Florida Real Estate Sales Associate — All Questions

For a real estate contract to be enforceable, the Statute of Frauds generally requires that it be:

• a.In writing and signed by the party to be charged✓
• b.Notarized by a real estate licensee
• c.Approved by the local zoning board
• d.Recorded with the county before signing

The Statute of Frauds requires contracts for the sale of real estate to be in writing and signed to be enforceable. This protects parties from fraudulent claims based on oral agreements. Certain short-term leases may be exceptions, but purchase agreements must be written.

The essential elements of a valid contract generally include offer and acceptance, consideration, legal purpose, and:

• a.A real estate license held by both parties
• b.A government subsidy
• c.A recorded deed
• d.Competent parties with legal capacity✓

A valid contract requires competent parties, mutual assent (offer and acceptance), consideration, and a lawful object. Parties must have legal capacity, meaning they are of legal age and sound mind. Missing an essential element can make a contract void or voidable.

When a seller responds to a buyer's offer by changing the price, this response is legally a:

• a.Counteroffer, which rejects the original offer✓
• b.Novation of an existing contract
• c.Unilateral contract
• d.Binding acceptance of the original offer

A counteroffer changes the terms of the original offer and thereby rejects it, creating a new offer that the other party may accept or reject. The original offer is no longer available for acceptance once countered. Negotiations often involve a series of offers and counteroffers.

A contract in which only one party makes a promise, such as an option to purchase, is a:

• a.Bilateral contract
• b.Unilateral contract✓
• c.Voidable contract
• d.Executed contract

In a unilateral contract, one party makes a promise in exchange for the other party's performance, rather than a mutual exchange of promises. An option is a common example: the seller promises to keep the offer open, but the buyer is not obligated to buy. A bilateral contract, by contrast, involves promises by both parties.

An 'executory' contract is one in which:

• a.No consideration was ever exchanged
• b.All obligations have already been fully performed
• c.The contract has been declared void by a court
• d.Something remains to be done by one or both parties✓

An executory contract is one that has been formed but not yet fully performed, such as a signed purchase agreement before closing. Once all parties complete their obligations, it becomes an executed contract. This distinction matters for determining remaining duties.

A contingency in a purchase contract, such as a financing or inspection contingency, functions to:

• a.Allow a party to cancel or renegotiate if a specified condition is not met✓
• b.Waive the buyer's right to inspect
• c.Transfer title before closing
• d.Automatically increase the purchase price

A contingency is a condition that must be satisfied for the contract to proceed, and it protects a party by allowing cancellation or renegotiation if the condition fails. Common examples include financing, appraisal, and inspection contingencies. If a contingency is not met, the protected party may usually withdraw without penalty.

The remedy of 'specific performance' in a real estate contract dispute means:

• a.A court orders the breaching party to complete the sale as agreed✓
• b.The broker forfeits the entire commission
• c.The buyer receives triple the deposit as damages
• d.The contract is automatically canceled with no consequences

Specific performance is an equitable remedy in which a court orders a party to perform the contract as agreed, often available because each parcel of real estate is unique. A buyer may seek it to compel a reluctant seller to convey title. It is an alternative to monetary damages.

'Liquidated damages' in a purchase contract typically refers to:

• a.The broker's guaranteed commission
• b.The buyer's mortgage interest for the year
• c.An amount, often the earnest money, agreed in advance as compensation if the buyer defaults✓
• d.A penalty imposed by the state on the seller

Liquidated damages are a predetermined amount the parties agree the seller may keep if the buyer defaults, commonly the earnest money deposit. This provides certainty and avoids litigation over actual damages. The amount must be a reasonable estimate, not a punitive penalty.

When a new party is substituted for an original party to a contract, with the consent of all parties, this is called:

• a.Novation✓
• b.Assignment
• c.Rescission
• d.Estoppel

Novation is the substitution of a new party or a new contract for an existing one, releasing the original party from liability, and it requires the consent of all parties. It differs from assignment, in which the original party may remain secondarily liable. Novation is common in loan assumptions where the lender releases the original borrower.

A listing agreement in which the broker earns a commission only if that broker procures the buyer, but the seller may also sell independently without owing a commission, is a(n):

• a.Exclusive agency listing✓
• b.Net listing guaranteed by law
• c.Exclusive right to sell listing
• d.Open listing that excludes the seller

In an exclusive agency listing, one broker is authorized, but the seller retains the right to sell the property themselves without paying a commission. This differs from an exclusive right to sell, where the broker earns a commission regardless of who finds the buyer. Both are common listing types.

Under an 'exclusive right to sell' listing, the listing broker earns a commission:

• a.Only if the seller finds the buyer
• b.Regardless of who procures the buyer during the listing period✓
• c.Only if the broker personally finds the buyer
• d.Never, because commissions are illegal

In an exclusive right to sell listing, the listing broker is entitled to a commission if the property sells during the listing period no matter who finds the buyer, including the seller. It offers the broker the strongest commission protection. This is the most common residential listing type.

A 'net listing,' which is discouraged or restricted in many jurisdictions, is one in which:

• a.The broker keeps any amount above a net price the seller specifies✓
• b.The buyer and seller split the commission
• c.The broker receives no compensation at all
• d.The seller pays a flat government fee

In a net listing, the seller sets a net amount they want to receive, and the broker keeps any sale proceeds above that figure as commission. This arrangement creates a conflict of interest and is prohibited or restricted in many states. Licensees should be cautious and follow state law.

If a buyer and seller mutually agree to cancel their contract and return to their pre-contract positions, this is called:

• a.Specific performance
• b.Novation
• c.Assignment
• d.Rescission✓

Rescission is the cancellation of a contract that returns the parties to their original positions, as if the contract had not been made. It can be mutual or, in some cases, granted by a court. Any consideration exchanged is typically returned.

The transfer of one's rights and obligations under a contract to another person is called:

• a.Subordination
• b.Foreclosure
• c.Assignment✓
• d.Escheat

Assignment is the transfer of contractual rights (and often duties) from one party to another. Unless the contract prohibits it, many real estate contracts are assignable. The original party may remain secondarily liable unless released through novation.

A contract signed by a minor is generally considered:

• a.A criminal offense
• b.Fully enforceable against the minor
• c.Automatically void from the start in all cases
• d.Voidable at the option of the minor✓

Contracts entered into by minors are generally voidable at the minor's option, meaning the minor may disaffirm the contract. This protects those who lack full legal capacity. A void contract, by contrast, has no legal effect from the beginning.

'Time is of the essence' in a real estate contract means:

• a.The closing can occur at any convenient time
• b.Only the seller's dates matter
• c.Deadlines in the contract must be strictly met✓
• d.The contract has no expiration

A 'time is of the essence' clause makes the stated deadlines binding and strictly enforceable, so failing to perform on time can be a breach. Without such a clause, courts may allow reasonable extensions. This clause is common in purchase agreements to keep transactions on schedule.

An option contract gives the holder (optionee) the:

• a.Obligation to purchase the property immediately
• b.Right, but not the obligation, to buy within a set time and price✓
• c.Right to occupy the property rent-free forever
• d.Power to change the property's zoning

An option contract gives the optionee the right, but not the obligation, to buy (or lease) property on set terms within a specified period. The optionor (owner) is bound to keep the offer open in exchange for consideration. If the option is not exercised, it simply expires.

Which of the following typically makes a contract 'void' rather than merely voidable?

• a.It requires performance of an illegal act✓
• b.One party was a minor
• c.One party later changes their mind
• d.One party was induced by a misrepresentation

A contract with an illegal purpose or object is void, meaning it has no legal effect and cannot be enforced by either party. Voidable contracts, by contrast, are valid until one party elects to disaffirm, as with a minor's contract or one induced by fraud. The illegality of the object is a fundamental defect.

In most residential purchase contracts, the earnest money deposit is:

• a.Kept by the broker as a nonrefundable fee in all cases
• b.Paid directly to the county as a tax
• c.Applied toward the purchase price or closing costs at closing✓
• d.Returned to the buyer even after a buyer default

Earnest money is credited toward the buyer's purchase price or closing costs when the transaction closes. If the buyer defaults without a valid contingency, the seller may be entitled to keep it as liquidated damages. Its handling depends on the contract terms and whether contingencies are met.

A 'meeting of the minds,' essential to contract formation, refers to:

• a.Mutual agreement by both parties to the same terms✓
• b.Approval by the homeowners' association
• c.The buyer and broker agreeing on commission
• d.A required in-person meeting at the courthouse

A meeting of the minds, or mutual assent, means both parties understand and agree to the essential terms of the contract. It is shown through a valid offer and acceptance. Without genuine mutual agreement, no enforceable contract is formed.

Under Florida law, a deed conveying real property generally must be signed by the grantor in the presence of:

• a.Two subscribing witnesses✓
• b.No witnesses, only a notary
• c.The county property appraiser
• d.The buyer's real estate broker

Florida Statutes require a deed to be signed by the grantor in the presence of two subscribing witnesses. This witnessing requirement is in addition to the notary acknowledgment needed for recording.

In a deed, the party who conveys the ownership interest is the:

• a.Grantor✓
• b.Grantee
• c.Trustee
• d.Devisee

The grantor is the person conveying the interest, and the grantee is the one receiving it. Remembering that the grantor 'gives' helps keep the terms straight.

Which deed offers the buyer the greatest protection by fully warranting title against all defects, even those arising before the grantor owned the property?

• a.Special warranty deed
• b.Quitclaim deed
• c.General warranty deed✓
• d.Bargain and sale deed

A general warranty deed contains the full set of covenants and warrants title against all defects, including those predating the grantor's ownership. It gives the grantee the strongest protection.

A special warranty deed differs from a general warranty deed because it warrants:

• a.Only the accuracy of the legal description
• b.Nothing at all about the title
• c.Only against defects arising during the grantor's ownership✓
• d.Against every defect since the beginning of the chain of title

A special warranty deed limits the grantor's warranties to claims arising during the grantor's own period of ownership. Defects predating the grantor are not covered.

A quitclaim deed is most commonly used to:

• a.Transfer personal property only
• b.Guarantee marketable title to the buyer
• c.Convey whatever interest the grantor may have and clear clouds on title✓
• d.Provide the strongest possible warranties in all cases under Florida law in every transaction

A quitclaim deed conveys only whatever interest the grantor holds, with no warranties. It is frequently used to remove clouds on title, such as a possible claim by a former spouse.

A deed that implies the grantor holds an interest but contains no warranties of title is a:

• a.Grant deed with full covenants
• b.General warranty deed
• c.Special warranty deed
• d.Bargain and sale deed✓

A bargain and sale deed implies that the grantor owns the property but does not warrant against encumbrances unless language is added. It offers less protection than a warranty deed.

The covenant of seizin in a warranty deed assures the grantee that the grantor:

• a.Will pay the property taxes forever
• b.Guarantees the property's future value in all cases
• c.Has never lived on the property
• d.Owns the property and has the right to convey it✓

The covenant of seizin promises that the grantor actually owns the estate being conveyed and has the right to transfer it. It is one of the basic covenants in a general warranty deed.

The covenant of quiet enjoyment in a deed protects the grantee against:

• a.Ordinary wear and tear of the home in all cases under Florida law in every transaction
• b.Noisy neighbors near the property
• c.Disturbance by a person holding a superior or lawful claim to title✓
• d.Increases in the property tax rate

The covenant of quiet enjoyment assures the grantee will not be evicted or disturbed by someone with a superior lawful title claim. It concerns legal title, not literal noise.

The clause in a deed beginning 'to have and to hold,' which defines the extent of ownership granted, is the:

• a.Granting clause
• b.Habendum clause✓
• c.Acceleration clause
• d.Defeasance clause

The habendum clause follows the granting clause and defines the quantity and type of estate the grantee receives. Its traditional wording is 'to have and to hold.'

The words of conveyance in a deed, such as 'grants and conveys,' appear in the:

• a.Granting clause✓
• b.Habendum clause
• c.Reddendum clause
• d.Testimonium clause

The granting clause contains the operative words showing intent to transfer, such as 'grants, bargains, and sells.' It identifies the parties and states that a conveyance is being made.

For title to pass by deed, the deed must be:

• a.Delivered by the grantor and accepted by the grantee✓
• b.Recorded before it can be signed
• c.Held by the grantor until death
• d.Approved by the local zoning board in all cases under Florida law

A deed transfers title only when it is delivered with intent to convey and accepted by the grantee. Recording is not required for a valid transfer, though it protects against later claims.

A legal description that identifies a parcel by referring to a recorded plat map using a lot and block number is the:

• a.Street address method
• b.Metes and bounds method
• c.Lot and block (recorded plat) method✓
• d.Government rectangular survey method

The lot and block, or recorded plat, method describes property by reference to a subdivision map filed in the public records. It is common in platted residential subdivisions.

The type of consideration in a deed described as love and affection, rather than money, is called:

• a.Nominal financing
• b.Liquidated consideration
• c.Valuable consideration
• d.Good consideration✓

Good consideration is based on affection or a nonmonetary motive, such as a gift between family members. Valuable consideration, by contrast, is money or something of measurable worth.

Recording a deed in the public records primarily serves to:

• a.Transfer title, which cannot occur without recording in all cases under Florida law
• b.Set the property's assessed value for taxes
• c.Give constructive notice of the owner's interest and establish priority✓
• d.Guarantee the property is free of all liens

Recording provides constructive notice to the world of the grantee's interest and helps establish priority over later claims. It protects the owner even though delivery, not recording, actually transfers title.

A title that is reasonably free from doubt, defects, and undisclosed encumbrances, so a buyer would accept it, is called:

• a.Equitable title
• b.Marketable title✓
• c.Color of title
• d.Clouded title

Marketable title is title a reasonable buyer would accept without fear of litigation, being free of serious defects and undisclosed liens. Contracts commonly require the seller to convey marketable title.

The main purpose of an owner's title insurance policy is to:

• a.Guarantee the property will rise in value in all cases under Florida law in every transaction without exception
• b.Insure the loan against borrower default
• c.Protect the owner against losses from covered title defects that existed before the policy date✓
• d.Cover physical damage from fire or storms

Owner's title insurance protects against losses from covered defects in title that predate the policy, such as forged deeds or undisclosed liens. It differs from hazard insurance, which covers physical damage.

A defect or claim that impairs an owner's title, which may be removed by a quitclaim deed or a quiet-title suit, is called a:

• a.Cloud on title✓
• b.Habendum defect
• c.Marketable title
• d.Covenant of seizin

A cloud on title is an apparent claim or encumbrance that may impair marketability. It can often be cleared by obtaining a quitclaim deed or by bringing a quiet-title action.

A lease of real property for a term longer than one year generally must be in writing to be enforceable because of the:

• a.Doctrine of laches
• b.Parol evidence rule
• c.Statute of Frauds✓
• d.Statute of Limitations

The Statute of Frauds requires certain contracts, including leases longer than one year and sales of real estate, to be in writing. This helps prevent fraudulent claims based on oral agreements.

In contract law, 'consideration' refers to:

• a.The buyer's real estate agent
• b.A government permit to build
• c.A required notarized signature in all cases under Florida law in every transaction
• d.Something of legal value that each party bargains for and exchanges✓

Consideration is the bargained-for exchange of value, such as money for a promise to convey. It is one of the essential elements needed to form a valid, enforceable contract.

If an offeror dies before the offeree accepts a purchase offer, the offer is generally:

• a.Binding on the heirs
• b.Automatically accepted
• c.Converted into an option
• d.Terminated✓

An offer is generally terminated by the death or incapacity of the offeror before acceptance. Because no contract has yet formed, there is nothing binding on the estate.

A financing contingency in a purchase contract protects the buyer by allowing cancellation if:

• a.The seller finds a higher offer
• b.The buyer cannot obtain the specified loan by the deadline✓
• c.Interest rates rise anywhere in the country
• d.The buyer simply changes their mind for any reason in all cases

A financing contingency lets the buyer cancel and typically recover the deposit if they cannot secure the described loan within the stated time. It ties the obligation to obtaining financing.

An appraisal contingency in a contract generally allows the buyer to renegotiate or cancel if:

• a.The seller repaints the home
• b.Property taxes are paid in arrears
• c.The buyer's agent changes brokerages in all cases under Florida law
• d.The property appraises below the agreed purchase price✓

An appraisal contingency protects the buyer when the appraised value comes in below the contract price. The buyer may renegotiate, pay the difference, or cancel per the contract terms.

Under a typical inspection contingency, the buyer generally has the right to:

• a.Waive the seller's duty to disclose defects
• b.Force the seller to lower the price by law
• c.Inspect the property and cancel or seek repairs within a set period✓
• d.Occupy the property before closing rent-free in all cases under Florida law

An inspection contingency gives the buyer a defined period to investigate the property's condition and to cancel or negotiate based on findings. It shifts investigation risk to the inspection window.

Under the Florida 'AS IS' residential contract, during the inspection period the buyer may:

• a.Force the seller to complete all requested repairs in all cases under Florida law in every transaction
• b.Never cancel once the contract is signed
• c.Extend the closing indefinitely without consent
• d.Cancel for any reason and get the deposit back, while the seller is not required to make repairs✓

The Florida AS IS Residential Contract lets the buyer cancel during the inspection period and recover the deposit, but the seller has no obligation to repair. The buyer accepts the property in its existing condition if they proceed.

The 'effective date' of a Florida purchase contract is generally the date:

• a.The property is first listed for sale in all cases under Florida law in every transaction
• b.The last party signs and communicates acceptance of the final terms✓
• c.The buyer is pre-approved for a loan
• d.The deed is recorded after closing

The effective date is when the last party signs and delivers acceptance, and it starts the clock on contract deadlines. Correctly identifying it is critical because time periods run from that date.

Under Florida rules, a broker who receives an earnest money deposit must generally place it into an escrow account no later than the end of the:

• a.Third business day after receiving the funds✓
• b.Thirtieth business day after receipt in all cases
• c.Tenth calendar day after closing
• d.Same hour the funds are received

Florida requires a broker to deposit trust funds into escrow no later than the end of the third business day after receiving them. Prompt deposit protects the funds and is strictly enforced.

When a broker receives conflicting demands over an escrow deposit, Florida law requires the broker to notify FREC within:

• a.24 hours
• b.15 business days✓
• c.3 business days
• d.6 months

A Florida broker must notify FREC within 15 business days of receiving conflicting demands or having a good-faith doubt about escrowed funds. The broker must then timely institute a settlement procedure.

To resolve a disputed escrow deposit, Florida permits a broker to use settlement procedures that include mediation, arbitration, litigation, or a(n):

• a.Ignoring the dispute until it resolves itself
• b.Escrow disbursement order (EDO) from FREC✓
• c.Keeping the funds as the broker's fee
• d.Immediate payment to whichever party asks first

Among the authorized settlement procedures, a broker may request an escrow disbursement order from FREC. The broker may not simply keep or arbitrarily release the disputed funds.

Under the Florida AS IS Residential Contract, if the buyer defaults without a valid reason, the seller's typical remedy is to:

• a.Retain the buyer's earnest money deposit as liquidated damages✓
• b.Force the buyer to purchase a different home
• c.Sue the buyer for triple damages automatically
• d.Keep the deposit and also demand the commission from the buyer

The standard contract lets the seller keep the earnest money deposit as agreed liquidated damages when the buyer defaults. Liquidated damages fix compensation in advance and avoid litigation over actual loss.

Under FIRPTA, when a foreign person sells U.S. real estate, the buyer generally must withhold and remit a percentage of the amount realized, typically:

• a.50 percent
• b.1 percent
• c.6 percent
• d.15 percent✓

The Foreign Investment in Real Property Tax Act generally requires withholding 15 percent of the amount realized on a sale by a foreign person. The buyer is responsible for withholding and remitting it to the IRS.

A Section 1031 like-kind exchange allows an investor to:

• a.Defer capital gains tax by exchanging investment property for like-kind property✓
• b.Exchange a personal residence tax-free at any time in all cases under Florida law in every transaction
• c.Avoid paying any property taxes going forward
• d.Eliminate the mortgage on the property

A 1031 exchange lets an owner defer capital gains tax by reinvesting proceeds from qualifying investment property into like-kind property. Strict timing and identification rules apply, and personal residences do not qualify.

Under Florida law, a listing agreement must generally:

• a.Last forever until the property sells
• b.Be approved by the county before it is valid in all cases under Florida law
• c.Automatically renew every 30 days
• d.Contain a definite expiration date and no automatic renewal✓

Florida requires listing agreements to have a definite expiration date and prohibits automatic-renewal (self-renewing) clauses. This protects sellers from being bound indefinitely.

In an open listing, the seller:

• a.Cannot sell the property personally
• b.Owes a full commission to every broker who advertises the home in all cases under Florida law
• c.Gives one broker the exclusive right to sell
• d.May list with multiple brokers and owes a commission only to the one who procures the buyer✓

An open listing lets the seller engage several brokers and pay only the broker who actually procures the buyer. The seller also keeps the right to sell independently with no commission.

A buyer brokerage agreement establishes that the licensee:

• a.Works only for the seller
• b.Must appraise the property for the lender
• c.Represents the buyer in the transaction✓
• d.Guarantees the buyer will qualify for a loan

A buyer brokerage agreement makes the licensee the buyer's representative, setting out duties and compensation. In Florida the relationship may be single agent, transaction broker, or no brokerage relationship as disclosed.

The broker who starts an uninterrupted chain of events that results in the sale is said to be the:

• a.Designated appraiser
• b.Statutory trustee
• c.Escrow agent of record in all cases
• d.Procuring cause of the sale✓

Procuring cause is the broker whose efforts set in motion the unbroken chain of events leading to a completed sale. It is often decisive in commission disputes between brokers.

Under a typical exclusive-right-to-sell listing, a broker generally earns the commission when the broker produces a buyer who is:

• a.Merely curious about the property
• b.Ready, willing, and able to purchase on the seller's terms✓
• c.Unable to qualify for financing
• d.Interested only in leasing the home in all cases under Florida law

A broker generally earns the commission by producing a ready, willing, and able buyer who meets the seller's terms, even if the seller then refuses to close. The buyer must have both the willingness and the financial ability to buy.

A right of first refusal gives its holder the right to:

• a.Match a bona fide offer before the owner sells to someone else✓
• b.Buy the property immediately at any price they choose in all cases
• c.Occupy the property rent-free indefinitely
• d.Force the owner to sell at a set future date

A right of first refusal lets the holder step in and match a legitimate third-party offer before the owner may sell to that party. Unlike an option, it is triggered only when the owner decides to sell.

A contract that calls for the performance of an illegal act is:

• a.Voidable at one party's option
• b.Merely unenforceable until recorded
• c.Fully enforceable
• d.Void✓

A contract with an illegal object or purpose is void and has no legal effect from the outset. Neither party can enforce it, unlike a voidable contract that is valid until disaffirmed.

Under the parol evidence rule, a prior oral agreement generally:

• a.Must be recorded to be valid
• b.Cannot be used to contradict the terms of a complete written contract✓
• c.Always overrides the written contract in all cases under Florida law in every transaction
• d.Replaces the need for consideration

The parol evidence rule bars using earlier oral or written statements to contradict a final, complete written contract. It encourages parties to put all agreed terms in the writing.

If a purchase contract specifies a closing date and a separate possession date, the possession date determines when the:

• a.Buyer is entitled to occupy the property✓
• b.Property is first advertised for sale in all cases
• c.Listing agreement first takes effect
• d.Deposit must be placed in escrow

The possession date sets when the buyer may take physical occupancy, which can differ from the closing date. Contracts should state clearly whether possession occurs at closing or another time.

Under Florida's Uniform Vendor and Purchaser Risk Act, if the property is materially damaged before title or possession passes, the risk of loss generally falls on the:

• a.County government
• b.Listing broker
• c.Buyer, in every case
• d.Seller✓

Under the Florida risk-of-loss statute, the seller generally bears the risk of material damage until title or possession transfers to the buyer. If neither has passed, the buyer may typically cancel and recover the deposit.

A buyer of a resale condominium in Florida generally has a right to cancel within a set period after receiving the required condominium documents, which is:

• a.1 year
• b.3 business days✓
• c.30 calendar days
• d.6 months

Florida gives a resale condominium buyer a 3-business-day right to cancel after receiving the condominium disclosure documents. The cancellation window protects buyers who need time to review association materials.

A purchaser of a Florida timeshare interest generally has a statutory right to cancel the contract within:

• a.10 calendar days✓
• b.45 days
• c.3 business days
• d.24 hours

Florida law gives a timeshare purchaser a 10-day right to cancel the purchase contract. This cooling-off period cannot be waived by the buyer.

Under Florida case law (Johnson v. Davis), a seller of residential property must disclose:

• a.Only cosmetic issues visible from the street
• b.Only defects the buyer specifically asks about in all cases under Florida law in every transaction
• c.Nothing, because all sales are caveat emptor
• d.Known facts that materially affect value and are not readily observable to the buyer✓

The Johnson v. Davis rule requires a seller to disclose known material defects that are not readily observable and not known to the buyer. This duty applies to residential transactions in Florida.

For a home built before 1978, federal law requires the seller to provide the buyer with a disclosure about:

• a.A guarantee of no future repairs
• b.The seller's personal credit score
• c.Known lead-based paint and related hazards✓
• d.The exact resale value in ten years in all cases

The federal lead-based paint disclosure rule applies to most housing built before 1978. Sellers must disclose known lead hazards and provide the EPA pamphlet and a disclosure form.

To convey or mortgage Florida homestead property owned by a married person, the law generally requires that:

• a.Both children must consent
• b.The spouse also join in signing the deed or mortgage✓
• c.Only the titleholder needs to sign in all cases under Florida law
• d.The county commission must approve

Florida's constitution protects homestead property, and a married owner generally must have the spouse join in any conveyance or mortgage of the homestead. This applies even if only one spouse holds title.

The difference between a deed and title is that a deed is:

• a.The written instrument used to convey ownership, while title is the ownership itself✓
• b.Issued by the government, while title is issued by the buyer in all cases under Florida law
• c.A type of mortgage, while title is a lease
• d.The ownership itself, while title is the document

A deed is the physical, written instrument that transfers an interest in real property. Title is the abstract concept of ownership and the bundle of rights that the deed conveys.

Before a deed can be recorded in the Florida public records, the grantor's signature typically must be:

• a.Notarized by the buyer's lender
• b.Published in a local newspaper
• c.Approved by the homeowners association in all cases under Florida law in every transaction
• d.Acknowledged before a notary (in addition to the required witnesses)✓

For recording, a deed must be acknowledged before a notary public, and Florida also requires two subscribing witnesses to the grantor's signature. Proper acknowledgment allows the deed to be recorded and provide constructive notice.

When an owner dies with a valid will directing who receives the real property, that transfer is called a:

• a.Dedication
• b.Descent
• c.Devise✓
• d.Escheat

A gift of real property by will is a devise, and the recipient is a devisee. If the owner dies without a will, the property passes by descent under the state's intestacy laws.

A claimant seeking title by adverse possession in Florida generally must possess the land openly, continuously, and hostilely for:

• a.30 years regardless of taxes
• b.6 months under color of title
• c.1 year with no other requirements in all cases under Florida law
• d.7 years, typically while paying the property taxes✓

Florida's adverse possession statute generally requires open, notorious, continuous, and hostile possession for 7 years, usually with payment of taxes. Meeting all statutory elements is necessary to claim title.

The substitution of an entirely new contract for an existing one, extinguishing the old obligation with all parties' consent, is:

• a.Ratification
• b.Novation✓
• c.Assignment
• d.Rescission

Novation replaces an existing contract or party with a new one, discharging the original obligation. It requires the agreement of all parties, unlike a simple assignment of rights.

A backup offer that a seller accepts while already under contract with another buyer generally:

• a.Has no legal effect whatsoever
• b.Immediately cancels the first contract
• c.Forces the seller to sell to both buyers in all cases under Florida law
• d.Becomes the primary contract only if the first contract falls through✓

A backup offer is a secondary contract that moves into first position only if the primary contract terminates. It gives the seller a ready replacement buyer without breaching the existing deal.

A percentage lease is one in which the tenant's rent is based on:

• a.A fixed amount that never changes over the term in all cases
• b.The landlord's mortgage payment each month
• c.A base rent plus a percentage of the tenant's gross sales✓
• d.The assessed value of the land only

A percentage lease is common in retail, where the tenant pays a base rent plus a percentage of gross sales. It lets the landlord share in a successful tenant's business volume.

Under a gross lease, the landlord is generally responsible for paying:

• a.Nothing, because the tenant pays every cost in all cases under Florida law in every transaction
• b.Only the tenant's utility bills
• c.The property's operating expenses, such as taxes, insurance, and maintenance✓
• d.The tenant's business income taxes

In a gross lease, the tenant pays a flat rent and the landlord covers operating expenses like taxes, insurance, and maintenance. A net lease, by contrast, shifts some of those expenses to the tenant.

The key difference between assigning a lease and subleasing is that an assignment transfers:

• a.Only part of the space for part of the remaining term in all cases under Florida law
• b.The tenant's entire remaining interest in the lease to a new party✓
• c.The landlord's duties to the original tenant
• d.Ownership of the building to the tenant

An assignment transfers the tenant's whole remaining leasehold interest to the assignee. A sublease transfers only part of the term or space, with the original tenant remaining liable to the landlord.