third business day to deposit the funds.
The broker can make the deposit earlier.
The broker can also receive the deposit directly without the involvement of a sales associate.
The same rule applies in this case: the broker has until the end of the third business day to make the deposit.
If an escrow check is made out to the sales associate personally, the best course of action is to ask the prospective buyer to write a new check payable to the broker’s escrow account.
However, if this is not practical, the sales associate should immediately endorse the check and include the words, “For Deposit Only to the (name of the escrow account)” and turn it over to the broker.
