FLORIDA REAL ESTATE LAW

1923 Florida Real Estate Law Create

1925 FREC was created to oversee the real estate law
1941 F.S. 475 was enacted
1991 F.S. 475 Part I & II
2005 F.S. 475 Part III & IV

Application with state and Pre-license course completion certificate is good for 2 years.
Can only work real estate for one employer (broker, government agency or owner developer) and
they are the only ones that can compensate you directly.
Remember: Any violation or infraction of law will result in a violation of F.S. 475

SALES ASSOCIATE
63-hours for pre-licensing and 45-hours post-license – 14 hours continuing education – 28 hours for
reactivation – must score 70% on exam
• If you do not take the 45-hour post-license education your license becomes null and void
o Post-license education does not have a state exam only a school exam, which you must score
a 75 out of 100 questions.
• If you fail to timely take all future continued education your license becomes involuntary and
inactive – you cannot remain in this status for more than two years before becoming null and void
• Must complete 14 hours of continued education plus pay a late fee within the 12-months – 28
hours of CE plus pay a late fee within 12-months plus up through the 24-month.

BROKER
72-hours for pre-licensing and 60-hours post-license – 14 hours continuing education – 28 hours for
reactivation – must score 70% on exam
• If you do not take the 60-hour post-license education your license becomes null and void.
o Two 30-hour courses: Management and Advance topics.
o Post-license education does not have a state exam only a school exam, which you must score
a 75 out of 50 questions.
o Note: You can elect to step back down to sale associate and must complete 14-hour continue
education within 6-months.
• If you fail to timely take all future continued education your license becomes involuntary and
inactive – you cannot remain in this status for more than two years before becoming null and void
• Must complete 14 hours of continued education plus pay a late fee within the 12-months – 28
hours of CE plus pay a late fee within 12-months plus up through the 24-month.

Initial license is good for 18 to 24 months à licenses are renewed either on March 31st or September
30th and cannot exceed two years. All sequent license good for 2-years.
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Mutual Recognition is granted to non-Florida resident who hold valid real estate licenses from one of
the 8 states that Florida is currently under agreement by taking a 40-question exam, which is solely
related to FL law (must score 75 on exam). You must also execute an IRREVOCABLE CONSENT TO SERVICE
AGREEMENT, which allows lawsuits to be filed against you in the State of Florida.
Alabama, Arkansas, Connecticut, Georgia, Illinois, Mississippi, Nebraska and Rhode Island – A.K.A.
NAR MAGIC.

A non-Florida resident who does not have a real estate license or does not live in one of the mutual
recognition states can apply for a license and must comply with all the pre-licensing requirements
and will have to execute an irrevocable consent to service agreement, as well.

APPLIES TO BOTH SALES ASSOCIATE AND BROKERS:

Brokers and Sales Associates can qualify for an equivalent type license in Florida if they meet the
following qualifications: Must be 18 years of age and hold a high school diploma or its equivalent.
NOTE: There are only two types of real estate licenses in Florida: Broker & Sales Associate. In Florida
you can work as a Broker Associate, which is a hybrid type license that allows an individual who has
passed the broker exam and has met all the requirements to open their own brokerage firm.
KEY: You can get a real estate license even if you are not a Florida Resident or a U.S. citizen

You’re considered to be a resident if you have resided or plan to reside in Florida for 4 calendar
months or have the intent to live more than 4 months.

If you do not complete your post-licensing education your license will be lost and can only be
regained by taking the pre-licensing courses required by law. Upon completion of post-license
continued education you’re required to complete 14-hours continued education. If you do not
complete the required education your license will be placed into involuntary inactive status and can
be held in this status for up to two years. Upon the second year the license will be lost and you must
begin the process all over again.

Within 12 months take your 14-hours continuing education and pay licensing fee plus a late fee.
Starting on the 13 months up to the 24 months you must take 28-hours of continuing education and
pay licensing fee plus a late fee. After 2 years, the license will become null & void if you take no
action.

Florida real estate services consist of the following 8-items A BAR SALE à Advertise, Buy, Appraised,
Rents, Sale, Auction, Lease and Exchange. These Real Estate services require that you have an active
license when you are performing such duties for someone else AND for compensation (actually
received, promised, or expected):

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If you have a 4-year degree OR higher in Real Estate you do not have to take pre-licensing or post
education; however, you must take continued education every 2-year.
If you’re an attorney in the State of Florida in good standing, you’re exempt for taking the 63-hour
pre-licensing and are not required to take 14-hours continued education. Everything else is fair game
like post-licensing education and broker pre-licensing.

Exempt for having a real estate license: salary employee, selling cemetery lots, Attorney in Fact (given
power of attorney), court appointed person.

LICENSE EXEMPTIONS:
Salaried employees who are not paid any type of commission; person selling cemetery lots; Attorneys
in Fact (given the power of attorney) or a court appointed person.

NOTIFICATION PROCESS:
You have 10-days to notify the DBPR if you change your mailing address. If you move out the State of
Florida (non-resident), you will have 60-days to notify the DBPR; however, the change of address
must be done in 10 days. If you want to maintain your license you must execute an IRREVOCABLE
CONSENT TO SERVICE AGREEMENT.

LICENSE LAW & ADMINISTRATION

Florida Real Estate Commission (FREC)
Consist of 7 members: 4 real estate brokers with at least 5 years of experience, 1 real estate sale
associate or real estate broker with at least 2 years of experience and 2 consumers. One of the 7
members must be 60 years or older. The members are appointed by the Governor and confirmed by
the Senate; they serve a 4-year term and cannot be reelected for more than 2 consecutive terms.

• FREC has executive power to regulate and enforce license law.

• Quasi-legislative power to enact rules and make revisions to administrative rules (Ch. 61J2)
• Quasi-judicial power to grant or deny applications and administer penalties for violating license
law.
• FREC cannot put a person in prison as a punishment; will refer the case to the State Attorney’s
Office.

Member of U.S. Armed Forces: While on active duty license will be placed in Voluntary Inactive and
will remain in good standings (renew fees and education on standstill). Upon being discharged,
licensee is given 24 months to renew license. This rule also applies to spouses, as well, as long as the
active duty is out of state of Florida. Note: If they are practicing real estate while on active duty – all
bets are off and must comply with licensing law requirements.

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Spouses who hold a real estate license from any other jurisdiction will be given a permanent license
in Florida, either a sales associate or broker license.

Involuntarily Inactive: occurs when a licensee fails to renew license at expiration date; if not
corrected, license becomes NULL AND VOID AFTER 24-MONTHS.
Void license: no longer exists
Ineffective license: it exists, but you cannot use it (ex. Suspension)

10/10/60-days rule (notification to FREC for the following):

• When you change your mailing address: Home or Brokerage/real estate school changes address.
• When there is a change of employment for sales or broker associate or instructor.
• You become a non-resident in the state of Florida

An ineffective license exists (inactive or suspended); however, it cannot be used.

License cancelation only occurs if you choose to surrender you license – only you can cancel your
license.

3 GENERAL AGENCIES
• Universal Agent – Authorized to do anything the client can
• General Agent – Authorized to do things related to a business.
• Special Agent – hired to perform a specific act or transactions. Please note, SA or Brokers are
considered to have this type of agency.

3 BROKERAGE RELATIONSHIPS IN FLORIDA

Note: Regardless of which relationship you are engaged under you must always deal honestly,
account for funds, and disclose any known material facts that materially affect the value of the
property.

TRANSACTION BROKER under Florida law it is presumed that you are operating under such a relationship
unless specifically agreed too otherwise – non-fiduciary relationship where you must present all
offers, exercise limited confidentiality and disclosure.
• Your employer is known as your customer.
• Under Transaction Broker you can represent both buyer and seller.

SINGLE AGENT – maintains a fiduciary relationship with client (both broker and agent). This relationship
is one based on trust and confidence, which is offered and accepted. Single Agent must provide the
following services that are referred to as COLD à Confident, Obedience, Loyalty, & Disclosure.

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• Please note that you can move from Single Agent to Transaction Broker by getting both parties
(buyer and seller) to agree and execute “a consent to transition agreement” between relationship
statuses.
• Your employer is known as either your client or principal or employer.
• Under Single agency you cannot represent both seller and buyer, which is known as Dual agency:
Is illegal in Florida with the exception of commercial transactions that meet certain criteria.
o You can remedy this by getting both parties to agree to change agency relationship status by
executing a CONSENT TO TRANSITION TO TRANSACTION BROKER to complete the transaction.

NO BROKERAGE – you do not represent the buyer or seller à must be Account for all funds, Disclose all
know material fact (residential) and Deal Honest and Fairly (remember ADD).

Written disclosure required in RESIDENTIAL SALES TRANSACTION ONLY, which is given before or at time of
listing agreement, or buyer representation agreement, or before showing property. All disclosure
documents that resulted in a contract MUST BE RETAINED FOR 5 YEARS, REGARDLESS if they did not close.

Designated Sales Associate is utilized for NON-RESIDENTIAL TRANSACTION, both (seller and buyer) must
have over $1 million dollars of assets; both (buyer and seller) must sign a disclosure document. The
broker will designate a sales associate to represent buyer and a sales associate to represent the
seller, both sales associates will have special agent relationship with their assigned client. Note:
Broker provides guidance only to the associates NOT clients (buyer or seller).

To charge or accuse someone of FRAUD all of the following four items must exist: There existed a
misstatement(s) by the licensee; licensee knew that the information was inaccurate or should have
known, the other party relied on information, and the other party was damaged. CULPABLE NEGLIGENCE
will exist when one of the four items above is missing.

REAL ESTATE BROKERAGE OPERATIONS

Active brokers must maintain an office of stationery construction. Note: SALES ASSOCIATES cannot own
an office and must work out of a broker’s office. Hold records for 5-years and have enclosed room to
conduct negotiations in privacy.

Branch offices must be registered every two years with DBPR and are not transferrable. Note: A
temporary shelter is not a branched office if used only for the protection of customers and sales
associates.

BROKERAGE OFFICE ENTRANCE SIGNAGE

Must include the following things: FULL NAME OF BROKER; the words “LICENSED (OR LIC.) REAL ESTATE
BROKER”; and TRADE NAME OR CORPORATION NAME (if any). Optional: Broker Associates or Sales Associates.
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BROKERAGE ADVERTISING
All advertising must include the name of the brokerage office à if not it’s a blind ad. Note: FALSE
ADVERTISING is a second-degree misdemeanor. A LICENSEE can sell their own home, as sell by owner
(FSBO); however, they MUST DISCLOSE that they are a licensed real estate professional AT THE POINT OF
MEANINGFUL NEGOTIATIONS.

ESCROW / TRUST ACCOUNTS

Must be maintained in the State of Florida and they must be a commercial bank, or credit union, or
savings association. Note: If the account is an interest-bearing account à the broker must get all
parties permission and written approval, as to who shall receive the interest income earned.

Broker must be the signor on the account and can keep NO MORE THAN $1,000 OF PERSONAL FUNDS IN SALES
ESCROW OR $5,000 IN PROPERTY MANAGEMENT ESCROW à if the broker chooses to have one account, as
long as they MEET THE REQUIREMENT OF BOTH THEY CAN ONLY HAVE A MAXIMUM OF $5,000 NOT $5K & $1K.
Note: if you exceed any of these limits you will be accused of commingling funds.

Sales Associate must turn earnest money deposits into broker IMMEDIATELY (BY NEXT BUSINESS DAY) and
the Broker must deposit the earnest money deposit by the end of the 3rd business day. Note: Post-
dated checks are okay, AS LONG AS THE SELLER APPROVES THEM and must be kept in a safe place until they
become due for deposit.

CONFLICTING DEMANDS ON ESCROW

Notify FREC within 15-business days of last demand à select 1 of 4 settlement procedures within 30
business days, which are Mediation (Non-Binding), Arbitration (binding), Litigation, and Escrow
Disbursement Order. Note: THERE ARE THREE EXCEPTIONS WITH RESPECT TO NOTIFICATION, as law governs the
exact procedure to follow and they are: SALE OF HUD OWNED PROPERTY, FINANCING CONTINGENCY, RESCISSION
BASED UPON CONDOMINIUM ACT. Remember if you ask for an EDO and parties take settle or go directly to
litigation you must notify FREC in 10-business days.

If the broker feels he is entitled to a portion of escrow he will file a “DECLARATORY JUDGMENT” or if he is
not owned he would request a “BILL OF INTERPLEADER” and walks away.

RENTAL LISTING
DEMAND FOR REFUND MUST BE MADE WITHIN 30-DAYS à the customer is entitled to 100% refund if the rental
listing contains errors à the customer is entitled to 75% refund if the person cannot find suitable
rental à SELLING BAD RENTAL LISTS ARE A 1ST DEGREE MISDEMEANOR VIOLATION AND/OR $1,000 FINE.

Court Test - IRMA

• Intent | Relation | Method of Annexation | Adaption

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When a judge is asked to interpret the language of a contract it is called construction.

KICKBACKS
An unearned fee paid to a licensee for non-real estate services are legal, as long as properly licensed,
provided a service and everyone involved (buyer & seller) are adequately informed (full disclosure).
Licensee CANNOT SHARE COMMISSION WITH UNLICENSED PERSON with the EXCEPTION OF BUYER & SELLER OF
TRANSACTION, AS THEY ARE DIRECT PARTICIPANTS OF THE TRANSACTION..

Referral fees permissible as long as person holds an active license in any other jurisdiction. Note:
they cannot participate in the transaction, unless they have a real estate license in Florida.

BROKERAGE ENTITIES
• Sole proprietorship: Unlimited liability and easy to create
• General Partnership: Each partner is responsible for other parties’ actions, and all the debt of the
partnership
• Limited Partnership (must be filed with the state): at least one general partner who runs the
business (unlimited liability) and has limited partners with limited liability (up to their dollar
investment).
• Limited Liability Partnerships: Similar to general except partners are not liable for another
partners act.
• Corporations (must be filed with the state): separate legal entity from its owners.
• Limited Liability Corporation (must be filed with the state): protects one from business debt.
• Sales associates CANNOT BE A GENERAL PARTNER in a general partnership or limited partnership.
• Sales associates CAN BE A LIMITED PARTNER in a limited partnership.
• Partners’ who deal with the public and perform real estate services must be licensed as active
brokers.
• Sales associates CANNOT BE AN OFFICER OR DIRECTOR IN A CORPORATION.
• Officers or directors who deal with the public and perform real estate services must be licensed as
active brokers.

7 STEP COMPLIANT PROCESS

1. Compliant Filed: must be legally sufficient.
2. Complaint Investigated: DRE does investigation, turns information over to probable cause panel.
3. Probable Cause Panel: Determines if there is enough evidence to proceed with case
4. Formal Complaint: an outline of the charges against the licensee.
5. Informal Hearing or formal hearing: informal if guilty, get penalty issued at normal FREC meeting;
formal if guilty and testify before administrative law judge.
6. Final Order: FREC receives recommended order from administrative law judge; they accept,
reject, or modify it to become the final order
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7. Judicial Review (appeal): must be filed within 30-day with District Court of Appeals; Writ of
Supersedes is issued which stops enforcement of penalty.

PENALTIES
• Administrative
o Deny Application
o Citations ranging from $100 to $1,000
o Administrative fine up to $5,000
o Suspension up to 10 years maximum
o Revocation

• Criminal – FREC must report to state attorney; FREC cannot impose prison term as a punishment.
o 1st Degree Misdemeanor: failing to provide current and accurate rental list for a fee; fine up to
$1,000 and/or up to 1 year in prison.
o 2nd Degree Misdemeanor: all other violations of chapter 475 fall in this category; fine up to
$500 and/or up to 60 days in prison.
o 3rd Degree Felony: unlicensed practice of real estate for compensation (no license or inactive
status); fine up to $5,000 and/or 5-years in prison.

RECOVERY FUND
• Account used to reimburse people who have suffered a monetary loss as a result of a licensee
• Maximum payout of $50,000 (single judgement) & $150,000 (multiple judgements).
• Automatic Suspension of license until repaid in full including all interest accrued.
• Fees are collected from licensees to fund the account when it reaches a balance of $150,000. At
$1,000,000 fees stop. (1.50 per year for sales associates, 3.50 per year for brokers)
• Reimbursement cannot be sought from the recovery fund in the following situations:
o Spouse of the person the judgment is against.
o Licensee who was part of transaction cannot make a claim for commission.
o Transaction where licensee was not acting as a licensee, but instead for their own account.
o Transactions where the licensee had an inactive real license.
o The judgment was issued against a business, not an individual.
• Reimbursement cannot be sought from the recovery fund in the following situations:

CIVIL RIGHTS ACTS OF 1866

• Prohibits RACIAL DISCRIMINATION in all real and property transactions.

CIVIL RIGHTS ACTS OF 1968

• Established PROTECTED CLASSES from discrimination including: race, color, religion, sex (gender),
national origin, familial status, and handicap.
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• Prohibited Activities
o Steering: directing homebuyers away from areas that do not include their race, into areas that
do.
o Blockbusting: getting existing homeowners to sell their home by claiming members in the
protected class are moving in.
o Redlining: denying loans or quoting different rates for home in a certain neighborhood.

FAIR HOUSING ACT

• Housing for elderly exempt from familial status protection if all units occupied by persons 62
years or older; or at least 80% of units are occupied by persons 55 years or older
• Religious organizations can restrict housing to members on as long as they do not discriminate on
membership.
• Must post equal opportunity poster which is obtained from HUD
• HUD prosecutes Fair Housing complaints

CONSUMER CREDIT PROTECTION ACT (TRUTH IN LENDING ACT)

• Regulation Z
• Requires lenders to disclose the annual percentage rate (APR) AND all costs associated with credit
in dollars and percentage.
• Triggering Terms: (ex. Amount or percentage of down payment): if ad contains them, then the
following information must also be disclosed.
o Amount or percentage of down payment
o Terms or repayment
o Annual percentage rate

REAL ESTATE SETTLEMENT PROCEDURE ACT (RESPA)

• Purpose is to ensure buyers know the type and amount of closing costs they will pay.
• Requires: HUD 1 (settlement statement at or before closing); Information booklet about the
settlement costs at time of loan application or within 3 business days; and estimate of settlement
cost at time of loan application or within 3 business days.

OTHER ACTS
• Equal Credit Opportunity Act (ECOA)
• Prohibits discrimination on basis of: race, color, religion, sex, national origin, MARITAL STATUS, AGE, OR
RECEIPT OF PUBLIC ASSISTANCE.
• Florida Residential Landlord and Tenant Act
• Laws concerning maintaining security deposits and advance rents: 3 Options
o Separate non-interest bearing account
o Separate interest bearing account and pay 5% interest or 75% of interest earned
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 o No separate account, but post surety bond for lesser of the funds or $50,000, and pay 5%
interest.

REAL PROPERTY
• Defined as real estate plus the bundle of rights that come with it
• Bundle of rights: Disposition, Use, Possession, Exclusion
• Riparian: land close to the river
• Littoral: land close to lake
• Personal property (chattel): anything that is not real property

FREEHOLD ESTATES
• Ownership type estate
• Fee Simple: most comprehensive, inheritable
• Life Estate: measured by a person’s life time
• Remainder Estate: goes to a 3rd party IF it does not go back to original person
o Reversion Estate: property goes back to grantor
o Bundle of rights: Disposition, Use, Possession, Exclusion

NON-FREEHOLD ESTATES (LEASEHOLDS)

• Leasing or renting
• Estate for Years: written lease agreement with start and end date
• Tenancy at Will: lease agreement with start date, but no fixed end date
• Tenancy at Sufferance (holdover tenant): situation that occurs when the lease end date has
passed, but the tenant remains in the property.

CO-OWNERSHIP
• Tenancy in common: take title at the same or different time, equal or unequal interest, heirs
inherit (no right of survivorship)
• Joint Tenancy: take title at same time, equal interest, and right of survivorship (must be expressly
stated, if not, in Florida it will default to a Tenancy in Common.
• Tenancy by the entireties: husband and wife only, right of survivorship is implied. Can only
separate property prior to marriage, or through inheritance or if it’s gifted.
o Remember Elective Share: protects a surviving spouse from an unfair will – will receive 30% of
real and personal property. Remember it’s not automatic you must file with the courts.
o Remember Homestead Rights trumps a Will – homestead property cannot be willed over if
there is a surviving spouse or children.

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