Study Guide Chapter 6 - 8

Question 1

When would stipulation be used?

Answer 1

Sometimes a licensee-respondent and the licensee’s attorney (if the licensee has legal counsel) will meet with a DRE attorney prior to a hearing to discuss a possible settlement and enter into a stipulation.

Question 2

Stipulation

Answer 2

A stipulation is an agreement as to the facts of the case and the penalty reached between the attorneys for the DRE and the licensee or licensee’s attorney.

Question 3

Who issues a recommended order?

Answer 3

The administrative law judge prepares and submits to the DBPR and to all other parties a recommended order that includes the administrative law judge’s finding and conclusions and the recommended penalty, if any, in accordance with the Commission’s range penalty as set forth in rule. Any party of record in the case may submit (within the statutory time limit) written exceptions to the administrative law judge’s recommended order.

Question 4

Writ of supersedeas

Answer 4

An order issued by a court containing a command to stay (stop)

Question 5

When may a notice of non-compliance be issued?

Answer 5

The DBPR/DRE may issue a notice of noncompliance as a first response to a minor violation by a licensee.
The FREC sets the guidelines for which violations warrant a notice of noncompliance

Question 6

What does a notice of noncompliance must identify?

Answer 6

The notice must identify the specific statute(s) and rule(s) violated, provide information on how to comply, and state the time to comply. The FREC sets the guidelines for which violations warrant a notice of noncompliance.

Question 7

What may happen if licensee fails to take action to correct minor violation after receiving a notice of noncompliance & how long does he/she have to comply?

Answer 7

If a licensee fails to take action to correct the minor violation within 15 DAYS after being notified, the licensee may be issued a citation.

Question 8

What is the only first degree misdemeanor pertaining to real estate brokerage is and the penalties involved

Answer 8

There is 1 violation of real estate license law that is a first degree misdemeanor: FAILING TO PROVIDE ACCURATE AND CURRENT RENTAL INFORMATION FOR A FEE.

The penalty for a first-degree misdemeanor is a fine of not more than $1,000 and/or up to 1 year in jail.

Question 9

Claim resulting from an EDO

Answer 9

If a broker who complied with an escrow disbursement order is later required by a court of law to pay damages as a result of legal actions taken by the buyer or seller in transaction, the FREC is authorized to order reimbursement to the broker for the amount of the judgement agains the broker up to $50,000. No disciplinary action will be taken against a broker who had previously requested an EDO and followed its instructions. The broker’s license will not be suspended, and no repayment to the fund is required.

Question 10

Eligible for reimbursement - claim resulting from an EDO

Answer 10

To be eligible for reimbursement, the broker must notify the FREC of the court case and the broker-defentant must diligently defend in court the disputed actions concerning the transaction. Furthermore, Florida Statute provides for the Commission to pay the broker-defendent’s reasonable attorney’s fee and court costs and, if the plaintiff prevails in court, the plaintiff’s (person who filed the lawsuit) reasonable attorney’s fees and court costs.

Question 11

What will not be awarded from the real estate recovery fund?

Answer 11

In cases other than those regarding compliance with and EDO, court costs and attorney’s fee may not be awarded. In all cases, punitive damages, treble (triple) damages, and interest may not be recovered from the fund.

Question 12

Conversion

Answer 12

Brokers may not use earnest money funds for their personal use. A licensee’s personal use or misuse of client (or customer) monies.

Question 13

Know the activities that are prohibited under the Fair Housing Laws

Answer 13

Steering - channel homeseekers to or away from particular neighborhoods because they are members of a protected class

Blockbusting - use the entry, or rumor of the entry, of a protected class into a neighborhood to persuade owners to sell

Redlining - deny loans or insurance coverage by a lender or insurer that present different terms or conditions for homes in certain neighborhoods

Question 14

What information is considered to be a triggering term under the Truth in Lending Act?

Answer 14

TILA requires creditors to disclose certain information if certain terms called triggering terms, are included in the advertisement.

Triggering terms include the

• amount or percentage of any down payment
• number of payments
• period (term) of repayment
• amount of any payment, and
• amount of any finance charge

Question 15

What are lender’s disclosure requirements under RESPA? (TIME REQUIREMENT)

Answer 15

RESPA disclosures at time of loan application or within 3 business days.

Question 16

What are lender’s disclosure requirements under RESPA?

Answer 16

When borrowers apply for a mortgage loan, they must be given the following disclosures

1. Special Information Booklet
2. Good Faith Estimate (GFE) of closing (settlement) costs, listing the charges the buyer is likely to pay at closing.
3. Servicing Disclosure Statement

Question 17

Special Information Booklet

Answer 17

Published by the Department of Housing and Urban Development (HUD), contains consumer information regarding closing services (required for purchase transaction only) the borrower may be charge for at closing, describes the home buying process, and explains both Good Faith Estimate and HUD-1 Settlement Statement

Question 18

Good Faith Estimate (GFE)

Answer 18

Good Faith Estimate (GFE) at closing (settlement) costs, listing the charges the buyer is likely to pay at closing. The standardized GFE facilitates shopping among settlement service providers. If the lender allows the borrower to shop for a third-party settlement services, the lender must provide the borrower a list of acceptable service providers

Question 19

Service Disclosure Statement

Answer 19

Discloses to the borrower whether the lender intends to service the loan or transfer it to another lender or service company.

Question 20

Rules for holding Security Deposits and Advance Rents as they apply to an owner managing their own properties

Answer 20

A Security deposit is typically paid to guarantee that the property will be left in good condition. Rent in advance is also often paid (typically the last month’s rent). When money is given to a landlord as a security deposit or advance rent, the landlord is obligated to account for such deposits in one of 3 ways:

1. Hold the money in a separate non interest-bearing Florida bank account and not commingle, hypothecate, that is, pledge as security for a debt, or use any such funds until due to the tenant.
2. Hold the money in a separate interest-bearing Florida bank account and pay tenant at least 75% of any annualized average interest rate or 5% per year simple interest, and not commingle, hypothecate, or use any such funds until due to the tenant.
3. Post a surety bond with the clerk of the circuit court in the county in which the rental property is located in the total amount for the security deposits and advance rents or $50,000, whichever is less, and pay the tenant 5% per year simple interest. If the landlord chooses this method, the landlord is not obligated to place the funds (deposits) into a special account.

Question 21

Accretion

Answer 21

The process of land buildup from water-borne rock, sand, and soil

Question 22

Alluvion

Answer 22

New deposits of land as a result of accretion; alluvion deposits commonly occurring at the mouth of large rivers (The landowner is entitled to all new soil deposits)

Question 23

Erosion

Answer 23

Gradual loss of land due to natural forces (A landlord may lose land through the natural process of erosion)

Question 24

Reliction

Answer 24

Gradual receding of water, uncovering additional land (The new land usually belongs to the landowner of the area that was previously covered by water)

Question 25

Identify fixtures

Answer 25

IRMA

Intent of the parties
Relationship between parties
Method of annexation
Adaptation of the article

Question 26

Method of annexation

Answer 26

The manner in which an article is attached to real property generally indicates whether it is a fixture or personal property. Normally, if removing the item would result in damage to real property, the article is classified as a fixture.

A set of built-in storage cabinets in the utility room would normally be considered a fixture if removing it would damage the wall.

Question 27

Adaptation of the article

Answer 27

It the item is adaptated or custom-built to fit the property, it will likely be considered a fixture even though it is moveable.

Question 28

What should an agent do in case of owner discriminating against protects based on their race, color, religion, sex, handicap status, familial status, and national origin?

Answer 28

First licensees should not answer any owner’s inquiry regarding race (or any of the other protected class) by doing so, licensee is violating the Fair Housing Act.

Also, licensee should seller/owner know about the discrimination, that by law licensees are not allowed to do so, and withdrawal from the contract if owners refuse to change their mind.

Question 29

What is Truth In Lending Act (TILA) is concerned about?

Answer 29

TILA makes “bait and switch” advertising a federal offense. IF a subdivision developer advertises homes for sale with a down payment of $1,000, the seller must accept $1,000 as the complete down payment or be in violation of the law.

TILA is also concerned that consumers may be misled by being given truthful, but inadequate, information in advertising.

Question 30

Real Estate Settlement Procedures Act

RESPA

Answer 30

Consumer protection law administered by the Consumer Financial Protection Bureau, intended to ensure that buyers are informed regarding the amount and type of charges they must pay at closing. It also attempts to eliminate kickbacks and referral fees that increase closing costs.

It applies to federal related residential loans (only)

Question 31

Freehold Estates

Answer 31

Ownership interest for an indefinite period. That interest can be inherited (fee simple estate) or can be measured by the lifetime of an individual (life estate)

ARE ESTATES OF OWNERSHIP

Question 32

Fee Simple Estate

Answer 32

Absolute and complete ownership, subject only to government restriction.

Ownership interest with complete power to use, to dispose of, and to allow the property to descend to heirs. It is the highest type of real property interest recognized by law.

MOST COMPREHENSIVE AND IT IS INHERITABLE

Question 33

Life Estate

Answer 33

Owner owns the property for ONLY THE PERIOD OF THE LIFETIME OF AN INDIVIDUAL (the owner or other designated person).

Owner with this type of ownership must maintain the property and not permit waste (anything that reduces the value of property) to occur.

Life estate owners also must pay the taxes and the property insurance and keep current any mortgage(s) or lien(s) to preserve the property.

When the life estate ends, the property reverts (returns) to the original grantor (previous owner) or goes to a third party, called a remainder.

If the life estate reverts to the original grantor, and estate in reversion reversion estate) is created.

Question 34

Estate in Reversion

Answer 34

Occurs when life estate property returns to the grantor

Question 35

Remainder Estate

Answer 35

Occurs when a life estate property goes to a third party

Question 36

Vested Remainderman

Answer 36

Refers to someone whose legal name is specified

Question 37

Contingent Remainderman

Answer 37

Referst to someone whose legal name is not specified (such as first-born child)

Question 38

Tenancy in Common

Answer 38

• 2 or more people share the ownership of a single property
• May acquire titles at different times or at the same time.
• Undivided interest/Undivided possession - ownership in the entire property, rather than ownership of a particular part of the property.
• Interest ownership Can be equal or unequal percentage
• May have same or different titles
• No right or survivorship. Heirs inherit the interest

Question 39

Joint Tenancy

Answer 39

• 2 or more people may share the ownership of the property
• Undivided possession/ Undivided interest - owners have interest in the entire property instead of ownership of a particular part of the property.
• Interest equal percentage. Owners share the same percentage of interest (50/50)
• Only one title - joint tenants acquire title on the same instrument (deed)
• Joint tentants acquire interest of the property at the same time
• Right of survivorship

Question 40

Process when a Joint Tenant sells his/her share

Answer 40

A joint tentant who wants to sell his/her share of property may do so. However the person who buys that share cannot be a joint tenant with the other original owners, but instead will be a tenant in common without the right to receive any property on the death of one off the original tenants. The tenants in common’s share can be disposed by will, descent, or other arrangements.

Question 41

Protection of the Homestead

Answer 41

The homestead property is protect from forced sale for debts owing to personal loans, credit card debt, and so forth. However, the protection does not prevent foreclosure for nonpayment of property taxes, special assessments, mortgages, vendor’s lien, or construction liens secured with the homestead property.

Question 42

Homestead Protection of Family

Answer 42

According to Florida Statute, if a married person dies the family homestead was titled in the deceased person’s name only (in severalty), by operation of law (even if a will states otherwise), the surviving spouse receives a life estate and the children (lineal descendants) receive a remainder estate. If there are o children, the surviving spouse receives a fee simple estate in the homestead. The purpose of the homestead law, therefore, is to protect the family and prevent it from being displaced from the homestead.

Question 43

When would a proprietary lease be used?

Answer 43

A cooperative, cooperative association, or co-op is normally organized as a corporation. The corporation holds title to the land and improvements. Authority and control of the corporation may be vested in an elected board of directors or trustees. Some apartments may be more expensive than others, depending on size and location, The owners purchase shares of stock in the corporation. The important result of the stock purchase is that ownership of the stock entitles the purchaser to a proprietary lease and the right to occupy the unit for life of the corporation.

Question 44

What is proprietary lease?

Answer 44

A written agreement between owner-corporation and the tenant-stockholder in a cooperative apartment