Section 6: Florida Laws and FREC Rules Flashcards
Escrow account records must include
- Where funds came from
- When funds were received
- When funds were deposited
- Where funds were deposited
- When the funds were disbursed
- Who received the disbursed funds and for what practice
Escrow account reconciliation must show:
- Dates reconciliation takes placed
- Names of banks, accounts, account numbers, account balance and dates
- Deposits in transit
- Outstanding checks (identified by date and check number)
- List of broker’s trust liability (sum of all deposits received, pending and being held by broker)
Brokerages must retain these items for an escrow accounts audit
- Monthly reconciliation statements
- Bank statements and cancelled checks
- Checkbooks, deposit books, and bank deposit receipts
- Ledger books or computer records for sale and property management records
- Pending sale contracts
- Voided contracts/offers with escrow funds presently being held
- Any earnest money deposit disputes
- Property management contracts, agreements and leases
Time for retaining escrow records
- Must maintain at least one legible copy (electronic is ok) of all books, accounts and other records related to the brokerage business for at least five years from the date entrusted to broker
3 actions investigators can take for violations
- Issue a notice of noncompliance
- Issue a citation
- Open a complaint
Notice of noncompliance
- Minor violations (one that doesn’t cause econ or physical harm
- Must specify statute or rule being violaged and give info on how to comply with that requirement within 15 days from the date the notice is received
- Citation issued if noncompliant after 15 day period
Notice of noncompliances examples
- Sales association or broker associate serving as officer/director of brokerage
- Failure to maintain the office entrance sign
- Failure to register a trade name
- Failure to sign the escrow account reconciliation if account balances
- Failure to adhere to team advertising requirements (1st violations)
Citations against broker
- No substantial threat to the public health/safety and welfare
- May be imposed upon licensee, registrat or permitholder
Citation examples
- Failure by a resident licensee to notify the FREC about becoming a nonresident
- Failure to maintain the required office or the required office signage
- Failure to register an out-of-state Florida broker’s office
- Failure to register a location as a branch office
- Failure to include the required information in a listing agreement
- Failure to give a listing agreement to a principal within 24 hours, including a self-renewal clause in a listing agreement
- Sales associate operating without a registered employer because of failure to renew or properly register
- Operating as a broker under a trade name that hasn’t been provided to the FREC for its records
- Failure to obtain a multiple permit
- Sales associate or broker associate serving as an officer/director of a registered brokerage corporation
- Failure to make sure the corporation/partnership is properly registered
- Failure to ensure that each officer, director, and sales associate is properly licensed
Complaint against broker
- DBPR reviews complaints submitted by consumers or confidential informants, or even anonymously
- DBPR has authority to open a complaint and initiate an investigation if it has reasonable cause to believe that licensee violated florida statute, DBPR rule, or Frec
Probable cause panel must have this many members
At least 2
The first step in investigating a potential violation of FL real estate law
Complaint filed with the DBPR
What step in the Florida compliance process comes after the probable cause proceedings but before hearing conducted?
Formal complaint is issued
Why might the DBPR issue an emergency suspension order against a licensee?
The licensee’s actions endangers the public welfare.
If a subject of a disciplinary complaint gives up his license instead of a hearing…
He can never reapply.
A Florida licensee has had a complaint filed against him. What is the next step in the process for handling this complaint?
An investigation occurs
When a complaint is filed against a real estate licensee in Florida, who or what entity is responsible for investigating the complaint?
The DBPR
How long does the FL probable cause panel have to either dismiss a complaint or find probable cause?
30 days
Florida Complaint Process
- Complaint filed
- Investigation
- Probable cause proceedings
- Formal complaint issued
- Hearing Conducted
- Final order issued
- Judicial review
The Florida Complaint Process - Step One - Complaint Filed
- Complaint filed and must be in writing and signed by complaintant
- Division determines if complaint is legally sufficient (includes facts that show a violation of laws, DBPR or FREC rules)
- Consumer has 5 years from complaint or discovery to file
The Florida Complaint Process - Step Two - Investigation
- DBPR sends copy of complaint to subject for response
- Can respond within 20 days
- If providing notice is detrimental to investigation, DBPR can withhold notifcation
- DBPR may subpoena records, interview and take depositions, review and audit records
The Florida Complaint Process - Step Three - Probable Cause Proceedings
- Probable Cause Panel has 2 members of FREC
- Must include 1 active real estate licensee
- One consumer (non-license) FREC member
- PCP has 30 days to review investigators report and DBPR recommendation
- PCP’s findingds delivered to the DBPR to:
1. Go forward with formal hearing
2. Issue a dismissal (probable cause doesn’t exist)
3. Issue a dismissal with letter of guidance
The Florida Complaint Process - Step Four - Formal Complaint Issued
- licensee has 21 days to respond
- Accept allegations and request informal hearing
- Accept allegations and waive right to be heard, negotiate a settlement of charges (stipulations)
- Dispute the allegations and request a formal hearing
- If licensee doesn’t want to go through with it, can request a voluntariy relinquishment for permanent revocation.
The Florida Complaint Process - Step Five - Hearing Conducted
- Informal hearing held in front of FREC
- If licensee disputes, formal hearing held in front of administrative law judge
The Florida Complaint Process - Step Six - Final Order Issued
- Both parties have 15 days to review report and attach any exceptions they may have. Recommended order submitted to FREC for the final order
- FREC members who didn’t serve on the probably cause panel issue a final order and is effective 30 days after issuance
The Florida Complaint Process - Step Seven - Judicial Review
- Licensee has right to file a petition of appeal with 30 days after final order is issued
- Licensee may also request stay of enforcement if the district court issues writ of supersedeas (a motion that stops the enforcing of a trial court judgment)
Administrative Penalties for Licensing Violations in FL
- Reprimands - include a notice of non-compliance which allows minor offenders to self-correct within 15 days
- Citations - from $100 to $500
- Fines up to $5,000 for each violation or as little as $250 to $2,500 for first time violations
- Probation with conditions (education courses, etc.)
- Suspension of a license for up to 10 years
- Denial of a license application or refusal to renew
- Revocation of a license permanently
- Broker can be held responsible too!
- DBPR can weigh in as well
Price Fixing
Competitors agree to set prices at certain point
Coudl be commission rates
Market Allocation
Competitiors agree to divide their market by geography, price range, property type, etc. and then no competing for business
Tie-In Arrangement
Provider of a service requires the client to purchase another service
Group boycotts
Example is new low-cost brokerage enters town and “old school” brokers decide not to do business with them
Bid Rigging
Competitors agree not to bid against one another
Bid rotation - Competitors take turns being the low bid
Florida licensees must report in writing to the DBPR within _ days if they’re convicted or found guilty of a crime, or if they pleaded guilty or nolo contendere to a crime.
30 days
What is an example of a tie-in arrangement?
A licensee tells his seller client he’ll only represent her if the client uses a specific company to close her transaction.
What is the punishment for a 2nd degree misdemeanor?
As long as 60 days of imprisonment.
Serious violations of the real estate license laws typically result in which disciplinary action or actions?
License suspension or revocation
What is the maximum administrative penalty a Florida licensee can be fined per violation if the violations are not the licensee’s first violations?
$5,000
Which one of the following is the least severe penalty under Florida’s disciplinary guidelines for real estate licensees?
Reprimand
Grounds For Denial of a License, Registration, Certification, or Permit
- Lacks minimum qualifications
- Doesn’t complete state licensing exam
- Under investigation
- Guilty of fraud
- Was guilty of acts that would require revocation or suspension
- Acted in violation
Grounds for Suspension and Revocation
- Unlawful act that Florida statutes say is grounds for suspension
How long will a real estate license be suspended if funds from the Florida Real Estate Recovery Fund are paid out against a license holder?
Until the money is paid back, plus interest.
How is the FL Real Estate Recovery Fund funded?
Licensing fees
What is the maximum payment allowed per transaction from the Florida Real Estate Recovery Fund?
$50,000
