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Practice Questions

Florida law requires all compensation earned by a sales associate to flow through their employing broker. The sales associate cannot legally accept payment directly from a buyer, seller, or any other party -- even if those parties are willing to pay directly. The broker receives the compensation and then distributes the sales associate's agreed-upon share per their employment or independent contractor agreement. This rule reinforces the broker's supervisory role and ensures accountability for all transaction funds.

Florida license law allows FREC to discipline a licensee convicted of a crime involving fraud, dishonesty, breach of trust, or moral turpitude -- even if the crime had no connection to real estate. A person who demonstrates dishonesty in their personal or professional life is not considered fit to hold a license that requires public trust. Grand theft involves dishonesty and would typically qualify as grounds for FREC disciplinary action against the real estate license.

In Florida, a 'client' is a party represented by a licensee in a fiduciary or agency capacity. A 'customer' is a member of the public who receives real estate services but is not represented by the licensee. For example, a buyer working with a listing agent (who represents only the seller) is a customer of the listing agent — they receive services but no representation.

Florida law requires that when a licensee sells their own property, the contract must disclose that the seller is a licensed real estate professional. This ensures the buyer knows they are transacting with someone who has professional training and market knowledge. The disclosure must appear in or with the purchase contract.

Commingling — mixing client funds with personal funds — is a serious violation of Florida license law regardless of the duration or intent. Earnest money and other client funds must be placed directly into the broker's escrow account; they cannot be held in personal accounts even temporarily. The duty to account for all funds prohibits commingling at all times.

A written buyer broker agreement is a contract between the buyer and the broker that establishes the broker's right to compensation. Without such an agreement, the broker's pay depends on what a listing broker offers in the MLS or on a seller's willingness to cooperate — neither of which is guaranteed. A written buyer broker agreement is the most reliable protection for a buyer's broker's compensation.

A broker is generally not liable for the truly unauthorized acts of a sales associate that fall entirely outside the scope of licensed duties — provided the broker did not authorize, ratify, or have prior knowledge of the act. However, if the broker knew or should have known about the conduct through proper supervision, liability may still attach. Independent contractor status alone does not shield the broker from supervisory liability.

A Florida licensee who follows an owner's instruction to discriminate based on a protected class becomes personally liable for the discriminatory act. Unit size is not a recognized exemption from the familial status prohibition — it is a pretext for discrimination. A licensee must refuse such an instruction and explain to the owner that it violates federal and Florida fair housing law. Compliance with an unlawful instruction is not a defense.

The FCRA requires that when a landlord takes an adverse action — such as denying a rental application — based wholly or partly on information in a consumer credit report, they must provide the applicant with an adverse action notice. The notice must include the name, address, and phone number of the credit reporting agency that supplied the report, and advise the applicant of their right to obtain a free copy of the report and dispute inaccurate information.

Under Florida Statute 732.401, when a homestead owner dies intestate (without a will) leaving both a surviving spouse and lineal descendants, the surviving spouse takes a life estate in the homestead and the descendants receive a vested remainder in fee simple. This significantly restricts the surviving spouse's ability to sell or mortgage the property without the descendants' joinder or consent — including minor children. The surviving spouse does NOT inherit fee simple title when lineal descendants survive.

While the government has an absolute right to take private property through eminent domain for a public purpose, the property owner has a constitutional right to receive just compensation — and the right to contest the government's determination of value. In a condemnation proceeding, the owner may present their own appraisal, and a court (or jury) will determine the fair market value. FREC has no role in eminent domain proceedings.

A right of first refusal gives the holder the opportunity to match any bona fide third-party offer before the owner can accept it — the price is not pre-set. An option contract, by contrast, grants the holder the right to purchase at a specific, predetermined price within a set period. Both are unilateral in that only the grantor is bound, but they operate quite differently in practice.

Without a 'time is of the essence' clause, missing a contractual deadline by a short period is generally treated as a minor breach, not a material breach. The non-breaching party is not automatically entitled to terminate the contract — they must give the breaching party a reasonable opportunity to cure. When 'time is of the essence' is included, deadlines become material and a breach can justify immediate termination. This distinction is frequently tested on the Florida exam.

When a contract includes a 'time is of the essence' clause, all stated deadlines are material terms. A buyer who fails to close on the specified date is technically in breach from that moment, even if the delay is brief and even if no actual harm results. The seller could have declared the buyer in default on June 15. In practice, many sellers accommodate short delays, but the seller's legal right to declare default arose immediately when the deadline passed. This illustrates the serious consequences of the 'time is of the essence' clause.

Ginnie Mae (Government National Mortgage Association, GNMA) is a government agency within HUD that guarantees mortgage-backed securities backed by FHA-insured and VA-guaranteed loans. Unlike Fannie Mae and Freddie Mac, Ginnie Mae is a true government agency — not a government-sponsored enterprise — and its guarantee carries the full faith and credit of the U.S. government.

Federal law requires borrowers with federally backed mortgages on properties in Special Flood Hazard Areas to purchase and maintain flood insurance for the life of the loan. Standard homeowner's insurance does not cover flood damage. Flood insurance is typically obtained through the National Flood Insurance Program (NFIP) or a private insurer.

Under current USPAP, the two written report types are: (1) an Appraisal Report — provides more detail allowing the intended user to understand the basis for the appraiser's conclusions; and (2) a Restricted Appraisal Report — contains less detail and is intended only for the client (with use restricted to the client alone). The familiar FNMA Form 1004 residential appraisal form is an example of an Appraisal Report.

Remaining economic life = Total Economic Life − Effective Age = 60 − 15 = 45 years. Remaining economic life is based on EFFECTIVE age, not actual (chronological) age. This distinction matters here: the well-maintained building with an effective age of 15 (not the chronological 20) has a remaining economic life of 45 years — 5 years more than it would if actual age were used. Effective age-based analysis rewards good maintenance in the cost approach.

The Save Our Homes cap limits annual assessed value increases on homestead properties to 3% or the CPI rate of inflation — whichever is less. Over time this can cause a property's assessed value to fall well below its market value.

Commission: $400,000 × 5.5% = $22,000. Net proceeds: $400,000 − $22,000 − $230,000 − $3,000 = $145,000.