Escrow Management & Law
14 Hours of Continuing Education for Florida Real Estate
Professionals
This textbook discusses the important aspects of the escrow management area of real estate brokerage business and the correct processes brokers and sales associates need to follow. Also covered are Florida real estate license laws, rules and updates that are important to the real estate brokerage business.
1
Florida
Escrow Management Course
Session 1
2
Mission Statement
Cooke Real Estate School's mission is to be the leader in bringing real
estate professional education to consumers, prospective students, current
students, past students, and the real estate industry through its
OPENCOURSEWARE policy. The OPENCOURSEWARE policy allows all
individuals to view all course presentations for FREE on the Cooke website
by video streaming. Cooke strives to provide students with all the "value
added tools" to give all students of real estate the knowledge to obtain their
goals. Development of the ability to provide real estate education outside
the conventional classroom by either live interactive video conferencing or
by video streaming on-demand is the goal of Cooke.
Course Purpose
The escrow management course leads the licensee through a review of
Florida real license estate law, including the laws regarding escrow
accounts, and concludes with a practical exercise for escrow account
reconciliation that is provided through the courtesy of the Florida Real
Estate Commission.
3
Learning Objectives:
After completing this session, the student should be able to:
Understand the education requirements for obtaining a Florida broker license or sales associate license;
Explain the need for supplying fingerprint data;
Know why applicants must provide a Social Security number;
Distinguish between post-license education and continuing education; List the requirements for renewing a license;
Know the differences among active, voluntarily inactive, and involuntarily inactive licenses; and
Explain who can and cannot renew a license.
Florida Legislative Intent
The intent of the Florida legislature is that persons desiring to engage in any lawful profession regulated by the department shall be entitled to do so as a matter of right, if otherwise qualified.
The legislature further believes that such professions be regulated only for the preservation of the health, safety, and welfare of the public under the police powers of the state.
Professions are regulated when:
a) Their unregulated practice can harm or endanger the health, safety, and welfare of the public, and when the potential for such harm is recognizable and clear;
b) The public is not effectively protected by other means, and
c) Less restrictive means of regulation are not available. (Chapter 455.201, F.S.)
Buy Low, Sell High
During the prosperous 1920’s before the “great depression”, people were mesmerized by the beauty of Florida and dreamed of a tropical paradise home. Newly-built railroads
4
advertised Florida destinations, and sunshine dreams became more accessible. Hucksters cashed in by buying the cheapest land available and selling unbuildable lots to dreamers out of state.
The Department of Business and Professional Regulation
The Florida legislature responded by passing laws regulating the real estate industry. In addition, the legislature created the Florida Real Estate Commission to regulate the licensing of real estate practitioners. Today, in line with Florida real estate disclosure laws passed to protect the general public, if it’s a swamp, you may call it a paradise, but you must lawfully disclose that paradise is a swamp.
The Department of Business and Professional Regulation licenses and regulates nearly a million Florida businesses and professionals
5
DBPR is responsible for licensing a diverse group of professions, including realtors, certified public accountants, boxers, community association managers, construction and electrical contractors, cosmetologists and veterinarians.
DBPR also investigates unlicensed activity to protect both licensees and consumers. New Online Services:
DBPR's online services provide an easy way for customers to apply for or maintain business or professional licenses. These online services reduce the time it may take to process an application by hand, making it easier and faster to get a license.
Office of the Secretary, DBPR
The head of the Department of Business and Professional Regulation is the Secretary, who is appointed by the Governor and is subject to confirmation by the Senate. There is no set term limit; the Secretary serves at the pleasure of the Governor.
The Secretary is responsible for planning, directing, coordinating and executing the powers, duties and functions vested in the Department, its divisions, bureaus and other subunits.
The Division of Florida Condominiums, Timeshares, and Mobile Homes (new name) provides consumer protection for Florida residents living in the regulated communities through education, complaint resolution, mediation and arbitration and developer disclosure.
This Division licenses and regulates yacht and ship brokers and regulates condominiums, cooperatives, timeshares and mobile home parks.
Division of Real Estate
The Division of Real Estate protects the public by regulation of real estate and appraisal licensees pursuant to Chapter 475, Florida Statutes.
The Division is responsible for the examination, licensing and regulation of over a quarter of a million individuals, corporations, real estate schools and instructors.
6
Real Estate License Law
The Real Estate License Law is found in Florida Statutes under Title XXXII, Regulation of Professions and Occupations, Chapter 475, Real Estate Brokers, Sales Associates, Schools, and Appraisers.
Chapter 475, F.S., is divided into four parts: Part I
Real Estate Brokers, Sales Associates, and Appraisers Part II
Appraisers Part III
Commercial Real Estate Sales Commission Lien Act (new) Part IV
Commercial Real Estate Leasing Commission Lien Act (new) Real Estate License Applicants Apply Online
Applicants now have the ability to upload required documents and fully complete and submit an application online. This enhancement will ensure that applications and supporting documentation submitted online will remain together. The online system allows for faster processing times, thus getting our licensees to work more quickly. FLORIDA REAL ESTATE COMMISSION
The Commission is also empowered to pass rules that enable it to implement its statutorily authorized duties and responsibilities. These rules are contained in Chapter 61J2, Florida Administrative Code. The statute and rules, along with Chapters 455, 215, 120, and 20, Florida Statutes, are available under Statutes and Rules on the FREC website.
The Florida Real Estate Commission (FREC) and the Florida Real Estate Appraisal Board (FREAB) are headquartered in Orlando, FL.
The FREAB is comprised of seven members (four appraisers, one consumer and two Florida residents who have no connection to the practice of real estate appraisal).
The FREC is comprised of seven members (five real estate licensees and two persons never licensed in real estate).
7
Members of both the Appraisal Board and the Real Estate Commission are appointed by the Governor and confirmed by the Florida Senate.
Florida Real Estate Commission Mission: Protecting the public by regulation of real estate and appraisal licensees through education and compliance.
Florida Real Estate Commission Vision: To be a trusted resource to real estate and appraisal licensees and the public through improved customer service and education. Qualifying for a Real Estate License
An applicant for licensure who is a natural person must be
At least 18 years of age
Hold a high school diploma or its equivalent
Be honest, truthful, trustworthy, and of good character, and
Have a good reputation for fair dealing
An applicant for an active broker’s license or a sales associate’s license must be competent, qualified to make real estate transactions, and qualified to conduct negotiations with safety to investors and to those with whom the applicant may undertake a relationship of trust and confidence.
The Commission may adopt rules requiring an applicant for licensure to provide written information to the Commission regarding the applicant’s good character.
In addition to other requirements, the Commission may require the satisfactory completion of educational courses as a condition for a person to become licensed or to renew her or his license as a broker, broker associate, or sales associate.
Authorized schools have the option of providing classroom courses, distance learning courses, or both.
Qualifications for a Broker’s License: More experience now required
A person may not be licensed as a real estate broker unless, in addition to other requirements by law, the person has
Held an active real estate sales associate’s license for at least 24 months in the last five years in any jurisdiction, or
Held a current and active broker’s license for at least 24 months in the last five years in a jurisdiction outside Florida.
8
45-Hour Post-License Requirement
A person who has been licensed as a real estate sales associate in Florida during the preceding 5 years may not be licensed as a real estate broker unless, in addition to the other requirements of law, she or he has completed the sales associate 45-hour post licensure educational requirements…. § 475.17, F.S. (The post-license requirement does NOT apply to a licensee with a 4-year degree in real estate).
This means, if you hold a Florida sales associate license and you want to apply for a Florida broker license, even if a portion of your required 24 months of experience was earned out of state, you MUST have successfully completed the Florida 45-hour post license course before you can become an applicant for a Florida broker license.
Commission’s Duty to Educate Members of the Profession
The Commission shall foster the education of brokers, broker associates, sales associates, and instructors concerning the ethical, legal, and business principles which should govern their conduct.
Pre-licensing Education Required by Commission Rule
Any person who wants to become licensed as a real estate sales associate must satisfactorily complete the Commission-prescribed course designated as FREC Course I. The course consists of 63 hours, including the examination, of basic fundamentals of real estate principles and practices, basic real estate, and license law. 61J2-3.008, F.A.C.
Exemption for Florida Attorney Who Applies for a Real Estate License
Any active member in good standing with the Florida Bar who is otherwise qualified under the real estate license law is exempt from the FREC prescribed prerequisite educational course for licensure as a real estate sales associate.
Equivalency for Prelicensing Education
According to FREC rule 61J2-3.012, any person who has obtained a 4-year degree with a major in real estate from an accredited institution of higher education which substantially covers the Commission-prescribed subject matter shall be deemed to have satisfactorily completed the course.
Application for equivalency education requires an official transcript from the college or university.
9
Broker Pre-licensing Education Required by Commission Rule
Any licensed sales associate desiring to become licensed as a broker must satisfactorily complete the Commission-prescribed course designated as FREC Course II.
Course II consists of 72 hours (including the examination) in the fundamentals of real estate appraising, investment, financing, and brokerage and management operations. …. 61J2-3.008 F.A.C.
State Licensing Examinations
Fingerprints required. In order to take a license examination to practice real estate in Florida, the person must submit digital fingerprint data and a fee. The digital fingerprints are forwarded to the Division of Criminal Justice Information Systems within the Department of Law Enforcement (DLE) for purposes of processing the fingerprints to determine if the applicant has a criminal history record.
The fingerprints are also forwarded to the Federal Bureau of Investigation (FBI) for purposes of processing the fingerprints to determine if the applicant has a criminal history record. Information from the DLE and the FBI is sent to the department to determine if the applicant is legally qualified for examination.
Licenses for Nonresidents Irrevocable Consent to Service
Any applicant who is not a resident of this state must file an irrevocable consent to service affirming that law suits and legal actions can begin against her or him in any county of this state in which a plaintiff having a cause of action or suit against her or him resides. The irrevocable consent allows a service of process in suits or actions be made by delivering the process or pleading to the director of the Division of Real Estate.
In other words, if you are a Florida real estate licensee who is not living in Florida, anyone who wants to sue you over a Florida real estate transaction does not have to go and find you in order to sue. You agree that person can sue you in the county in Florida where that person lives, and can notify you that you are being sued by having the process served on the Director of the Division of Real Estate.
Moving from Florida
Any resident licensee who becomes a nonresident must, within 60 days, notify the commission of the change in residency and comply with non resident requirements by submitting the irrevocable consent to service.
10
Social Security Number Required for All License Applications
Under the Federal Privacy Act, disclosure of Social Security numbers is voluntary unless specifically required by Federal Statute. In this instance, however, disclosure of Social Security numbers is mandatory pursuant to the federal statute, Title 42, United States Code, Sections 653, 654; and Sections 409.2577, 409.2598, and 559.79, Florida Statutes.
Why are Social Security numbers required by law on license applications?
Social Security numbers are used to allow efficient screening of applicants and licensees by a Title IV-D child support agency to assure compliance with child support obligations. Social Security numbers must also be recorded on all occupational license applications and are used for licensee identification purposes pursuant to the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (Welfare Reform Act), 104 Pub. L. 193, Sec. 317.
In order to be granted a Florida real estate license you do NOT have to be a resident of Florida, NOR do you have to be a citizen of the United States. However, you must have a Social Security number.
Exemption from Prelicense Course for Applicants with a 4-year Degree in Real Estate Individuals with a four-year real estate degree are exempt from the 63 hour pre-licensing course, but must make application and take the state exam. Applicants with a four-year real estate degree must include an official transcript(s) with their application. Refer to Rule 61J2-3.012(2), Florida Administrative Code. Additionally, applicants with a four-year degree in real estate are exempt from post-licensing education but not continuing education.
Attorney’s Real Estate License
Attorneys in good standing with the Florida Bar are exempt from the 63 hour pre-licensing course and 14 hour continuing education but are required to take the 45 hour post-licensing course within the initial renewal cycle.
Attorneys are required to take the 72 hour pre-licensing course for brokers and are required to take the 60 hour broker post- licensing course.
11
Florida Residency for Real Estate License
A “resident” of Florida is defined as a person who has resided (regardless of whether the place of residence is a recreational vehicle, hotel, rental unit, or any other temporary or permanent site) in Florida, continuously for a period of 4 calendar months or more within the preceding one year, or a person who currently resides in Florida with the intention to reside continuously for a period of 4 calendar months or more.
Nonresident Licenses
Nonresidents of Florida may legally apply for a Florida real estate license. The Commission recognizes that nonresidents of Florida may have a lesser opportunity than Florida residents to avail themselves of the education, experience, and examination requirements for Florida licensure.
Nonresident Licenses through Mutual Recognition
The Commission, under Chapter 475.180, F.S., may in its discretion enter into written agreements with other states, territories, or jurisdictions of the United States or foreign nations, to mutually recognize the education and afford nonresident licensure opportunities comparable to nonresident licensure opportunities afforded to Florida licensees in consenting states.
Under the written agreements, the Commission has determined it is in the best interest of the public’s welfare to ensure the nonresident seeking licensure in Florida is knowledgeable in Florida law, statutes, and administrative rules.
The subject area of the Commission-required exam (40 – question exam required for a real estate license through mutual recognition) will consist of real estate license law, Florida statutes, and the rules of the Florida Real Estate Commission.
The mandatory exam consists of 40 questions, with each question being worth one (1) point. An applicant, who receives a grade of 30 points or higher, will be deemed to have successfully completed the examination requirement for non-resident licensure.
The Commission currently has written agreements (mutual recognition agreements) with nine states. The mutual recognition agreements apply only to licensed residents of those particular states who have written agreements* with the Florida Real Estate Commission.
The Commission currently has recognition agreements with Alabama, Arkansas, Connecticut, Georgia, Indiana, Mississippi, Nebraska, Oklahoma, and Tennessee. Agreements can expire and may or may not be replaced.
12
A current certification of license history from the state the applicant is claiming as the mutual recognition agreement state is required. The history must contain the licensee applicant’s initial license exam type, current license status, disciplinary information, and how many active months of licensure within the preceding five years.
Nonresident Licenses
The Commission otherwise requires all other persons who apply for a Florida nonresident license to meet the same standards of education, experience, and examinations required of all applicants who reside in Florida.
Applicants to Supply Background Information
Individual applicants for a real estate license are required to disclose:
a) If ever convicted of a crime, or if any judgment or decree has been rendered against the applicant for fraud or dishonest dealings, or
b) If now a patient of a mental health facility or similar institution for the treatment of mental disabilities.
c) If ever called by or done business under any other name, or alias, other than the name signed on the application, or
d) If ever had a broker’s or sales associate’s license revoked, suspended, or otherwise acted against, or had an application for licensure denied by the real estate licensing agency of another state, territory, or jurisdiction.
Persons with a criminal history may apply for a real estate license. Each applicant is considered on their own merits.
The department shall not issue a license to an applicant who is under investigation in any other state, territory, or jurisdiction of the United States or any foreign national jurisdiction for any act that would constitute a violation of Chapter 475 or Chapter 455, F. S. until such time as the investigation is complete and disciplinary proceedings have been terminated.
Where to Apply
Completed applications for licensure may be submitted to the Division of Real Estate online or at the address on the application.
Mail all applications to: DBPR Central Intake Unit 1940 North Monroe Street Tallahassee, FL 32399-0783
13
Notice of Denial
When an application is denied by the Commission, a copy of the order is mailed to the applicant by registered or certified mail setting forth the reasons for denial and advising that the applicant has 21 days from the date of receipt to request a hearing in accordance to law.
Components of License Renewal
A renewal is made up of two components: education and fees. Both of the components must be complete before a license can be renewed. Failure to complete both components could result in losing your license.
Sales Associate Post license Educational Requirements
The Commission may prescribe a post licensure education requirement in order for a person to maintain a valid sales associate’s license which shall not exceed 45 hours, exclusive of examination, prior to the first renewal following initial licensure.
Real Estate License Renewal Information
To maintain your real estate license, all licensees must comply with post-licensing or continuing education requirements and pay necessary renewal fees. This also applies to those licensees with a suspended license.
In support of the statutory requirements for your profession, the Department of Business and Professional Regulation has implemented a 100% Post and Continuing Education Monitoring database.
All course providers are required to report your education completion to the department within 30-days of completion, or prior to the expiration date, whichever occurs first. All newly licensed sales associate and broker licensees must take required post-licensing education before the end of the first license renewal period.
Your license will become null and void if you fail to take the post-licensure education within the initial licensure renewal period, as mandated by Florida statute.
14
The license of any sales associate that does not complete the 45-hour post licensure education requirement prior to the first renewal shall be considered null and void. Such person wishing to again operate as a real estate sales associate must re-qualify by satisfactorily completing the sales associate’s prelicense course and passing the state exam for licensure as a sales associate.
No 60-Hours Broker Post license Education = No Broker’s License
The license of any broker who does not complete the 60-hours post licensure education requirement prior to the first renewal shall be considered null and void. Such person wishing to again operate as a real estate broker must requalify by satisfactorily completing the broker prelicense course and passing the state exam for licensure as a broker.
Ex-Broker Who Failed to Complete Post-License Education Can Become a Sales Associate Again
If the person who did not complete the broker post license education requirement before the first renewal of the broker license wishes to operate as a sales associate, he or she may be issued a sales associate’s license following the loss of the broker license after providing proof she or he has satisfactorily completed the 14-hour continuing education course within six months following the broker license becoming null and void.
Post-Licensing Education Required for Both Active and Inactive Broker and Sales Associate Licensees
All applicants for licensure who pass a broker or sales associate licensure examination must satisfactorily complete a Commission-prescribed post-licensing course prior to the first renewal following initial licensure.
For a licensed sales associate, the post-licensing education requirement consists of one or more Commission-approved course or courses which shall not exceed 45 hours. For a broker, post-licensing education consists of one or more Commission-approved course or courses which shall not exceed 60 hours.
A grade of 75% or higher on the Commission-prescribed end-of-course examination constitutes satisfactory course completion.
Students failing a Commission-prescribed end-of-course examination must wait at least 30 days from the date of the original examination to retest.
15
Post-Licensing Education Only two tries to pass!
Within one year of failing the original exam, a student may retest a maximum of one time. Otherwise, students failing the Commission-prescribed end-of-course examination a second time must repeat the entire course prior to being eligible to again take the end-of-course examination.
Florida Attorneys Who Hold a Real Estate License Must Take 45-hour Post Licensing Course
Florida attorneys who are members in good standing with the Florida Bar are exempt from the 14 hour continuing education course but are not exempt from the 45-hour post licensing course.
An attorney who is in good standing with the Florida Bar and is exempt from 14 hours of continuing education will need to send a copy of their bar card with the renewal notice to DBPR-CIU Renewal Section, 1940 North Monroe Street, Tallahassee, Florida 32399-1027 to have education exemption.
Is Anyone Exempt from the 45-hour Post License Course Renewal Requirement?
A person with a four-year degree in real estate is the only exemption from the 45 hour post license course. … 61J2-3.020(10), Florida Administrative Code
Renewal of License
The department shall renew a license upon receipt of the renewal application and fee. The renewal application for an active or inactive license as broker, broker associate, or sales associate shall include proof satisfactory to the Commission that the licensee has, since the issuance or renewal of her or his current license, satisfactorily completed the Commission-prescribed education during each biennium of a license period.
Continuing Education for Active and Inactive Broker and Sales Associate Licensees Excluding the first renewal period of their current license, all persons holding active or inactive licenses as brokers or sales associates must satisfactorily complete a minimum of 14 hours of instruction during each license renewal period.
Excluding the first renewal period, a licensee must take the 3-hour Core Law course at least once during each license renewal period as part of the 14-hour continuing education requirement.
16
Sales associates and brokers are not required to meet the 14-hour continuing education requirement prior to the first renewal following initial licensure because they must successfully complete a post-license course instead in order to renew.
Activate a License
Florida real estate licenses are issued as inactive licenses. In order to practice real estate, an inactive license must be changed to active status. This can be done using the DBPR RE 10-Sales Associate, Broker Sales Associate Transactions form.
Alternatively, once the new license number is issued, the broker can activate the sales associate using the broker's online account.
Active Licensees
“Broker” means a person who, for another, and for any compensation or valuable consideration directly or indirectly paid or promised, provides or offers to provide real estate services.
An active broker can offer services of real estate for others for compensation. “Broker associate” means a person who is qualified to be issued a license as a broker but who operates as a sales associate in the employ of another.
Broker associates can only operate under the direction of another broker.
“Sales associate” means a person who performs any act specified in the definition of “broker”, but who performs such act under the direction, control, or management of another person.
An active sales associate must act under the direction of a legal employer, which may be a broker, an owner-developer, or a government agency.
Voluntarily inactive status
“Voluntarily inactive statue” means the licensure status that results when a licensee has applied to the department to be placed on inactive status and has paid the fee prescribed by the rule.
17
Session - 2
Services of Real Estate
Learning Objectives:
Upon completing this session, you will be able to: Identify the services of real estate which require a license; Identify those persons who are exempt from licensure; and
Distinguish between acts unlicensed personal assistants may and may not perform.
************************* Real Estate Services
Anyone who engages, advertises, or represents themselves as engaging as a licensee in a real estate transaction, must first obtain a license from the Florida Real Estate Commission, unless that person has been exempted from licensure by Florida Law. Definitions
“Real property” or “real estate” means any interest or estate in land and any interest in business enterprises or business opportunities, including any assignment, leasehold, sub-leasehold, or mineral right.
However, the term “real estate” does not include any cemetery lot or right of burial in any cemetery; nor does the term include the renting of a mobile home lot or recreational vehicle lot in a mobile home park or travel park. s. 475.01, (1)(i), F.S.
Anyone who, for another, for compensation or valuable consideration, appraises, auctions, sells, exchanges, buys, rents, or offers, attempts, or agrees to appraise, auction, or negotiate the sale, exchange, purchase, or rental of business enterprises or business opportunities or any real property or any interest in or concerning the same, is acting as a broker, s. 475.01(3), F. S.
Anyone who, for another, for compensation or valuable consideration, advertises or holds out to the public by any oral or printed solicitation or representation that she or he is engaged in the business of appraising, auctioning, buying, selling, exchanging, leasing, or renting business enterprises or business opportunities or real property of others or interests therein, including mineral rights is acting as a brokers. 475.01(3),F.S.
18
The Services of Real Estate
As we can see from the legal definitions just presented, any of the actions listed below, if performed for another for any kind of compensation, are services of real estate that require a Florida real estate license.
Appraising Auctioning Selling Exchanging Buying Renting Leasing
Advertising services of real estate
The fee for these services can be anything of value, not necessarily money.
Contracts of unlicensed person for commissions invalid.—No contract for a commission or compensation for any act or service enumerated in s. 475.01(3) is valid unless the broker or sales associate has complied with this chapter in regard to issuance and renewal of the license at the time the act or service was performed. 475.41, F.S. .
Practicing Real Estate Without A License
A person may not operate as a broker or sales associate without being the holder of a valid and current active license. Any person who violates this paragraph commits a felony of the third degree, s. 475.42(1)(a), F.S. .
Group License
A group license is for an owner/developer who owns properties through various entities, but all such entities are connected so that such ownership or control is by the same individual or individuals.
A sales associate or broker associate may have a “group license” in order to sell for all the entities owned by the owner/developer.
Exemptions from License Requirement
There are exceptions to the requirement for a real estate license. Those persons who are exempt from the license requirement are:
1. Any person acting as an attorney in fact for the purpose of the execution of contracts or conveyances; an attorney at law acting within the scope of her or his duties; a person acting as a personal representative, receiver, trustee, or a person
19
acting by will or by order of a court, or acting under a deed of trust or trust agreement. An attorney-at-law referring a client to a licensee is not entitled to receive any compensation from a listing firm or offered by a common source information company to cooperating brokers, unless the attorney also holds a Florida real estate license.
2. Any individual, corporation, partnership, trust, joint venture, or other entity which sells, exchanges, or leases its own real property; however, this exemption is not available if and to the extent that an agent, employee, or independent contractor is paid a commission or other compensation strictly on a transactional basis is employed to make sales, exchanges, or leases to or with customers in the ordinary course of the owner’s business.
3. Any employee of a public utility, a rural electric cooperative, a railroad, or a state or local governmental agency who acts within the scope of her or his employment, as long as no compensation in addition to the employee’s salary is paid to buy, sell, appraise, exchange, rent, auction, or lease any real property or any interest in real property for the use of her or his employer.
4. Any salaried employee of an owner, or of a registered broker for an owner, of an apartment community who works in an onsite rental office of the apartment community in a leasing capacity.
5. Any person employed for a salary as a manager of a condominium or cooperative apartment complex as a result of any activities or duties which the person may have in relation to the renting of individual units if rentals arranged by the person are for periods no greater than 1 year.
6. Any person, partnership, corporation, or legal entity which, for another and for compensation sells, offers to sell, advertises for sale, buys, offers to buy, or
negotiates the sale or purchase of radio, television, or cable enterprises licensed or regulated by the Federal Communication Commission. (If the sale involves land, buildings, and improvements to the land, a licensed broker or sales associate must be retained for that portion of the transaction.
7. Any full-time graduate student who is enrolled in a Commission approved degree program in this state, if the student is acting under the direct supervision of a licensed broker or a licensed or certified appraiser, the appraisal activities are related to the approved degree program, and the student’s appraisal report is issued in the name of the supervising individual.
8. An owner of one or part of one or more timeshare periods for the owner’s own use and occupancy who later offers one or more of such periods for resale.
20
9. Any person registered, licensed, or certified by the Department under Chapter 475, Part II, as an appraiser or trainee appraiser performing appraisals in accordance with that part.
10. Any person who appraises under the unit-rule method of valuation a railroad or railroad terminal company assessed for ad valorem tax purposes.
11. Any person, partnership, corporation, or other legal entity which, for another and for compensation or other valuable consideration, rents or advertises for rent, for transient occupancy, any public lodging establishment licensed as such.
12. Any dealer registered under the Securities and Exchange Act of 1934, or any federally insured depository institution, in connection with the sale, exchange, purchase, or rental of a business enterprise to or by a person who is an accredited investor as defined by the Securities Act.
13. Any property management firm or any owner of an apartment complex for the act of paying a finder’s fee or referral fee to a censed person who is a tenant in such apartment complex provided the value of the fee does not exceed $50 per
transaction. “Finder’s fee” means a fee paid or credit towards rent or some other thing of value to a tenant who introduced a new tenant to a transaction involving the rental or lease of an apartment.
Discipline
The Commission may deny an application for licensure, registration, or permit, or renewal thereof.
The Commission may place a licensee, registrant, or permit tee on probation, may suspend a license, registration, or permit for a period not exceeding 10 years. The Commission may impose an administrative fine not to exceed $5,000 for each count or separate offense; and may issue a reprimand, and any or all of the forgoing if it finds that the licensee, registrant, permit tee, or applicant is found guilty of license provisions.
Grounds for Discipline:
a) Has violated any provision of s. 455.227(1), being convicted or found guilty of, or entering a plea of guilty or nolo contendere to, regardless of adjudication, a crime in any jurisdiction which relates to the practice of, or the ability to practice, a licensee’s profession.
b) Has been found guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme, or device, culpable
negligence, or breach of trust in any business transaction in this state or any other state, nation, or territory; has violated a duty imposed upon her or him by
21
law. It is immaterial that the victim or intended victim has sustained no loss or damage, or that the loss or damage has been settled.
c) Has advertised property or services in a manner which is fraudulent, false, deceptive, or misleading in form or content.
d) (1)Has failed to account or deliver to any person at the time which has been agreed upon or is required by law or, in the absence of a fixed time, upon demand of the person entitled to such accounting and delivery, any personal property such as money, fund, deposit, check, draft, abstract of title, mortgage, conveyance, lease, or other document or thing of value.
d) (2)Has failed to deposit money in an escrow account when the licensee is the purchaser of real estate under a contract where the contract requires the purchaser to place deposit money in an escrow account to be applied to the purchase price if the sale is consummated.
e) Has violated any of the provisions of this chapter (chapter 475, F.S.) or chapter 455, F.S.
f) Has been convicted or found guilty of, or entered a plea of nolo contendere to, regardless of adjudication, a crime in any jurisdiction which directly relates to the activities of a licensed broker or sales associate, or involves moral turpitude or fraudulent or dishonest dealing. A certified or authenticated record of a conviction shall be admissible as prima facie evidence of such guilt.
g) Has had a broker’s or sales associate’s license revoked, suspended, or
otherwise acted against, or has had an application for such licensure denied, by the real estate licensing agency of another state, territory, or country.
h) Has shared a commission with, or paid a fee or other compensation to, a person not properly licensed as a broker, broker associate, or sales associate under the laws of this state, for the referral of real estate business, clients, prospects, or customers, or for any one of more of the services set forth in s. 475.01(1)(a) as services of real estate which require a real estate license. However, a licensed broker of this state may pay a referral fee or share a real estate commission with a broker licensed or registered under the laws of a state other than Florida so long as the out-of-state broker does not violate any Florida law.
i) Has become temporarily incapacitated from acting as a broker or sales associate with safety to investors or those in a fiduciary relation with her or him because of drunkenness, use of drugs, or temporary mental derangement; but suspension of a license in such a case shall be only for the period of such incapacity.
j) Has rendered an opinion that the title to any property is good or merchantable, except when correctly based upon a current opinion of a licensed attorney at law, or has failed to advise a prospective purchaser to consult her or his attorney on the merchantability of the title or to obtain title insurance.
22
k) Has failed, if a broker, to immediately place, upon receipt, any money, fund, deposit, check, or draft entrusted to her or him by any person dealing with her or him as a broker in escrow with a title company, banking institution, credit union, or savings and loan association located and doing business in the state of
Florida, or to deposit such funds in a trust account maintained by her or him with some bank, credit union, or savings and loan association located and doing business in this state. Has failed, if a sales associate, to immediately place with her or his registered employer any money, fund, deposit, check, or draft
entrusted to her or him by any person dealing with her or him as agent of the registered employer.
l) Has made or filed a report or record which the licensee knows to be false, has willfully failed to file a report or record required by state or federal law, has willfully impeded or obstructed such filing or has induced another person to impede or obstruct such filing; but such reports or records shall include only those which are signed in the capacity of a licensed broker or sales associate. m) Has obtained a license by means of fraud, misrepresentation, or concealment. n) Is confined in any county jail, post-adjudication; is confined in any state or federal
prison or mental institution; is under home confinement ordered in lieu of institutional confinement, or through mental disease or deterioration, can no longer safely be entrusted to competently deal with the public.
o) Has been found guilty of a course of conduct or practices which show that she or he is so incompetent, negligent, dishonest, or untruthful that the money, property, transactions, and rights of investors, or those with whom she or he may sustain a confidential relation, may not safely be entrusted to her or him.
p) Has been found guilty, for a second time, of any misconduct that warrants her or his suspension or has been found guilty of a course of conduct or practices which show that she or he is so incompetent, negligent, dishonest, or untruthful that the money, property, transactions, and rights of investors, or those with whom she or he may sustain a confidential relation, may not safely be entrusted to her or him. q) Has failed 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.
r) Has violated any provisions of the license law regarding disclosures and agency obligations.
s) Has failed in any written listing agreement to include a definite expiration date, description of the property, price and terms, fee or commission, and a proper signature of the principal(s); and has failed to give the principal(s) a true and correct copy of the listing agreement within hours of obtaining the written
agreement. The written listing agreement cannot contain a provision requiring the person signing the listing to notify the broker of the intention to cancel the listing after such definite expiration date.
23
t) Has had a registration suspended, revoked, or otherwise acted against in any jurisdiction. The record of the disciplinary action certified or authenticated in a form that is admissible in evidence under the laws of the state shall be prima facie evidence of such disciplinary action.
u) Has violated any standard for the development or communication of a real estate appraisal or other provision of the Uniform Standards of Professional Appraisal Practice, as approved and adopted by the Appraisal Standards Board of the Appraisal Foundation. This does not apply to a real estate broker or a sale associate who, in the ordinary course of business, performs a comparative market analysis, gives a broker price opinion, or gives an opinion of value of real estate. However, in no event may this comparative market analysis, broker price opinion, or opinion of value of real estate be referred to as an appraisal.
v) Has failed, if a broker, to direct, control, or manage a broker associate or sales associate employed by such broker. A rebuttable presumption exists that a broker associate or sales associate is employed by a broker if the records of the department establish that the broker associate or sales associate is registered with that broker.
w) Has failed, if a broker, to review the brokerage’s trust accounting procedures in order to ensure compliance with this chapter.
Definitions
A broker associate is a person who is qualified to be a broker, but who continues to operate as a sales associate in the employ of another. Even though their status with the department is broker associate, the department still issues the license with a BK as the identifier.
“Firm” means any sole proprietorship (non-broker owned), partnership, association, limited liability company, or corporation, (other than a broker-owned sole
proprietorship), which is required by the Board’s regulations to obtain a separate brokerage firm license.
Self-Reporting of Crime Requirement
During the 2009 Legislative Session, the Florida Legislature passed House Bill 425, which became law on October 1, 2009. Beginning October 1, 2009, House Bill 425 requires all professional licensees to report to the department within 30 days of being convicted or found guilty of or having plead nolo contendere or guilty to a crime in any jurisdiction.
House Bill 425 also requires that any conviction prior to October 1, 2009, be reported by November 1, 2009. A licensee who fails to report that information may be subject to disciplinary action.
24
Disciplinary action includes fines, suspension or license revocation.
To report this information, complete the criminal self-reporting document and mail to the department as provided on the form. You will need to provide a written
explanation of each disclosure. Definition
“Active” means any broker or salesperson who is under the supervision of a principal or supervising broker of a firm or sole proprietor and who is performing those
services which require a real estate license.
Therefore, providing services of real estate without the proper license violates the Real Estate License Law, and the Commission is authorized to take legal action. In addition, the DBPR has the authority to issue summons for violations of the statutes and regulations governing the unlicensed practice of professions regulated by the Department.
In short, you must have a Florida real estate broker’s license before you can operate a real estate business and collect anything of value for providing real estate
services.
You must have an active Florida real estate license to provide brokerage services under a Florida broker.
Licensed Personal Assistants
A Florida real estate licensee who works as an assistant and acts as a real estate salesperson must be paid by the broker and not by another real estate person. Furthermore, Commission rules state that when the real estate assistant has a Florida real estate license he/she must be affiliated with same licensed real estate broker as the person being assisted.
Unlicensed Personal Assistants
A broker or salesperson who is employed by a broker-employee may personally employ unlicensed personal assistants.
Licensed personal assistants may perform any function that requires a real estate license.
If any action requires a real estate license, then unlicensed assistants cannot undertake the task.
25
Unlicensed assistants may not perform any of the acts for which a license is required under Florida Real Estate License Law. The supervising broker must exercise
reasonable and adequate supervision regarding the use of unlicensed individuals. Office policy should be clear regarding the services an unlicensed personal assistant may provide and may not provide.
Unlicensed Personal Assistants may
Submit listings and changes to MLS
Follow up on loan commitments after contracts have been negotiated
Have keys made for listings
Compute commission checks
Place signs on properties
Act as a courier service
Schedule appointments
Record and deposit earnest money, security deposits and advance rents given to the licensee
Prepare contract forms (with approval of the licensee and supervising broker)
Prepare promotional materials and advertisements
An unlicensed assistant may greet people and hand out printed sales material, but cannot provide property-related information and services. DON'TS
Show property
Answer questions on listings, titles, financing or closings
Discuss or explain with anyone outside the firm a contract, listing, lease, agreement, or other real estate documents
Collect payment as a real estate assistant on the basis of real estate activity, such as a percentage of commission, or any amount based on listings or sales.
An unlicensed personal assistant may not assist a licensee at an open house for the sale of real estate or a business without the direct, on-premises
supervision and presence of a real estate
A real estate salesperson or broker-employee, before hiring an unlicensed personal assistant, should enter into a written agreement with his or her broker-employer which sets forth the:
Duties of the unlicensed personal assistant;
26
Responsibilities for the supervision of the personal assistant’s activities between the licensed salesperson and the supervising broker.
Compensation
Any licensee who engages an unlicensed personal assistant as an employee must follow all of the state of Florida and federal tax, unemployment, and workers’ compensation law.
Compensation cannot be tied to listings or buyers solicited or obtained by the unlicensed assistant.
Unlicensed assistants may:
Pick up and deliver paperwork;
Check on a loan’s status, obtain information from government entities, and put together closing documents.
Gather information for a comparative market analysis or broker Create and place advertising under the supervision and approval of the licensee and principal broker.
Have keys made and place signs on a listed property.
Schedule appointments for a licensee to show listed property. Tasks unlicensed support personnel MAY NOT PERFORM:
1. Placing calls or making contacts that would require a license, such as cold calls, contacting expired listings, placing marketing calls, etc.
2. Hosting open houses, kiosks, home show booths, or fairs.
3. Preparing promotional materials without the review and approval of the licensee and supervising broker.
4. Opening properties for viewing. 5. Showing property.
6. Attending pre-closing walk- through or real estate closings unless accompanied by a licensee.
7. Answering questions regarding a listing except for information on price and amenities expressly written by the licensee.
8. Discussing or explaining a contract, listing, lease, or agreement with anyone outside the firm.
9. Negotiating or agreeing to any commission on behalf of a licensee.
10. Discussing the attributes or amenities of a property, that would not be included or appear in a simple ad.
11. Discussing with a property owner the terms and conditions of the real property offered for sale or lease.
27
12. Negotiating the amount of rent, security deposit or other lease provisions in connection with rental property.
13. Providing property owners or prospective purchasers or lessees with any advice on the sale, purchase, exchange, or lease of real property that is listed or to be listed.
14. Holding himself or herself as being licensed or affiliated with a firm as a licensee.
28
Session - 3
License Law and Administration
************************* Learning Objectives:
Upon completing this session, you will be able to: Understand the mission of the Florida Real Estate Commission; Know the requirements for being appointed a Commission member; Describe the purpose of the Division of Real Estate;
Denote the powers of the Florida Real Estate Commission;
Discuss the commission Education and Research Foundation; and Note the purpose and the restrictions of the Real Estate Recovery Fund. Definition
“Commission” means the Florida Real Estate Commission. s. 475.01(1)(c), F.S. Commission Principal Office
The principal office of the Commission shall be located at 400 West Robinson Street, Orlando, Florida 32801-1757.
The Commission may also be contacted through the Department of Business and Professional Regulation, 1940 North Monroe Street, Tallahassee, Florida 32399-0750. The Florida Real Estate Commission
The Florida Real Estate Commission (FREC) was created to protect the public through education and regulation of Florida real estate licensees.
The Commission consists of seven members appointed by the Governor, subject to confirmation by the Senate.
Any member of the Commission who is licensed as a broker or sales associate and who holds real estate schools permit, or instructor permit, may offer, conduct, or teach any Commission-prescribed course.
Four members must be licensed brokers, each of whom has held an active license for five years preceding appointment.
One member must be a licensed broker or a licensed sales associate who has held an active license for two years preceding appointment.
29
Two members must be persons who are not, and have never been, brokers or sales associates.
At least one member of the Commission must be 60 years of age or older.
Members of the Commission shall be appointed for four-year terms. (Chapter 475.02, Florida Statutes)
The Commission elects a chairperson and vice chairperson from its membership. Commission Member Compensation
Unless otherwise provided by law, a Commission member shall be compensated $50.00 for each day in attendance at an official meeting of the Commission, including Probable Cause Panel Meetings, and for each date the member participates in other business involving the Commission.
The names of the current members of the Florida Real Estate Commission can be found at “Meet The Commission” on the FREC website where their positions and term lengths are listed.
Composition 4 Real Estate Brokers
1 Real Estate Broker or Sales Associate 2 Consumer Members
The Florida Real Estate Commission meets once per month. The dates of Commission meetings can be found at Meeting and Workshops on the FREC website. The
Commission meetings are held at the Division of Real Estate offices in Orlando, Florida. Real estate sales associates and brokers may earn three (3) hours of continuing
education credit per renewal cycle for attending one legal session of the FREC meeting. If you plan to attend for the purpose of obtaining continuing education credit, you will need to attend the full day when the Legal Docket is heard. Sign-in will begin at 8:00 a.m. The start time for the meeting is 8:30 a.m. for both meeting days. The Legal Docket is the first day of the meeting (Tuesday). Sign-in will begin at 8:00 a.m. Please be sure to contact the Division of Real Estate Education Section prior to the meeting to make the proper arrangements to receive credit.
The Division of Real Estate
All services concerning Chapter 475, including, but not limited to, recordkeeping services, examination services, legal services, and investigative services, and those services contained in Chapter 455 necessary to perform the duties of Chapter 475 shall
30
be provided by the Division of Real Estate. The Commission, by majority vote, may rescind any such delegation of duties at any time.
DRE Director
Juana Watkins, Director. Division of Real Estate 400 West Robinson Street, N801 Orlando, Fl 32801 Phone: 850.487.1395 Fax: 407.317.7245.
The Division of Real Estate shall be funded by fees and assessments of the
Commission, and funds collected by the Commission shall be used only to fund real estate regulation.
The Florida Real Estate Commission
The FREC administers and enforces the real estate license law, Chapter 475, Part I, Florida Statutes.
The Commission is also empowered to pass rules that enable it to implement its statutorily authorized duties and responsibilities. These rules are contained in Chapter 61J2, Florida Administrative Code.
The Commission has the duty to foster the education of brokers, broker associates, sales associates, and instructors concerning the ethical, legal, and business principles which should govern their conduct. In addition, the Commission, through the
Commission Education and Research Foundation, expands real estate education through our colleges and universities, and to the general public.
The Florida Real Estate Commission Education and Research Foundation The Florida Real Estate Commission Education and Research Foundation is administered by the Commission.
The Foundation was established:
1. To create and promote educational projects to expand the knowledge of the public and real estate licensees in matters pertaining to Florida real estate. 2. To augment the existing real estate programs by increasing the number of
teaching personnel and real estate courses in the state in degree-granting programs and universities and colleges in this state.
3. To conduct studies in all areas that relate directly or indirectly to real estate or urban or rural economics and to publish and disseminate the findings and results of the studies.
31
4. To augment the existing real estate programs by increasing the number of teaching personnel and real estate courses in the state in degree-granting programs and universities and colleges in this state.
5. To conduct studies in all areas that relate directly or indirectly to real estate or urban or rural economics and to publish and disseminate the findings and results of the studies.
6. To periodically review the progress of persons conducting such research and studies.
7. To prepare information of consumer interest concerning Florida real estate and to make the information available to the public and appropriate state agencies. The Chief Financial Officer shall invest $3 million from the portion of the Professional Regulation Trust Fund credited to the real estate profession, and the income earned thereon shall be available to the foundation to fund the activities and projects authorized as objectives of the foundation.
Any of the earned funds in excess of $1 million shall revert to the Professional Regulation Trust Fund credited to the real estate profession.
Commission May Delegate Some Powers
Any of the duties and powers of the Commission, except disciplinary powers and the power to adopt rules, may be delegated, by resolution, to any member; but the Chair may exercise such duties and powers without such resolution.
Legal Service
Subject to the prior approval of the Attorney General, the Commission may retain independent legal counsel to provide legal advice to the Commission on a specific matter. No attorney employed or utilized by the Commission shall prosecute a matter and provide legal services to the Commission with respect to the same matter. Powers of the Commission
The Commission may enact bylaws for its own government.
The Commission may adopt rules to implement the provisions of law conferring powers or duties upon the Commission.
The Commission may decide questions of practice arising in the proceedings before it having regard to the regulation of the real estate profession.
The courts shall judicially notice such rules.
32
Copies of proceedings, records, and acts of the Commission and certificates purporting to relate the facts concerning such which are signed by the Chair, the custodian of such records, or another person authorized to sign, and which are authenticated by the seal, shall be prima facie of the authenticity of the copies in all courts of this state.
Registration and Licensing
Each partnership, limited liability partnership, limited liability company, or corporation which acts as a broker shall register with the Commission and shall renew the licenses or registrations of its members, officers and directors for each license period. If the partnership is a limited partnership, only the general partners must be licensed brokers or brokerage corporations registered with the Commission.
If the license or registration of at least one active broker member is not in force, the registration of a corporation, limited liability company, limited liability partnership, or partnership is canceled automatically during that period of time.
The Commission shall license a broker associate or sales associate as an individual or, upon the licensee providing the Commission with authorization from the Department of State, as a professional corporation, limited liability company, or professional limited liability company.
Licensing of Broker Associates and Sales Associates
A license shall be issued in the licensee’s legal name only and, when appropriate, shall include the entity designation.
This does not permit a broker associate or sales associate to register or be licensed as a general partner, member, manager, officer, or director of a real estate brokerage firm. Registration and Licensing
A license may be revoked or canceled if it was issued through the mistake or inadvertence of the Commission.
Such revocation or cancellation shall not prejudice any subsequent application for licensure filed by the person against whom such action was taken.
The department shall reissue the license of a licensee against whom disciplinary action was taken upon certification by the Commission that the licensee has complied with all of the terms and conditions of the final order imposing discipline.
33
The Commission may adopt rules allowing the director of the Division of Real Estate to grant to a licensee placed on probation additional time within which to complete the terms of probation, but the rules must allow the licensee to appeal any denial to the Commission.
An administrative complaint against a broker, broker associate, or sales associate shall be filed within 5 years after the time of the act giving rise to the complaint or within 5 years after the time the act is discovered or should have been discovered with the exercise of due diligence.
The department shall promptly notify a licensee’s broker or employer when a formal complaint is filed against the licensee alleging violations of Chapters 475 or 455. The notification to the broker or employer shall not be issued until 10 days after a finding of probable cause has been found to exist by the probable cause panel or the department, or until the licensee waives his or her privilege of confidentiality, whichever comes first.
The Commission shall promptly report to the proper prosecuting authority any criminal violation of any statute relating to the practice of a real estate profession regulated by the Commission.
Citation Authority
In accord with state law, the Commission sets forth violations for which there is no substantial threat to the public health, safety, and welfare; or, if there is a violation for which there is no substantial threat to the public health, safety, and welfare, such potential for harm has been removed prior to the issuance of the citation. Fines for citations run from $100 to $500.
The citation shall be issued to the subject and shall contain the subject’s name and address, the subject’s license number if applicable, a brief factual statement, the sections of the law allegedly violated, and the penalty imposed.
Examples of violations for which a citation may be issued include:
failed to timely notify the DBPR of the current mailing address or any change in the current mailing address…$500.00 fine; or
failed to properly reconcile an escrow account when the account balances…$500.00 fine; or
failed to secure the written permission of all interested parties prior to placing trust funds in an interest bearing escrow account…$300.00.
34
Citations may be issued to real estate licensees, permit holders, and registrants by the Division of Real Estate.
Citations are served upon the subject either by personal service or certified mail, restricted delivery, to the subject’s last known address.
A citation must be issued within 6 months after the filing of the complaint that is the basis for the citation.
The citation must clearly state that the subject may choose, in lieu of accepting the citation, to dispute the citation.
A subject who receives delivery of a citation may dispute the citation in writing within 30 days of receipt of the citation.
However, if the subject does not dispute the matter in the citation with the department within 30 days after the citation is served, the citation
becomes a final order and constitutes discipline. The penalty shall be a fine or other conditions as established by rule.
The subject of the citation has 30 days from the date the citation becomes a final order to pay the fine.
All fines are to be made payable to the “Department of Business and Professional Regulation-R.E. Citations” and sent to the Division of Real Estate in Orlando. Rule 61J2-24.002(5).
Disciplinary Proceedings
According to s. 455.225(1)(a), there shall be an investigation for any complaint that is filed if the complaint is in writing, signed by the complainant, and legally sufficient. A complaint is legally sufficient if it contains ultimate facts that show that a violation of Chapter 455 or of any practice relating to the practice of the real estate profession, or of any rule of the Florida Real Estate Commission has occurred. In order to determine legal sufficiency, the department may require supporting information or documentation. Anonymous Complaint
The department (DBPR) may investigate an anonymous complaint if the complaint is in writing and is legally sufficient, if the alleged violation of law or rules is substantial, and if the department has reason to believe, after preliminary inquiry, that the violations alleged in the complaint are true.
35
DBPR May Initiate an Investigation
The department (DBPR) may initiate an investigation if it has reasonable cause that a licensee or a group of licensees has violated a Florida statute, a rule of the department, or a rule of the Commission.
Subject of Investigation Must Be Informed
When an investigation of any subject is undertaken, the department shall promptly furnish to the subject or the subject’s attorney a copy of the complaint or document that resulted in the initiation of the investigation.
Subject May Respond in Writing
The subject of the complaint may submit a written response to the information contained in the complaint or document within 20 days after service to the subject of the complaint. The subject’s written response shall be considered by the probable cause panel.
Exceptions to Subject Notification
If the Secretary of the DBPR or the secretary’s designee, and the chair of the Commission, or the chair of its probable cause panel agree in writing that such notification would be detrimental to the investigation, the department may withhold notification.
The DBPR may conduct an investigation without notification to any subject if the act under investigation is a criminal offense.
Investigative Report to Probable Cause Panel
When the investigation is complete and legally sufficient, the department shall prepare and submit to the probable cause panel of the Commission the investigative report of the department.
The report shall contain the investigative findings and the recommendations of the department concerning the existence of probable cause.
Complaint Investigation
If the investigation does not show probable cause that a violation occurred, the case will be dropped.
