General Practice Flashcards

Seller employed Broker to sell his property in Astoria Park. Broker subsequently negotiated a contract whereby Seller and Buyer agreed to sell and buy the property in Astoria Park. The contract was prepared and typed in Broker's office. As there were numerous conditions and terms that had been agreed upon by Seller and Buyer, the contract was quite long and involved. Since the amount of deposit obtained by Broker from Buyer was equal to what his commission was going to be, in the middle of one of the long paragraphs was the phrase "In the event the buyer defaults, the deposit shall be retained by the broker as his compensation." At the time Broker presented the contract to Seller and Buyer for their signatures, he made no mention of the phrase he inserted in the contract, nor did he recommend that they read the contract. However, he did not in any way try to influence them not to read it. Seller and Buyer signed the contract without reading it. In the area, a 50/50 split of defaulted deposits is customary between sellers and brokers. Buyer subsequently defaulted. Seller asked Broker for 50% of the deposit. Broker refused and showed Seller the phrase he had inserted in the contract. What should Broker do?

Answer: Give Seller 50% of the deposit.

A real estate broker has a fiduciary duty to act in the best interest of their client, the seller. Inserting a clause that allows the broker to retain the entire deposit upon buyer default, without full disclosure and recommendation for the seller to seek independent legal advice, constitutes a breach of this duty and self-dealing. Given the customary 50/50 split in the area, the broker should adhere to ethical standards and customary practice, sharing the deposit with the seller.

Possession of a current and valid license will be considered by a court

Answer: as sufficient evidence to prove the license status unless stronger evidence to the contrary is introduced.

Possession of a current and valid real estate license serves as prima facie evidence in court. This means it is considered sufficient proof of the holder's qualification to perform real estate services unless stronger, contrary evidence is presented to dispute its validity or the licensee's conduct. It is not undeniable proof, but a legal presumption that can be challenged.

A sales associate gets a signed contract from a buyer and mails it to the seller. The seller has agreed to the terms and the escrow deposit is safely in the broker's escrow account. The sales associate has a disagreement with his broker and quits. The broker refuses to pay a commission because the sales associate was not in his employ when the contract was actually received and signed. The sales associate should

Answer: sue the broker

A sales associate earns their commission when they successfully procure a ready, willing, and able buyer and a binding contract is secured, regardless of when the closing occurs or if they are still employed by the broker at that exact moment. The commission is owed by the employing broker, not the seller, as the sales associate works under the broker's license. Therefore, the sales associate should sue the broker for their rightful share of the commission.

A licensee who has passed the broker's state examination, but desires to continue to operate under an owner-employer will be registered as a

Answer: broker associate

A broker associate is an individual who holds a broker's license but chooses to be employed by another broker or an owner-developer, rather than operating independently as a principal broker. This allows them to perform real estate services under the supervision of their employer, similar to a sales associate, but with the higher qualification of a broker's license.

A hardware store owner, who is neither a real estate licensee nor a licensed or certified appraiser, was appointed by the court to appraise another hardware store. The person can

Answer: be compensated for the appraisal.

Individuals appointed by a court to perform an appraisal are generally exempt from real estate appraiser licensing requirements. When acting under court order, their authority stems from the judicial appointment, not from a state professional license. Therefore, the hardware store owner can be compensated for the appraisal performed under court appointment without holding a specific appraisal license.

In order to be a licensee member of the Florida Real Estate Commission, an individual must have been licensed a minimum of

Answer: 2 years

To be eligible to serve as a licensee member on the Florida Real Estate Commission (FREC), an individual must meet specific experience requirements. While four broker members must have been actively licensed for at least 5 years, one licensee member (either a broker or sales associate) is required to have been actively licensed for a minimum of 2 years preceding their appointment. This allows for a broader range of licensee experience on the commission.

Broker Bill has a listing contract to sell Janet's condominium. A prospective buyer offers to pay $60,000, but refuses to give a binder deposit with the contract. Broker Bill should

Answer: present the offer and suggest that the owner counteroffer for a binder

A real estate broker has a fiduciary duty to present all offers to their client, the seller, promptly and without withholding any information. A binder deposit (earnest money) is not a legal requirement for a valid offer or contract; consideration is needed, but it doesn't have to be a deposit. Therefore, Broker Bill must present the offer, even without a deposit, and can suggest the seller counteroffer to include one.

A buyer gives a sales associate a binder check made out to him. The sales associate should

Answer: endorse the check and give it to the broker within one business day.

A sales associate must immediately deliver any earnest money deposit received to their employing broker. Florida law typically requires this to be done by the end of the next business day. The sales associate should endorse the check to the broker, who is then responsible for depositing it into an appropriate escrow or trust account within the legally mandated timeframe.

The F.R.E.C. is composed of

Answer: seven members.

The Florida Real Estate Commission (FREC) is composed of seven members. These include four licensed brokers who have held active licenses for at least five years, one licensed broker or sales associate who has held an active license for at least two years, and two lay members who have never been licensed as real estate brokers or sales associates.

Licensure may be suspended for what maximum period of time?

Answer: 10 years

The Florida Real Estate Commission (FREC) has the authority to impose disciplinary actions for violations of real estate law. For serious offenses, FREC can suspend a real estate license for a significant period. The maximum period for which a license can be suspended is 10 years, reflecting the severity of potential infractions.

Broker Larry, Broker Linda, and Broker Susan form a partnership to buy a tract of land and develop and sell the land. Sales Associate Lee joins the partnership and profits will be split equally among the four. Profits for the first year amount to $80,000. Which is correct?

Answer: Profits may be divided four ways

While a sales associate cannot be a partner in a real estate brokerage firm, the scenario describes a partnership formed to *buy, develop, and sell land*, which is an investment or development venture, not a brokerage operation. In such a venture, a sales associate can legally be a partner and share in the profits, as they are acting as an investor/developer, not performing brokerage services for others independently.

Which is not correct?

Answer: A real estate licensee may not appraise a single family residence unless she has been licensed as a state licensed or certified appraiser

Real estate licensees are permitted to perform comparative market analyses (CMAs) or broker price opinions (BPOs) for compensation, which involve estimating the value of a property like a single-family residence. They do not need to be a state-licensed or certified appraiser to do so, as long as they do not call it a formal 'appraisal' or perform it for federally related transactions. Therefore, the statement that a licensee *may not* appraise a single-family residence without an appraiser license is incorrect.

The passage of rules require

Answer: a quorum vote of the Commission

The Florida Real Estate Commission (FREC) is a quasi-legislative body empowered to adopt rules necessary to implement Florida real estate law. For the passage of these rules, a quorum of the Commission members must be present, and a majority vote of that quorum is required. This ensures that rules are formally approved by the governing body.

Jane is a broker and accepts a deposit made out to her firm for $3,000. What is her legal requirement?

Answer: She must place it in her trust account within three business days

In Florida, a real estate broker who receives an earnest money deposit must place it into an escrow or trust account. The legal requirement is to deposit these funds no later than the end of the third business day following their receipt. This ensures the safekeeping of client funds and prevents commingling with the broker's operating funds.

Broker Jacqui decides to move her branch office from Fort Walton to Panama City. The proper procedure is for Jacqui to

Answer: cancel the existing branch license and submit the request and a new fee for the Panama City branch office

Branch office licenses are issued for a specific physical location. If a broker decides to move a branch office, the existing license for the old location becomes invalid. The proper procedure is to cancel the current branch office license and then submit a new application and fee for a new branch office license at the desired Panama City location. This ensures that each branch operates under a valid, location-specific license.

A real estate sales associate is a person who

Answer: may perform any of the services ordinarily performed by a broker provided that the service is under the supervision of the employing broker.

A real estate sales associate is licensed to perform various real estate services for the public, such as listing properties, showing homes, and negotiating contracts. However, they are legally required to do so only under the direct supervision and employment of a licensed real estate broker or an owner-employer. They cannot operate independently or receive compensation directly from clients.

A sales associate chooses not to renew his license at the appropriate time. His license will be

Answer: involuntary inactive.

If a sales associate fails to renew their real estate license by the expiration date, their license automatically transitions to an 'involuntary inactive' status. This means they cannot legally perform real estate services. It is not immediately canceled, nor is it a 'voluntary inactive' status, which is a choice made by the licensee.

The license period is currently

Answer: 2 years.

In Florida, real estate licenses are issued for a specific duration. The current license period for real estate professionals is two years. Licensees must renew their licenses before the expiration date to maintain an active status and continue practicing real estate.

Which category is exempt from licensing when performing real estate services?

Answer: CPAs acting within the scope of their duties

Certain professionals are exempt from real estate licensing requirements when performing real estate services that are incidental to their primary professional duties. Certified Public Accountants (CPAs) are one such group; they can provide advice or services related to real estate transactions within the scope of their accounting practice without needing a real estate license. Other options like transactional-based employees or funeral directors typically do not fall under this exemption for real estate activities.

Practicing real estate without a license is a

Answer: third-degree felony

In Texas, practicing real estate without a license is a serious offense. The Texas Real Estate License Act (TRELA) classifies this activity as a third-degree felony. This classification reflects the state's commitment to protecting the public from unqualified or unethical individuals engaging in real estate transactions, emphasizing the gravity of operating outside legal bounds.