Florida Real Estate Broker Exam — All Questions

A Florida broker's principal role at a residential closing is to:

• a.Prepare the deed and the closing disclosure for both of the parties
• b.Certify to the buyer that the seller's title is marketable and clear
• c.Decide which party is legally entitled to the escrow deposit money
• d.See that the parties meet their contract obligations and funds are accounted for✓

The broker coordinates: assembling the documents the contract calls for, tracking contingency deadlines, communicating with the closing agent and lender, attending the closing, and accounting for the escrowed funds the brokerage holds. Preparing deeds and rendering opinions on the marketability of title are the practice of law and belong to the attorney or closing agent. Deciding entitlement to a disputed deposit is precisely what a broker may not do: s. 475.25(1)(d)1., F.S., requires the broker to notify the commission and institute one of four settlement procedures instead of choosing between the parties.

Which deed conveys Florida real property with covenants warranting title only against defects arising during the grantor's own ownership?

• a.A bargain and sale deed
• b.A general warranty deed
• c.A quitclaim deed
• d.A special warranty deed✓

A special warranty deed warrants only that the grantor has done nothing to impair the title during the grantor's period of ownership, leaving earlier defects uncovered, which is why it is common in transfers by fiduciaries and institutional sellers. A general warranty deed warrants the title against all defects arising at any time in the chain, and s. 689.02, F.S., prescribes the statutory form of warranty deed used in Florida. A quitclaim deed conveys whatever interest the grantor may have, with no warranties at all, and is typically used to clear clouds on title. A bargain and sale deed implies ownership but carries no warranty against encumbrances.

Under chapter 712, F.S., Florida's Marketable Record Title Act, a person has marketable record title when the public records show a root of title of record for at least:

• a.20 years
• b.50 years
• c.40 years
• d.30 years✓

Section 712.02, F.S., provides that any person having the legal capacity to own land in this state who, alone or with predecessors in title, has been vested with an estate in land of record for 30 years or more shall have a marketable record title, free and clear of all claims except the matters set forth as exceptions in s. 712.03, F.S. The act shortens title searches by extinguishing most older interests that are not properly preserved. Those statutory exceptions matter in practice, because interests such as certain easements, rights of persons in possession, and properly filed notices survive the 30-year cutoff.

Under s. 695.01, F.S., an unrecorded Florida deed is:

• a.Void between the parties and against any later purchaser as well
• b.Good against everyone as soon as the grantee takes possession
• c.Good between the parties but not against a purchaser without notice✓
• d.Void unless it is recorded within 30 days after it is delivered

Section 695.01(1), F.S., provides that no conveyance, transfer, or mortgage of real property, nor any lease for a term of 1 year or longer, shall be good and effectual in law or equity against creditors or subsequent purchasers for a valuable consideration and without notice unless it is recorded according to law. The deed still binds the grantor and grantee between themselves; recording protects against third parties. That is why the statute makes notice decisive rather than possession or a filing deadline, and Florida imposes no 30-day recording requirement for validity, although prompt recording is the only way to obtain the protection.

Under the federal TRID rules, a residential borrower must receive the Closing Disclosure no later than:

• a.3 business days after consummation of the loan
• b.3 business days before consummation of the loan✓
• c.1 business day before consummation of the loan
• d.7 business days after the loan application is submitted

The TILA-RESPA Integrated Disclosure rules require the creditor to ensure the consumer receives the Closing Disclosure no later than three business days before consummation, giving the borrower time to compare final terms against the earlier estimate. Certain changes after delivery, such as an increase in the annual percentage rate beyond tolerance, a change in loan product, or the addition of a prepayment penalty, restart the three-day waiting period. Do not confuse this with the Loan Estimate, which must be delivered or placed in the mail within three business days after the creditor receives the consumer's application.

Florida documentary stamp tax on a deed is imposed at the rate of:

• a.35 cents on each $100 of the consideration
• b.55 cents on each $100 of the consideration
• c.70 cents on each $100 of the consideration✓
• d.2 mills on each dollar of the consideration

Section 201.02(1)(a), F.S., imposes the tax on deeds and other instruments conveying an interest in real property at 70 cents on each $100 of the consideration, and where the full consideration is not shown on the face of the instrument the tax applies to each $100 or fractional part. The other figures are real Florida rates attached to different instruments, which is what makes them tempting: 35 cents on each $100 is the tax on promissory notes and written obligations under s. 201.08, F.S., and 2 mills on each dollar is the nonrecurring intangible tax on mortgages under s. 199.133, F.S.

Florida documentary stamp tax on a promissory note is imposed at the rate of:

• a.2 mills on each dollar of the indebtedness
• b.70 cents on each $100 of the indebtedness
• c.45 cents on each $100 of the indebtedness
• d.35 cents on each $100 of the indebtedness✓

Section 201.08(1)(a), F.S., imposes the tax on promissory notes, nonnegotiable notes, and written obligations to pay money at 35 cents on each $100 or fraction of the indebtedness, and it caps the tax on such a document at $2,450. Paragraph (1)(b) applies the same rate to mortgages and other evidences of indebtedness filed or recorded in this state. Because a financed purchase generates both a deed and a note, both taxes are typically due at a Florida closing: 70 cents per $100 on the deed under s. 201.02, F.S., and 35 cents per $100 on the note, plus the separate intangible tax on the mortgage.

Florida's nonrecurring intangible tax on a new mortgage securing Florida real property is imposed at:

• a.2 mills on each dollar of the obligation✓
• b.2 mills on each $100 of the obligation
• c.70 cents on each $100 of the obligation
• d.35 cents on each $100 of the obligation

Section 199.133(1), F.S., imposes a one-time nonrecurring tax of 2 mills on each dollar of the just valuation of all notes, bonds, and other obligations for payment of money secured by mortgage, deed of trust, or other lien upon real property situated in this state. Two mills is $0.002 per dollar, which works out to $2 per $1,000 of the obligation, so a $200,000 mortgage carries $400 of this tax. Section 199.133(2), F.S., limits the tax to the extent the obligation is secured by Florida real property. The 70-cent and 35-cent rates belong to the documentary stamp taxes on deeds and notes respectively.

A Florida home sells for $285,000 and the buyer assumes no existing debt. The documentary stamp tax on the deed is:

• a.$1,995.00✓
• b.$1,425.00
• c.$997.50
• d.$2,850.00

Divide the consideration by 100 to get the number of taxable units, then multiply by the deed rate of 70 cents: $285,000 divided by 100 is 2,850 units, and 2,850 multiplied by $0.70 is $1,995.00. The $997.50 figure applies the 35-cent note rate instead of the 70-cent deed rate, which is the single most common error on this calculation. The $2,850.00 figure stops after counting the units and forgets to apply any rate at all. The $1,425.00 figure uses a 50-cent rate that does not exist in s. 201.02, F.S. Remember that a fractional part of $100 is taxed as a full unit.

When unpaid annual property taxes are prorated at a Florida closing, the seller is charged with:

• a.The entire tax year, regardless of the actual closing date
• b.Nothing, because Florida property taxes are always the buyer's
• c.Only the buyer's taxes for the coming year, as a courtesy credit
• d.The portion of the tax year during which the seller owned the property✓

Proration divides a recurring cost as of the closing date so that each party bears the expense for the period of actual ownership. The seller is charged for the portion of the tax year up to closing and the buyer takes over from there, with local custom deciding whether the day of closing itself goes to the seller or the buyer. Because Florida real estate taxes are paid in arrears, meaning the bill for the current year is not payable until November, the seller's share is normally handled as a debit to the seller and a corresponding credit to the buyer, who will later pay the full bill.

A Florida sale closes on April 30. Unpaid annual taxes are $3,650, prorated on a 365-day year with the day of closing charged to the seller. The seller's share is:

• a.$1,190
• b.$1,210
• c.$1,200✓
• d.$2,450

First find the daily rate: $3,650 divided by 365 days is exactly $10 per day. Then count the days from January 1 through April 30 inclusive, since the day of closing is charged to the seller: 31 days in January, 28 in February, 31 in March, and 30 in April, which totals 120 days. Multiplying 120 days by $10 gives $1,200. The $1,190 figure results from excluding the closing day and counting only 119 days, and $1,210 from counting one day too many. The $2,450 figure has no basis in the arithmetic and would exceed two-thirds of the annual bill for a sale that closed a third of the way through the year.

On a Florida closing statement, unpaid real estate taxes prorated to the closing date normally appear as:

• a.A credit to the seller and a debit to the buyer
• b.A debit to the seller and a credit to the buyer✓
• c.A debit to both the seller and the buyer alike
• d.A credit to both the seller and the buyer alike

Because Florida real estate taxes are paid in arrears, the tax bill covering the seller's period of ownership has not yet been paid at closing, and the buyer will eventually pay the full year. The seller therefore owes the buyer for the seller's share, which is recorded as a debit to the seller and a matching credit to the buyer. The mirror image occurs with items the seller has prepaid, such as an annual association assessment, which produce a credit to the seller and a debit to the buyer. A prorated item is always entered on both sides of the statement, one party debited and the other credited, never both the same way.