Discover millions of ebooks, audiobooks, and so much more with a free trial

Only $11.99/month after trial. Cancel anytime.

Florida Real Estate Pre-License Course for Sales Associates
Florida Real Estate Pre-License Course for Sales Associates
Florida Real Estate Pre-License Course for Sales Associates
Ebook907 pages7 hours

Florida Real Estate Pre-License Course for Sales Associates

Rating: 0 out of 5 stars

()

Read preview

About this ebook

The course materials are designed to encompass 63 hours of study including 20 primary subject areas combined with end-of-chapter exams, practice exams and an official end-of course exam which is posted with the Florida Real Estate Commission. Each chapter begins with clearly identifiable learning objectives indicated in bullet format. Special attention should be governed towards accomplishing each objective to assure successful completion of the course.
LanguageEnglish
PublisherXlibris US
Release dateDec 29, 2012
ISBN9781479732555
Florida Real Estate Pre-License Course for Sales Associates

Related to Florida Real Estate Pre-License Course for Sales Associates

Related ebooks

Business For You

View More

Related articles

Reviews for Florida Real Estate Pre-License Course for Sales Associates

Rating: 0 out of 5 stars
0 ratings

0 ratings0 reviews

What did you think?

Tap to rate

Review must be at least 10 words

    Book preview

    Florida Real Estate Pre-License Course for Sales Associates - Cutting Edge Real Estate Academy

    53676.jpg

    FLORIDA REAL ESTATE

    PRE-LICENSE COURSE

    For Sales Associates

    2012-2013 Edition

    AUTHORS:

    DON L. HORN, J. D.

    SHALLEY J. HORN, PHD.

    BERNARD M. ISLER

    DEREK JACKSON, J.D.

    DANIELLE SPRADLEY, J.D.

    THOMAS P. WAYNE

    Financial Center

    1000 Hallandale Beach Blvd Suite 7

    Hallandale Beach, Florida 33009

    Tel. 954-744-8409

    customerservice@cereacademy.com

    Copyright © 2013 by Cutting Edge Real Estate Academy.

    Library of Congress Control Number:      2012919216

    ISBN:                   Hardcover                           978-1-4797-3254-8

                                  Softcover                             978-1-4797-3253-1

                                  Ebook                                   978-1-4797-3255-5

    All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without permission in writing from the copyright owner.

    To order additional copies of this book, contact:

    Xlibris Corporation

    1-888-795-4274

    www.Xlibris.com

    Orders@Xlibris.com

    104220

    CONTENTS

    Preface

    Session 1 Introduction: The Real Estate Business

    Session 2 Real Estate License Law And Qualifications For Licensure

    Session 3 Real Estate License Law And Commission Rules

    Session 4 Authorized Relationships, Duties And Disclosure

    Session 5 Real Estate Brokerage Activities: Guides For Salespersons

    Session 6 Violations Of License Law, Penalties And Procedures

    Session 7 Federal And State Real Estate Laws

    Session 8 Property Rights: Estates And Tenancies; Condominiums, Cooperatives, And Time-Sharing

    Session 9 Title, Deeds And Ownership Restrictions

    Session 10 Legal Descriptions

    Session 11 Real Estate Contracts

    Session 12 Real Estate Finance

    Session 13 Types Of Mortgages And Sources Of Financing

    Session 14 Real Estate Related Computations And Closing Of Transactions

    Session 15 Real Estate Appraisal

    Session 16 Introduction To Residental Product Knowledge

    Session 17 Real Estate Investments & Business Opportunity

    Session 18 Taxes Affecting Real Estate

    Session 19 The Real Estate Market

    Session 20 Planning And Zoning

    Final Examination I

    Final Examination II

    Glossary

    Sample Mortgage Document

    Sample Note Document

    Chapter Quizzes Answer Key

    Chapter Exams Answer Key

    crest%20copy-gray.jpg PREFACE

    On behalf of the entire staff at Cutting Edge Real Estate Academy, I would like to take this opportunity to thank you for choosing us in preparing for your real estate career. We pride ourselves on presenting to you the very highest standard of care in preparing this course. Our assurance to you is that all information contained herein meets the requirements of the Florida Real Estate Commission and are approved for training.

    We realize that you could have chosen any real estate school in the country but you chose us from among them all. Please know that we do not take that choice for granted and we commit to you the very finest quality of service available anywhere. Your complete satisfaction and success as well as the optimum convenience for all candidates are the underlying principles for our business model.

    The course materials are designed to encompass 63 hours of study including 20 primary subject areas combined with end-of-session exams, quizzes and an official end-of course exam which is posted with the Florida Real Estate Commission. Each chapter begins with clearly identifiable learning objectives indicated in bullet format. Special attention should be governed towards accomplishing each objective to assure successful completion of the course.

    The materials offered in this course should be supplemented with a review of appropriate Florida statutes and rules such as Chapter 475 F.S. and rule 61J2 of the Florida Administrative Code. Other supplemental references to applicable federal and state laws can be found in the Candidate Information Booklet for the Real Estate Salesperson Examination as published by the Florida Department of Business & Professional Regulation, Division of Professions, Bureau of Education and Testing, Northwood Centre, 1940 North Monroe Street, Tallahassee, Florida 32399-0791, phone 850-488-5952. Website access can be found at http://www.myflorida.com/dbpr.

    I would also like to take the opportunity to extend a special thank you to the following writers for their tireless efforts in producing such a quality product, namely: Don Horn, Shalley Jones Horn, Derek Jackson, Danielle Spradley and Thomas Wayne. A special thank you is extended also to my lovely wife Pearl James-Isler for her never ending love and unwavering support.

    Congratulations again for your choice to embark upon the world’s most exciting and fulfilling career. Should you have comments on how we can make this an even better course, please forward them to me personally at bernardisler@hotmail.com.

    Bernard M. Isler

    Editor

    crest%20copy-gray.jpg SESSION 1

    INTRODUCTION:

    THE REAL ESTATE BUSINESS

    OVERVIEW

    Real estate professionals play an essential and dynamic role in the nation’s economy. Whether we consider residential, commercial, industrial, business brokerage or agricultural services, the common denominator is that our global economy depends upon a healthy real estate sector to flourish as an international community. As evidence for that statement, one only has to look back over the last few years to the real estate bubble to realize how vast an impact the industry has on other sectors of our economy. Construction, banking, finance, insurance, to name a few, all fell victim to an over heated real estate market; of which the damage is still being assessed.

    Understanding the role that you as a real estate professional will play in this interdependent economy is what this course is all about. Please review the following objectives and vocabulary terms for this first session as we enter into the diversified world of the real estate market.

    Learning Objectives

    57372.jpg Describe the various activities of real estate brokerage

    57375.jpg Distinguish among the five major sales specialties

    57377.jpg Identify reasons why property management has grown in importance

    57379.jpg Explain the provision under Chapter 475.611 regarding federally related transactions

    57381.jpg Explain the provision under Chapter 475.25 regarding USPAP compliance

    57383.jpg Distinguish between a comparative market analysis and an appraisal

    57385.jpg Understand the licensing requirements of mortgage bankers and mortgage brokers

    57387.jpg Explain the three phases of development and construction

    Vocabulary Terms

    SPECIALIZATIONS

    The profession of real estate offers diversification over a wide scope of specializations that requires expert information to properly grasp and market efficiently in such a vastly changing environment. This expert information is what separates the attributes of the prospective purchaser or seller from the true professional and can be viewed from three different perspectives; knowledge of property transfer, knowledge of market conditions and knowledge of real estate marketing.

    57403.jpg Property Transfer—The process of transferring property ownership in the state of Florida is one that requires expertise in the various state statues, rules of law, federal policies, local and regional building codes, zoning, institutional finance, conveyance of title, insurance, underwriting, and a host of other specialties that are suitable for the professional arena. The enormous risk associated with each step of the process can be unnecessarily costly if mistakes and/or omissions are made along the way. Real estate professionals are trained and tested in all areas aforementioned that they may prove themselves worthy of their profession.

    57406.jpg Market Conditions—The ever-changing climate of the real estate market is absolutely essential in effecting closing transactions. Interest rates, loan criteria, economic outlook, property valuations, crime, demographics, statutory changes, to name a few, must be considered to fully understand the process by which real estate transactions are conducted. Again, the real estate professional is trained to recognize trend change in these areas and to stay abreast of pertinent factors that may hinder or help the buyers and sellers of properties within the industry.

    57408.jpg Real Estate Marketing—The real estate professional can be a valuable resource in introducing properties and businesses to the willing and buying public through various advertising vehicles that may not be available to the general public. Various listing services, networking mediums, strategic planning and implementation techniques and the latest technologies are some of the ways that licensed professionals can provide marketing advantages to reach the investor pool necessary to properly promote and attain maximum sales exposure. In the process of providing such services, the real estate professional should never forget one of the most important aspects of marketing and that is follow-up. Follow-up involves service after the sale and can be quite impactful upon advertising via word-of-mouth.

    REAL ESTATE BROKERAGE

    SALES AND LEASING

    The Florida Real Estate Commission, as authorized by the Florida Legislature, administers and enforces the rules and regulations pertaining to the real estate brokerage business. A primary consideration among the rules is the principle that all real estate licensed-related activities must be performed under the supervision and authority of the real estate broker. Although sales agents work as independent contractors for the most part, it is incumbent upon the broker to be held accountable for the actions of his associates.

    The broker serves as an intermediary of transactions between buyers and sellers, lessees and lessors in the purchase and/or lease of real properties and business opportunities. The broker negotiates with both parties to secure an agreement of the minds and does follow-up with other appropriate entities to close the transaction. Any salesperson that performs such services is required to work for a broker and is not allowed to operate independently and without supervision.

    The typical real estate transaction involves a complexity that requires expert information which may not be available to the average layperson. Acquiring the services of a professional can greatly assist the general public in filtering through the maze of details necessary to close a real estate transaction. This is especially true for the absentee owner that may not only find it more efficient but more convenient to rely on such services.

    Many real estate professionals today specialize in certain geographical areas to obtain customers through a process known in the industry as farming. Targeted letters, flyers, brochures, emails and personal visits are common among such strategies in attempting to expand customer base. Specific geographical areas, known as farming areas, generally located near or surrounding a particular brokerage office are often predetermined by brokers and sales associates within the office as part of an overall marketing plan and advertisement. The idea is for the professional to become more personally familiar with the residents and vice versa. Information that may be exchanged through the advertisements are designed to be helpful to the residents in understanding more about their real estate valuations and the market conditions surrounding them.

    As we consider more about the specializations of the real estate industry, it is important to note that there are five major specialties that have their own unique nuances that every professional must become familiar with. They are residential, commercial, industrial, agricultural and businesses. Each specialty is discussed below.

    57410.jpg Residential—In the residential specialty, real properties such as single-family dwellings, manufactured homes, condominiums/apartments, townhouses, duplexes, triplexes and quadraplexes are included. Family units of five or more are generally grouped as multi-family residential or income-producing properties and are treated differently from other residential dwellings as it pertains to financing, investing, marketing, zoning, insurance and sales.

    57412.jpg Commercial—The commercial specialty is one comprised of properties such as shopping centers, retail outlets, warehouses, office complexes, farmland and other special-purpose property utilized for commerce and enterprise. Multi-family dwellings of five units or more are also considered commercial property because of their investment potential. Commercial properties are often distinguished as investment class properties as a result of their ability to produce a profit and reap tax benefits.

    57414.jpg Industrial—The industrial specialty consists of real properties that are used to manufacture, produce, display, store and/or distribute goods for trade. Buildings such as warehouses, storage facilities, manufacturing plants, showrooms, distribution centers, and other multi-purpose or flex-buildings with dockage are included among this class of properties. It is common throughout the country to see this class type with frontage alongside or near major roadways and railways. The logistical conveniences for large transport vehicles to access these facilities are a prime consideration for their location. Therefore it is necessary for the real estate professional to familiarize himself/herself with the special nuances of industrial real estate. Environmental concerns should be an integral part of the assessment and evaluation process for all types of industrial use properties.

    57416.jpg Agricultural—The agricultural specialty involves real estate that is primarily used for animal, fish, plant and fruit production. Activities such as farming, ranching, hunting, forestry and fishing are common among this property class. The locations of such properties are generally found in rural areas with large tracts of land. The agricultural specialty requires the real estate professional to be astute in the economics of commodities, weather patterns, topography and risk management in order to develop marketing strategies and determine values that are relevant to its functions.

    57418.jpg Businesses—The specialty of businesses involve the transfer of ownership of a business opportunity from a seller to a purchaser. Often, business opportunities may require the transfer of shares of preferred and/or common stock and may require the professional representative to possess a securities license in order to perfect sale. For most small business transfers, however, the services of a licensed real estate professional are sufficient to coordinate a closing of the transaction.

    Businesses are also associated with leasing and subleasing arrangements which may involve the real estate professional to provide services to facilitate such transactions. It is not uncommon to find enterprises that attain master leases from property owners that offer subletting as a method of producing income. In these cases, the master leaseholder receives the right to offer real property for lease without the benefit and liability of actual ownership.

    PROPERTY MANAGEMENT

    Another facet of the roles of the real estate licensee is in the area of property management. Property management require the skills and professionalism of the licensee to be used as a buffer between the property owner and tenant. Such responsibilities include lease contract negotiations, collection of rents, maintenance and repairs, accounting of expenses and income, coordinating with homeowner associations, mortgage companies, tax officials and insurance agents; property presentation, marketing and advertisement, legal notices and evictions, property inspection, code enforcement maintenance and a host of other representations of which the owner would otherwise be responsible for.

    Many property owners that require the services of the real estate professional are absentee owners or persons/entities that are located outside the area of the subject property. The convenience of utilizing the services of the local real estate associate is mutually beneficial. The owner possesses the convenience of property ownership without the headache of direct management and the real estate professional earns a commission for his services, commonly a percentage of annual or monthly revenue. For this reason, property management has grown in importance over the years.

    Due to the complexity of such fiduciary responsibility, it may be necessary to require a written management agreement to describe with clarity what responsibilities are intended for each party to the agreement. It is important to note within the agreement which responsibilities are shared and which responsibilities are independently assigned. Each area of responsibility, as expressed above, must be clearly delineated and tasked in the agreement so that no void is created as problems arise. Protection of the investment as well as maximizing potential return should be the main objective of the relationship. The consultation of an attorney can be quite helpful in such matters and is highly advised.

    APPRAISING

    Appraising of real estate can be defined as the process of estimating value by qualitative and quantitative methods of commonly acceptable standards established by the industry profession and requires the services of a licensed professional that adheres to those standards. An appraisal, then, becomes the cumulative result of a definitive process that arrives at a rational mathematical conclusion through the use of prescribed standards. To put it quite simply, appraising is the process of estimating real estate value.

    In 1989, the United States Congress passed the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) which recognized the Uniform Standards of Professional Appraisal Practice (USPAP) as the accepted appraisal standards for federally related transactions and requires compliance with said standards for State Appraiser Certification Boards. The USPAP are recognized as the generally accepted standards for the appraisal profession throughout North America. Within the state of Florida, all state-certified, licensed and registered appraisers are regulated by the Florida Real Estate Appraisal Board which operates under the standards of the USPAP.

    The USPAP were first drafted and adopted by the Ad Hoc Committee on the Uniform Standards of Professional Appraisal Practice in 1986-1987 and were donated by the Committee to the Appraisal Foundation in 1987. The Appraisal Foundation included in its structure a board to establish and utilize criteria to measure the standards of appraiser qualifications and named it the Appraiser Qualifications Board (AQB). A second board known as the Appraisal Standards Board (ASB) was also established and adopted the USPAP on January 30, 1989. Subsequently, the U.S. Congress passed the FIRREA on August 9, 1989 and authorized the Appraisal Foundation as the source of appraisal standards and appraiser qualifications. For further information, please visit their website at www.appraisalfoundation.org.

    Real estate activities that require appraisal services include those of real estate brokers, mortgage brokers and lenders, real estate counseling and real estate consulting. Other entities such as depository and nondepository credit intermediaries, insurance companies, commercial and residential developers, taxing authorities and institutions that conduct federally-related transactions may also require the services of a real estate appraiser. All appraisals conducted for federally-related transactions, however, must be in writing. F. S. Chapter 475.611(1) (p) defines federally-related transactions as "any real estate-related financial transaction which a federal financial institutions regulatory agency or the Resolution Trust Corporation engages in, contracts for, or regulates, and which requires the services of a state-licensed or state-certified appraiser."

    Distinctions should also be considered for the type of appraisal services conducted. Real estate appraisers generally fall into two categories; certified residential and certified general. According to F.S. 475.611 (1) (h)(i), Certified general appraiser means a person who is certified by the department as qualified to issue appraisal reports for any type of real property.

    (i) Certified residential appraiser means a person who is certified by the department as qualified to issue appraisal reports for residential real property of one to four residential units, without regard to transaction value or complexity, or real property as may be authorized by federal regulation.

    A third category recognized by the state is the licensed real estate appraiser. However, after July 1, 2003, the Department of Business & Professional Regulation stopped issuing licenses of that type. Finally, the designation of Registered trainee appraiser refers to a person who is qualified to perform appraisal services but must conduct them under the direct supervision of a certified or licensed appraiser.

    Also worthy of note is the distinction between the appraiser and the assessor. Appraisers generally conduct activities within the aforementioned two categories and perform services one property at a time. Assessors, on the other hand, are often hired by tax authorities and commonly appraise large tracts of properties simultaneously.

    Demand for appraisal services are directly tied to the economic health of the real estate market. In areas where construction of real properties is robust, appraisal services are generally in high demand. Conversely, low demand is anticipated for less healthy real estate environments.

    According to the United States Department of Labor, Bureau of Labor Statistics, Occupational Employment and Wages, May 2010; industry employment activities related to real estate appraisers and assessors showed 25,990 employed while local governments (OES Designations) employed 25,450. In comparison, the Bureau reports offices of real estate agents and brokers employed 690 while other professional, scientific and technical services industries employed 890. Additionally, the state of Florida ranked 3rd in the nation among other states with the highest employment levels at 4,730 compared to number 1 ranked Texas (5,020) and number 2 ranked California (5,010).

    The licensed real estate professional is allowed to appraise properties in the state of Florida provided that no representation is made as to being state-certified, registered or licensed as such. In conducting appraisals, the licensed sales associate must conform to the standards of USPAP. Compensation for services is also allowed with clear disclosure of non-designation, lack of state certification or registration.

    The USPAP’s Ethics Rule addresses compensation for the real estate appraiser under its Management section and discloses five contingencies in which the appraiser must not accept. It specifically states:

    "An appraiser must not accept an assignment, or have a compensation arrangement for an assignment, that is contingent upon the following:

    1. The reporting of a predetermined result (e.g., opinion of value);

    2. A direction in assignment results that favors the cause of the client;

    3. The amount of a value opinion;

    4. The attainment of a stipulated result (e.g., that the loan closes, or taxes are reduced); or

    5. The occurrence of a subsequent event directly related to the appraiser’s opinions and specific to the assignment’s purpose."

    An appraiser is compensated then by salary, if he works for an institution or by fee based on time, effort and difficulty if he works as an independent.

    Furthermore, the Discipline Section of F.S. 475.25(1) (t) regulates compliance of USPAP by stating:

    "The commission may deny an application for licensure, registration, or permit, or renewal thereof; may place a licensee, registrant, or permittee on probation; may suspend a license, registration or permit for a period not exceeding 10 years; may revoke a license, registration, or permit; 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 foregoing, if it finds that the licensee, registrant, permittee, or applicant:

    (t) 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 defined in s. 475.611, as approved and adopted by the Appraisal Standards Board of the Appraisal Foundation, as defined in s. 475.611. This paragraph does not apply to a real estate broker or sales associate who, in the ordinary course of business, performs a comparative market analysis, broker price opinion, or gives an opinion of value of real estate. However, in no event is this comparative market analysis, broker price opinion, or opinion of value of real estate be referred to as an appraisal, as defined in s. 475.611."

    Another approach used by the licensee in determining an estimate of real estate value is the comparative market analysis or CMA. In this analysis, properties similar to the subject property are compared with each other in terms of location, sale price, date of sale, square footage, number of bedrooms and baths, year built, swimming pool or no swimming pool, lot size, tax assessment and other common features to determine an average estimate of value. No further certification, registration or designation is required for conducting the CMA beyond the state-issued real estate license nor is there any associated requirement to conform to USPAP. This approach is commonly used by licensees to obtain listings and present contract offers to purchase real property.

    FINANCING

    Another component of the real estate industry that is required to transact and close business is in the area of financing. Financing is that part of the business that provides funds for real estate transactions. Without this very essential component, the real estate professional is limited in his or her ability to succeed. Therefore, it is important to have great availability of sources of funds for all types of real estate transactions in order to service the needs of a diversified group of potential purchasers.

    Financing sources for real estate transactions include commercial banks, savings & loan associations (S&Ls), mortgage bankers, mortgage brokers, credit unions, insurance companies, real estate investment trusts (REITS), individual investors, foreign investors, pension funds; government sponsored enterprises or GSEs (Fannie Mae, Freddie Mac and Ginnie Mae) as well as federal, state and local governments. To determine which of these funding sources are most appropriate for the potential purchaser requires a unique and specialized expertise that the real estate professional must possess in order to avoid problems in closing transactions and to expedite the process. It is often beneficial for the agent to have a working knowledge of the funding source’s efficiency in execution so as to attain optimal professional collaboration.

    S&Ls provide the majority of financing for owner-occupied single family dwellings in the U.S. and are considered second in asset size to commercial banks. S&Ls provide primarily conventional mortgages for single family dwellings but do offer a smaller percentage in Federal Housing Association (FHA) insured and Veterans Association (VA) guaranteed loans. Traditionally, these loans are provided for the local community in proximity to the S&L. They are either state chartered or federally chartered institutions.

    Commercial banks comprise the largest assets of financial sources but are primarily involved with short-term construction loans typically six months to a year or more in duration. They are either nationally or state chartered. Nationally chartered banks are supervised by the Comptroller of the Currency and are required to be members of the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve System (FRS). They must also include the word National as part of their title. State-chartered commercial banks are regulated by their individual states and have no requirements for membership in FDIC or FRS. However, it is common for states to require memberships for them in state insurance corporations.

    Mortgage bankers and mortgage brokers must be licensed as such. Both are considered middlemen but the mortgage banker actually uses its funds to package mortgages and sells them to either a commercial bank or in the secondary market. The mortgage broker generally puts investors and purchasers together and collects a brokerage fee for their services, usually around 1% of the mortgage amount.

    COUNSELING

    Counseling can be defined as the service of analyzing existing or potential projects and providing advice. According to The Counselors of Real Estate (CRE), the process of counseling involves an extensive range of real estate knowledge and expertise to transition from problem identification to problem-solving. Such expertise includes economic and fiscal impact studies, feasibility studies, financing, valuation and appraisal, acquisitions and dispositions, brokerage, asset management, arbitration and mediation, etc. More information can be obtained by visiting their website at www.cre.org.

    DEVELOPMENT AND CONSTRUCTION

    Development and construction within the State of Florida are governed by what is known as Florida Land Development Regulations. Included among these regulations are statutes, ordinances and codes that give guidance and legal authority as to what can or cannot be done in Florida growth management. A key change of the 2011 Florida Legislature was presented by HB 7207, now called Chapter 2011-139, Laws of Florida. Previously labeled the Local Government Comprehensive Planning and Land Development Regulation Act, it has been renamed the Community Planning Act {§163.3161(1), F.S.}, reflecting a "shift from State oversight to local government control of the planning and growth management process." More about regulation and planning will be discussed in the Role of Government section of this chapter.

    It is important to note, from an investor perspective, that there are 3 phases of development and construction; land acquisition, subdividing and development and construction. Each will be discussed separately. The real estate professional should be thoroughly familiar with each phase.

    LAND ACQUISITION

    The first phase of development and construction after budgetary and feasibility considerations have been met is land acquisition. The size, location, cost, zoning, highest and best use, history and purpose for the development are commonly held as prerequisites in the building process. Land acquisition is usually executed through a purchase agreement or land lease agreement with associated rights of ownership or appropriate leasehold arrangements for the intended land-use.

    Land acquisition for large developments is more feasibly executed through one owner with sizeable acreage or square footage. Often developers are met with complex challenges in attempting to acquire contiguous land from multiple owners. In high density urban areas, for example, developers are sometimes faced with the dilemma of having to persuade several different existing property owners to convey title for a single project, especially as it pertains to expansion in mixed-use neighborhoods. The real estate professional can be most useful in these circumstances.

    SUBDIVIDING AND DEVELOPMENT

    After land has been acquired, the next phase of development and construction involves subdividing larger tracts of land into smaller ones that are suitable for building and resale. A subdivision plat map is therefore necessary to be designed and approved by the local municipality that governs the site location. A subdivision plat map details the layout of the proposed building site including buildings, infrastructure and landscaping and must be approved before any construction or marketing can begin. Once the subdivision plat map is approved, it is then recorded in the public records.

    Property designated for public streets and right-of-way is conveyed to local government through a process known as dedication. Dedication can be defined simply as the conveyance of private property for public use. Local governments are not mandated to accept such conveyances but often do if no zoning violations or unlawful restrictions are included.

    CONSTRUCTION

    Once property is acquired and subdivided, it is then ready for construction. A licensed contractor is needed for this phase of the development process which is often accompanied by the use of several sub-contractors. As it pertains to residential real estate projects, 3 types of residential construction is considered; spec homes, tract homes and custom homes.

    57420.jpg Spec Homes—These homes are built with the expectancy that purchasers are available and will be attracted to a completed model. Obvious risks are associated with spec homes because there is no guarantee that the developer will sell the home and get reimbursed for the expenses incurred. The market environment, then, must be carefully studied and deemed suitable for prospects in order to achieve success in this business model.

    57422.jpg Tract Homes—Building tract homes is similar to spec homes except different types or models of homes are built to showcase varying styles and sizes. The risk is even greater than spec building because of the additional expenses to create the variety and availability. However, from a marketing perspective, if the developer’s budget allows, tract building can be especially useful in attracting capable investors for immediate occupancy and thereby curbing risk.

    57424.jpg Custom Homes—Developers who build custom homes offer flexibility to the customer and/or his architect to provide input that satisfies personal design style and taste. Close collaboration with the customer is essential in producing the desired product. Custom building generally involves customers with high net worth thus demanding greater quality, construction costs and associated risk. The real estate professional can be extremely useful to the developer in finding such potential investors.

    THE ROLE OF GOVERNMENT

    FEDERAL GOVERNMENT

    The federal government has an enormous influence on the real estate market. Each branch of the government; legislative, judicial and executive, along with the Federal Reserve System, develop and/or enforce regulations, rules and policies that affect the way that real estate business is conducted. Legislative actions such as the passing of Fair Housing and anti-discrimination laws; sweeping and broad-based financial reform legislation (i.e. Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010); enforcement of federal protection laws by the judicial system; investigative and enforcement policies of the executive branch, plus interest rate and federal reserve policies, all work together to create a climate within the real estate profession that prompts the professional to acknowledge and adjust to.

    STATE GOVERNMENT

    The role of state government in real estate transactions is similar to the federal government as it pertains to branches of governments’ involvement. There are state statutes passed by the legislature and enforced by the judicial and executive branches. Administratively, there are departments established to oversee the routine business conduct of the real estate professional and to provide a support basis for professionals through education and personal assistance. The scope of authority and procedures for real estate transactions rests largely with state governments and may vary from state to state.

    In the state of Florida, all applications for licensing as real estate sales associates, brokers, appraisers and schools are processed through the Florida Department of Business and Professional Regulation (DBPR), Division of Real Estate (DRE) pursuant to chapter 475 of the Florida Statutes. The Florida Real Estate Commission (FREC) is the governing body of the DRE and is empowered to administer and enforce real estate law under the Florida Statutes and to pass rules known as the Florida Administrative Code (FAC) to carry out its delegated duties and responsibilities.

    LOCAL GOVERNMENT

    After following federal and state rules and regulations to conduct real estate activity, it is then necessary to apply to local government to acquire a permit to practice the profession. These permits, commonly known as occupational licenses or business tax receipts, are issued by the local governing municipalities and require proof of compliance with state and federal law beforehand. Local government requires adherence to building and zoning regulations, fire and safety codes, planning and engineering ordinances, and other rules that insure the public safety.

    PROFESSIONAL ORGANIZATIONS

    In addition to compliance with governmental regulation, it is also essential for successful real estate professionals to consider the ethical requirements of the industry which can be realized by joining and adhering to the policies of a number of professional organizations. Organizations like the National Association of REALTORS© (NAR), the Florida Realtors, formerly Florida Association of Realtors and the myriad Local Board Association of REALTORS© exist to set high ethical standards for the professional to abide by in the interest of public protection. They also provide a multiplicity of educational opportunities and certification designations that align with their Code of Ethics.

    NATIONAL ASSOCIATION OF REALTORS® (NAR)

    As stated in the mission of the NAR, their main purpose is to assist members in becoming successful and more profitable. Their vision sets forth the identity as an advocate for home ownership and the preservation of all rights pertinent to the process for those seeking to acquire, use or transfer real property. The National Association of Realtors is established in the United States and recognized the world over for its dedication to its members to benefit from its research and resources. Looking forward, the NAR has established strategic objectives balanced within a planning process over the next three to five years to secure innovation and cutting edge impact on the real estate community.

    Florida Realtors® (FAR)

    The Florida Realtors® was established in 1916 at a convention in Jacksonville Florida and has since grown to be the largest trade association in the state with over 115,000 members. The mission of the Florida Realtors® is to use its resources to help shape today’s real estate industry and build upon the efforts of the local Board of Realtors®. It operates under the guidelines of the NAR and is dedicated to encourage high ethical standards in conducting real estate transactions within the State of Florida and to give input to NAR to make the national real estate community a better place to work and transact business.

    Several committees work in collaboration to make Florida a leader in the real estate industry by serving the professional in areas of education, leadership, governmental affairs, ethics, and others. Integration into these various committees is best accomplished by serving first at the local level. By participating in these dedicated teams of service, the real estate professional can gain an intricate perspective of how the industry works as a whole.

    LOCAL BOARD (ASSOCIATION) OF REALTORS®

    The local Board (Association) of Realtors is the grass roots organization that advocates on behalf of the local real estate community for local, state, and national endeavors. Committee service at the local level is the recommended approach before advancing to state and national levels of involvement. Since real estate is considered to be local in nature, the local Board can be instrumental in keeping the professional apprised of pertinent issues affecting the market practices in which he/she resides.

    Other services such as the multiple listing service; providing of real estate listing and sales contracts, disclosure forms and addendums are commonly provided by the local real estate Boards. Additionally, guidelines are established and published so as to keep the professional congruent in all facets of real estate practice. Put simply, the local Boards can be an essential part of the overall success and growth within the real estate profession and community.

    SESSION 1 Quiz

    1. When demand for property managers increase it usually means an

    44472.png

    .

    2. When a contractor builds a home to the specifications of the owner, it is called

    44475.png

    .

    3. When you have an absentee owner, the demand will increase for

    44477.png

    .

    4. A person who is licensed to market, maintain and lease property is

    44479.png

    .

    5. When FREC revises or passes new rules, they do so using

    44482.png

    .

    6. Florida licensing laws require a sales associate, before his first renewal to complete

    44484.png

    .

    7. Appraisers and licensees most often use

    44486.png

    when estimating sale price.

    8. When a developer give the city a portion of his development property for public use it is called a

    44488.png

    .

    9. When a licensee markets his services in a specific focus area it is called

    44490.png

    .

    10. A property manager must be

    44492.png

    by FREC.

    11. The primary purpose of a real estate brokerage is to broker the

    44495.png

    and

    44498.png

    of real estate.

    12. A map of a subdivision is called a

    44500.png

    map.

    13. After the sale, the broker should

    44502.png

    with his/her new client.

    14. Federally related transactions are explained in the provisions under chapter

    44504.png

    F.S.

    15. An appraiser’s main focus is the process of

    44506.png

    the value of real estate.

    Session 1 Exam

    1. Which below is not one of the five major sales specialties?

    a. residential

    b. commercial

    c. industrial

    d. governmental

    2. Three types of residential construction are

    a. spec homes, tract homes, and luxury homes

    b. spec homes, affordable homes, and specialized homes

    c. custom homes, affordable homes, and intermediate homes

    d. tract homes, spec homes, and custom homes

    3. Expert information that a salesperson or broker must market includes

    a. knowledge of market conditions

    b. knowledge of property transformation

    c. knowledge of how to list property

    d. a and c but not b

    4. A licensee’s responsibilities as a property manager include

    a. income reporting to IRS

    b. coordinating with homeowner associations

    c. filing state sales taxes

    d. a and c but not b

    5. The financing source that provides the majority of financing for owner-occupied single family dwellings in the U.S. is

    a. the commercial bank

    b. the Federal Housing Administration

    c. the Savings & Loan Association

    d. the mortgage banker

    6. All appraisals conducted for federally related transactions require a

    a. State licensed real estate appraiser

    b. State certified real estate appraiser

    c. State registered real estate appraiser

    d. a and b but not c

    7. A real estate appraiser is paid

    a. percentage commission based on property value

    b. fee based on time, effort and difficulty

    c. a salary

    d. b and c but not a

    8. Development and construction within the State of Florida are governed by

    a. Florida Land Development Regulations

    b. Florida Development and Construction Regulations

    c. Florida Land and Construction Regulations

    d. Florida Land Development and Construction Regulations

    9. The first phase of development and construction after budgetary and feasibility considerations have been met is

    a. planning

    b. land acquisition

    c. financing

    d. project consultation

    10. Real estate brokers and salespersons often specialize in a particular geographic area or property type called

    a. specialized location

    b. geographic localization

    c. situs

    d. farming

    11. The service of analyzing existing or potential projects and providing advice is known as

    a. brokerage

    b. property management

    c. counseling

    d. development construction

    12. Property designated for public streets and right-of-way is conveyed to local government through a process known as

    a. allocation

    b. dedication

    c. delegation

    d. ad valorem

    13. Homes that are built with the expectancy that purchasers are available and will be attracted to a completed model are called

    a. spec homes

    b. tract homes

    c. custom homes

    d. model homes

    14. The scope of authority and procedures for real estate transactions rests largely with

    a. local governments

    b. state governments

    c. federal government

    d. a and b but not c

    15. After following federal and state rules and regulations to conduct real estate activity, it is then necessary to apply to local government to acquire a permit to practice the profession commonly known as

    a. occupational licenses

    b. business tax receipts

    c. real estate activity permit

    d. a and b but not c

    crest%20copy-gray.jpg SESSION 2

    REAL ESTATE LICENSE LAW AND QUALIFICATIONS FOR LICENSURE

    Learning Objectives

    57426.jpg Identify the qualifications for a salesperson’s license

    57428.jpg Describe the application requirements for licensure including nonresident application requirements

    57430.jpg Understand the importance of responding accurately to question 9 on the license application and understand the background check procedure conducted by the DBPR

    57434.jpg Describe the education requirement for pre—and post-license education and continuing education

    57436.jpg Distinguish among the various license categories

    57438.jpg Identify services of real estate

    57440.jpg Recognize exemptions from real estate licensure

    57442.jpg Distinguish between registration and licensure

    57444.jpg Understand mutual recognition agreements

    Vocabulary List

    HISTORY AND OBJECTIVES OF REAL ESTATE LICENSE LAWS

    HISTORY OF FLORIDA’S REAL ESTATE LICENSE LAW

    The Department of Business and Professional Regulation (DBPR) licenses and regulates nearly a million Florida businesses and professionals, from real estate agents, veterinarians, and accountants to contractors and cosmetologists. Their mission is to license efficiently and regulate fairly. 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. The general provisions that govern the operation and functions of the Department of Business and Professional Regulation are found in Florida Statute Chapter 455.

    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. Its mission is stated as protecting the public by regulation of real estate and appraisal licensees through education and compliance.

    Its vision is stated as to be a trusted resource to real estate and appraisal licensees and the public through improved customer service and education.

    The Florida Real Estate Commission (FREC) was created to protect the public through education and regulation of real estate licensees. 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 Administrative Code sections as well as Chapters 455, 215, 120, and 20, Florida Statutes, have provisions relevant to the work of the FREC. The Commission consists of seven members appointed by the Governor, subject to confirmation by the Senate. 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.

    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.

    The general provisions that govern the operation and functions of the Florida Real Estate Commission are found in Florida Statute Chapter 475.02. Commissioners are charged with the responsibility and duty of implementing and enforcing Florida Statue 475, Florida Statue 455, Florida Administrative Code 61J2 and periodically enacting bylaws and other rulings that will be of a benefit to licensees as well as consumers. These tasks are accomplished during public meetings held on the third Tuesday and Wednesday of each month. Commissioners seek to foster the education of brokers, broker associates, sales associates, and instructors concerning the ethical, legal, and business principles which should govern their conduct.

    NEED FOR REGULATION

    Caveat emptor is a Latin phrase that simply means, let the buyer beware. It is an old legal maxim that business dealings placed an obligation or burden on the buyer or purchaser. What it implied was that it was the purchaser’s duty to ensure that an item they were buying was right for them, and that it would do the job. The seller of an item was under no legal obligation to the customer if the item was faulty, or if it didn’t do what the seller claimed it could. Under this system charlatans, flim-flam artists and other unscrupulous persons often ended up selling defective items and even unusable real estate (such as land in the Everglades) to unsuspecting buyers. The result of these gotcha practices was a realization that the sale of real estate was an area that needed to be regulated.

    PURPOSE OF REGULATION

    The Florida Legislature deems it necessary in the interest of the public welfare to regulate real estate brokers, sales associates, and real estate schools in this state. Fl. Stat. 475.001. The regulation of the sale of real estate is one example of the consumer protection laws that have been passed to counter the negative impact and implications of caveat emptor. The primary reason for regulations is the protection of the consumer.

    Commissioners understand the importance of protecting the public, realtors, and the real estate industry in Florida, and will continue to maintain and defend the integrity of Florida’s real estate profession. By upholding the legislation and rulings of our state, FREC will ensure the integrity of the Florida real estate profession, the trust between our licensees and the public, and the future viability of our state as one of the largest areas for homeownership and economic development in America.

    IMPORTANT REAL ESTATE STATUTES AND RULES

    Florida’s real estate license laws, the eligibility requirements and the application process for obtaining a salesperson’s or brokerage license are set forth in Chapter 455 of the Florida Statutes. The applicable statutes and rules set the qualifications for obtaining a salesperson’s license as well as present the application requirements for obtaining such a license. As reflected in the statutes, the available licenses are broken down into three (3) major categories; Broker, Salesperson and Broker-salesperson.

    LICENSE CATEGORIES

    A broker is a person who, for another, and for compensation or in anticipation of compensation, appraises, auctions, sells, exchanges, buys, rents or offers, attempts or agrees to appraise, auction, or negotiate any sale, exchange, purchase, or rental of business enterprises or any real property or any interest in or concerning the same or who advertises the same. A broker renders a professional service and is a professional within the meaning of s. 95.11(4)(a). The term broker also includes any person who is a general partner, officer, or director of a partnership or corporation which acts as a broker. The term broker also includes any person or entity who undertakes to list or sell one or more timeshare periods per year in one or more timeshare plans on behalf of any number of persons, except as provided in ss. 475.011 and 721.20. With a broker’s license you can open your own firm and hire Sales Associates to work for you.

    A sales associate, also known as a salesperson, 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. A sales associate renders a professional service and is a professional within the meaning of s. 95.11(4)(a). A sales associate is a person who, for another, and for compensation or in anticipation of compensation, appraises, auctions, sells, exchanges, buys, rents or offers, attempts or agrees to appraise, auction, or negotiate any sale, exchange, purchase, or rental of business enterprises or any real property or any interest in or concerning the same or who advertises the same, but who performs such act under the direction, control, or management of a broker or owner/developer. With a sales associate license one can participate in listing and selling residential, commercial, industrial property, vacant land, business opportunities, timeshares, rent and manage real property as long as you work under the supervision of a licensed real estate broker.

    A Broker associate, also known as a Broker-salesperson, 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.

    GENERAL LICENSURE PROVISIONS

    The general licensure provisions for persons seeking to become brokers, broker associates or sales associates are designed to ensure that each applicant meets certain minimum requirements and is of such character and reputation that he/she will not engage in conduct harmful to consumers. Pursuant to Florida Statute 475.17 and 61J2-2.027 some of the minimum requirements and information that must be included with each application include the following.

    A. Age—Each applicant who is a natural person must be at least 18 years of age.

    B. Education—Each applicant must have obtained a high school diploma or its equivalent.

    C. Character—Each applicant must be honest, truthful, trustworthy, of good character and have a good reputation for fair dealing.

    D. Criminal History—Each applicant is required to disclose any and all criminal convictions (felony, misdemeanor or criminal traffic offenses) or pleas of nolo contendere, regardless of whether adjudication was withheld or the applicant was placed on probation.

    E. Competency—Each applicant is required to disclose whether they are now a patient of a mental health facility or similar institution for the treatment of mental disabilities.

    F. Aliases or A/K/As—Each applicant is required to disclose whether he/she has used, been known as, has done business under or been called by another name (e.g., maiden name or nickname) or alias other than the name signed to the application.

    G. Prior denials, suspensions or revocations of licenses—Each applicant is required to disclose whether he/she ever had an application for registration, certification, or licensure in Florida or in any other jurisdiction denied, and disclose whether there is now pending a proceeding or investigation to deny such an application.

    H. Prior denials of licenses or registrations to practice any regulated profession—Each applicant is required to disclose whether he/she ever had a If ever had a broker’s or sales associate’s license or permit to practice any regulated profession revoked, denied, suspended or was otherwise disciplined in Florida or in any other jurisdiction and disclose whether there is now pending any such proceeding or investigation.

    I. Guilty of any conduct that would be grounds for suspension or revocation—Each applicant is required to disclose whether he/she ever engaged in any conduct or practice that would have been grounds for suspension or revocation under F.S. 475.

    J. Citizenship—Florida makes no distinction as it relates to the citizenship of persons who desire to practice a regulated profession in this state. Specifically, no person shall be disqualified from practicing an occupation or profession regulated by the state solely because he or she is not a United States citizen. (F.S. 455.10)

    K. Immigrant Applicants—As the legislature wants all Florida citizens to receive better services, Florida Statute 455.11 declares as its purpose the encouragement of the use of foreign-speaking Florida residents duly qualified to become actively qualified in their professions.

    APPLICATION REQUIREMENTS

    All applicants must submit a completed application, electronic fingerprints, and appropriate fee. The initial application fee for licensure for brokers and sales associates is $20. Fee: To apply for a broker license the fee is $115.00. This breaks down to: $20.00 non-refundable application fee; $90.00 license fee; $5.00 unlicensed activity fee.

    Each applicant must make it possible to immediately begin the inquiry as to whether the applicant is honest, truthful, trustworthy, of good character, and bears a good reputation for fair dealings, and will likely make transactions and conduct negotiations with safety to investors and to those with whom the applicant may undertake a relation of trust and confidence. In regards to the background check that will be conducted the applicant is required to disclose all of the information listed in A. thru I. above. 61J2-2.027

    In lieu of the hardcopy fingerprint cards of the past, pursuant to Chapter 475, Florida Statutes, electronic fingerprinting is mandatory for all real estate sales associate, real estate broker, and real estate appraiser applicants. Electronic fingerprinting allows applicants to have their fingerprints scanned and electronically submitted to the Florida Department of Law Enforcement (FDLE) and Federal Bureau of Investigation (FBI).

    Upon receipt of a license application, an agency shall examine the application and, within 30 days after such receipt, notify the applicant of any apparent errors or omissions and request any additional information the agency is permitted by law to require. An agency may not deny a license for failure to correct an error or omission or to supply additional information unless the agency timely notified the applicant within this 30-day period. An application is complete upon receipt of all requested information and correction of any error or omission for which the applicant was timely notified or when the time for such notification has expired.120.60

    Each applicant shall be given written notice, personally or by mail, that the agency intends to grant or deny, or has granted or denied, the application for license. The notice must state with particularity the grounds or basis for the issuance or denial of the license, except when issuance is a ministerial act. An application for a license must be approved or denied within 90 days after receipt of a completed application unless a shorter period of time for agency action is provided by law. The 90-day time period is tolled by the initiation of a proceeding under ss. 120.569 and 120.57.

    When an application shall be denied by the Commission, a copy of the order shall be mailed to the applicant by registered or certified mail, or actual service, or constructive service in a manner as provided in Chapter 120, F.S., if service upon the applicant by registered or certified mail, or actual service, is not obtainable, setting forth the reasons for the denial and advising that the applicant has 21 days from date of receipt to request a hearing in accordance with Chapter 120, F.S. 61J2-2.030. Applicants whose applications are denied have a right to a hearing. Each notice must inform the recipient of the basis for the agency decision, inform the recipient of any administrative hearing pursuant to ss. 120.569 and 120.57 or judicial review pursuant to s. 120.68 which may be available, indicate the procedure that must be followed, and state the applicable time limits. 120.60 (3).

    When an applicant for licensure as a real estate sales associate or broker requests a Section 120.57(2), F.S., informal hearing before the Commission, in addition to other requirements of law, before the applicant shall be considered for approval to sit for the real estate examination, the applicant must submit at least 3 letters of reference from persons who know of the applicant’s honesty, truthfulness, trustworthiness, good character and good reputation for fair dealing as required in Section 475.17(1)(a), F.S. At least 2 of the letters must be from individuals not related to the applicant. 61J2-2.032 Informal Hearings.

    When an applicant receives a Notice of Intent to Deny, the applicant has two options:

    1. An informal hearing to appear before the Florida Real Estate Commission, or

    2. A formal hearing in front of an administrative law judge may be requested.

    In the Notice of Intent to Deny, it is important to review the section, Notice of Rights. It explains that the applicant may seek review of the order by filing a petition with the Division of Real Estate within 21 days from the receipt of the notice.

    The application expires two years from date received by DRE. An application for a real estate license is good for two years from the date a complete application is received.

    NONRESIDENT APPLICATION

    REQUIREMENTS—61J2-26.001

    Examination Requirements.

    The Florida Real Estate Commission has determined that it is in the best interest of the public’s welfare to ensure a nonresident seeking licensure in this State, pursuant to s. 475.180, Florida Statutes, is knowledgeable in Florida law, statutes and administrative rules. To properly ensure such applicant has this knowledge, a written examination will be mandatory. This examination will consist of 40 questions, with each question being worth one (1) point. An applicant who receives a grade of 30 points or higher shall be deemed to have successfully completed the examination requirement for nonresident licensure.

    Enjoying the preview?
    Page 1 of 1