L5: Real Estate Brokerage Activities & Procedures

Question 1

How long must a brokerage store records of contracts and money received for?

Answer 1

5 years

And 2 years after legal proceedings ended, if applicable

Question 2

Temporary shelter

Answer 2

Commonly used in construction sites

Must be registered as branch office if sales associates are permanently working there or if real estate transactions are closed there

Question 3

What must be included in a brokerage signage?

Answer 3

Brokers name
“Licensed real estate broker”
Trade name (if applicable), must be registered with DBPR & DOS

Question 4

Blind advertisement

Answer 4

An ad in which a license holder attempts to promote or solicit real estate without disclosing the fact that they are a license holder

NB: All adds must include broker/agent’s point of contact information

Question 5

How long does sales agent have to give employee broker money received from customer/client?

Answer 5

By end of following business day

Question 6

Escrow accounts

Answer 6

AKA, Trust accounts

Are accounts were funds and/or financial documents are held by a disinterested third-party on behalf of the other two parties until conditions are met

Purpose: mitigate liability and give brokers a safe place to store funds

In Florida, it can be brokerage’s, title companies’ or attorneys’ accounts and can be opened in commercial banks, credit unions and saving associations

Question 7

Commingling

Answer 7

Illegal act of mix and personal funds with clients’ funds

Also happens when broker doesn’t promptly removed earned commission and fees from the trust account

Question 8

Earnest money

Answer 8

Payment made to confirm or commit to a contract, ex. deposit

Can be full or partial

Question 9

Conversion

Answer 9

Misusing (spend) that money belong in to others by a licensed holder

Question 10

Deposit

Answer 10

Payment made from one party to another that shows sincerity to fulfill the transaction

AKA, Binder deposit or good faith deposit

Question 11

How long does broker have to deposit money received from sponsored sales agent into escrow account?

Answer 11

By the end of the 3rd business day

PS: Written receipt must be obtain within 10 days

Question 12

Conflicting demands

Answer 12

Unresolved demands made by buyer and seller in a transaction regarding escrowed property disbursement

Must be settled through a settlement procedure & FREC must be notified in writing within 15 days

Settlement procedures must be implemented within 30 days

Question 13

Steps of Settlement Procedures in Conflicting Demands

Answer 13

MEDIATION (informal negotiation held by independent 3rd party, max 90 days)
—-> (a) ARBITRATION (conflict is presented to a 3rd party that has binding judgment)
—-> (b) LITIGATION (legal process in court w interpleader or declaratory judgment)
—-> (c and from a/b) ESCROW DISBURSEMENT ORDER (FREC’s decision on who should receive the disputed escrow funds)

EDO only works for funds on escrow accounts opened by broker

Question 14

Stipulation

Answer 14

Settlement between parties, must be approved by FREC

Question 15

Good Faith Doubt

Answer 15

Doubt that’s honest, honors the business contract, is free of fraudulent motive & implies intent to fulfill the contract

If there is good-faith doubt, FREC must be notified within 15 days

Question 16

2 Types of Commission Split

Answer 16

1) Cooperating Brokers Split:
- between 2 brokers working with 2 parties in some transaction
- normally listed on the MLS

2) Broker-Sales Associate Split (negotiated when joining brokerage)

Question 17

Brokerage/Agent Relationship

Answer 17

Agents work on the broker’s behalf
Agent can only hang license under one 1 brokerage
Has binding duties, obligations and confidentiality carries over forever (no record of transactions or client records can be taken with agent when leaving brokerage)

Change of brokerage must be notified to FREC in 10 day

Question 18

Maximum amount allowed to be paid as finders fee or referral fee to non-licensed holders

Answer 18

$50

Question 19

Interpleader

Answer 19

A court procedure meant to resolve a dispute when a party holds funds they know they do not own, but to which multiple other parties lay claim

Question 20

Kickback

Answer 20

Payment made to a licensee for service unrelated to the real estate transaction or a service that does not fall under the responsibility of the licensee

Kickbacks are illegal for title searches, title insurance, attorney services, credit reports, survey and appraisals

Question 22

Entities that can be registered as Brokerage

Answer 22

Sole proprietorship
General partnership (Co-owners share power, responsibility and profit)
Limited partnership (has general and limited partners)
Corporation
LLC
LLP (parties are protected from some liabilities)

Question 25

Ostensible partnership

Answer 25

Appearance that a partnership exists between two parties even though no partnership was intentionally created (not allowed in FL)