FL Real Estate Exam Flashcards
What are the basic job responsibilities for a Real Estate Agent? (8 in total)
A BAR SALE A-Advertising B-Buying A-Auctioning S-Selling A-Appraising L-Leasing E-Exchange real prop. for compensation
Can you do real estate job responsibilities and get compensation without a license?
No. You need a license to get actual compensation.
What does DBPR mean?
Department of Business & Professional Regulation
What does FREC mean?
Florida Real Estate Commission
What are the 4 responsibilities of the FREC?
- Adopt a seal
- Foster Education of applicants
- Regulate Practices
- Report criminal violations (only apply to administrative matters, not criminal).
Who administers the FREC?
Department of Business & Professional Regulation (DBPR)
When FREC report a criminal violation to the DBPR, what 4 things can the DBPR do?
- Investigate consumer complaints
- issue subpoenas during investigation
- issuing a cease-desist orders to unlicensed individuals
- citing licensees
What is the license which is given to broker or sales associates who work for owner/developer who owns property under different names, and enables them to sell for the entities?
Group License
What is the license that is only for brokers and allows the broker to sell for multiple entities?
Multiple License
What does a Single Agency do?
Represents a buyer or seller as a fiduciary (Licensees may not act as a fiduciary for both buyer and seller in FL).
What are the 9 Fiduciary duties?
DAD UP COLD D-Deal honestly and fairly A-Account all funds D-Disclose U-Use skill, care and diligence P-Present all offers and counter offers C-Confidentiality O-Obendience L-Loyalty D-Disclosure (full)
What is it called when licensees have no broker relationship, and work with customers without providing representation (written disclosure required)?
Non-Representation Relationship
What are the fiduciary duties of a Non-Representation relationship? (only 3)
DAD
D-Deal honestly and fairly
A-Account all funds
D-Disclosure
Provides limited representation to a buyer, seller or both in real estate transaction, but neither in a fiduciary capacity.
Transaction Brokerage Relationship
When licensees are assumed to be working as transaction brokers, unless there is single agent or no brokerage relationship.
Default Brokerage Relationship
May represent the buyer, the seller or both in a single transaction, but in a limited capacity.
Transaction Broker
What are the fiduciary duties of a transaction broker?
DAD PUMA D-Deal honestly and fairly A-Account all funds D-Disclose P-Present all offers and counter offers U-Use skill, care and diligence M-Maintain limited confidentiality (unless in writing) A-Any additional duties are mutually agreed to with party or parties (written)
How long should documents be kept after they are used in court?
5 years
What is the Designated Sales Associate Method of Representation? What are the 2 key aspects?
Broker assigns a single agent sales associate to the buyer and seller.
- Cannot be used for residential transactions
- May only be used when the combined assets of the buyer and seller are at least 1 million
What are the 8 benefits of affiliating with a broker as a licensee?
- Reduced/Shared
- Office space and professional surrounding
- Administrative support
- Training
- Networking, social, and vacation coverage
- Brand awareness and recognition
- Floor time
- Shared advertising costs
What happens when the brokerage is moving to a new location or you want to change brokerage?
- Employee must terminate relationship with current broker and new broker must sign the Change Application form.
- Employee must apply for the transfer of license using the
What are the two major types of Brokerage Firms in FL?
Franchise Firm
Lesser Known or Independent Brokerage Firm
What are the four major ways an Independent Brokerage Firm can be legally structured?
- Sole Proprietorship
- Partnership
- Corporation
- LLC (Limited Liability Corporation)
Limited Liability Partnership (LLP)
A general partnership, but partners receive some limited personal liability.
General Partnership
Business arrangement by which two or more individuals agree to share all assets, profits, financial and legal liabilities of a jointly-owned business structure.
Limited Partnership
partnership consisting of a general partner, who managers the business and has unlimited personal liability for the debts and obligations of this partnership.
Combines the tax advantages of partnership and legal shield offered by corporations.
LLC (Limited Liability Corporation)
Separate entity covered by its own articles of incorporation (corporation is liable not individual).
Corporation
What are the two types of corporation?
General Corporation and Close Corporation
Has three tiers of power: shareholders, directors and officers. Separate legal entity owned by stockholders.
General Corporation
Corporation whose shareholders and directors are entitled operation like a partnership. Shareholders do not face any personal liability for the debts of the corporation.
Close Corporation
What are the four business models that are prohibited?
- Sole Corporation (church)
- Joint Ventures (temporary)
- Business Trusts
- Unicorporated Association
What is FTC?
Federal Trade Commission and Truth in Advertising
What does the FTC require of advertisers?
To have back-up evidence for any claims made.
What are deceptive ads?
One that contains or emits a statement or info that is:
- Likely to mislead
- Material (important to the consumers decision as to where to buy)
What is an unfair ad?
Ad or business practice that
- Causes or is likely to cause substantial unavoidable consumer injury
- Is not outweighed by the benefit to consumers (ex. X automobile protects you in case of accident).
What are the Real Estate advertising guidelines? (4)
TN FE
T - Truthful
N - Non-Deceptive
F - Fair
E - Evidence Based
What is the DO NOT CALL IMPLEMENTATION ACT OF 2003?
Illegal to make a phone solicitation to any household that has listed its number in the Federal Commissions Do Not Call Registry (DNCR).
When can you call people even when they are in the DNCR?
- you have business with them
- you can continue to call former customer 18 months after transaction
- can call for up to 3 months after an inquiry
What is the Junk Fax Prevention Act?
Cannot send fax unless allowed & Must have opt-out option.
What is the CAM-SPAM Act?
protects consumer from unwanted e-mails.
According to the CAM-SPAM Act, what must commercial e-mails always contain?
- Legit Return e-mail or postal address
- Clear option for opt-out
- opt-out mechanism that is active for at least 30 dyays
- A clear notice that message is clear ad or solicitation
What must always be present in any Internet Real Estate advertising in FL?
Name and Phone number of the agency.
What is PRLS?
Pre-paid Rental Listing Services
Are PRLS, subject to same advertising and disclosure requirements?
YES
What are some of the most common PRLS violations a licensee makes?
- refer a client or prospective tenant to a false listing
- refer client to a property that the licensee has not confirmed the availability within four days from offering the info.
- refer properties without obtaining written or oral permission from owner, manager or authorized agent.
What is a cease and desist order?
requires you to stop running the deceptive ad or engaging in deceptive practices.
What are 3 important facts of an escrow account?
- given and guarded by a 3rd party
- one of the most common violations
- money in an escrow account cannot be touched by creditors
What is an escrow account?
Escrow is when an impartial third party holds on to something of value during a transaction.
What are earnest money funds? & Where is it usually deposited?
Earnest money is a deposit made to a seller that represents a buyer’s good faith to buy a home. Usually deposited in an escrow account.
How much money is allowed to be in a sales and property management escrow account to cover bank expenses?
- Sales Escrow accounts - 1,000
2. Property Management Escrow Accounts - 5,000
What are the two types of escrow accounts?
- Interest bearing accounts
2. Non-interest bearing accounts
What should a licensee do when there are conflicting demands regarding disbursement of funds or have good-faith doubt as to which party received the funds?
Contact your broker
What must a broker do when a licensee receives conflicting demands regarding discernment or has good-faith doubt on who receives the funds?
- Notify the FREC in writhing within 15 days
2. Request settlement procedures within 30 days of the conflict to determine who receives funds
If funds are in dispute, who can the broker allow to mitigate this?
The courts
What are the 4 settlement procedures?
- Escrow Disbursement Order (EDO)
- Mediation
- Arbitration
- Litigation
What is a Escrow Disbursement Order (EDO)?
It is a settlement procedure. Request from FREC to determine who is entitled to the funds. If FREC denies the order then broker must notify FREC within 10 days as to what settlement procedure will be used to settle the dispute.
What is a Mediation?
A settlement Procedure where you obtain written consent from all parties to send the matter to a non-binding negotiation process with a 3rd party mediator.
What is Arbitration?
A settlement procedure where you obtain written consent from all parties to agree to a neutral third parties binding judgement.
What is Litigation?
A settlement procedure where you submit the matter to the courts. May be initiated by any party by filing a lawsuit or court action.
What is an interpleader and declaratory judgement? In what settlement procedure can these be used?
Interpleader - is used by the broker, should he/she not want any part of the fund.
Declaratory Judgement - used by the broker, should he/she have some claim to the fund.
These are used in the litigation settlement procedure.
How long must brokers keep receipts funds, deposits or checks for the DBPR to audit?
5 years and 2 extra years if documents used in courts.
What is per-se guilt?
when there is an agreement between competing entities to restrict competition.
What is price-fixing?
agreement between competitors to set their prices at a certain price point.
What are some ways to do price-fixing?
- set same prices
- set same discount
- same method of pricing
What is price/term fixing?
when 2 or more firms agree to offer the same terms in their agency agreement.
What is price fixing by default?
is when 2 or more brokerage firms have the same commission rates by accident, not intentional.
What is market allocation?
when real estate professionals from competing firms agree to divide their market by geography, price range, etc.
What entity controls competition?
Antitrust Division of the U.S. Department of Justice
What is the Sherman Act? Who enforces it?
Act that prohibits any agreements among competitors to fix price, rig bids or engage in other anti competitive activity. The Antitrust Division of the US. Department of Justice enforces it.
What is a kickback?
Anything of value that an individual or company provides to a real estate professional in exchange for referring business to a Settlement Service Provider (SSP).
What is the act to prevent kickbacks and who enforces it?
Real Estate Settlement and Procedures Act (RESPA). Who enforces it is the Consumer Financial Protection Bureau (CFPB).
What is the RESPA Act?
Law enforced by the CFPB to prevent payment of kickbacks and other fees, which drive up costs to consumers.
What are examples of an SSP provider?
- Mortgage Lenders
- Title Insurance Comp
- Home Inspectors
Real Estate Agents can receive compensation from SSP for performing actual services. This is called…
Fee
According to RESPA, what are the 4 things for a compensation to be considered a FEE from a SSP?
- must be a flat amount, no %
- cannot be based on the success of the transaction
- cannot exceed the market value of services or good provided
- must be disclosed to the client
What must a Real Estate Agent do if they are associated to an SSP?
- Disclose this to the client
- Cannot be needed to make the business (optional)
- Compensation must be related to the return earned from owning the business.
- Business must be owned by a REA professional
What are Broker Lien Rights?
It’s when as a REA professional your re allowed to initiate a lawsuit for commission on your broker/employer. Broker may place a lien on the real property for non-payment of commission or place a lien on a commercial property that has been put for sale or lease.
What is CRESCLA?
Commercial Resl Estate Sales Commission Act
What does CRESCLA state?
- in order for broker to have right to place lien in property, this has to be disclosed to the seller before agreement is signed.
- for commercial property the broker may only place lien on the sellers personal net sales proceeds.
- for leased properties the broker may only lien on the landlords interest in the real estate, and its agains tenant their lease hold in the real estate can be liened.
What is a lien?
any charge against a property or funds for payment of a debt or an amount owned for services rendered.
Since FL does not have real estate code of ethics they refer to?
The National Association of Realtors (NAR) Code of Ethics (COE).
What is the difference between a client and customer?
A client is a person or entity with whom a REA has an agency or legally recognized non-agency agreement. (have contract). A customer is a party to a real estate transaction who receives info, services, etc. but has no contractual agreement with REA or firm.
What is a prospect?
Means a purchaser, seller, tenant, or landlord who is not subject to a representation agreement with the REA.
What are the most common mistakes concerning Unauthorized practice of LAW for REA?
- Interpreting (only explain)
- Changing fees
- Not using templates, and changing text
- Advising clients on landlord/tenant rights and responsibilities
What are the 4 elements of misrepresentation?
- false statement or representation of material fact
- person who falsely represented material fact, and knew
- another person relies on material fact info
- person who relied on this information is harmed
What re the 4 types of misrepresentation?
- self dealing
- intentional misrepresentation
- unintentional misrepresentation
- puffery vs misrepresentation
What is self-dealing?
Is when personal interest in a transaction is not disclosed. Must always be disclosed.
What is intentional misrepresentation?
When you know full well of the defect and hit it or failed to say it.
What is unintentional misrepresentation?
when the agent unknowingly makes a misstatement of fat that is material and the buyer relies on it, and the buyer is harmed.
Puffery vs Misrepresentation
This means exaggeration. (Ex. this is the best view in the neighborhood).
What are the top 10 license law violations?
- demonstrating untrustworthiness or incompetency
- miss deadlines
- misrepresenting
- failing to provide adequate disclosures
- failing to disclose agency relationships
- contractural interferences
- offering property for sale without owner permission
- placing sing or listing property without owner permission
- retaining info from a listing agreement after terminating association with the broker
- performing services classified as practice of law
What is contractural interference?
when a REA takes the seller by telling him/her that he already has someone, event though the seller is listed with a different broker. (Stealing clients).
What are the two penalty types for License violations in FL?
- Civil (1st and 2nd degree)
2. Criminal Felony (1st - 3rd degree)
What are the 6 penalties the FREC can administer?
- reprimands (Ex. non-compliance letter or letter of guidance)
- citations
- probation with conditions
- suspension
- denial
- revocation
The FREC and DBPR can only award damager or asses imprisonment or fines at the level of…..
Administrative level. The rest is up to the courts.
What is the difference between a Mitigating and Aggravating circumstance?
- Mitigating circumstance - not intentional
2. Aggravating circumstance - intentional
What is the procedure when either a mitigating or aggravating circumstance occurs? (3)
- both compliant and licensee charged will have a chance to provide evidence surrounding the violation
- from this evidence the commission will determine wether the lesser or greater penalty will apply
- each side has to provide the other party at least 7 days notice of any evidence to be considered in the hearing.
Who does the investigation or any violations by a REA?
The DBPR, and they send the report for FREC to impose the penalties.
Should the DBPR submit a formal complaint, after the investigation, the accused can choose a:
- informal hearing - held meeting in front of FREC, and done
- Formal hearing - uses a judge, my dispute all facts. Both require a 14 day notice.
What is Floridas Real Estate Recovery Fund?
funded through licensee fees. Helps to compensate victims after they’ve gone through all of the steps to collect a judgement against a licensee, but have not been successful.
How to qualify for the FL Real Estate Recovery Fund? (4)
- Claim must be against an active licensee at the time of violation
- Claimant must have final judgement with a write of execution and any other documents
- Claimant must provide an affidavit that no personal or real property from the licensee has turned up to sufficiently satisfy the judgement
- Licensees who have filed for bankruptcy must still have judgment rendered against them
Who is not qualified for the FL Real Estate Recovery Fund?
- spouse of licensee in violation
- licensee who acted as an agent or broker
- claims against a licensee who was dealing with own property
What was the result of the Plessy vs Ferguison case?
upheld the constitutionality of racial segregation laws for public facilities as long as the segregated facilities were equal in quality – a doctrine that came to be known as “separate but equal”
What was the result Brown vs Board of Education case?
took out the separate but equal out of the schools. Everyone is equal.
What was the result of the Jones vs Affred case?
Brought about the ban on discrimination of any type of property sale and rentals, even private.
What is the Civil Rights Act of 1886?
recognizes all persons born in the U.S. as citizens regardless of race, color, and protected the rights of every u.s. citizen to buy, sell, convey, inherit and posses property as well as to enter contracts.
What is the Fair Housing Act of 1968?
Prohibited additional discrimination based on race, color, national origin and religion.
What is the Housing & Community Development Act of 1974?
Added sex to the list of protected classes
What is the Equal Credit Opportunity Act of 1974?
Backed up the Housing & Community Development Act requiring lenders to give businesses and consumers equal access to credit.
What is the Fair Housing Amendment of 1988?
Provided consumers remedies if they believed to be victims of discrimination in the rental, sale or financing of housing.
What is the Americans with Disabilities Act (ADA) of 1990?
Prohibits discrimination based on disability.
What is the Housing for Older Persons Act (HOPA) of 1995?
states that communities and facilities that meet certain criteria for providing housing for older persons are legally exempt from familial status discrimination. Housing must have one person who is age 55 or older in at least 80% of its occupied units, housing prove its for older people of 55+.
What are exemptions to the Fair Housing Act?
- owner occupied building no more than 4 units
- single family housing sold and rented without broker
- housing operated by religious organization or private club
- housing designed for senior use
What is Blockbusting?
the practice of persuading owners to sell property cheaply because of the fear of people of another race or class moving into the neighborhood, and thus profiting by reselling at a higher price.
What is redlining?
practice of a lender to refuse to lend to a specific area, based on minority makeup.
What is Steering?
illegal practice of nudging buyers away or toward a specific area based on presence or absence of protected class.
What is Megans LAW?
term used to cover all the state laws requiring law enforcement to make information regarding the location of registered sex offenders in various neighborhoods available to the public.
What is right to enjoyment in the Florida Residential Landlord & Tenant Act?
right to the undisturbed use and enjoyment of real property by a tenant or landowner.
What is right to access in the Florida Residential Landlord & Tenant Act?
right to go onto someone else’s land to access specific parts of your own property only which are inaccessible from anywhere on your own land.
What are the five steps before a tenant can be evicted?
- Notice of eviction (after 3 days)
- complaint for eviction (court clerk has 5 days)
- final order
- writ of possession
- lien
What are the 5 basic property rights? (DEEP C)
- Right of Disposition
- Right of Enjoyment
- Right of Exclusion
- Right of Possession
- Right of Control
What are the three right called to be able to use the physical component of the land? (3)
- Surface Rights
- Subsurface Rights
- Air Rights
What are surface rights?
include land and water rights
What are subsurface rights?
rights to use the natural gas and minerals (all under the land)
What are Air rights?
Involve the right to use the open space above building up to a height established by law.
What is ‘Bundle of Rights’?
is the common term to mean the complexities of property ownership rights.
What is the doctrine of proper appropriation?
Legal doctrine that grants water right to the first individual or entity to take water from a source for beneficial use. “If you need it, it’s yours”.
What is referred by land?
everything from the earths core to the edge of space
What does real estate encompase?
land and all the stuff attached to the land. Also, anything attached permanently to it.
What is real property?
refers to the land, the stuff attached, and the bundle of legal rights.
What is considered personal property objects?
Free standing, not attached (TV, shelves, etc.)
What is considered real property objects?
Build in, attached (fireplace, hot tub, etc.)
What are the four tests to determine property type?
IRMA
I - Intent of the parties (most important)
R - Relationships of the parties
M - Method or degree of attachment
A - Adaptation of the item (if taking out one item causes another item to be taken out, then its real property)
What are riparian rights?
right to access non-navigable rivers, streams, and other flowing bodies of water adjacent to a property
Riparian and River
Littorial and Lake
What does freehold estate mean?
means the right of ownership. Also that your property is encumbered by a mortgage.
What is a fee simple estate?
buyer is given a title (ownership) of the property, which includes the land and any improvements to the land in perpetuity
What is a life estate?
Doesn’t convey the entire bundle of rights because owners own the estate for only their lifetime. May pass to original owner or another person.
What is a conventional life estate?
created by property owner, who will then grant or transfer the property to an individual for a lifetime.
What 2 things happen to a conventional life estate when the owner dies?
- original owner takes property back (estate in reversion)
- property goes to a third party (reminder man)
- vested remainder man or contingent remainder man
What is the difference between a vested and contingent remainderman?
Vested Remainderman - names in will
Contingent Remainderman - not named, identified with descriptions such as offspring
