CH 1 – 3 **Real Estate Business, License Law & FREC Rules** – Flashcards
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The various activities of a real estate brokerage include
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sales and leasing property management property valuation financing counseling
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A property owner who does not reside on the property and who usually relies on a property manager to oversee the investment
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Absentee Owner
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A supported, defended estimate of the value of property rights as of a given date
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Appraisal
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The marketing and sale of a going concern operation
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Business Opportunity Brokerage (Florida requires that business brokers have a real estate license to market business opportunities)
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An informal estimate of market value performed by a real estate licensee for the seller to assist in arriving at an appropriate listing price, or if working with the buyer, an informal estimate of market value to assist the buyer in arriving at an appropriate offering price
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Comparative Market Analysis
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A deliberate transfer of land by its owner for public use and accepted for such use by the public
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Dedication
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A selected and limited geographical district to which a sales associate devotes special attention and study
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Farm Area
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A post-closing communication initiated by a licensee to maintain customer contact and goodwill
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Follow-Up
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The process of directing, controlling, operating, and maintaining real estate for a third party
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Property Management
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A commercial activity in which the sale, purchase, leasing, rental, exchange or management of real property is conducted by qualified and licensed individuals acting either for themselves or for others for compensation
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Real Estate Brokerage
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The layout of a subdivision showing lots, roads and other infrastructure by the developer to a local government agency
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Subdivision Plat Map
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Rules and guidelines that must be followed by any professional conducting an appraisal
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USPAP
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The body that oversees and regulates the real estate license law and licensed individuals that participate in the real estate business
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Florida Real Estate Commission (commonly referred to as "FREC")
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There are five major areas of sales that a licensee may specialize in:
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Residential, Commercial, Industrial, Agricultural, Businesses
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This area specializes in the marketing and sales of up and running businesses (going concern operations
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Business Brokerage or Business Opportunity Brokerage (requires an understanding of both tangible assets, e.g. inventory, and intangible assets, e.g. goodwill
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Property management has become a growing industry in Florida due to the increase of:
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Absentee Owners
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The reason appraisers are not compensated on a percentage of the subject property's value is:
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to avoid a conflict of interest situation
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Acts as a consultant by performing research on the subject real property and its community location, and making recommendations about the subject property's ultimate value.
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Real Estate Counselor
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There are several major sources of lendable funds for real estate financing:
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commercial banks savings and loan associations, mortgage bankers credit unions life insurance companies
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The process of preparing the land site for subdividing the parcel into individual, smaller parcels:
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Subdivision and Development (The developer will also typically install infrastructure which is defined as the sewer, water, electrical, streets, and storm drains necessary for the support of a development)
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developers must submit a ______ of the proposed project to the applicable local government that will identify where streets and lots will be located.
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SUBDIVISION PLAT MAP (Once approved, the Subdivision Plat Map is recorded in the public records of the county where the subject property is located.)
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There are three types of residential construction:
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Speculative Tract Custom
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There are three entities of government which influence real estate decisions:
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Local - implements zoning laws, building codes, and establish property taxes; State - has implemented many laws protecting our environment and waterfront properties; Federal - various federal agencies and regulations that influence real estate ownership
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The local government is authorized to enact laws to protect the health, safety, and welfare through its use of:
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Police Powers
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Licensees are prohibited from using the term ______ unless they are current members in good standing with local, state and national associations of REALTORS®.
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REALTOR®
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Three phases of development and construction involve:
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[1] land acquisition [2] subdividing and developing [3] construction
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When a builder builds a home on his own land in hopes of selling it:
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Speculative building
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When a builder builds a pre-arranged home on an owner's property:
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Custom building
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When a criminal final judgment is withheld or not recorded in public record.
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Adjudication Withheld
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One who is licensed by the State of Florida to carry on the business of dealing in real estate.
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Broker (A broker may receive a commission for their part in bringing together parties in a real estate transaction)
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An individual qualified to be issued a broker's license but who operates as a sales associate in the employ of another
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Broker Associate
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Any form of remuneration, payment, or value
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Compensation
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A person who has resided in Florida for at least four months, or a person that is residing in Florida with an intent to remain for at least four months
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Florida Resident
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A document issued by the Department of Business and Professional Regulation, which certifies that the licensee is or was duly licensed on the effective date shown
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License
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A plea of no contest entered in a criminal court of law
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Nolo Contendre
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Evidence that is valid and admissible on its face requiring no further proof of authenticity
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Prima Facie Evidence
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Real Estate Services:
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Buy, advertise, rent, sell, auction, lease, and exchange (BAR SALE)
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Authorization by the state to place an applicant on the register (record) of officially recognized individuals and businesses
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Registration
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A licensed individual who, for compensation, is employed by a broker or owner/developer
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Sales Associate
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Under Florida Statute, Chapter 475, the ____ was empowered to "protect the public and ensure minimal competence of real estate practitioners"
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Florida Real Estate Commission (FREC)
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Also involved in the governmental regulation of real estate practitioners is the _____
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Florida Department of Business and Professional Regulation, Division of Real Estate
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The ______ is part of the DBPR and works in conjunction with FREC.
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Division of Real Estate (DRE)
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There are two types of real estate licenses issued in Florida:
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Broker Sales Associate
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The ___________ license entitles an individual to perform real estate services, for compensation, for the public.
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Broker
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The _______ license entitles an individual to perform real estate services, for compensation, for the public, but does so under the direct supervision and control of an active broker or owner/employer (developer)
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Sales Associate
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A sales associate can only place their license with _____ employer at a time.
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one
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A ________ is an individual who has a broker's license, but has chosen to work in real estate under the direct supervision and control of a broker or owner/employer.
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BROKER ASSOCIATE
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Applicants for a Florida real estate license are not required to have:
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Florida residency or United States Citizenship
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Minimal requirements must be met by all applicants for real estate licensure:
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-18 years of age or older -high school diploma or equivalent (G.E.D.) -honest, trustworthy, truthful, of good character, and have a reputation of dealing fairly with others. -Disclose if ever convicted of a crime; declared mentally incompetent; had an alias; denied a real estate license application in another state; or if such a license has ever been suspended or revoked; been found guilty of any practice or conduct that would have been grounds for suspension or revocation under Florida Real Estate License Law (F.S. 475)
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Each prospective licensee must submit to the ______, a completed, notarized application or electronic application, fingerprints, and appropriate application fee.
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Department of Business and Professional Regulation, Division of Real Estate
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Non-resident applicants must sign an ______ in order to be issued a Florida license, which means that the applicant agrees that Florida courts and Florida authorities have jurisdiction over any matter relating to the license.
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irrevocable consent to service
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Sales associates are required to complete a __ -hour pre-license course and a ___ -hour post-license course within the initial license period.
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63 (pre-license) 45 (post-license)
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Brokers are required to complete a __ -hour pre-license course and __ hours of post-license education within the initial license period.
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72 (pre-license) 60 (post-license)
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Florida has entered into a _____ agreement with a number of states that allow licensees of those states (that reside in those states) to obtain a Florida license of equal status by taking and passing a 40-question law exam with a passing score of 75% or higher.
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mutual recognition
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If a Florida resident licensee moves out of state, that licensee must sign an irrevocable consent to service within ___ days of moving. Failure to do so may result in a citation and fine of $100.00.
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60
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If an applicant does not attain a grade of 70 or higher on the pre-licensing course final exam, the applicant must wait at least __ days before taking a different final examination.
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30
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The entire FREC pre-licensing course must be repeated if an applicant does not attain a grade of 70 or higher upon taking final exam for the ____ time.
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second
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Once the FREC Course I examination is passed, the applicant/student will receive an end of course report which is valid for ___ years from the successful completion date.
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two
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If the applicant/student does not successfully complete the _______ within a two-year period, the applicant/student must repeat the entire FREC Course I.
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state exam
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After receiving the end of course report (and notice of an approved application), the applicant/student is qualified to take the ____ administered by a private testing company.
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state examination
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After obtaining the initial sales associate license, the licensee must complete a ___ post-license education course before the initial license expires.
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45-hour
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Failure to timely complete and pass the post-license education course could result in the sales associate's license being declared _______ when discovered by the Division of Real Estate.
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null and void
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Every sales associate's license expires on either _______ or _______, depending on when the state examination is passed.
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March 31st or September 30th
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The initial license is valid for a period of time greater than_____ months, but less than ___ months.
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18 months; 24 months
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After the initial license period, each additional license period is valid for a full ___ years.
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two
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Once the applicant has passed the state examination, the ____ will issue the initial license that contains an effective date (start date).
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DRE
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The student must pass an post-license course final exam with a score of ____ or better. If the student does not pass that exam, a period of 30 days must pass before re-examination.
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75%
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In order to become a broker, the applicant must first complete the Florida sales associate _______ course and must have worked for an active real estate broker or brokers for ____ months of the preceding 5 years.
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post-license 24 months
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Time spent working for an ______ does not qualify towards the experience requirement of broker applicants.
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owner-employer (not active broker)
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Broker applicants must complete the FREC Course II Broker Pre-License __ -hour course.
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72
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The FREC Course II may be started after ___ months of being an active sales associate under the supervision of a broker. However, the state examination can only be taken after complying with the ___ month experience requirement.
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18 24
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The end of course ____ examination consists of 40 questions on real estate law, 45 questions on principles and practices, 5 questions on math, and 5 questions on closing statements.
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broker
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Students must pass the broker end of course exam with a grade of ___ and pass the state examination with a grade of ___ .
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70 75
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After obtaining the initial broker's license, the licensee must complete ___ hours of post-license education before the initial broker license expires.
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60
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Failure to timely complete and pass the post-license education course could result in the broker's license being declared _______ when discovered by the Real Estate Division
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null and void
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Every broker's license expires on either ___ or ____, depending on when the state broker examination is passed. The initial license is valid for a period of time greater than ___ months, but less than ___ months.
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March 31st or September 30th 18 months 24 months
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The initial broker licensee must successfully complete ___ hours of post-license education.
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60
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The student must pass the broker post-license final exam with a score of ___ or better. If the student does not pass that exam, a period of 30 days must pass before re-examination.
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75%
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Florida has entered into mutual recognition with 9 states:
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Alabama, Arkansas, Connecticut, Georgia, Indiana, Mississippi, Nebraska, Oklahoma, and Tennessee
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A person who resides in any state that Florida has a _____ agreement with may obtain the same type of license in Florida by submitting an approved application and passing a 40 question examination on Florida real estate law with a passing score of 75% or higher.
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mutual recognition
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If the applicant moves to Florida BEFORE applying for a ____ license, then the applicant no longer qualifies. However, the applicant may obtain a Florida license under normal application and requirement guidelines.
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mutual recognition status
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A real estate license is considered ____ that the holder of the license possesses a current and valid licensure (rebuttable presumption).
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PRIMA FACIE EVIDENCE
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The ____contains an effective date, expiration date, the name of the governor, and the secretary of the DBPR. The license contains an effective date, expiration date, the name of the governor, and the secretary of the DBPR. It also contains the licensee's full name and their license status.
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real estate license
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Real estate sales associates and brokers are licensed and are afforded the _____ to practice real estate in Florida. To be valid and current, those licenses are registered with the DRE.
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privilege
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_______ simply means placing on record the name of the business and the business address, and the name and address of each licensed broker, sales associate, officer, director, partner or general partner.
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Registration
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If an officer, director, partner, or general partner is unlicensed, their name is simply registered with the DRE with the understanding that:
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no services of real estate can be offered or performed
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During the first renewal period AFTER initial license issue, and all renewals thereafter, the licensee is required to complete ___hours of continuing education for each 2-year license period thereafter.
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14
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A real estate license is required by anyone who performs::
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-Any service of real estate -In the state of Florida -For someone else -For compensation or the mere expectation of compensation (If any of these four requirements are not fulfilled, then no real estate license is required.)
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Anything of value, such as money, reimbursement of expenses, or other consideration of value:
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Compensation
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The services of real estate include: (remember: BAR SALE)
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Buying Advertising Renting (or rental information list) Selling Auctioning Leasing Exchanging
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Certain types of individuals exempt from real estate licensure include the following:
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-Anyone who is court appointed -Hotel and motel clerks for short-term rentals -Attorneys within scope of atty/client relationship -A salaried employee of an apartment bldg owner -A salaried manager of a condo or co-op -Persons who rent mobile home lots/travel trailer lots
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Property managers may pay up to $___ to unlicensed individuals for rental referrals.
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$50.00
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The _____, under Florida Statute Chapter 455 (F.S. 455), regulates all licensed professions throughout the state of Florida.
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Department of Business and Professional Regulation (DBPR)
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The chief administrator of the DBPR is the Secretary of the DBPR who is appointed by the _______ of the State of Florida.
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Governor
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Contained within the DBPR are the following divisions:
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-Division of Technology, Licensure, and Testing -Division of Regulation (legal and investigative authority) -Division of Professions (regulates state boards & commissions) -Division of Real Estate (provides support to FREC)
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The Director of the Division of Real Estate is appointed by the ______ Secretary and is responsible directly to the Secretary.
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DBPR
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The main DBPR office is located in ____ , Florida, and the Florida Real Estate Commission is located in ____, Florida.
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Tallahassee Orlando
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The _______ was created as a consumer protection agency to ensure the minimal competence of real estate practitioners.
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Florida Real Estate Commission (FREC)
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FREC is composed of seven members. By law, five members of FREC must be real estate licensees and two members must be ______ .
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unlicensed
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Of the five licensed FREC members, four (4) members must be licensed brokers with at least ____ years experience as a broker. The other licensed member must be either a broker, broker associate, or sales associate with at least ____ years of licensed experience.
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five (5); two (2)
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At least one member of FREC must be at least _____ years of age.
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60
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FREC members are appointed by the _____ and confirmed by the Florida State ______.
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Governor; Senate
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FREC members are appointed to _____ terms, but may not serve more than ____ consecutive terms.
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four-year; two
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FREC members are not paid a salary, but they do receive $_____ per day while conducting FREC business
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$50.00
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In general, FREC has three basic types of powers and duties to implement and administer the real estate license law:
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-Executive Powers (to regulate and enforce) -Quasi-Legislative (to enact rules and regulations) -Quasi-Judicial (to determine violations and administer penalties)
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More specifically, the FREC is empowered to do the following:
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-Adopt a Seal to authenticate official documents -Educate members of the profession -Power to enact rules and regulations, and decide questions of practice -Power to inspect and audit licensees and their records -Power to discipline licensees for violations
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Any complaint against a licensee with probable cause (alleging a criminal violation) submitted to the Division of Real Estate must be promptly be reported to the _________ for consideration of criminal prosecution.
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State Attorney's Office
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The FREC must inform the __________ when disciplinary action is taken by FREC against any real estate licensee.
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Division of Florida Land Sales, Condominiums, and Mobile Homes
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The __________ is a division of the Florida Department of Business and Professional Regulation (DBPR) that is chiefly empowered to provide administrative assistance and support to FREC.
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Division of Real Estate (DRE)
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The DRE is empowered to administer the ______ application and ______process. Additionally, the DRE is responsible for maintaining ________ on all licensees and applicants.
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license; testing records
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Funding for the DRE is provided by funds generated from:
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real estate license applications, fees, fines, and publication sales.
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The DRE works in conjunction with the Division of Technology, Licensure, and Testing to supervise ______ for all applicants and licensees.
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testing
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The DRE has a very strict policy concerning any license obtained by fraud, misrepresentation or concealment. Any person obtaining their license in this manner will most likely result in the license being ________ .
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revoked
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Prior to _______, each licensee is expected to complete a renewal application and confirm that all educational requirements have been met.
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expiration
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When an applicant passes the state examination, the initial license status is _______________.
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voluntary inactive
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In order to activate a new license, the licensee must submit the proper form either at the time of testing at the testing site, or submit the proper form to the ______ after the initial effective date has been issued or anytime thereafter.
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DRE
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In order for a sales associate to have an active license, they must submit the proper form, which includes their _______ information and signature.
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employer's
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For a broker to become active, they can either continue to practice under their current employer as a ___________ without submitting the proper form OR if they choose to change their status to an active broker, submit a completed form with appropriate information and signatures.
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broker/sales associate
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If a person's license is _________, they are prohibited from performing real estate services for a fee.
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inactive
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A sales associate's active license becomes inactive if either:
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1. Their license expires prior to proper renewal, or 2. The licensee requests inactive status by filing the proper form with the DRE
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The status when a licensee chooses not to have an active license or files the proper form with the DRE requesting inactive status.
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Voluntary Inactive
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A licensee may remain on voluntary inactive status for _________, provided education requirements and renewal fee obligations are both satisfied every _____ years.
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as long as they like; two
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The status when a licensee fails to renew their license in a timely manner, OR when a sales associate or broker associate are registered with a broker whose license has been suspended or revoked
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Involuntary Inactive
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A sales associate's license automatically becomes involuntary inactive when she:
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-Fails to submit a renewal application, or; -Fails to pay the appropriate renewal fee, or; -Does not complete 14 hours of continuing education, or; -Is registered with a broker whose license is suspended or revoked
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An involuntary inactive license can remain in effect for ____ years, after which time the license becomes _____________.
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2; null and void
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An involuntary inactive license holder may elect to convert their license to active status. If the license has been Involuntary Inactive for _____ months or less, then the licensee must submit the proper renewal form, pay the appropriate fees (including late fee) and confirm that the continuing education requirements have been fulfilled.
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12
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If a license has been Involuntary Inactive for more than 12 months but less than ___ months, then the licensee must submit the proper renewal form, pay the appropriate fees (including late fee) and show completion of 28 hours, in-class education (reactivation credit).
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24
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After a license has been Involuntary Inactive for 24 months, and no reinstatement is requested, the license will then automatically expire and be declared _________.
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Null and Void
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A licensee who is a spouse of a member of the Armed Forces of the U.S. is exempt from all renewal requirements provided the spouse is on _______ and for an additional period of ______ after the spouse's military discharge.
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active duty; six months (the licensee must also reside outside of Florida because of their spouse's duties with the military)
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A sales associate (or broker associate) license is ______ when the associate is registered as working under a broker or owner-developer, while maintaining all education requirements and license renewal requirements.
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active
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A broker license becomes active when the broker registers the of ________ his/her office.
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location (Sometimes this license status is also referred to as "Active and Current")
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If a license is ______________, the licensee must continue to satisfy the same education and license renewal requirements as Active licensees.
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Voluntary Inactive
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If a licensee is registered with a Brokerage that has its registration Cancelled because the sole broker of record dies, resigns, or is otherwise removed from the position of active broker, then all licensees are declared _______ until such time as they register their license with another broker or request Voluntary Inactive status.
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Involuntary Inactive
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If brokerage partnership is in a dispute between the former partners as to the right of the firm name, then all _____ and _____ registered with the partnership are declared Involuntary Inactive until the partnership dispute is settled or until the DRE is requested to reissue the brokerage registration and licenses under a different partnership name.
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brokers and associates
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License status is considered NULL AND VOID when either:
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A. The post-license education requirement is not timely satisfied, or B. The license has been Involuntary Inactive for more than 24 months after a failure to renew.
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A temporary penalty issued against a licensee, not to exceed 10 years. During this time, the licensee may not practice real estate.
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Suspended license
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A permanent loss of the license ordered by FREC.
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Revoked license
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When a license is suspended or ceases to be in force, cancelled, or involuntary inactive because a broker of record has been suspended or revoked.
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Ineffective
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Whenever a broker changes his or her business address, or when a sales associate (or broker associate) changes their employer, the _____ must be notified within ____ days.
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DRE; 10
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Failure to timely provide the required notice will render the broker license (when changing business address) or sales associate license (when changing employer) to a status of ______________________ until such time as the proper notice is submitted.
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Cease To Be In Force
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If a broker resigns, dies, fails to renew his or her license, or is otherwise removed as broker of record otherwise a replacement broker must be registered within _____ days, otherwise the brokerage registration is ________ and all associates registered with the brokerage are declared ___________ until they register their license with another broker OR request Voluntary Inactive status.
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14 Cancelled Involuntary Inactive
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An active broker may be issued a _______ license that allows him to be the broker of record for more than one brokerage entity, provided the broker can demonstrate a genuine business need and demonstrate that no conflict of interest exists among the brokerage entities.
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Multiple License
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Sales associates and broker associates who are employed by an unlicensed owner of real estate (such as a developer) may be issued a ________ license which will entitle the licensee to work for separate sales projects provided the licensee can demonstrate that the same person(s) is the driving force behind both projects.
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Group License
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A licensee possessing a group license is still considered to have only ____ employer. Additionally, a person holding a group license can only market the product owned by that unlicensed owner-employer.
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one
