Florida Escrow Management

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.

Florida Escrow Management & Law

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Florida

Escrow Management Course Session 1

Qualifications for Licensure


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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.


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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


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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

The Department’s Mission: to license efficiently and regulate fairly.


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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.


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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).


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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.


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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.


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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.


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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.

An attorney must have a real estate license in order to receive real estate commissions.


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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.


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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


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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.

No 45-Hour Sales Associate Post license Course = No Sales Associate License


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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.


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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.


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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.


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Session - 2

Services of Real Estate


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.

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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.


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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


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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.


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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


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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.


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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.


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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.


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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.


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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;

Manner of compensation for the unlicensed personal assistant; and the


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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.


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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.

*******************


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Session - 3

License Law and Administration

*************************



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.


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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


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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.


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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.

The Commission shall adopt a seal by which it shall authenticate its proceedings.


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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.


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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.


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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.


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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.


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Notice of Noncompliance for Initial Offense of a Minor Violation

As an alternative to an investigation, when a complaint is received, the department may

provide a licensee with a notice of noncompliance for an initial offense of a minor

violation.

Definition of “A minor violation”

A violation is a minor violation if it does not demonstrate a serious inability to practice

the profession, result in economic or physical harm to a person, or adversely affect the

public health, safety, or welfare or create a significant threat of such harm.

Failure to take action to correct the violation within 15 days after the notice may result in

the institution of regular disciplinary proceedings.

Probable Cause Panel

The probable cause panel shall be composed of two members of the Commission. Any

probable cause panel must include a present Commission member. Any probable

cause panel must include a former or present professional Commission member.

However, any former professional member of the Commission serving on the probable

cause panel must hold an active valid license.

All proceedings of the panel are confidential until 10 days after probable cause has

been found to exist by the panel or until the subject of the investigation waives his or her

privilege of confidentiality.

If the probable cause panel finds that probable cause exists, it shall direct the

department to file a formal complaint against the licensee. The Commission may

conduct informal hearings pursuant to the finding of probable cause.

Informal Hearings

If any party raises an issue of disputed fact during an informal hearing, the hearing shall

be terminated and a formal hearing before an administrative law judge from the Division

of Administrative Hearings shall be held.

Administrative Law Judge to Issue a Recommended Order to the Commission

A formal hearing shall be conducted according to the procedures found in Chapter 120,

F.S.

The administrative law judge shall issue a recommended order to the Commission after

conducting a formal hearing.


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Commission to Issue a Final Order

The Commission, with those members of the panel who reviewed the investigation

being excused, shall determine and issue the final order in each disciplinary case. Such

order shall constitute final agency action.

Any consent order or agreed settlement shall be subject to the approval of the

department.

Authorized Signatures on Final Orders

A Final Order of the Commission may be signed by either the chairperson or vice

chairperson of the Commission or the Division Director. Serving on a probable cause

panel does not preclude the chairperson or the vice chairperson from signing a Final

Order of the Commission.

Possible Outcomes

The FREC’s decision in the matter is final.

The licensee who is the subject to the final order may appeal the decision in a Court of

Appeals.

Final Orders

An order revoking or suspending the license of a broker shall automatically cause the

licenses of all sales associates and broker associates registered with the broker, and, if

a partnership or corporation, of all members, officers, and directors thereof to become

involuntarily inactive, while the license of the broker is inoperative or until new

employment or connection is secured.

Unlicensed Activity

In order to protect the public and to ensure a consumer-oriented department, it is the

intent of the Legislature that vigorous enforcement of regulation for all professional

activities is a state priority.

All enforcement costs should be covered by the professions regulated by the

department.

Unlicensed Activity Fee

Therefore, the department shall impose, upon initial licensure and each renewal thereof,

a special fee of $5 per licensee. Such fee shall be in addition to all other fees collected

from each licensee and shall fund efforts to combat unlicensed activity.


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Real Estate Recovery Fund

The Florida Real Estate Recovery Fund was created as a separate account in the

Professional Regulation Trust Fund. The fund shall be disbursed on order of the

Commission as reimbursement to any person, partnership, or corporation adjudged by a

court of competent civil jurisdiction in this state to have suffered monetary damages by

reason of any act committed as a part of any real estate brokerage transaction involving

real property in this state by any broker or sales associated who, at the time the act was

committed, held a current, valid, active Florida real estate license.

Funding the Recovery Fund

A fee of $3.50 per year shall be added to the license fee for both new licenses and

renewals of licenses for brokers, and a fee of $1.50 shall be added for new licenses and

renewals for sales associates. If the fund exceeds $1 million, collection of these fees

shall be discontinued and not re-imposed until the fund is reduced below $500,000

through disbursement. In addition to the Recovery Fund fee added to the license fee

for both new licenses and renewals of licenses, all moneys collected from fines

imposed by the Commission and collected by the department shall be transferred into

the Real Estate Recovery Fund.

Payments from the Fund

When the claim meets the requirements defined by law, the Commission shall pay the

claimant according to a final judgment. Payments for claims arising out of the same

transaction shall be limited, in the aggregate, to $50,000 regardless of the number of

claimants. Payments for claims based upon judgments against any one broker or sales

associate may not exceed, in the aggregate, $150,000.

All Commission-approved payments and disbursements made from the Real Estate

Recovery Fund shall be made by the Chief Financial Officer upon a voucher signed by

the Secretary of the DBPR. Upon the payment of any amount from the Real Estate

Recovery Fund in settlement of a claim in satisfaction of a judgment against a broker or

sales associate, the license of such broker or sales associate shall be automatically

suspended upon the date of payment from the fund.

Such license may not be reinstated until the licensee has repaid in full, plus interest, the

amount paid from the fund.


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Who Cannot Collect From Recovery Fund?

A person is not qualified to make a claim for recovery from the Real Estate Recovery

Fund if:

a) Such person is the spouse of the judgment debtor or a personal representative of

such spouse;

b) Such person is a licensed broker or sales associate who acted as a single agent

or transaction broker in the transaction that is the subject of the claim;

c) Such person’s claim is based upon a real estate transaction in which the licensed

broker or sales associate was the owner of or controlled the property involved in

the transaction; in which the licensee was dealing for the licensee’s own account;

or in which the licensee was not acting as a broker or sales associate;

d) Such person’s claim is based upon a real estate transaction in which the broker

or sales associate did not hold a valid, current, and active license at the time of

the real estate transaction; or

e) The judgment is against a real estate brokerage corporation, partnership, limited

liability company, or limited liability partnership.

Facsimile Signatures or Writing Accepted

When any act performed under Part I, Chapter 475, F. S. must be performed in writing

or acknowledged with a signature, the provision of an instrument or writing by electronic

means or facsimile, including a signature transmitted by electronic means or facsimile,

is binding and sufficient. s 475.5018, F.S.

Regulation of Real Estate Education Providers

The Commission may regulate any school that is established to offer real estate

courses, except those schools that are regulated by another state agency.

The Commission approves course titles, content, and the credit hours for real estate

courses.


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Session – 4

Brokerage Relationships

Learning Objectives


Differentiate between the duties owed by single agent brokers, transaction

brokers, and no relationship brokers;

Understand Florida’s laws regarding dual agency;

Explain the requirements for designated agents; and

Discuss Florida’s requirements for disclosure.

Brokerage Relationship Disclosure Act, Sections 475.2701-475.2801, F.S.

In order to eliminate confusion and provide for a better understanding on the part of

customers, the Legislature has passed the Brokerage Relationship Disclosure Act. The

disclosure requirements apply only to residential sales.

Definition of “Residential Sales”

The term “residential sale” means the sale of improved residential property of four units

or fewer, the sale of unimproved residential property intended for use of four units or

fewer, or the sale of agricultural property of 10 acres or fewer. s. 457.278(5)(a), F.S.

The purpose of the Brokerage Relationship Disclosure Act is to provide that:

1. Disclosed dual agency as an authorized form of representation by a real estate

licensee in this state is expressly revoked;

2. Disclosure requirements for real estate licensees relating to authorized forms of

brokerage representation are established;

3. Single agents may represent either a buyer or a seller, but not both, in a real

estate transaction; and

4. Transaction brokers provide a limited form of non-fiduciary representation to a

buyer, a seller, or both in a real estate transaction.

Designated Sales Associate

In any real estate transaction other than a residential sale as defined by law, and where

the buyer and seller have assets of $1 million or more, the broker at the request of the

customers may designate sales associates to act as single agents for different

customers in the same transaction.


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Such designated sales associates shall have the duties of a single agent, including

disclosure requirements.

The buyer and seller as customers shall both sign disclosures stating that their assets

meet the $1 million or more requirements and requesting that the broker use the

designated sales associate representation.

The required disclosure notice shall include:

FLORIDA LAW PROHIBITS A DESIGNATED SALES ASSOCIATE FROM

DISCLOSING, EXCEPT TO THE BROKER OR PERSONS SPECIFIED BY THE

BROKER, INFORMATION MADE CONFIDENTIAL BY REQUEST OR AT THE

INSTRUCTION OF THE CUSTOMER THE DESIGNATED SALES ASSOCIATE IS

REPRESENTING. HOWEVER, FLORIDA LAW ALLOWS A DESIGNATED SALES

ASSOCIATE TO DISCLOSE INFORMATION ALLOWED TO BE DISCLOSED OR

REQUIRED TO BE DISCLOSED BY LAW AND ALSO ALLOWS A DESIGNATED

SALES ASSOCIATE TO DISCLOSE TO HIS OR HER BROKER, OR PERSONS

SPECIFIED BY THE BROKER, CONFIDENTIAL INFORMATION FOR THE PURPOSE

OF SEEKING ADVICE OR ASSISTANCDE FOR THE BENEFIT OF THE CUSTOMER

IN REGARD TO A TRANSACTION. FLORIDA LAW REQUIRES THAT THE BROKER

MUST HOLD THIS INFORMATION CONFIDENTIAL AND MAY NOT USE SUCH

INFORMATION TO THE DETRIMENT OF THE OTHER PARTY.

For the purposes of this section regarding designated sales associates, the term “buyer”

means a transferee or lessee in a real property transaction, and the term “seller” means

the transferor or lessor in a real property transaction.

Presumption of Transaction Brokerage

A real estate licensee in this state may enter into a brokerage as either a transaction

broker or as a single agent with potential buyers and sellers.

There is a presumption of transaction brokerage—it shall be presumed that all licensees

are operating as transaction brokers unless a single agent or no brokerage relationship

is established, in writing, with a customer.

Dual Agency Not Legal

A real estate licensee may not operate as a disclosed or non-disclosed dual agent.

As used in this section, the term “dual agent” means a broker who represents as a

fiduciary both the prospective buyer and the prospective seller in a real estate

transaction.


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Licensee May Change From One Brokerage Relationship to Another

The law does not prevent a licensee from changing from one brokerage relationship to

the other as long as the buyer or the seller, or both, gives consent as required before

the change and the appropriate disclosure of duties is made to the buyer or seller.

Brokerage Relationship Not Required

The Brokerage Relationship Disclosure Act does not require a customer to enter into a

brokerage relationship with any real estate licensee.

Compensation Does Not Determine Brokerage Relationship

Without consideration of the related facts and circumstances, the mere payment or

promise to pay compensation to a licensee does not determine whether an agency or

transactional brokerage relationship exists between the licensee and a seller, landlord,

buyer, or tenant.

Definition of “Customer”

According to s. 475.01(c), F.S., “customer” means a member of the public who is or

may be a buyer or seller of real property and may or may not be represented by a real

estate licensee in an authorized brokerage relationship.

Legal Definition of “Transaction Broker”

“Transaction broker” means a broker who provides limited representation to a buyer, a

seller, or both, in a real estate transaction, but does not represent either in a fiduciary

capacity or as a single agent. In a transaction broker relationship, a buyer or seller is not

responsible for the acts of a licensee.

Additionally, the parties to a real estate transaction are giving up their rights to the

undivided loyalty of a licensee.

This aspect of limited representation allows a licensee to facilitate a real estate

transaction by assisting both the buyer and the seller, but a licensee will not work to

represent one party to the detriment of the other party when acting as a transaction

broker to both parties.

Duties of a Transaction Broker

(a) Dealing honestly and fairly;

(b) Accounting for all funds;

(c) Using skill, care, and diligence in the transaction;


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(d) Disclosing all known facts that materially affect the value of residential real

property and are not readily observable to the buyer;

(e) Presenting all offers and counteroffers in a timely manner, unless a party has

previously directed the licensee otherwise in writing;

(f) Limited confidentiality, unless waived in writing by a party. This limited

confidentiality will prevent disclosure that the seller will accept a price less than

the asking or listed price, that the buyer will pay a price greater than the price

submitted in a written offer, of the motivation of any party for selling or buying

property, that a seller or buyer will agree to financing terms other than those

offered, or of any other information requested by a party to remain confidential;

and

(g) Any additional duties that are mutually agreed to with a party.

Legal Definition of “Single Agent”

“Single agent” means a broker who represents, as a fiduciary, either the buyer or seller

but not both in the same transaction.

Definition of “Principal”

“Principal” means the party with whom a real estate licensee has entered into a single

agent relationship.

Single Agent Relationship Duties

The duties of a real estate licensee owed to a buyer or seller who engages the real

estate licensee as a single agent include the following:

1. Dealing honestly and fairly;

2. Loyalty;

3. Confidentiality;

4. Obedience;

5. Full disclosure;

6. Accounting for all funds;

7. Skill, care, and diligence in the transaction;

8. Presenting all offers and counteroffers in a timely manner, unless a party has

previously directed the licensee otherwise in writing; and

9. Disclosing all known facts that materially affect the value of residential real

property and are not readily observable.

Duties of a single agent must be fully described and disclosed in writing to a buyer or

seller either as a separate and distinct disclosure document or included as part of

another document such as a listing agreement or other agreement for representation.


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The disclosure must be made before, or at the time of, entering into a listing agreement

or an agreement for representation or before the showing of property, whichever occurs

first. When incorporated into other documents, the required notice must be of the same

size type or larger, as other provisions of the document and must be conspicuous in its

placement so as to advise customers of the duties of a single agent.

The first sentence of the required disclosure form must be printed in UPPERCASE AND

BOLD TYPE.

Transition to Transaction Broker Disclosure

A single agent relationship may be changed to a transaction broker relationship at any

time during the relationship between an agent and principal, provided the agent first

obtains the principal's written consent to the change in relationship. This disclosure

must be in writing to the principal either as a separate and distinct document or included

as part of other documents such as a listing agreement or other agreements for

representation when incorporated into other documents, the required notice must be of

the same size type, or larger, as other provisions of the document and must be

conspicuous in its placement so as to advise customers of the duties of limited

representation.

The first sentence of the disclosure must be printed in UPPERCASE AND BOLD TYPE.

To gain the principal’s written consent to a change in relationship, the Consent to

Transition to Transaction Broker disclosure form must be signed.

No Brokerage Relationship

Duties of a licensee who has no brokerage relationship with a buyer or seller must be

fully described and disclosed in writing to the buyer or seller. The disclosure must be

made before the showing of property.

When incorporated into other documents, the required notice must be of the same size

type or larger, as other provisions of the document and must be conspicuous in its

placement so as to advise customers of the duties of a licensee that has no brokerage

relationship with a buyer or seller.

The first sentence of the disclosure form must be printed in UPPERCASE AND BOLD.

No Brokerage Relationship Duties

A real estate licensee owes to a potential seller or buyer with whom the licensee has no

brokerage relationship the following duties:

1. Dealing honestly and fairly;


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2. Disclosing all known facts that materially affect the value of the residential real

property which are not readily observable to the buyer; and

3. Accounting for all funds entrusted to the licensee.

Disclosure Limitations

The real estate disclosure requirements of this section do not apply when a licensee

knows that the potential seller or buyer is represented by a single agent or a transaction

broker.

The real estate disclosure requirements of this section do not apply when an owner is

selling new residential units built by the owner and the circumstances or setting should

reasonably inform the potential buyer that the owner's employee or single agent is

acting on behalf of the owner, whether because of the location of the sales office or

because of office signage or placards or identification badges worn by the owner's

employee or single agent.

The real estate licensee disclosure requirements do not apply to nonresidential

transactions; the rental or leasing of real property, unless an option to purchase all or a

portion of the residential property is given; a bona fide open house or model home

showing that does not involve eliciting confidential information.

The real estate licensee disclosure requirements do not apply to the execution of a

contractual offer or agreement for representation.

The real estate licensee disclosure requirements do not apply to negotiations

concerning price, terms, or conditions of a potential sale; unanticipated casual

conversations between a licensee and a seller or buyer which do not involve eliciting

confidential information, the execution of a contractual offer or agreement for

representation, or negotiations concerning price, terms, or conditions of a potential sale.

The real estate licensee disclosure requirements do not apply to responding to general

factual questions from a potential buyer or seller concerning properties that have been

advertised for sale; situations in which a licensee's communications with a potential

buyer or seller are limited to providing general factual information, oral or written, about

the qualifications, background, and services of the licensee or the licensee's brokerage

firm.

The real estate licensee disclosure requirements do not apply to auctions; appraisals;

and dispositions of any interest in business enterprises or business opportunities,

except for property with four or fewer residential units.


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Brokerage Disclosure Records

Disclosure documents required shall be retained by the real estate licensee in all

transactions that result in a written contract to purchase and sell real property.

Each broker shall preserve at least one legible copy of all books, accounts, and records

pertaining to her or his real estate brokerage business for at least 5 years from the date

of receipt.

Copies of any disclosures made in connection with fully executed purchase contracts

must be kept by the licensee for a period of five years as proof of having made the

disclosure, whether or not the disclosure is acknowledged in writing by the party to

whom the disclosure was shown or given.


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Brokerage Operations

Session 5



Describe a brokerage office requirements;

List the legal components of the office sign;

Understand when a branch office license is necessary, and

Discuss the legality of an arrangement or agreement to receive, directly or

indirectly, any kickback or rebate, for the placement of, or favor in, any business

transaction.

Real Estate Brokerage Corporations

Officers and directors of a real estate brokerage corporation shall be registered. No

registration shall be issued to the corporation or licenses to any officer or director,

unless the corporation shall cause to register, and biennially renew the license of at

least one active officer.

License Status of Active Officers and Directors

Officers and directors who expect to be active must qualify and become licensed in the

same manner and procedure as any other applicant for active license. No registration

shall be issued to the corporation or partnership unless every broker licensed with the

corporation or partnership is registered as an officer, director, or partner of the

corporation or partnership.

No sales associate or broker associate may be registered as an officer, director or a

brokerage corporation or general partner of a brokerage partnership.

Individual applications for renewal shall not be required of inactive officers and directors

of a corporation.

Registration shall be maintained upon the representations contained in the application

or request for renewal by the corporation.

Vacancies of Office

A corporation shall have at all times registered the name (s) of its officer (s) and director

(s). In the event that a corporation has but one active broker, and such broker dies,

resigns, or is otherwise removed from the position as the active broker, then, in such


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event, such vacancy shall be filled within 14 calendar days during which no new

brokerage business may be performed by the corporation or a licensee registered with

the corporation until a new active broker is appointed and registered. Failure to appoint

another active broker within 14 calendar days will result in the automatic cancellation of

the corporate registration, and the licenses of all its officers, directors and salespersons

will become involuntarily inactive.

If a corporation has more than one active broker and one such broker dies, resigns, or

is otherwise removed from the position as an active broker, neither the corporate

registration nor licenses of any of its officers, directors, or salespersons is affected by

this vacancy.

Broker to Maintain Office

Each active broker shall maintain an office, which shall consist of at least one enclosed

room in a building of stationary construction.

If a broker’s registered office is located outside the state of Florida, prior to registering

such office the broker shall agree in writing to cooperate with any investigation initiated

in accordance with Florida real estate license law.

The required office may be in a residential location, if not contrary to local zoning

ordinances, provided the minimum office requirements are met, and the required

broker’s sign is properly displayed as required by the Florida statutes and by the

Commission rule.

Sales associates must be registered from and work out of an office maintained and

registered in the name of the employer.

Broker Must Maintain Sign at Entrance to Office

Each active broker shall maintain a sign on or about the entrance of his or her principal

office and each branch office. The sign must contain the name of the broker, together

with the trade name, if any.

For a partnership or corporation, the sign must contain the name of the firm or

corporation or trade name of the firm or corporation, together with the name of at least

one of the brokers.

At a minimum, the words “licensed real estate broker” or “lic. real estate broker” must

appear on the office entrance signs.


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License to Expire on Change of Address

A license shall cease to be in force whenever a broker changes her or his business

address, a real estate school changes its business address, or a sales associate

working for a broker or an instructor working for a real estate school changes employer.

The licensee shall notify the Commission of the change no later than 10 days after the

change, on a form provided by the Commission.

When a broker changes a business address, the brokerage firm must file with the

commission a notice of the change, along with the names of any sales associates who

are no longer employed by the brokerage.

Such notification shall also fulfill the change of address notification requirements for

sales associates who remain employed by the brokerage.

Mailing Address

The Commission defines “current mailing address” as the current residential address

which is used by a licensee or permit holder to receive mail through the United States

Postal Service. Each licensee and permit holder is required to notify the DBPR in

writing of the current mailing address and any change in the current mailing address

within 10 days of the change.

Branch Office

Whenever any licensee desires to conduct business at some other location, either in the

same or a different municipality or county than that in which she or he is licensed, each

other place of business shall be registered as a branch office, and an annual

registration fee prescribed by the Commission shall be paid for each such office.

It shall be necessary to maintain and register a branch office whenever, in the judgment

of the Commission, the business conducted at a place other than the principal office is

of such a nature that the public interest requires registration of the branch office. Each

additional office must be registered as a branch office and the fee must be paid for its

registration, as provided by Commission rule.

A mere temporary shelter, on a subdivision being sold by the broker, for the protection

of salespersons and customers and at which transactions are not closed and

salespersons are not permanently assigned, is not deemed to be a branch office.

The permanence, use, and character of the activities customarily conducted at the office

or shelter shall determine whether it must be registered.


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If a broker closes a branch office and opens another at a different location, the

registration of the office which was closed may not be transferred, and the new location

must be registered and paid for as though the other had not been closed. However,

upon application to the DBPR, the broker may reopen the first office at any time during

the remaining license period without payment of an additional fee.

Any office shall be deemed to be a branch office if the name or advertising of a broker

having a principal office located elsewhere is displayed in such a manner as to

reasonable lead the public to believe that such office is owned or operated by such

broker.

Advertising

All advertising must be in a manner in which reasonable persons would know they are

dealing with a real estate licensee. All real estate advertisements must include the

licensed name of the brokerage firm.

No real estate advertisement placed or caused to be placed by a licensee shall be

fraudulent, false, deceptive or misleading.

When the licensee’s personal name appears in the advertisement, at the very least the

licensee’s last name must be used in the manner in which it is registered with the

Commission.

When advertising on a site on the Internet, the brokerage firm name as required in

subsection (1) above shall be placed adjacent to or immediately above or below the

point of contact information. “Point of contact information” refers to any means by which

to contact the brokerage firm or individual licensee including mailing address(es),

physical street address(es), e-mail address(es), telephone number(s) or facsimile

telephone number(s).

A person may not disseminate or cause to be disseminated by any means any false or

misleading information for the purpose of offering for sale, or for the purpose of causing

or inducing any other person to purchase, lease, or rent, real estate located in the state

or for the purpose of causing or inducing any other person to acquire an interest in the

title to real estate located in the state.

Presumptions

According to Chapter 475.43, F.S., in all criminal cases, contempt cases, and other

cases filed pursuant to Chapter 475, if a party has sold, leased, or let real estate, the

title to which was not in the party’s name at the time, it shall be the presumption that

such party was acting as a real estate broker, and the burden of proof shall be upon him

or her to show otherwise.


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All contracts, options, or other devises not based upon a substantial consideration, or

that are otherwise employed to permit an unlicensed person to sell, lease, or let real

estate, the beneficial title to which has not, in good faith, passed to that party for

substantial consideration, are hereby declared void and ineffective in all cases, suits, or

proceedings taken under this chapter.

Rental information; contract or receipt; refund; penalty

Each broker or sales associate who furnishes a rental information list to a prospective

tenant, for a fee paid by the prospective tenant, shall provide such prospective tenant

with a contract or receipt, which contract or receipt contains a provision for the

repayment of any amount over 25 percent of the fee to the prospective tenant if the

prospective tenant does not obtain a rental.

If the rental information list provided by the broker or sales associate to a prospective

tenant is not current or accurate in any material respect, the full fee shall be repaid to

the prospective tenant upon demand.

A demand from the prospective tenant for the return of the fee, or any part thereof, shall

be made within 30 days following the day on which the real estate broker or sales

associate has contracted to perform services to the prospective tenant. The contract or

receipt shall also conform to the guidelines adopted by the Commission in order to

effect disclosure of material information regarding the service to be provided to the

prospective tenant.

Any person who violates any provision of subsection regarding rental information is

guilty of a misdemeanor of the first degree,

In addition, the license of any broker or sales associate who participates in any rental

information transaction which is in violation of the rental information provisions shall be

subject to suspension or revocation by the Commission in the manner prescribed by

law.

Brokerage Business Records

Each broker shall keep and make available to the department such books, accounts,

and records as will enable the department to determine whether such broker is in

compliance with the provisions of this chapter.

Each broker shall preserve at least one legible copy of all books, accounts, and records

pertaining to her or his real estate brokerage business for at least 5 years from the date

of receipt of any money, fund, deposit, check, or draft entrusted to the broker.


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In the event no funds are entrusted to the broker, records must be kept for at least 5

years from the date of execution by any party of any listing agreement, offer to

purchase, rental property management agreement, rental or lease agreement, or any

other written or verbal agreement which engages the services of the broker.

If any brokerage record has been the subject of or has served as evidence for litigation,

relevant books, accounts, and records must be retained for at least 2 years after the

conclusion of the civil action or the conclusion of any appellate proceeding, whichever is

later, but in no case less than a total of 5 years as set above.

Use of Association Names

No licensee shall use an identification or designation of any association or organization

having to do with real estate unless entitled to use such identification of designation.

Violations

A person may not operate as a broker or sales associate without being the holder of a

valid and current license therefore.

A person licensed as a sales associate may not operate as a broker or operate as a

sales associate for any person not registered as her or his employer.

A sales associate or broker associate may have only one registered employer.

Kickbacks or Rebates

Any real estate licensee who receives, or makes any arrangement or agreement to

receive, directly or indirectly, any kickback or rebate, for the placement of, or favor in,

any business transaction which forms a part of, or is incident to, any transaction(s)

negotiated or handled by said licensee, is a violation of Section 475.25(1)(b) or (d),

Florida Statutes, or both of said subsections of the Florida Statutes.

However, if prior to the time of the placement of, or favor in, said business transaction,

the licensee shall have fully advised the principal if any and all affected parties in the

transaction(s), which the licensee is handling, of all facts pertaining to the arrangement

of kickbacks or rebates, the transaction is legal.

The sharing of brokerage compensation by a licensee with a party to the real estate

transaction with full disclosure to all interested parties is not considered a violation of

Chapter 475, Part I, Florida Statutes.


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Trade Names

An individual broker, partnership or corporation may use a trade name and, if so, it must

be disclosed upon the request for license, and be placed upon the registration or

license. The trade name shall not be, and the Commission will refuse to issue a license

containing a trade name which is the same as the real or trade name of another

registrant or licensee registered or licensed with the Commission.

No individual, partnership or corporation may be registered under more than one trade

name.

The actual name of the individual or an entity is not a trade name.

Multiple Licenses

A licensed broker may be issued upon request additional licenses as a broker, but not

as a sales associate or as a broker associate, whenever it is clearly shown that the

requested additional licenses are necessary to the conduct of real estate brokerage

business.

Involuntarily Inactive

“Involuntarily inactive status” means the licensure status that results when a license is

not renewed at the end of the license period prescribed by the department.

A license that is not renewed in a timely manner will become involuntarily inactive.

A licensee may reactivate a license that has been involuntarily inactive for 12 months or

less by satisfactorily completing a required 14-hour CE course.

A licensee may reactivate a license that has been involuntarily inactive for more than

12 months but fewer than 24 months by satisfactorily completing 28 hours of a

Commission-prescribed course.

A license that has been involuntarily inactive for more than 2 years shall automatically

expire.

Activation or Transfer of License

A voluntary inactive licensee can activate that license with a licensed real estate firm or

sole proprietorship by completing an activate form RE-10 as prescribed by the

Commission.


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Expired License

Once a license expires, it becomes null and void without any further action by the

Commission or Department.

In order to again practice real estate, an applicant must qualify for a new license.

Any licensee may transfer from one licensed real estate firm or sole proprietorship to

another by submitting the required form to the DBPR.

Requirements for Delivery of Instruments

Licensees must provide in a timely manner to all principals to the transaction written

notice of any material changes to the transaction.

Licensees may not, without just cause, refuse or fail to surrender to the rightful owner,

on demand, any document or instrument which the licensee possesses.

License Law Requirements

A licensee must disclose to an owner the licensee’s intention to acquire, directly or

indirectly, an interest in property which he or she or his or her associates have been

employed to sell.

A licensee must disclose to any lender, guaranteeing agency, or other interested party,

the true terms of a sale of real estate.


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Session Six

Escrow Accounts and Broker Records


After completing this course you will be able to:

Know minimum information to be included in broker’s monthly

statement-reconciliation;

Define a “reasonable amount of time” according to FREC rules;

Explain state’s policy for fines and penalties; and

List a broker’s escape procedures for conflicting demands on escrow

money.

Brokerage Firms and Record-keeping

A brokerage firm is a business. All businesses must keep records for tax purposes.

In addition, Florida brokerage firms must keep records in order to account for other

people’s money that is received and disbursed, or transferred.

Florida real estate law doesn’t require brokers to maintain escrow accounts for holding

other people’s money.

Escrow or trust funds may be held by an attorney or a title company.

Even so, brokers are required by law to account for other people’s money as monies

are received and disbursed, and the records must be kept available for audit for at least

five years.

Brokers have a legal obligation to ensure that sales associates collect escrow payments

and that the deposits are made in accordance with the timeframe required by law.

Brokers who do not have an escrow account are still legally required to verify deposits

have been received within the time frame required by law.

Definition of Deposit

A “deposit” is a sum of money, or its equivalent, delivered to a real estate licensee, as

earnest money, or a payment, or a part payment, in connection with any real estate

transaction named or described by Florida Statute.


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A deposit shall extend to and include not only cash, or currency, but any medium of

exchange, or any securities to be converted into money, to be held or converted into

cash or bank credits.

Placing Deposits With Title Companies Or With An Attorney

When a deposit is placed or to be placed with a title company or an attorney, the

licensee who prepared or presented the sales contract shall indicate on that contract the

name, address, and telephone number of such title company or attorney.

Written Verification of Deposit

Within three business days after each deposit is due under the sales contract, the

Licensee’s broker shall make written request to the title company or attorney to provide

written verification of receipt of the deposit.

Real Estate Sales Associates

Every sales associate who receives any deposit shall deliver the same to the broker or

employer no later than the end of the next business day following the receipt of the item

to be deposited.

Saturday, Sundays and legal holidays shall not be construed as business days.

Receipt by a sales associate or any representative of the brokerage firm shall constitute

receipt by the broker.

Definition of “Immediately”

“Immediately” means the placement of a deposit in an escrow account no later than the

end of the third business day following the day of receipt of the item to be deposited.

Saturdays, Sundays and legal holidays shall not be considered as business days.

Broker Responsibility

A broker shall not be responsible for the payment of any check or draft, unless the

broker, through culpable negligence, fails to deposit the same in the regular course of

business, and the check or draft is not paid to such culpable negligence, and damage

results to some party entitled to complain of said culpable negligence.


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Brokerage Firms and Record-keeping

Florida law does not require any specific type of bookkeeping system be used by

brokers who maintain escrow accounts.

The following slides proposing the minimum standards for a brokerage escrow account

are only given as an example or model in order to help students become familiar with

bookkeeping standards.

Accurate trust account records are essential to fulfilling a broker’s responsibilities.

Real Estate Broker

Every broker who receives from sales associates, principals, prospects, or other

persons interested in any real estate transaction, any deposit, fund, money, check,

draft, personal property, or item of value shall immediately place the same in a bank,

savings and loan association, trust company, credit union or title company having trust

powers, in an insured escrow or trust account. The deposit may be placed with an

attorney.

Minimum Trust Account Records

Minimum trust account records should include:

1. A separate bank or savings and loan association account or accounts in the

name of the broker or brokerage firm and clearly labeled as a “trust account.”

2. Original or clearly legible copies of deposit slips if the copies include all data on

the originals, and, in case of currency or coin, an additional cash receipts book

identifying date and source of all trust funds received and the client or transaction

for which the funds were received.

3. Original canceled checks or clearly legible copies of original canceled checks,

including any voided checks, all of which must be numbered consecutively, if the

copies include all endorsements and all other data and tracking information.

4. Other documentary support for all disbursements and transfers from the trust

account.

5. A separate cash receipts and disbursements journal, including columns for

receipts, disbursements, transfers and the account balance, containing at least:

a. Name of client or transaction for which funds were received, disbursed, or

transferred;

b. Date on which all trust funds were received, disbursed, or transferred;

c. Check number of all disbursements; and

d. Reason for which trust funds were received, disbursed, or transferred.


58

6. Separate file or ledger with an individual card or page for each client or

transaction, showing all individual receipts, disbursements, or transfers and any

unexpended balance with

a. Identification of client or transaction;

b. Date on which trust funds were received, disbursed, or transferred:

c. Check number for all disbursements; and

d. Reason for which trust funds were received, disbursed, or transferred.

7. Monthly reconciliation of each escrow account.

Monthly Reconciliation

Florida law requires broker escrow accounts be reconciled monthly. The broker must

personally review and sign the written reconciliation.

The broker is wholly liable for escrow account activity and for maintaining escrow

records for five years, or two years after litigation involving the records has ended,

whichever is longer.

Trust Liability as Defined by Florida Law

Trust liability is defined as the sum total of all deposits received, pending and being

held by the broker at any point in time.

Broker’s Escrow Records

Rules of the FREC require a broker, once monthly, to cause to be made a written

statement comparing the broker’s total liability with the reconciled bank balance (s)

of all trust accounts.

Statement-Monthly Reconciliation

The minimum information to be included in the monthly statement reconciliation

must:

Date reconciliation was undertaken,

Date used to reconcile the balances,

Name of the bank (s),

Name of the account (s) and account number (s),

Account balance (s) and date (s),

Deposits in transit,

Outstanding checks identified by date and check number,

An itemized list of the broker’s trust liability,

Any other items necessary to reconcile the bank account balance (s),

The balance per the broker’s checkbook (s), and


59

Other trust account books and records disclosing the date of receipt and the

source of all funds.

Reconciliation

Name of bank: ____________________________________________

Name of account: __________________________________________

Account number: ___________________________________________

Reconciliation for the month of: ________________________________

Date used for reconciliation: __________________________________

Date reconciliation performed: ________________________________

Outstanding Checks Deposits in Transit

Date Check# Amount Date Amount

_____ _______ _________ _____ _________

_____ _______ _________ _____ _________

_____ _______ _________ _____ _________

_____ _______ _________ _____ _________

_____ _______ _________ _____ _________

Total - ______________ Total - _______________

Balance Per Bank Statement $______________________

Add Deposits in Transit (+)

$______________________

Subtract Outstanding Checks (-)

$______________________

Adjusted Account Balance (=)

$______________________

List of Broker’s Trust Liability

_________________________________ $_____________

_________________________________ $_____________


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_________________________________ $_____________

_________________________________ $_____________

_________________________________ $_____________

_________________________________ $_____________

Total Liability $______________________

Adjusted Account Balance and Total Liability should agree. If Adjusted Account

Balance and Total Liability do NOT agree, explain the difference:

Total Shortage $__________

Reason for shortage & corrective action

taken________________________________

Total Overage $__________

Reason overage & corrective action taken (if necessary)_____________________.

I __________________________________, Broker, have reviewed this monthly

reconciliation statement on _____________________________Date

_____________________________________________Signature of Broker

The broker must review, sign, and date the monthly statement-reconciliation.

Whenever the trust liability and the bank balances do not agree, the reconciliation

must contain a description or explanation for the differences (s) and any corrective

action taken in reference to shortages or overages of funds in the account (s).

Whenever a trust bank account record reflects a service charge or fee for a non-

sufficient check being returned or whenever an account has a negative balance, the

reconciliation must disclose the cause (s) of the returned check or negative balance

and the corrective action taken.

A broker shall be provided a reasonable amount of time to correct escrow errors if

there is no shortage of funds and such errors pose no significant threat to

economically harm the public.


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According to FREC rules, a reasonable amount of time is defined as 30 days from

the date the last reconciliation statement was performed or should have been

performed. 61J2-14.010(2), F.A.C.

Authority to inspect and audit, 475.5016, F.S.

Duly authorized agents and employees of the Department have the power to inspect

and audit in a lawful manner at all reasonable hours any broker or brokerage office

licensed under Chapter 475, F.S., for the purpose of determining if any provisions of

the chapter 475 or chapter 455, or any rule promulgated under the authority of either

chapter is being violated.

It is the state’s policy that the purpose of regulation is to protect the public by

attaining compliance with the policies established by the Legislature.

Notice of Noncompliance

Fines and other penalties may be provided in order to assure compliance; however

fines and penalties are secondary to the primary goal of attaining compliance with an

agency’s rules.

Each agency shall issue a notice of noncompliance as a first response to a minor

violation of a rule.

A violation of a rule is a minor violation if it does not result in economic or physical

harm to a person or adversely affect the public health, safety, or welfare or create a

significant threat of such harm.

A notice of noncompliance is a notification issued to the person or business subject

to the rule.

The intent of the Legislature is that a notice of noncompliance should be the first

response to a minor violation in an instance in which it is reasonable to assume that

the violator was unaware of the rule or unclear as to how to comply with it.

A notice of noncompliance is a notification issued to the person or business subject

to the rule.

The intent of the Legislature is that a notice of noncompliance should be the first

response to a minor violation in an instance in which it is reasonable to assume that

the violator was unaware of the rule or unclear as to how to comply with it.

It is the obligation of each agency to review all of its rules and designate those for

which a violation would be a minor violation and for which a notice of noncompliance


62

must be the first enforcement action taken against a person or business subject to

regulation.

In regard to escrow accounts, the Commission Rules 61J2-14.012 and 61J2-

14.014(2), F.A.C., designate as minor violations subject to notices of

noncompliance:

“failure to sign the escrow account reconciliation if the account balances.” and

“failure to stop interest from accruing prior to disbursement.”

The time for compliance begins to run from the time the licensee, registrant or

permit-holder receives the notice of noncompliance.

Failure to comply within the time allowed shall result in the issuance of a citation,

and if there is no citation listed for the violation, then regular disciplinary proceedings

will be instituted.

The notice of noncompliance may be delivered to the licensee, registrant or permit

holder’s current mailing address by certified mail, by restricted delivery or by

personal service.

The notice of noncompliance may be issued by the Division of Real Estate.

Rights of Broker in Deposits

A broker who receives a deposit does not have any right to or lien upon the said

deposit until the transaction involved has been closed.

A depositor has the right to demand return of a deposit until such time as another

party has acquired some interest or equity.

The depositor’s interest in the deposit is subject to the right to make an express

agreement to compensate the broker for time and expense incurred prior to a

demand for the return of the deposit.

The depositor’s right to demand return of the deposit again accrues upon a breach

by the other party to the contract or agreement under which it is held, or the

expiration of the time fixed or a reasonable time, for performance of the things

necessary to establish the exclusive right of such other party to the deposit.

A broker shall not deliver the deposit to the other party to the transaction until the

transaction is closed, except as otherwise directed or agreed to specifically by the

depositor.


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The interested parties involved, other than the broker, may by express agreement,

alter the disposal of the deposit, but the burden shall be on the broker to establish

good faith in the matter if such agreement is to the broker’s advantage.

The broker shall recognize and comply with the joint directions of said parties in

such cases, except where the parties act in bad faith with intent to deprive the broker

of a commission.

Broker’s Good Faith Doubt Concerning Escrowed Property

A broker who has a good faith doubt as to whom is entitled to any trust funds held in

the broker’s escrow account, must provide written notification to the Commission

within 15 business days after having such doubt and must institute one of the

settlement procedures within 30 business days after having such doubt.

A determination of good faith doubt is based on facts of each case brought before

the FREC. 61J2-10.032, F.A.C...

A Broker’s Conflicting Demands on Escrowed Property

A real estate broker, upon receiving conflicting demands for any trust funds being

maintained in the broker’s escrow account, must provide written notification to the

Commission within 15 business days of the last party’s demand and the broker must

institute one of the settlement procedures set forth in Section 475.25(1)(d)1., F.S.,

within 30 business days after the last demand. 61J2-10.032, F.A.C.

Broker’s Good Faith Doubt Concerning or Conflicting Demands on, Escrowed

Property

If a licensee, in good faith, entertains doubt as to what person is entitled to the

accounting and delivery of escrowed property, or if conflicting demands have been

made upon the licensee for the escrowed property, which property she or he still

maintains in her or his escrow or trust account, the licensee will notify the

Commission in writing and institute one of the settlement procedures. 475.25(1)(d)1,

F.S.

Lawfully Required Settlement Procedures

After promptly notifying the Commission of good-faith doubts or conflicting demands,

the licensee must promptly either

a. Request that the Commission issue an escrow disbursement order determining

who is entitled to the escrowed property; or


64

b. With the consent of all parties, submit the matter to arbitration (decision of

arbitrator is legally binding); or

c. By interpleader or otherwise, seek adjudication of the matter by a court; or

d. With the written consent of all parties, submit the matter to mediation.

Conditions to Mediation

Mediation is a nonbinding decision by a mediator.

The Department may conduct the mediation or contract with a professional mediator

to provide the service.

Payment for mediation must be agreed to in writing by the parties.

The mediation process must be completed within 90 days following the last demand

or the licensee must promptly employ one of the other escape procedures required

by law.

Lawfully Required Settlement (Escape) Procedures

If the licensee promptly employs one of the escape procedures required by law, and

abides by the order or judgment that results, no administrative complaint may be

filed against the licensee for failure to account for, deliver, or maintain the escrowed

property. 475.25(1)(d)1, F.S.

Three Exceptions to Instituting a Settlement Procedure

When there are conflicting demands on the escrow deposit, there are three

circumstances under which a licensee may disburse property from the licensee’s

escrow account without notifying the commission or employing one of the escape

procedures.

1. If the buyer of a residential condominium unit delivers to a licensee written

notice of the buyer’s intent to cancel the contract for sale and purchase, as

authorized by law, the licensee may return the escrowed property to the

purchaser without notifying the Commission or initiating any of the escape

procedures.

2. If the buyer of real property in good faith fails to satisfy the terms in the

financing clause of a contract for sale and purchase, the licensee may return

the escrowed property to the purchaser without notifying the Commission or

initiating any of the escape procedures.

3. Brokers who are entrusted with an earnest money deposit pursuant to a

residential sales contract used by the Department of Housing and Urban

Development (HUD) in the sale of property owned by HUD, are not required


65

to follow the settlement procedures set forth in Section 475.25(1)(d)1, F.S.,

but are required to follow HUD’s broker participation rules. 61J2-10.032,

F.A.C.

Residential Landlord and Tenant Act Deposit Money or Advance Rent

Whenever money is deposited or advanced by a tenant on a rental agreement as

security for performance of the rental or as advance rent for other than the next

immediate rental period, the landlord or the landlord’s agent has legal obligations

regarding the money.

Duty of Landlord or Landlord’s Agent

When money is collected from a tenant as security or advance rent, the landlord or

the landlord’s agent shall either:

a. Hold the total amount of such money in a separate non-interest bearing

account; or

b. Hold the total amount of such money in a separate interest-bearing account;

or

c. Post a surety bond with the clerk of the circuit court for $50,000 or the total

amount of deposits and security money, whichever is less.

If the landlord as principal executes a surety bond with the clerk of the circuit court in

the county in which the dwelling unit is located, the landlord shall pay to the tenant

interest at the rate of 5 percent per year, simple interest.

Such money deposited in a non-interest-bearing account or in an interest-bearing

account shall be placed in a Florida banking institution and held for the benefit of the

tenant or tenants.

The landlord (or agent) shall not commingle such moneys with any other funds of the

landlord (or agent). Only real estate trust funds can be deposited in a trust account.

However, Commission rules allow the landlord’s agent to place up to $5,000 of the

broker’s personal or other funds into the account in order to pay for the bank

charges.

The landlord or landlord’s agent shall not hypothecate, pledge, or in any other way

make use of such moneys until such moneys are actually due to the landlord.

If the money is placed in an interest-bearing account, the tenant shall receive and

collect interest in an amount of at least 75 percent of the annualized average interest


66

rate payable on such account or interest at the rate of 5 percent per year, simple

interest, whichever the landlord elects.

Within 30 days of receipt of advance rent or a security deposit, the tenant must be

notified in writing of the manner in which the advance rent or security deposit is

being held, and the rate of interest, if any, which the tenant is to receive and the time

of interest payments to the tenant.

The written notice must be given to the tenant in person or by mail.

The notice must state the name and address of the depository where the advance

rent or security deposit is being held, whether the advance rent or security deposit is

being held in a separate account for the benefit of the tenant or is commingled with

other funds of the landlord, and if commingled, whether such funds are deposited in

an interest-bearing account in a Florida banking institution.

Upon vacating the premises for the termination of the lease, if the landlord does not

intend to impose a claim on the security deposit, the landlord has 15 days to return

the security deposit together with interest.

If the landlord intends to impose a claim on the security deposit, the landlord has 30

days to give the tenant written notice by certified mail to the tenant’s last known

mailing address of his or her intention to impose a claim on the deposit and the

reason for imposing the claim.

If the landlord fails to give the required notice within the 30-day period, he or she

forfeits the right to impose a claim upon the security deposit.

If the tenant objects to the imposition of the landlord’s claim on the amount, the

tenant must do so within 15 days after receipt of the landlord’s notice.

If the tenant fails to object within 15 days after receipt of the landlord’s notice to

impose a claim on the security deposit, the landlord may then deduct the amount of

his or her claim and shall remit the balance of the deposit to the tenant within 30

days after the date of the notice of intention to impose a claim for damages.

If either party institutes a court action over the party’s right to the security deposit,

the prevailing party is entitled to receive his or her court costs plus a reasonable fee

for his or her attorney.

The court will advance the cause on the calendar.


67

Session Seven

Escrow Accounts Made Easy

***********************************

After completing this session, you will be able to:

Know current requirements for escrow accounts;

List monetary exceptions to commingling;

Itemize brokers deposits and checks; and

Complete a monthly statement-reconciliation.

Current Requirements

Deposits entrusted to a broker must be maintained in an escrow account

A broker must reconcile his escrow accounts on a monthly basis

Brokerage business books and records must be maintained for “at least” 5

years

DEPOSITS

A “deposit” is a sum of money, or its equivalent, delivered to a real estate licensee,

as earnest money, or a payment, or a part payment, in connection with any real

estate transaction named or described in 475.01(1)(a)…

Earnest money deposits from real estate transactions

Rents

Security Deposits

ESCROW ACCOUNTS

An account in a bank or trust company, title company having trust powers, credit

union, or a savings and loan association within the State of Florida.

DEPOSITS

Broker must be a signatory

All brokers equally responsible

Unlimited number of accounts

Cannot commingle personal or business brokerage funds*


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*Exception

*A broker may place and maintain up to $1,000 of personal or brokerage

broker may place and maintain up to $1,000 of personal or brokerage funds

per each sales escrow account

*A broker may place and maintain up to $5,000 of personal or brokerage

funds per each property management escrow account funds per each sales

escrow account

RECONCILIATIONS

Once monthly, a broker shall cause to be made a written statement

comparing the broker’s total liability with the reconciled bank balance

Whenever the trust liability and bank balances do not agree, the reconciliation

shall contain a description or explanation for the difference

Reconciliation

Name of bank: ____________________________________________

Name of account: __________________________________________

Account number: ___________________________________________

Reconciliation for the month of: ________________________________

Date used for reconciliation: __________________________________

Date reconciliation performed: ________________________________



_____ _______ _________ _____ _________

_____ _______ _________ _____ _________

_____ _______ _________ _____ _________

_____ _______ _________ _____ _________

_____ _______ _________ _____ _________

Total - ______________ Total - _______________

Balance Per Bank Statement $______________________


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Add Deposits in Transit (+) $______________________


$______________________

Adjusted Account Balance (=)

$______________________


_________________________________ $_____________

_________________________________ $_____________

_________________________________ $_____________

_________________________________ $_____________

_________________________________ $_____________

_________________________________ $_____________

_________________________________ $_____________

Total Liability $______________________



Total Shortage $__________

Reason for shortage & corrective action taken________________________________


Reason for overage & corrective action taken (if necessary)_____________________

I __________________________________, Broker have reviewed this monthly

reconciliation statement on _____________________________.

_________________________________________________

Signature of Broker


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Information for Reconciliation

Date the reconciliation was undertaken

Date used to reconcile the balances

Name of the bank

Name of the account

Account Number

Account balance

Deposits in transit

Outstanding checks

Itemized list of the broker’s trust liability

Any other items necessary to reconcile the account balance and books

What is Trust Liability?

The sum total of all deposits received, pending and being held by the broker at any

point in time.

Computing the trust liability

Sales Escrow Accounts

o Earnest money deposits

o Disputed funds

Security Deposit Accounts

o Security deposits

o Pet deposits

Rental Distribution Accounts

Rents (including early payments)

o Repair reserves

o Insurance proceeds

o Sales tax

o Maintenance fees

Determining the Reconciled Bank Balance

Balance per Bank Statement + Deposits in Transit - Outstanding (uncleared)

Checks = Adjusted Bank Balance


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Goal of Reconciliation

Trust Liability = Reconciled Bank Balance

Practical Example

In this example, Pet Deposits and Security Deposits are being held in a separate trust

account.

The broker uses this escrow account for holding the owners’ reserve deposits, for the

deposit of rental income, paying rental property expenses, and for disbursing the

broker’s earned commissions and the rental income to the property owners.

Gator Realty, LLC.

Balance Sheet

As of June 30, 2010

Property Address Owner Rent Security

Deposit

Other

Deposit

Owner Balance

100 Swamp Street Harwood $1000 $1000 $250 (reserve)

150 Glades Street O’Bryant $1000 $1000 $250 (reserve)

200 Marsh Street Watkins $1080 $1200 $250 (reserve)

250 Canal Street Koshland $800 $ 800 $300 (pet) $(-250)

300 Lake Street Skilling $1500 $1500 $200 (pet) $150 (reserve)

$1500 (early rent –

July)


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DRE BANK

Statement 5/1/10 – 5/31/10

Account #987654321

Gator Realty, LLC.

Rental Escrow Account Page 1

Beginning Balance $1,250

Deposits/Credits $5,500

Checks/Debits $3,700

Ending Balance $3,050

_________________________________Checks________________

Check Date Amount

1008 5/17 $ 900

1009 5/19 $ 900

1012 5/25 $1350

1014 5/07 $ 550

_________________________________Deposits_______________

Date Amount

5/1 $3200

5/3 $1500

5/4 $ 800


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DRE BANK

Statement 6/1/10 – 6/30/10

Account #987654321

Gator Realty, LLC.

Rental Escrow Account Page 2

Beginning Balance $3,050

Deposits/Credits $7,000

Checks/Debits $7,300

Ending Balance $2,750

_________________________________Checks________________

Check Date Amount

#1010 6/7 $1080

#1011 6/9 $720

#1015 6/20 $900

#1016 6/20 $900

#1017 6/21 $1080

#1018 6/22 $720

#1019 6/23 $1350

#1020 6/17 $550

_________________________________Deposits_______________

Date Amount

6/1 $2000

6/2 $2000

6/4 $1500

6/29 $1500


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Gator Realty LLC. Pg1

Check Register

Date Check # Payee Amount Memo

5/15/10 1008 Harwood $900 Rent- Swamp- May

5/15/10 1009 O’Bryant $900 Rent-Glades-May

5/15/10 1010 Watkins $1080 Rent-Marsh-May

5/15/10 1011 Koshland $720 Rent-Canal-May

5/15/10 1012 Skilling $1350 Rent-Lake-May

5/15/10 1013 VOID

5/15/10 1014 Gator Realty, LLC $550 Commissions-May

Check Register

Date Check # Payee Amount Memo

6/15/10 1015 Harwood $900 Rent-Swamp-June

6/15/10 1016 O’Bryant $900 Rent-Glades-June

6/15/10 1017 Watkins $1080 Rent-Marsh-June

6/15/10 1018 Koshland $720 Rent-Canal-June

6/15/10 1019 Skilling $1350 Rent- Lake-June

6/15/10 1020 Gator Realty, LLC $550 Commissions-June

6/29/10 1021 SS Diversified $500 A/C repair-Canal

6/29/10 1022 Safety Lock $100 Re-Key-Lake


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Name of bank: ______DRE BANK___________________________

Name of account: _Gator Realty, LLC., Rental Distribution Account__

Account number: ____#987654321____________________________

Reconciliation for the month of: __June 2010____________________

Date used for reconciliation: _____June 30, 2010_________________

Date reconciliation performed: ___Today’s Date_________________



_6/29_ __1021_ __500.00_ _____ _________

_6/29_ __1022_ __100.00_ _____ _________

_____ _______ _________ _____ _________

_____ _______ _________ _____ _________

_____ _______ _________ _____ _________

Total - ____$600.00___ Total - _______________

Balance Per Bank Statement $_________2,750________

Add Deposits in Transit (+) $_____________0________


$___________600________

Adjusted Account Balance (=) $_________2,150________


___100 Swamp Street_______________

$___________250_______

___150 Glades Street________________

$___________250_______

___200 Marsh Street________________

$___________250_______


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___300 Lake Street _________________

$_________1,650_______

_________________________________

$_____________________

_________________________________

$_____________________

_________________________________

$_____________________

Total Liability $_________2,400_______



Total Shortage $____250.00___

Reason for shortage & corrective action taken____Due to negative cash flow on 250

Canal Street property______________________________


Reason for overage & corrective action taken (if necessary)_____________________

I __________________________________, Broker have reviewed this monthly

reconciliation statement on _____________________________.

_________________________________________________

Signature of Broker

****************************************************************************************************

Definition of Conversion

Conversion is the unlawful turning or applying the personal goods of another to the use

of the taker, or of some other person than the owner.

When a party takes away or wrongfully assumes the right to goods which belong to

another, it will generally be sufficient evidence of a conversion.


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Gator Realty LLC Reconciliation

Although the monthly statement-reconciliation was performed correctly, and assuming

the broker for Gator Realty LLC signed the reconciliation within the lawful amount of

time, is there another problem?

Most common escrow account and reconciliation errors

Failure to place rent monies in an escrow account

Disbursement prior to tenant checks clearing account

Failure to properly reconcile

Failure to note overages/shortages in account

Negative cash flow

Late deposits

Failure to secure the written permission of parties when placing funds in an

interest bearing account

Failure to stop interest from accruing prior to disbursement

Failure to maintain books and records

Record Keeping

FS 475.5015

….Each broker shall preserve at least one legible copy of all books, accounts and

records pertaining to her or his real estate brokerage business for at least 5 years from

the date of receipt….


78

Session Eight

FREC Disciplinary Guidelines

***********************************


After completing this session you will be able to:

Explain the purpose of the Disciplinary Guidelines;

Demonstrate the range of disciplinary measures the guidelines propose for trust fund

violations;

Disciplinary Guidelines

61J2-24.001 Disciplinary Guidelines can be accessed by going to the FREC website

from myfloridalicense.com.

Pursuant to Section 455.2273, F.S., the Commission sets forth below a range of

disciplinary guidelines from which disciplinary penalties will be imposed upon licensees

guilty of violating Chapter 455 or 475, F.S.

The FREC has established a range of disciplinary guidelines from which penalties will

be imposed on licensees guilty of violating Chapters 455 or 475 F.S.

The maximum fine has been increased from $1,000 to $5,000.

The purpose of the disciplinary guidelines is to give notice to licensees of the range of

penalties which normally will be imposed for each count during a formal or an informal

hearing.

For purposes of this rule, the order penalties, ranging from lowest to highest, is:

reprimand, fine, probation, suspension, and revocation or denial.

Pursuant to Section 475.25(1), F.S., combinations of these penalties are permissible by

law.

Nothing in this rule shall preclude any discipline imposed upon a licensee pursuant to a

stipulation or settlement agreement, nor shall the range of penalties set forth in this rule

preclude the Probable Cause Panel from issuing a letter of guidance.

As provided in Section 475.25(1), F.S., the Commission may, in addition to other

disciplinary penalties, place a licensee on probation.


79

The placement of the licensee on probation shall be for such a period of time and

subject to such conditions as the Commission may specify.

Standard probationary conditions may include, but are not limited to, requiring the

licensee:

to attend pre-licensure courses;

to satisfactorily complete a pre-licensure course; to attend post-licensure

courses;

to satisfactorily complete a post-licensure course;

to attend continuing education courses; to submit to and successfully complete

the state-administered examination;

to be subject to periodic inspections and interviews by a DBPR investigator;

If a broker, to place the licensee on a broker associate status; or, if a broker, to file

escrow account status reports with the Commission or with a DBPR investigator at such

intervals as may be prescribed.

The penalties are as listed unless aggravating or mitigating circumstances apply.

The verbal identification of offenses is descriptive only; the full language of each

statutory provision cited must be consulted in order to determine the conduct included.

Every licensee should be familiar with all of the disciplinary guidelines.

The following slides reference only the disciplinary guidelines that are specific to escrow

trust accounts, but any time a statute or a rule has been violated, a number of charges

may apply.

(c) Section 475.25(1)(b), F.S. Fraud, misrepresentation, and dishonest dealing.

Penalty Range-First Violation: $1,000 to $2,500 administrative and 30-day suspension

to revocation.

Second and Subsequent Violations: $2,500 to $5,000 administrative fine and 6 month

suspension to revocation

(c) Section 475.25(1)(b), F.S. Concealment, false promises, false pretenses by trick,

scheme or device.

Penalty Range-First Violation: $1,000 to $2,500 administrative fine and 30-day

suspension to revocation.




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(c) Section 475.25(1)(b), F.S. Culpable negligence or breach of trust.

Penalty Range-First Violation: $1,000 to $2,500 administrative fine and 30-day




(e) Section 475.25(1)(d), F. S. Failed to account or deliver to any person as required

by agreement or law, escrowed property.

Penalty Range-First Violation: $250 to $1,000 administrative fine and suspension to

revocation.

Second and Subsequent Violations: $1,000 to $5,000 administrative fine and


(j) Section 475.25(1)(h), F.S. Has shared a commission with or paid a fee to a person

not properly licensed under Chapter 475, F.S.


revocation.



(l) Section 475.25(1)(k), F.S. Has failed, if a broker, to deposit any money in an escrow

account immediately upon receipt until disbursement is properly authorized.


revocation.



(l) Section 475.25(1)(k), F.S. Has failed, if a sales associate, to place any money to be

escrowed with his registered employer.


revocation.




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(v) Section 475.25(1)(v), F.S. Has failed, if a broker, to review the brokerage’s trust

accounting procedures in order to ensure compliance with this chapter.


revocation.



(z) Section 475.25(1)(d), F.S. A sales associate shall not collect any money in

connection with any real estate brokerage transaction except in the name of the

employer.


revocation.



(mm) Section 475.501, F.S. Failure to keep and make available to the department

such books, accounts, and records as will enable the department to determine whether

the broker is in compliance with the provisions of this chapter.


revocation.

Second and Subsequent Violations: $1,000 to $5,000 administrative fine and 90-day


(4)(a) When either the Petitioner or Respondent is able to demonstrate aggravating or

mitigating circumstances to the Commission in a hearing or to a Division of

Administrative Hearings hearing officer, in a hearing, by clear and convincing evidence,

the Commission or hearing officer shall be entitled to deviate from the above guidelines

in imposing or recommending discipline, respectively, upon a licensee.


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Session 9

Breezin’ Through A FREC Audit

*************************************************

Upon completion of this session, the student will be able to:

distinguish between inspections and audits;

know the reasons for audits and inspections;

understand how firms are selected for audit;

and

discuss the preparations needed for a smooth audit experience.

“Breezin” thru a FREC Audit

Courtesy of



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Limitation

The information contained in this presentation is a general overview and should not be

considered complete.

Many additional requirements exist for which the broker is responsible.

Specific circumstances require specific interpretation of law.

Mission Statement

The Department’s mission is to protect the health, safety and welfare of Florida’s citizens by

ensuring that regulated businesses and professionals meet prescribed standards of education,

competency, and practice.

Legal Basis, 475.021

The Division of Real Estate is charged by law to provide to the Real Estate Commission all

services to perform the duties concerning Chapters 475 and 455, Florida Statutes.

The services include, but are not limited to, recordkeeping services, examination services, legal

services, and investigative services.

Funding

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.

Authority to Inspect and Audit

Chapter 475.5016, F.S. Duly authorized agents and employees of the department shall have

the power to inspect and audit in a lawful manner at all reasonable hours any broker or

brokerage office licensed under Chapters 475, for the purpose of determining if any of the

provisions of Chapters 475 and 455, or any rule promulgated under the authority of either

chapter is being violated.

Florida Department of Business & Professional Regulation

Division of Real Estate Juana Watkins, Director

Audit and Audit/Inspection Program

Goals/Inspection

Preparation

Selection

Procedures

Schedules & Status


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Other related information


The Division of Real Estate administers the provisions of Chapter 475, Florida Statutes, relating

to real estate sales associates, brokers, and real estate appraisers who hold Florida real estate

and/or appraisal licenses.

The enforcement process begins at the inspection/audit level when periodic and routine reviews

of business and office activities determine compliance with Florida law.

Audits and Inspections

Audits are of your escrow accounts.

Inspections are of your office (space), sign, licenses, and records (contracts, leases, corp.

officers, corp./renewal, disclosures etc.). Inspections are sometimes done by questionnaire.

Audit/Inspection Goals:

To provide assistance to licensees.

The Division is set up to be a trusted resource to real estate licensees and the public through

improved customer service and education.

To provide current and changing laws.

Current real estate statutes and regulations can be found at:

www.myfloridalicense.com/dbpr/re/statutes.html

To ensure compliance with Rules and Regulations.

To listen and record suggestions and criticism and relay it to the Division of Real Estate,

Orlando.

Who Is Selected For Audit?

1. Selection is made from a spreadsheet of brokers that have not been audited.

2. Broker or firm is selected as a result of a complaint alleging escrow problems, or from

not being audited within last year.

Uniform Complaint Form (RE 2200) Instructions

All complaints must be submitted in writing to:

Attention: Consumer Complaints Section

DBPR - Division of Real Estate

400 West Robinson Street, Suite N801

http://www.myfloridalicense.com/dbpr/re/statutes.html


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Orlando, FL 32801-1757

3. Selection is made because of a Disciplinary Enforcement Request from the Florida Real

Estate Commission.

4. Audit is due to a special request (i.e. Law Enforcement).

5. Selection is made randomly, to fill a missed interview.

Preparation for the Audit

Check your office sign.

Placement: Can the sign be seen by persons who are entering the office?

Content:

The Firm’s name—for a partnership or corporation, the name of the firm or corporation

or trade name of the firm or corporation

The Broker’s name—if a partnership or corporation, the name of at least one of the

brokers

The Words “Licensed Real Estate Broker” must appear on the office entrance signs

Assemble copies of all licenses

SL Real Estate Broker or Sales

BK Real Estate Broker or Sales

BL Real Estate Broker or Sales

BO Real Estate Branch Office

CQ Real Estate Corporation

Make sure proper disclosures are being used.

Copies of all single agent notices, transition disclosures, designated agent disclosures, and no

brokerage relationship notices must be retained in the office records for a period of five years.

Have available for inspection and audit

Reconciliation statements (past 6 months) of all escrow accounts

Bank Statements, cancelled checks (past 6 months)

Check Register, deposit slips, and cancelled checks (past 6 months)

Have available ledger books/computer printouts for sales & Property Mgt. (last 6 months)

Have available for inspection:

Sales Contracts you’re holding escrow for


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Property Mgt. Files (contracts, leases, agreements, lease options etc. past 6 months)

Have available for inspection:

Any paperwork involving escrow disputes

Escrow Disputes

Who is responsible for notifying the Florida Real Estate Commission of conflicting demands

over monies held in escrow?

If a broker is holding the funds in his or her escrow account, that broker is responsible for

notifying the Florida Real Estate Commission in writing.

If an attorney or a title company is holding the escrow deposit, the broker has no responsibility

for informing FREC of an escrow dispute.

The Division of Real Estate has no jurisdiction over escrow monies held by an attorney or title

company.

If there is a dispute, it becomes a civil matter.

Procedures

Prior to Investigator’s arrival

Check corporation records, fictitious trade registration, Citations/NNCs and licenses. (These

may have been reviewed prior to date of the inspection.)

Appointments may or may not have been made.

Although notification and time of most audits/inspections are arranged with the broker, this is a

courtesy, not a legal necessity.

Refusal, or failure of the broker to respond in setting a time for an audit/inspection can cause a

complaint to be filed against the broker. (SS 475.5015 and .5016, and Rule 61J2-14.012)

Schedule

Investigator works an area for a day or more, and leaves.

Investigator may have time to fill, and conduct an audit.

If you were audited within the past year, present the audit form.

Common Violations

Failure to use proper disclosure forms

Failure to properly register a corporation

Not active with Division of Corporations


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Use of title/designation not authorized

Working without current/valid license

Change of address violation

Broker not officer in corporation

Broker not signatory on bank account

Improper Reconciliation, or no Reconciliation

Failure to follow proper EDO procedures

Salesperson has no broker affiliation, while earning commissions

Broker has failed to reconcile rental escrow properly

Related Issues

Where do I obtain forms, Regulations, Rules?

Where can I renew my license?

Where can I confirm licensure and other important information?

- DBPR’s website http://fcn.state.fl.us/dbpr

Important Phone Numbers

DRE Tampa 813/356-1379

DRE Orlando 407/245-0820

- Licensing

- Escrow

- Legal

- All inquiries

Conclusion

Review your office now to ensure compliance

Check with your local DRE office, or Orlando, for direction as needed

Don’t get caught in Hot Water!!!

Invitation to you, and associates

The Division of Real Estate extends a warm welcome to visit your local office, or Headquarters,

Orlando

http://fcn.state.fl.us/dbpr

Documents

Florida Escrow Management