Florida Real Estate Broker Exam — All Questions

The core difference between a Florida broker's license and a sales associate's license is that only a broker may:

• a.Open a brokerage, hold escrow funds, and supervise sales associates✓
• b.Show a listed property to a prospective buyer for compensation
• c.Advertise a listed property under the registered brokerage name
• d.Accept a commission earned on a transaction that has closed

Section 475.01(1)(j), F.S., defines a sales associate as a person who performs the acts of a broker but does so under the direction, control, or management of another person, and s. 475.42(1)(b), F.S., forbids a sales associate to operate as a broker or to work for anyone not registered as the employer. Opening a brokerage, serving as escrow holder, and supervising associates are therefore broker-level acts. The other three choices are ordinary sales associate work: showing property, advertising under the brokerage name, and being paid a commission are all things an associate does routinely, though s. 475.42(1)(d), F.S., requires that the commission be collected in the employer's name.

Under s. 475.17(2)(b), F.S., a Florida broker applicant must have held which of the following for at least 24 months during the preceding 5 years?

• a.A Florida sales associate license, because out-of-state time does not count
• b.Ownership of income-producing real property located within Florida
• c.A sales associate license issued by Florida or another jurisdiction✓
• d.An appraiser certification issued under part II of chapter 475, F.S.

Section 475.17(2)(b), F.S., lists three qualifying paths, and the first is an active real estate sales associate license held for at least 24 months during the preceding 5 years in the office of one or more brokers licensed in this state or any other state, territory, or jurisdiction of the United States or in any foreign national jurisdiction. Out-of-state experience therefore does count, which is why the second choice states the rule too narrowly. The statute also allows 24 months as a salaried government-employed licensee or 24 months holding a broker license in another jurisdiction. Property ownership is consumer experience rather than licensed experience, and appraiser certification is governed by part II, a separate credential.

The FREC-prescribed prelicense course that a sales associate must complete to qualify for a broker license consists of:

• a.63 hours of 50 minutes each, inclusive of the end-of-course examination
• b.72 hours of 50 minutes each, inclusive of the end-of-course examination✓
• c.45 hours of 50 minutes each, inclusive of the end-of-course examination
• d.60 hours of 50 minutes each, inclusive of the end-of-course examination

Rule 61J2-3.008(2)(a), F.A.C., prescribes Course II at 72 hours of 50 minutes each, inclusive of examination, covering the fundamentals of appraising, investment, financing, brokerage, and management operations, and s. 475.17(2)(a)1., F.S., caps the broker prelicense requirement at that same 72 hours. The other figures are real Florida numbers attached to different requirements: 63 hours is Course I for sales associates, 45 hours is the sales associate postlicensure requirement under s. 475.17(3)(a), F.S., and 60 hours is the broker postlicensure requirement under s. 475.17(4)(a), F.S.

A newly licensed Florida broker who fails to complete the required postlicensure education before the first renewal will find that the broker license is:

• a.Renewed automatically as soon as the late renewal fee has been paid
• b.Placed in voluntarily inactive status until the coursework is completed
• c.Null and void, so the broker must retake Course II and pass the state exam✓
• d.Suspended for 90 days and then reinstated on the broker's application

Section 475.17(4)(a), F.S., authorizes a broker postlicensure requirement of up to 60 classroom hours before the first renewal following initial licensure, and s. 475.17(4)(c), F.S., states that the license of a broker who does not complete it shall be considered null and void. To operate as a broker again the licensee must requalify by completing the broker prelicense course and passing the state examination. The statute does offer one softer path that is easy to confuse with renewal: the licensee may be issued a sales associate license on proof of completing the 14-hour continuing education course within the 6 months following expiration. No fee, inactive status, or fixed suspension revives the broker license.

Of the 14 hours of continuing education a Florida broker must complete each renewal period, the commission specifically requires:

• a.3 hours of Core Law and 3 hours of Business Ethics✓
• b.3 hours of Core Law and 3 hours of escrow management
• c.7 hours of Core Law and 7 hours of specialty education
• d.4 hours of Core Law and 4 hours of instructional techniques

Section 475.182(1)(a), F.S., requires at least 14 classroom hours of 50 minutes each during each biennium of a license period, and rule 61J2-3.009(2), F.A.C., breaks that into a 3-hour Core Law course and a 3-hour Business Ethics course, with the remaining specialty hours totaling at least 8. There is no separate mandatory escrow management course, and specialty hours are 8 rather than 7. The 4 hours of instructional techniques belongs to a different credential: rule 61J2-3.017, F.A.C., requires permitted school instructors to complete 3 hours of Core Law and 4 hours of Instructional Techniques to recertify competency.

A Florida broker applicant who has been approved but has not yet passed the licensing examination should know that the application expires:

• a.2 years after the date the department received it✓
• b.1 year after the date the department received it
• c.5 years after the date the department received it
• d.90 days after the applicant's first failed attempt

Section 475.181(2), F.S., provides that the application shall expire 2 years after the date received if the applicant does not pass the appropriate examination. The same subsection adds a second two-year clock that candidates often overlook: if the applicant does not pass the licensing examination within 2 years after the successful course completion date, the successful course completion itself becomes invalid for licensure. Nothing in the statute cuts the application off after one year, extends it to five, or terminates it on a single failed attempt, since candidates may retake the examination.

When a Florida broker moves the brokerage to a new business address, s. 475.23, F.S., requires notice to the commission no later than:

• a.30 days after the change, on a form provided by the commission
• b.60 days after the change, on a form provided by the commission
• c.The next renewal, on the license renewal application itself
• d.10 days after the change, on a form provided by the commission✓

Section 475.23, F.S., provides that a license ceases to be in force whenever a broker changes business address, and that the licensee shall notify the commission of the change no later than 10 days after the change on a form provided by the commission. The brokerage must also file the names of any sales associates who are no longer employed there, and that filing satisfies the change of address requirement for the associates who remain. Rule 61J2-10.038(2), F.A.C., sets the same 10-day period for a change in the current mailing or email address, with a first-time failure drawing a citation.

Under s. 475.215, F.S., a Florida licensee who holds multiple licenses is one who holds:

• a.A broker license and a sales associate license at the same time
• b.Registration with more than one employing broker at the same time
• c.More than one broker license, to serve more than one brokerage✓
• d.Licenses issued by Florida and by at least one other state

Section 475.215(1), F.S., allows a licensed broker to be issued additional licenses as a broker, but expressly not as a sales associate or broker associate, and only when it is clearly shown the additional licenses are necessary to conduct real estate brokerage business. Holding a broker and a sales associate license simultaneously is therefore what the statute rules out. Section 475.215(2), F.S., separately provides that a sales associate or broker associate shall have no more than one registered employer at any one time. A discipline order against a broker applies to the primary license and to every multiple license held when the order takes effect.

Which of the following is exempt from Florida real estate licensure under s. 475.011, F.S.?

• a.A person paid per transaction to sell properties an owner holds
• b.A manager paid a commission to rent an owner's single-family homes
• c.A corporation selling real property that the corporation itself owns✓
• d.A person paid a fee to resell timeshare periods for several owners

Section 475.011(2), F.S., exempts any entity that sells, exchanges, or leases its own real property. The exemption is not open-ended, though: it is unavailable to the extent an agent, employee, or independent contractor paid a commission strictly on a transactional basis is employed to make sales or leases in the ordinary course of the owner's business, which disposes of the first wrong choice. Renting homes for another for a commission falls squarely within the definition of broker in s. 475.01(1)(a), F.S. Section 475.42(1)(l), F.S., specifically requires a license to list or sell timeshare periods on behalf of any number of persons.

A Florida-licensed broker who moves out of state and becomes a nonresident must notify the commission of the change in residency within:

• a.10 days, and must then comply with the nonresident requirements
• b.60 days, and must then comply with the nonresident requirements✓
• c.6 months, and must then comply with the nonresident requirements
• d.30 days, and must then comply with the nonresident requirements

Section 475.180(2)(a), F.S., gives a resident licensee who becomes a nonresident 60 days to notify the commission of the change in residency and to comply with nonresident requirements, and states that failure to notify and comply is a violation of the license law subject to the penalties in s. 475.25, F.S. Do not confuse this with the 10-day address change rule in s. 475.23, F.S. Mutual recognition lives in s. 475.180(1), F.S., which lets the commission enter written agreements with licensing authorities of other states so that Florida licensees receive comparable nonresident licensure opportunities.

A Florida real estate license that has been involuntarily inactive for more than 2 years:

• a.Expires automatically and becomes null and void without further action✓
• b.May be reactivated by completing 28 hours of prescribed education
• c.May be reactivated by completing 14 hours of prescribed education
• d.Reverts to voluntarily inactive status until the licensee reapplies

Section 475.183(2)(b), F.S., provides that any license involuntarily inactive for more than 2 years shall automatically expire and becomes null and void without any further action by the commission or department, with 90 days' advance notice from the department. The two education figures are the reactivation rules for shorter lapses under s. 475.183(2)(a), F.S.: 14 hours reactivates a license inactive for 12 months or less, and 28 hours reactivates one inactive for more than 12 but fewer than 24 months. Voluntarily inactive status is elected by the licensee under s. 475.01(1)(m), F.S., and is not where an expired license lands.

A Florida real estate brokerage that operates as a corporation or a limited liability company must:

• a.Register with the Division of Corporations and employ no licensed broker
• b.Register with the department and have at least one active broker officer or member✓
• c.Be owned in its entirety by brokers licensed and active in Florida
• d.Obtain a broker license issued by the department in the entity's own name

Section 475.15, F.S., requires each partnership, limited liability partnership, limited liability company, or corporation acting as a broker to register with the commission and to renew the licenses or registrations of its members, officers, and directors each license period. Brokerage entities are registered rather than licensed, which is why the fourth choice misstates the mechanism. Registering with the Division of Corporations creates the business entity but does nothing about real estate regulation. Chapter 475 imposes no requirement that every owner be a licensed broker; what it requires is that at least one active broker member keep a license in force.

When a Florida brokerage operates as a limited partnership, s. 475.15, F.S., requires that:

• a.Every partner, general and limited alike, be a licensed Florida broker
• b.Only the limited partners be licensed brokers or registered corporations
• c.Only the general partners be licensed brokers or registered brokerage corporations✓
• d.At least half of all partners be licensed brokers in active status

Section 475.15, F.S., states that if the partnership is a limited partnership, only the general partners must be licensed brokers or brokerage corporations registered pursuant to part I. That distinction tracks the economics of the entity, because general partners manage and bind the partnership while limited partners are passive investors whose role does not involve brokerage acts. Requiring every partner to be licensed would defeat the point of the limited partnership form, inverting the rule onto limited partners has it exactly backward, and the statute sets no percentage threshold of licensed partners.

If a registered Florida brokerage corporation is left with no active broker member whose license is in force, the corporation's registration is:

• a.Suspended by the commission after a probable cause hearing
• b.Canceled automatically for that period of time✓
• c.Continued for 6 months while a replacement broker is recruited
• d.Converted to a branch office registration under another firm

Section 475.15, F.S., provides that if the license or registration of at least one active broker member is not in force, the registration of the corporation, limited liability company, limited liability partnership, or partnership is canceled automatically during that period of time. No hearing is needed because nothing is being adjudicated; the registration simply lapses by operation of law. The statute does direct the commission to adopt rules allowing a brokerage to register a broker on a temporary emergency basis if the sole broker of a brokerage dies or is unexpectedly unable to remain a broker, which is the narrow relief available.

Section 475.22(1), F.S., requires each active Florida broker to maintain an office consisting of at least:

• a.One enclosed room in a commercially zoned building only
• b.Two enclosed rooms, one of which is reserved for records
• c.One enclosed room having its own street-level public entrance
• d.One enclosed room in a building of stationary construction✓

Section 475.22(1), F.S., states that each active broker shall maintain an office which shall consist of at least one enclosed room in a building of stationary construction. Commercial zoning is not required by the statute; rule 61J2-10.022, F.A.C., expressly allows the required office to be in a residential location if that is not contrary to local zoning ordinances, provided the minimum office requirements are met and the broker's sign is properly displayed. Neither the statute nor the rule requires a second room for records or a dedicated street-level entrance.

At a minimum, which words must appear on a Florida broker's office entrance sign?

• a.Licensed real estate office, or lic. real estate office
• b.Licensed real estate broker, or lic. real estate broker✓
• c.Registered real estate brokerage, or reg. real estate brokerage
• d.Florida real estate broker, or Fla. real estate broker

Section 475.22(1), F.S., requires a sign on or about the entrance of the principal office and each branch office that can be easily observed and read by any person about to enter, containing the broker's name together with any trade name, and it states that at a minimum the words licensed real estate broker or lic. real estate broker must appear. Note where this requirement lives today: rule 61J2-10.024, F.A.C., which used to govern office entrance signs, was repealed effective 3-15-06, so the statute is now the operative source. The other phrasings describe the office or the entity rather than the licensed individual.

Under rule 61J2-10.023, F.A.C., a temporary shelter on a subdivision the broker is selling, where transactions are not closed and no sales associate is permanently assigned, is:

• a.A branch office, so branch registration and the fee are required
• b.Not a branch office, so no branch registration is required✓
• c.A branch office for as long as any model home remains unsold
• d.Exempt from registration only while it is open fewer than 90 days

Rule 61J2-10.023(2), F.A.C., states that a mere temporary shelter on a subdivision being sold by the broker, for the protection of salespersons and customers, at which transactions are not closed and salespersons are not permanently assigned, is not deemed to be a branch office. The rule then supplies the test that decides closer cases: the permanence, use, and character of activities customarily conducted at the office or shelter determine whether it must be registered. There is no 90-day safe harbor and no rule tying branch status to unsold model homes. Section 475.24, F.S., sets the branch registration fee at not more than $50 annually.

Rule 61J2-10.025, F.A.C., requires that every Florida real estate advertisement:

• a.Include the license number of the brokerage firm
• b.Include the full legal name of the listing sales associate
• c.Include the street address of the brokerage principal office
• d.Include the licensed name of the brokerage firm✓

Rule 61J2-10.025(1), F.A.C., requires that all advertising be done in a manner in which reasonable persons would know they are dealing with a real estate licensee, that all real estate advertisements include the licensed name of the brokerage firm, and that no advertisement be fraudulent, false, deceptive, or misleading. License numbers and office addresses are not required by the rule. As for the associate's name, subsection (2) requires only that when the licensee's personal name appears, at the very least the last name must be used in the manner in which it is registered with the commission, which is a floor rather than a demand for the full legal name.

When a Florida licensee advertises on an Internet site, the brokerage firm name must be placed:

• a.Immediately above, below, or adjacent to the point of contact✓
• b.In the page title and in the site's registered domain name
• c.At the top of every page of the site in bold capital letters
• d.Within the first paragraph of every property description

Rule 61J2-10.025(3)(a), F.A.C., requires that when advertising on a site on the Internet, the brokerage firm name required by subsection (1) be placed adjacent to or immediately above or below the point of contact information. The rule defines point of contact information as any means by which to contact the brokerage firm or individual licensee, including mailing addresses, physical street addresses, email addresses, telephone numbers, or facsimile numbers. The requirement is about proximity to contact details, not about domain names, page headers, typography, or property copy, and subsection (3)(b) applies the rest of the advertising rule online as well.

Under rule 61J2-10.026, F.A.C., a Florida real estate team or group name may not include:

• a.The word Team, Group, or the members' own surnames
• b.The word Realty, Properties, or Real Estate✓
• c.The word Sales, Homes, or Neighborhood
• d.The name of the city or the county the team serves

Rule 61J2-10.026(4), F.A.C., permits team or group names to include the words team or group but bars a list of words that suggest the team is a separate brokerage, including agency, associates, brokerage, brokers, company, corporation, corp., inc., LLC, LP, LLP or partnership, properties, property, real estate, and realty, plus any similar word. Geographic terms and words such as sales or homes are not on that list. Subsection (6) adds that the team name may not appear in larger print than the name of the registered brokerage, and subsection (3) requires the broker to maintain a current written record of each team's members at least once monthly.

Rule 61J2-10.034, F.A.C., provides that an individual broker, partnership, or corporation may be registered under:

• a.Up to three trade names, one for each line of business
• b.Any number of trade names disclosed upon the license
• c.No more than one trade name at any given time✓
• d.One trade name for each registered branch office

Rule 61J2-10.034, F.A.C., states that no individual, partnership, or corporation may be registered under more than one trade name. A trade name must be disclosed upon the request for license and placed on the registration or license, and the commission will refuse to issue a license containing a trade name that is the same as the real or trade name of another registrant. The rule also clarifies a point that trips up candidates: the actual name of the individual or entity is not a trade name. Section 475.42(1)(j), F.S., makes it a violation to operate as a broker under a trade name that is not noted in the commission's records.

When a Florida broker and a sales associate establish an independent contractor relationship, chapter 475:

• a.Does not recognize it, so the associate must be a salaried employee
• b.Treats it as employment, and relieves the broker of supervisory duties
• c.Treats it as employment, so neither party is relieved of chapter 475 duties✓
• d.Recognizes it only where the associate holds a broker associate license

Section 475.01(2), F.S., provides that the terms employ, employment, employer, and employee, when used to describe the relationship between a broker and a sales associate, include an independent contractor relationship when the parties intend and establish one, and that the existence of such a relationship shall not relieve either the broker or the sales associate of duties, obligations, or responsibilities under the chapter. The tax and payroll treatment may change, but the regulatory duties do not. Section 475.25(1)(u), F.S., independently makes it a ground for discipline if a broker fails to direct, control, or manage a broker associate or sales associate.

A Florida sales associate who accepts a commission check made payable to the associate personally rather than to the employing broker has violated:

• a.Section 475.42(1)(a), F.S., on operating without a valid active license
• b.Section 475.42(1)(d), F.S., on collecting money in the employer's name✓
• c.Section 475.42(1)(j), F.S., on operating under an unregistered trade name
• d.Section 475.42(1)(b), F.S., on operating for an unregistered employer

Section 475.42(1)(d), F.S., provides that a sales associate may not collect any money in connection with any real estate brokerage transaction, whether as commission, deposit, payment, rental, or otherwise, except in the name of the employer and with the express consent of the employer. Taking the check personally is exactly that violation. The associate in this fact pattern does hold a license and does work for a registered employer, so paragraphs (a) and (b) are not engaged, and paragraph (j) concerns operating as a broker under a trade name that has not been noted in the commission's records.

A Florida sales associate who believes a commission is owed may bring an action for that compensation against:

• a.The broker registered as the associate's employer when the service was rendered✓
• b.The buyer whose purchase generated the disputed commission money
• c.The seller who signed the listing agreement with the brokerage firm
• d.The cooperating brokerage that shared in the transaction proceeds

Section 475.42(1)(d), F.S., states that no real estate sales associate, whether the holder of a valid and current license or not, shall commence or maintain any action for a commission or compensation in connection with a real estate brokerage transaction against any person except a person registered as her or his employer at the time the sales associate performed the act or rendered the service. The associate's contractual and statutory relationship runs to the employing broker alone, which is why suing the seller, the buyer, or the cooperating brokerage is barred no matter how the money actually flowed through the transaction.

Under s. 475.42(1)(c), F.S., a Florida broker may not employ, or continue to employ, as a sales associate any person who:

• a.Does not hold a valid and current broker associate license
• b.Has not completed the 45-hour postlicensure education course
• c.Has not been registered with the brokerage for at least 30 days
• d.Does not hold a valid and current sales associate license✓

Section 475.42(1)(c), F.S., makes it a violation for a broker to employ or continue in employment any person as a sales associate who is not the holder of a valid and current license as a sales associate. The duty is continuing, so a broker who lets an associate keep working after a license lapses violates the paragraph just as surely as one who hires an unlicensed person. The same paragraph adds a useful mechanism: a sales associate license may be issued to a person licensed as an active broker, upon request and surrender of the broker license, without an additional fee.

A Florida brokerage that records commission income only when the money is actually received, and expenses only when they are actually paid, is using:

• a.The accrual method of accounting
• b.The cash method of accounting✓
• c.The installment method of accounting
• d.The percentage-of-completion method

Under the cash method, revenue is recognized when cash is received and expenses when cash is disbursed, which makes the brokerage's books track its bank balance closely and is why many small brokerages choose it. The accrual method instead recognizes commission income when it is earned and expenses when they are incurred, regardless of when money moves, so a closed transaction produces income even if the check has not arrived. The percentage-of-completion method applies to long-term contracts, and the installment method spreads gain over the years payments are received on a sale.

Section 475.5015, F.S., requires a Florida broker to preserve at least one legible copy of the brokerage's books, accounts, and records for at least:

• a.3 years from receipt of entrusted money or execution of the agreement
• b.5 years from receipt of entrusted money or execution of the agreement✓
• c.7 years from receipt of entrusted money or execution of the agreement
• d.2 years from receipt of entrusted money or execution of the agreement

Section 475.5015, F.S., requires each broker to preserve at least one legible copy of all books, accounts, and records pertaining to the brokerage business for at least 5 years from the date of receipt of any money, fund, deposit, check, or draft entrusted to the broker, or, where no funds are entrusted, for at least 5 years from execution of the listing agreement, offer to purchase, rental property management agreement, lease, or other agreement engaging the broker's services. The 2-year figure appears in the same section but with a different trigger: records used as evidence in litigation must be kept 2 years after the conclusion of the action or appeal, and in no case less than the 5 years above.

A Florida broker who personally receives an earnest money deposit must place it in an escrow account no later than the end of the:

• a.Next business day following receipt of the item to be deposited
• b.Tenth business day following receipt of the item to be deposited
• c.Fifth business day following receipt of the item to be deposited
• d.Third business day following receipt of the item to be deposited✓

Rule 61J2-14.008(3), F.A.C., defines immediately, for escrow purposes, as the placement of a deposit in an escrow account no later than the end of the third business day following receipt of the item to be deposited, and it expressly excludes Saturdays, Sundays, and legal holidays from the count of business days. The next-business-day figure belongs to a different licensee: rule 61J2-14.009, F.A.C., gives a sales associate until the end of the next business day to deliver a deposit to the broker. Five and ten business days appear nowhere in the deposit rule, though ten business days is the verification period for deposits placed with a title company or attorney.

A Florida sales associate who receives a binder deposit from a buyer must deliver it to the broker no later than the end of the:

• a.Third business day following receipt of the item to be deposited
• b.Second business day following receipt of the item to be deposited
• c.Next business day following receipt of the item to be deposited✓
• d.Same business day on which the item was actually received

Rule 61J2-14.009, F.A.C., requires every sales associate who receives a deposit to deliver it to the broker or employer no later than the end of the next business day following receipt, with Saturdays, Sundays, and legal holidays excluded. The rule closes the obvious loophole by adding that receipt by a sales associate or any other representative of the brokerage firm constitutes receipt by the broker for purposes of the three-business-day rule in 61J2-14.008(3), F.A.C. So the clock on the broker's deposit obligation starts when the associate takes the check, not when the broker finally sees it.

A Florida broker who deposits escrow money into the brokerage's operating account rather than a separate escrow account has committed:

• a.A violation of the federal appraisal independence requirements
• b.A permissible bookkeeping shortcut if corrected before closing
• c.A violation of the local zoning rules governing home offices
• d.Commingling, which chapter 475 and the FREC rules prohibit✓

Rule 61J2-14.008(2)(a), F.A.C., states that only funds described in the rule shall be deposited in trust or escrow accounts and that no personal funds of any licensee shall be deposited or intermingled with escrowed funds except as allowed by 61J2-14.010(2), F.A.C. Putting entrusted money in the operating account is commingling and exposes client funds to the brokerage's own creditors. Federal appraisal rules govern how property is valued and by whom, zoning governs where an office may sit, and there is no shortcut exception: the narrow allowance is for a small amount of the broker's own money left in the escrow account, not the reverse.

When a Florida broker acts as the escrow holder for a transaction, the broker:

• a.Holds the deposit in the brokerage escrow account until closing✓
• b.May apply the escrow funds to brokerage operating expenses if repaid
• c.Must use a title company instead whenever an attorney is involved
• d.Must deliver the deposit to the seller when the contract is signed

Rule 61J2-14.010(1), F.A.C., requires a broker who receives a deposit to place it immediately in an insured escrow or trust account at a bank, savings and loan association, trust company, credit union, or title company having trust powers, and the broker must be a signatory on all escrow accounts. Rule 61J2-14.011, F.A.C., adds that a broker shall not deliver the deposit to the other party until the transaction is closed, except as specifically directed or agreed by the depositor. A title company or attorney may hold the funds instead, but that is an option rather than a requirement, and escrow money is never available for brokerage expenses.

When a Florida broker receives conflicting demands for escrowed funds, the broker must notify FREC in writing and institute a settlement procedure within:

• a.15 business days to notify, and 30 business days to institute a procedure✓
• b.10 business days to notify, and 30 business days to institute a procedure
• c.15 business days to notify, and 45 business days to institute a procedure
• d.30 business days to notify, and 60 business days to institute a procedure

Rule 61J2-10.032(1)(a), F.A.C., requires a broker who receives conflicting demands for trust funds to provide written notification to the commission within 15 business days of the last party's demand and to institute one of the settlement procedures set forth in s. 475.25(1)(d)1., F.S., within 30 business days after the last demand. Paragraph (1)(b) applies the same two periods when the broker has a good faith doubt as to who is entitled to the funds, running from the date the doubt arose. Notice comes first, putting the regulator on record while the dispute is worked out; releasing the funds unilaterally or waiting for a lawsuit is not an option.

Which of the following is an authorized escrow dispute settlement procedure for a Florida broker?

• a.Requesting an escrow disbursement order from the commission✓
• b.Retaining the funds if no party claims them within 90 days
• c.Letting the listing sales associate decide who should receive them
• d.Paying the funds to whichever party demanded them first in writing

Section 475.25(1)(d)1., F.S., authorizes exactly four escape procedures: requesting an escrow disbursement order from the commission, submitting the matter to arbitration with the consent of all parties, seeking adjudication by a court through interpleader or otherwise, and submitting the matter to mediation with the written consent of all parties, with mediation to be completed within 90 days of the last demand. If the broker promptly employs one of these and abides by the resulting order, no administrative complaint may be filed for failure to account for the escrowed property. Nothing in the statute lets a broker keep, delegate, or unilaterally award disputed funds.

Rule 61J2-14.010(2), F.A.C., permits a Florida broker to keep personal or brokerage funds in escrow accounts up to:

• a.$5,000 per sales escrow account and $1,000 per property management account
• b.$1,000 per sales escrow account and $1,000 per property management account
• c.$1,000 per sales escrow account and $5,000 per property management account✓
• d.$500 per sales escrow account and $2,500 per property management account

Rule 61J2-14.010(2), F.A.C., allows a broker to place and maintain up to $1,000 of personal or brokerage funds per sales escrow account and up to $5,000 per property management escrow account, and states that personal or brokerage funds in any escrow account shall not exceed $5,000 per account. The allowance exists so the account can absorb bank service charges without going negative, which is why the property management figure is the larger of the two. The same subsection gives a broker a reasonable amount of time to correct escrow errors where no shortage exists, defined as 30 days from the date the last reconciliation was or should have been performed.

Rule 61J2-14.012, F.A.C., requires a Florida broker to compare total trust liability with the reconciled bank balances of all trust accounts:

• a.Once weekly, in a written statement the broker reviews, signs, and dates
• b.Once monthly, in a written statement the broker reviews, signs, and dates✓
• c.Once quarterly, in a written statement the broker reviews, signs, and dates
• d.Once annually, in a written statement a certified public accountant signs

Rule 61J2-14.012(2), F.A.C., requires that once monthly a broker cause to be made a written statement comparing the broker's total liability with the reconciled bank balances of all trust accounts, and that the broker review, sign, and date it. Trust liability is defined as the sum of all deposits received, pending, and being held by the broker at any point in time. The rule lists the minimum contents, including account numbers and balances, deposits in transit, outstanding checks by date and number, and an itemized list of trust liability. No outside accountant is required, and subsection (3) requires an explanation and corrective action whenever liability and bank balances disagree.

Before a Florida broker may place escrow funds in an interest-bearing account, rule 61J2-14.014, F.A.C., requires:

• a.Written permission of all parties as to the account, recipient, and timing✓
• b.An escrow disbursement order from the commission approving the account
• c.A written opinion of the brokerage's attorney approving the arrangement
• d.Written permission of the buyer alone, because the buyer supplied the funds

Rule 61J2-14.014(1), F.A.C., allows a broker to place escrow funds in an interest-bearing account, but the placement, the designation of the party who is to receive the interest, and the time the earned interest must be disbursed all require the written permission of all the parties to the transaction. The account must be insured and located in a depository doing business in Florida. Interest is a benefit somebody will receive, so the buyer cannot authorize it alone. An escrow disbursement order is a dispute remedy under s. 475.25(1)(d)1., F.S., not a prerequisite to opening an account, and no attorney opinion is called for.

Real estate brokers in Florida are regulated under chapter 475, part I, Florida Statutes, by:

• a.The Florida Bar, through its real property law section
• b.The county property appraiser for the county of the office
• c.The Florida Real Estate Commission, within the department✓
• d.The Florida Department of Revenue, through its tax division

Florida real estate licensing is governed by chapter 475, part I, F.S., and rule chapter 61J2, F.A.C., and s. 475.01(1)(c), F.S., defines commission to mean the Florida Real Estate Commission, which sits within the Department of Business and Professional Regulation. Section 475.021, F.S., assigns the recordkeeping, examination, legal, and investigative services to the Division of Real Estate. The Florida Bar regulates attorneys, a separate profession with its own admission and discipline. The county property appraiser values real property for tax purposes, and the Department of Revenue administers state taxes, including the documentary stamp tax that touches real estate transactions.

Under s. 475.25(1), F.S., the maximum administrative fine FREC may impose for each count or separate offense is:

• a.$5,000, and a license may be suspended for up to 10 years✓
• b.$1,000, and a license may be suspended for up to 10 years
• c.$5,000, and a license may be suspended for up to 5 years
• d.$10,000, and a license may be suspended for up to 3 years

Section 475.25(1), F.S., authorizes the commission to deny an application, place a licensee on probation, suspend a license for a period not exceeding 10 years, revoke a license, impose an administrative fine not to exceed $5,000 for each count or separate offense, and issue a reprimand, and it permits any or all of these in combination. Because the cap is per count, a multi-count complaint can produce a total far above $5,000. Rule 61J2-24.001(1), F.A.C., sets out the guideline range and orders the penalties from lowest to highest as letter of concern, reprimand, fine, probation, suspension, and revocation or denial.

In Florida, operating as a real estate broker or sales associate without a valid and current active license is:

• a.A misdemeanor of the first degree under s. 475.42(1)(a), F.S.
• b.A misdemeanor of the second degree under s. 475.42(1)(a), F.S.
• c.A noncriminal violation punishable by administrative fine alone
• d.A felony of the third degree under s. 475.42(1)(a), F.S.✓

Section 475.42(1)(a), F.S., provides that a person may not operate as a broker or sales associate without holding a valid and current active license, and that any person who violates the paragraph commits a felony of the third degree, punishable as provided in s. 775.082 or s. 775.083. That is the most serious criminal classification in the section, and it reflects the public protection rationale for licensure. Section 475.42(2), F.S., supplies the default for the rest of the section: any person who violates the other provisions of subsection (1) is guilty of a misdemeanor of the second degree, except where a different punishment is prescribed.

A Florida licensee who pleads nolo contendere to a felony must inform the commission in writing within:

• a.10 days after entering the plea to the felony charge
• b.60 days after entering the plea to the felony charge
• c.30 days after entering the plea to the felony charge✓
• d.30 days after the court imposes a sentence for the felony

Section 475.25(1)(p), F.S., makes it a ground for discipline to fail to inform the commission in writing within 30 days after pleading guilty or nolo contendere to, or being convicted or found guilty of, any felony. The trigger is the plea or the finding of guilt, not sentencing, so a licensee who waits for the sentencing hearing has already missed the deadline. The reporting duty is independent of whatever discipline the underlying conduct may draw, which means a licensee can be disciplined for the failure to report even where the felony itself is unrelated to real estate practice.

Payments from the Florida Real Estate Recovery Fund are limited to:

• a.$50,000 per claim and $250,000 in the aggregate against one licensee
• b.$50,000 per claim and $150,000 in the aggregate against one licensee✓
• c.$25,000 per claim and $150,000 in the aggregate against one licensee
• d.$100,000 per claim and $300,000 in the aggregate against one licensee

Section 475.484(1)(a), F.S., caps recovery at the unsatisfied portion of the claimant's judgment or $50,000, whichever is less, and only to the extent the judgment reflects actual or compensatory damages, with treble damages, court costs, attorney's fees, and interest generally excluded. Section 475.484(4), F.S., caps payments based on judgments against any one broker or sales associate at $150,000 in the aggregate. A third cap sits between them in s. 475.484(3), F.S.: claims arising out of the same transaction are limited to $50,000 in the aggregate regardless of the number of claimants or parcels involved.

When the Florida Real Estate Recovery Fund pays a claim on a judgment against a licensee, that licensee's license is:

• a.Automatically revoked on the date of payment, with no further action needed
• b.Suspended only after a separate disciplinary hearing before the commission
• c.Placed on probation until the licensee has repaid the fund with interest
• d.Automatically suspended on the date of payment, with no further action needed✓

Section 475.484(7), F.S., provides that upon payment of any amount from the fund in satisfaction of a claim described in s. 475.482(1), F.S., the license of the broker or sales associate is automatically suspended on the date of payment, and it states expressly that no further administrative action is necessary. The license may not be reinstated until the licensee has repaid the fund in full plus interest. The subsection also closes an obvious escape route: a discharge in bankruptcy does not relieve a licensee of these penalties and disabilities, except to the extent the provision would conflict with 11 U.S.C. s. 525.

A claim against the Florida Real Estate Recovery Fund must be made within 2 years of the act or its discovery, and in no event more than:

• a.4 years after the date of the act giving rise to the claim✓
• b.3 years after the date of the act giving rise to the claim
• c.5 years after the date of the act giving rise to the claim
• d.6 years after the date of the act giving rise to the claim

Section 475.483(1)(c), F.S., requires that a claim for recovery be made within 2 years from the time of the act giving rise to the claim, or within 2 years from the time the act is discovered or should have been discovered with the exercise of due diligence, and it adds an outer limit: in no event may a claim be made more than 4 years after the date of the act. The 5-year figure belongs to a different clock, the deadline in s. 475.25(5), F.S., for filing an administrative complaint against a licensee. Eligibility also requires a final civil judgment, notice to the commission, and an unsatisfied writ of execution.