Florida Real Estate Exam Study Guide
Real Estate Definitions and Concepts
Licensing and Regulation
PMI = Private mortgage insurance
Commission = Florida Real Estate Commission (FREC)
Department = The Department of Business and Professional Regulation
Division = Division of Real Estate (DRE)
A sales associate can only work for one broker at a time.
An owner-developer is registered with the Department but has no Real Estate License.
License & Registration: Keeping records of the name and address of an individual or business.
Having a valid real estate license is considered prima facie evidence.
Sales Associate 1st Renewal – Must complete the 45-hour post-license course. If the associate fails, their license will be void. Continuing education is only 14 hours. If the licensee did not meet the deadline, the license will be involuntarily inactive.
Attorney-in-fact: Has power of attorney.
Attorney-at-law: May perform legal services but not receive a commission.
Quasi-legislative power: Gives the commission the power to make and pass rules to regulate real estate.
Group License: Only a sales agent or broker associate can get this.
Multiple License: Only brokers can get this.
Administrative Law: Statutes can authorize the creation and operation, administer and enforce certain laws.
Agency Relationships
Special Agent: Authorized to perform on a single act.
General Agent: Has the principal’s authority to act for him on a continuing basis.
Universal Agent: Authorized to act for the principal in all matters, generally by a power of attorney.
Single Agent: A broker who represents as a fiduciary to a seller or buyer but not both in the same transaction.
Transaction Broker: Provides limited representation to a buyer or seller or both but does not represent either in a fiduciary capacity.
Referral Fees: Can be paid to another person from out of state as long as they do not participate in the sale transaction.
Office and Transaction Procedures
Branch offices must be registered with the department. A broker must have a sign with his name and the name of the branch.
Personal Transactions: Allowed by licensees as long as they disclose their license to the general public.
Earnest Money Deposit: Shows good faith from the buyer.
An escrow account may be held in a commercial bank, title company, or credit union. Limited Partnership consists of at least one general partner and one limited partner.
Fair Housing and Anti-Discrimination
Blockbusting: Inducing an owner to list or sell on the basis of changes in the neighborhood.
Steering: Directing buyers into or away from a location based on protected characteristics.
Redlining: Refusing to provide loans or insurance based on location and race.
ADA Act: Passed in 1990 to prohibit discrimination against individuals with disabilities.
Real Property and Ownership
Real Property vs. Real Estate
Real Estate: Physical and immobile. Real Property: Physical land and the bundle of rights associated with it.
Water Rights
Riparian Rights: Property borders a waterway such as a river.
Littoral Rights: Rights of owners of property with non-flowing water like an ocean, sea, or lake.
Erosion: Loss of land.
Accretion: Adds land by mother nature.
Fixtures
The 4 tests by the court are: Intent, Relationship, Method of Annexation, Adaptation (IRMA).
Estates and Ownership
Freehold Estates: An estate involving ownership.
- Estate in Severalty: One owner.
- Tenancy in Common: Co-ownership with no right of survivorship.
- Joint Tenancy: Co-ownership with the right of survivorship.
Elective Share: 30% of the surviving spouse’s estate.
Homestead Rights: Cannot be forced to sell the land if debt is owed.
Transfer of Title
Constructive Notice: Recording documents in public records.
Voluntary Alienation: Separated by choice such as a deed or in a will.
Involuntary Alienation: No will and no kids. Escheat: Returns to the government.
Adverse Possession: True owner failed to eject trespassers.
Deeds
Premise Clause: Description of the deed.
Quitclaim Deed: Contains no warranties of any kind.
General Warranty Deed: Has all covenants and warranties; the best one to have.
Eminent Domain: Allows the government to take private property for public use.
Real Estate Transactions
Leases
Gross Lease: Flat fee rent.
Net Lease: Rent, taxes, fees + insurance.
Percentage Lease: Gives the landlord a percentage of sales from the business operating on the property.
Liens and Encumbrances
Real estate property taxes are also a super lien.
Legal Descriptions
Metes and Bounds: The most accurate method.
Point of Beginning: A primary reference point.
A township is 6 miles square and contains 36 square miles. The checks have 24 miles.
Plat Method: Identifies the folio #. Assessor’s Parcel Number (APN): A unique number assigned to the property.
Contracts
Agreement: When a contract is reached.
Consideration: A promise of future money.
Statute of Limitations: Oral contracts – action must be made within 4 years; written contracts – 5 years to enforce action.
Acceptance: Offer is accepted by the parties, becomes a contract.
Withdrawal: An offer can be withdrawn at any time before acceptance.
Listing Agreements
Exclusive Right of Sale Listing: Best way to sell; the broker gets paid regardless of who finds the buyer.
Exclusive Agency Listing: Owner hires a broker to sell the property, but if the owner finds a buyer, they do not need to pay the broker.
Mortgages and Financing
Contract for Deed: Seller financing with conditions on the sale.
Promissory Note: A promise to repay the loan or debt with interest.
Lien Theory: Allows the borrower to retain ownership of the property during the loan period.
Equity of Redemption: A way for a borrower to cure the default before foreclosure.
Conventional Mortgage Loans: Not insured by an agency or government.
Index: Can only go up 2% per year (referring to adjustable-rate mortgages).
Binder Deposit: When the contract was first entered, the binder or earnest money deposit.
Closing and Proration
The day of closing belongs to the seller or buyer depending on the prorated closing date.
Real Estate Appraisal
Liquidation Value: The amount that remains after all assets of a business have been sold.
Principle of Highest and Best Use: The best way to use the land to maximize its value.
External Obsolescence: A loss in value caused by factors beyond the boundaries of the property, like effective age.
GRM (Gross Rent Multiplier): Sales price divided by rent.