Real estate buisness
Development, construction, sale, purchase appraisal, insurance, property management, investment, counseling, financing.
Real estate License
One who has met requirements of law + permitted to perform services for others related to R/E transactions.
Real estate professional's 3 areas of expertise
Valuation, Marketing; and property Transfer.
Specialization
Residential sales- Licensees may concentrate on one type or style or on one particular neighboorhood or area ; this is FARMING. -Commercial sales; Industrial sales; Agricultural sales and Business Brokerage-The value of a business is called Growing concern value.
Real estate license law
First FL law 1923
First FREC 1925
Real estate license law is FS.475
Division of Real estate (DRE) was created within the Department of regulation in 1982
Part 1 of F.S 475=Licensure and regulation of real estate licensees; Part 2(administered by the FL board estate APPRAISAL Board)= Registration licensure and certification of APPRAISERS in federally related transactions.
Purpose of the law
.To protect the public
Department of business and professional regulation (DBPR) is a consumer protection agency.
Post -License education
ALL sales associates (including Attorneys), Whether Active or Inactive MUST complete a 45 hr-post-license education(PLE) course Prior to expiration of their initial license .
-Individuals With a 4-yr degree in real estate are exempt.
-Failure to complete PLE will cause licenense to become VOID!
-To continue to practice , individual will need to re-take the 63 hr pre-license course again and PASS another state exam.
Obtaining FL brokerage license law
-A sales associate that wish to become licensed of a broker must complete the required pre-license education course specified by the FREC.
-Course is 72 hrs- and includes a final exam of 100 questions need a 70 to PASS!
Brokers license
-Applicants for a Broker's license may choose to continue employment in a SALES ASSOCIATE capacity subsequent to passing the State Exam- If so the Broker applicant will be registered as a Broker Associate after passing the state exam.
-When inactive , the broker is issued an Inactive broker's license.
Brokers POST -LICENSE EDUCATION
-All Broker's (Active & Inactive) Must complete 60hrs of PLE during initial period as a broker
-Failure=License is VOID
-Mutual Recognition applicants are exempt from PLE ONLY if NON-RESIDENTS -Upon passage of class exam, licensees receives certificate
Continuing Education
- 14-HRS of FREC approved(CE) must be completed prior to each license renewal(Every 2 years)
Mutual Recognition
FL does NOT have reciprocity with any other state
-FL has contractual arrangements with a limited number of states recognizing similarity in requirements for licensing =Mutual recognition of licenses
-NON-RESIDENTIAL licensees residing in a (MR) STATE licensed for >2 yrs may apply to take a 40 question test (law)/ 30 + pass. NO PRE-LICENSE required.
Statutory Service of real estate
F.S 475 prescribes when a license is required and services that maybe performed.
Persons required to be Licensed
Unless exempt , when a person performs a service of real estate in FL; for another ; and for compensation . Compensation is ANYTHING other than a thank you.
Statutory Services (non-comprehensive list)
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EXEMPTIONS (non-comprehensive list)
-Attorneys in fact-Authorized for another under a power of attorney
-Attorneys at law-Giving legal advice, Not getting commission on sales etc.
-Court Appointees-For SALARY only NOT commission, includes trustees, receivers, masters in chancery, court-appointed appraisers, etc
-Salaried Employees- of an owner or broker for an owner of an Apartment Community working in an on-site real estate office in a LEASING CAPACITY.
-Note; Tenants may receive up to $50(cash,rent, credit, etc) as a referral fee
-Individuals -when dealing for themselves
-Cemetery lot sales people
-Registered, Licensed and certified appraisers-Under FS.475 PART2, so long as performing appraisal services authorized under that part.
Form of the License
-Has name , type of license ,address, effective date and expiration date on it .
-Also has seal of the State of FL and the NAMES (NOT SIGNATURES)of the Governor and the Secretary of the DBPR .
Employment by a Broker or Owner Employer
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Employment by a Broker
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Employment by an owner - employer
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real estate license law and commission rules
Department of business and professional regulation aka DBPR
-CREATED BY FS.455, provides oversight and regulates professional and business in FL.
-OFFICES IN TALLAHASSE
INTENT OF LEGISLATION
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ISSUING AND RENEWING LICENSE
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TESTING NEW APPLICANTS
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Powers of the DBPR
-DBPR is authorized to (1) issue cease and desist orders,(2) administer oaths,(3)take depositions ,(4) issue subpoenas and (5) adopt rules concerning violations that can be submitted for mediation.
-DBPR may seek an injunction from a court against UNLICENSED persons, but may seek an injunction from the court for failure to follow a DBPR order.
Legal Advice
-The DEPARTMENT OF LEGAL AFFAIRS office(I.E., the Attorney General's Office) provides legal advice to the DBPR and the FREC.
The FL REAL ESTATE COMMISSION-(FREC)
Composition of the FL REAL ESTATE COMMISSION
-7 MEMBERS TOTAL
-Appointed by the Governor(confirmed by the senate)
-4 members must be actively licensed Brokers licensed for at least 5 years prior
-1 member must be any actively licensed or sales associate or Broker Associate licensed for at least 2 years prior
-Remaining 2 members (LAY MEMBERS) CANNOT HOLD OR HAV EVER HELD a real estate license prior
-Total 5 members must be licensed.
Term of office
-FREC members are appointed for 4 yr terms
-May not serve more than 2 consecutive terms
-No max of time able to serve so long as no two consecutive terms
-Do NOT get paid salaries/ receive $50 per day + expensed for all days worked.
Meeting of the FREC
-FREC meets monthly, usually at the office of the DIVISION OF REAL ESTATE ( DRE-part of the DBPR) in ORLANDO(7 members=7 dwarves/disney)
-Once per year Frec meets organizationally to choose a chairman and vice chairman for that year
-A QUORUM or a majority (4)of the members MUST be present in order for certain business to be conducted.
POWERS OF THE FREC
-Executive powers-PUBLICATION of books & newsletters, furthering Education & Investigation of complaints
-Executive powers can be exercised by the chairman alone or delegated to any other member by a quorum
-QUASI-LEGISLATIVE Powers-Power to MAKE AND PASS rules regulating licensees and professionals
-QUASI-JUDICIAL POWERS- POWER TO IMPOSE DISCIPLINARY ACTION for violation of laws or rules (similar to court of law)
-NOTE: someone CAN go to jail for violating FS.475!
lICENSE STATUS
Initial issue
-An applicant 's INITIAL ISSUE is the FIRST license received in his or her CATEGORY(SALES ASSOCIATE, Broker)
-First license is valid on the date applicant receives official notification of the passage of the state exam -receives INACTIVE STATUS.
-First license is for a period of between 18 months and 2yrs, expiring on MARCH 31 OR SEPT 30 of the appropriating year
Renewal
-Replaces a prior license/ requested when a license is about to expire
-DBPR mails a notice of renewal to last known address abt 60 days before expiration
-If you fail to renew timely , you become INVOLUNTARY inactive/can remain that way for 2 years
REISSUE
-licensee CANNOT operate with a VOID or INVALID license
-A license is(1) void(2)ineffective(3) invalid or(4) not in force after a expiration, being suspended or revoked or if (c) changes occurred affecting a licensees registration(change of name , address , employer is no longer correct in the records.
-A reissue is necessary also if a license is lost or destroyed
Active and Inactive license status
-License can be Active or Inactive
-2 types of INACTIVE
-(1) Voluntary - Licensee no longer desires to actively engage in real estate / must be requested. Still must pay required fees, STILL must do continuing education(CE). Still must renew prior to expiration may remain in this state FOREVER.
-INVOLUNTARY -When licensee does not timely request renewal, pay required fees, or do CE- - AUTOMATICALLY IS PLACED IN INVOLUNTARY inactive status / may remain this way for 2 years ONLY.
-May become active by; (1)during the first twelve months complete 14 hrs of CE and pay additional fee or (2) during the next 13 -24 months -complete 28 hr reactivation course and pay add'l fee
-NOTE IF LICENSE NOT BROUGHT CURRENT WITH IN THE 2 YRS IT AUTOMATICALLY EXPIRES
Members of the armed forces
-Fees, dues and other requirements(CE) are waived for members of the us armed forces while SERVING on active duty and for 6 months following ( so long as they were not engaged in the private practice of real estate business while serving)
-Same applies to non-military spouses if stationed out of FL
VOID AND INEFFECTIVE LICENSE
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Group license and Multiple license
-GROUP-A license acquired when a sales or broker associate works for one (O/E) with affiliated organizations providing real estate services in DIFFERENT GEOGRAPHIC AREAS.
-MULTIPLE- a BROKER (ONLY) can be issued additional license in two or more capacities / companies by requesting multiple licenses if he can show it is necessary for a legit business need (that is not prejudicial to public)
Real estate schools
-Schools must be approved and issued a permit by the DBPR to prep students for sales associate's and broker's licenses/ EACH school must have a permit/ EACH instructor must be issued a permit.
Authorized Relationships; Duties and disclosures
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TYPES OF AGENCY RELATIONSHIPS
-An AGENT represents the interests of another and acts based on trust and confidence(Husband/Wife, DR/Patient,Attorney/Client)
-Agency relationship can be created accidentally or inadvertently or may be implied by words or actions.
-Once created law imposes duties
-An Agent works for his employer , or principal to represent his best interest
-Special Agent-Authorized by principal to perform a SINGLE ACT/ defined by contract.
-GENERAL AGENT-Has principal's authority to act for him on a continuing basis with 1 business , e.g a sales associate is a (GA) of his broker or (O/E)
-UNIVERSAL AGENT Authorized to act for and represent a principal on ALL matters , without limit this is usually power of attorney
-SUB-AGENT--Extension of another agency relationships, e.g a sales associate Agency Relationship e.g sales associate is the general agent of a broker and by extension , the subagent of the brokers principals(the clients)
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NOTICE REQUIREMENTS
-As of 1997, ALL residential real estate professionals MUST use only the disclosure forms specified in the ^(BRDA)
-Residential Transaction is
-Improves residential property of equal to or less than 4 units
-Unimproved prop intended for is equal to or less than 4 units
-Agricultural prop of 10 acres or less
-Lease with option
Authorized brokerage relationships
-A real estate Broker can be employed by a member of the public in one of (3) different relationships:(1) Transaction Broker, (2) Single Agent ; and (3)No Brokerage Relationship .
-Written Disclosure specify the nature of the relationship and the Broker's duties inherent in that relationship in required in Single Agency Relationship and in NO BROKERAGE RELATIONSHIP
-SINGLE AGENCY RELATIONSHIP(SAR) is created when a broker accepts employment under a Single Agency Agreement that defines certain services to be performed on behalf of a principal Broker may represent only one side of a transaction(buyer or seller;landlord or tenant..)
-Attempt to represent both parties would be an illegal dual agency
-ONLY agency that creates a fiduciary duty (allowing principle to place trust and confidence in Broker)/fiduciary duties include:
--Confidentiality with any harmful information received from principal(excludes material defects in a property)
--Obedience -must obey all legal instructions of the principal
--Loyalty-Required to act in the best interest of the principle
--Interest of none other above /most favored price & terms
--Disclosure-Must report any fact or rumor that may affect principals decision
-Accountability-Required to account for all money and property the agent comes to possess for principal
--Skill, care, diligence -licensed pros are held to a higher standard of conduct than public
--Single agent notice for must be completed before or at the time of entering into a listing agreement , agreement for representation or before showing property, whichever occurs first.
-NO BROKERAGE RELATIONSHIP(NBR) exist when a real estate licensee has no brokerage relationship with a customer (for sale by owner)/STILL must deal fairly and honestly ,still MUST Disclose all material facts affecting value ,Still must account for all funds entrusted to him
--IMPLIED AGENCY, however , may be created if a real estate licensee confuses or misleads the customer by inappropriate words or acts that suggest that the licensee has assumed a role different from that originally agreed to Written Notice of(NBR) MUST BE GIVEN by licensee before showing of property/ may be paid fees for services
--TRANSACTION BROKER RELATIONSHIP(TBR) is the defualt , assumed relationship between a real estate licensee and the other customer, unless a SAR or NBR has been established by a written notice / agreement with customer
Transaction Broker Relationship(TBR)
TBR provides limited representation to buyer , seller or both in a real estate transaction, allowing the real estate licensee to FACILITATE a transaction working WITH both parties
-Verbal disclosure is required in a TBR
-Transition to Transaction Broker occurs when transitioning from one role to another , e.g a broker that is a single agent to seller subsequently employed by the buyer as a single agent to seller is subsequently employed by the buyer as a single agent -Would otherwise be illegal dual agency
--TTB may occur anytime/ licensee must give WRITTEN NOTICE and principle gives WRITTEN CONSENT before change in relationships occur
NON RESIDENTIAL SALES
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Presenting Offers
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Brokers Right to Compensation
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Payment of commission
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Procuring Cause of sale
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Uniform Commission rates
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REFERRAL FEES
FL Broker may pay a referral or share with a licensee or registrant in another state or county / Party may come to FL with customer, but cannot engage in real estate activities in any manner
Multiple Listing service
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Arms Length Relationship
-When parties deal at arm's length they are adverse / Opposite of fiduciary relationship / Caveat emptor-buyer beware
Net listing problems
If a seller's desired net in a sale is 280,000 closing are estimated at 4k and the broker's commission is 6% what does the sale price have to be in order for the seller to achieve his desired net from the transaction?
--Desired Net+cost x100% - commission percent = Sale price
-Here 280,000 +4,000 divide !(100%-6%)=302,127