Which Florida Statute establishes real estate licensees legal rights and responsibilities?

Q:    

Do Florida attorneys with The Florida Bar have to take the pre licensing course to be eligible for the state sales associate exam?

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• What is the Florida statute 475?
• Which statute regulates Florida real estate licensees?
• Which Florida statute governs the DBPR?
• Which Florida Statute establishes real estate licensees legal rights and responsibilities?

A:    

FREC Rule 61J2-3.008(8) states that any active member in good standing with the Florida Bar who is otherwise qualified under the real estate license law is exempt from the Commission-prescribed prerequisite education course for licensure as a real estate sales associate.           

Q:    

            It appears that there are realtors doing CMA's and actually calling it that and not appraisals. They charge a fee for that service. Can a realtor do so as long as it is called a CMA? How would they get paid? Should the fee go to the broker or to that associate?

A:    

            Real estate licensees may help potential sellers determine an asking price by preparing a comparative market analysis (CMA). A CMA is a marketing tool and may not be referred to or be represented as an appraisal. Section 475.25(1)(t) of the Florida Statutes states that the Commission may discipline a licensee who:

(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, 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, as defined in s. 475.611.

Licensees may charge a fee for preparing a CMA, either as part of or in addition to the sale commission. All monies earned by a sales associate for any real estate service must be paid to the sales associate’s registered employer (broker) and not directly by the buyer or seller. It is a violation of Section 475.42(1)(d) for a sales associate to collect any money in connection with any real estate brokerage transaction except in the name of his or her employer. (See below)

(d)  A sales associate may not collect any money in connection with any real estate brokerage transaction, whether as a commission, deposit, payment, rental, or otherwise, except in the name of the employer and with the express consent of the employer; and no real estate sales associate, whether the holder of a valid and current license or not, shall commence or maintain any action for a commission or compensation in connection with a real estate brokerage transaction against any person except a person registered as her or his employer at the time the sales associate performed the act or rendered the service for which the commission or compensation is due.

A:
A California broker may refer a customer to a Florida broker and for doing so the California broker is entitled to a referral fee or a share of the commission. The California broker, however, may not come to Florida and perform real estate activity (such as show property to the CA customer) in Florida. Section 475.25 (2)(h), F.S., states “A licensed broker of this state may pay a referral fee or share a real estate brokerage commission with a broker licensed or registered under the laws of a foreign state so long as the foreign broker does not violate the law of this state.

Q:
If an attorney refers a customer to a licensee and the licensee doesn't pay the attorney part of the commission, can the attorney sue the licensee?

A:
An attorney must have a valid, active real estate license to receive compensation in connection with the performance of a real estate brokerage activity such as referring a buyer to a broker. Exempt individuals are listed on page 24 of PPL (see line 11). Attorneys-at-law are exempt from real estate licensure when acting within the scope of their professional duties (i.e., legal representative in a client-attorney relationship), but this does not mean that they can earn referral fees for simply referring customers to brokers. Section 475.25(2)(h), F.S., states that the Commission may discipline a licensee who “has shared a commission with, or paid a fee or other compensation to, a person not properly licensed as a broker, broker-salesperson, or salesperson under the laws of this state, for the referral of real estate business, clients, prospects, or customers, or for any one or more of the services set forth in s. 475.01(1)(a).

Q:
I have noticed that most of the Ratio Analysis in the 23rd edition of PPL has been eliminated from the 24th edition of PPL (reference Chapter 15 'Real Estate Investment Analysis'). Are my students responsible for knowing these ratios (i.e.: Equity Dividend Ratio, Cash Breakeven; Debt Coverage Ratio, etc.) for the State Licensing Exam?

A:
The ratios to which you refer were removed from the salesperson's course (Course I) syllabus. The revised syllabus was approved by the FREC and is available on the Internet as a 'pdf' file.

The intent was to remove some content (mostly the ratios) from the salesperson's course and cover them in the broker's course. This was done in part to allocate time to product knowledge information that you will find in the appendix of the 24th edition of PPL. Students are responsible for the product knowledge information. The Education Section has indicated that they will not test the material removed from the syllabus. Your students are not responsible for the ratios that have been removed—they are, however, responsible for the loan-to-value ratio. If students are tested in the future regarding any of the ratios that have been removed from the Course I syllabus, please let the Education Section, DRE know immediately.

Q:
Can a real estate licensee make a claim against the recovery fund if the licensee acted in the capacity of a buyer or a seller and not as a licensee?

A:
Section 475.483(2)(b), F.S., precludes a licensee from collecting from the Recovery Fund when the licensee acted as a licensee in a real estate transaction. However, there is nothing in the law that prevents an individual who has a real estate license, but did not act as a licensee in a given transaction, from seeking relief from the Recovery Fund. According to Assistant Attorney James Mitchell, "Years ago there was a blanket preclusion for anyone who had a license but the FREC deemed this unfair and had the law changed to reflect that the preclusion only applied when the licensee acted as such."

Q:
Who is issued a group license—the salesperson or the owner-developer?

A:
Pursuant to Rule 61J2-6.006, F.S., it is the salesperson or broker-salesperson who holds a group license, not the owner-developer.  The FREC does not license owner-developers, only brokers and salespersons. The FREC registers owner-developers but only for the purpose of identifying the salesperson's or broker-salesperson's employer. Because the rule speaks of a license, it could only be issued to a salesperson or broker-salesperson, and not to an entity or a person with whom the Commission has no jurisdiction.

August 1999

Q:
Does the lead based paint law apply to mobile homes? 

A:
Yes. Mobile homes (manufactured housing) built before 1978 are included in the definition of "target housing". Although these units may have been constructed largely of pre-finished materials, some surfaces, both interior and exterior, may have been painted with lead-based paint.  Therefore, EPA and HUD do not exempt mobile homes as a class.  Houseboats, recreational vehicles, etc. are not considered "target housing." 

For more information regarding lead-based paint contact the National Lead Information Clearinghouse at 1-800-424-LEAD. The information regarding mobile homes was found in the "Interpretive Guidance for the Real Estate Community on the Requirements for Disclosure of Information Concerning Lead-Based Paint in Housing, Part II", available on the Internet at: http://www.epa.gov/opptintr/lead/igd.pdf

Q:
Is an earnest money deposit required to make a contract for the sale of real estate valid? 

A:
Consideration is a necessary element of a contract, however, consideration can be a promise, act or forbearance bargained for and given over in exchange for a promise, act or forbearance. A return promise to do something that one was not otherwise obligated to do is sufficient consideration. Most real estate contracts take the form of a promise for a promise. 

A:
We asked Asst. Attorney James Mitchell to respond to this question. 

A CMA is for the purpose of assisting a seller to arrive at a listing price or a buyer to arrive at an offering price. A BPO, or whatever it may be called, is for the purpose of arriving at a value. Note the distinction; a CMA arrives at a price; a BPO arrives at a value.  Anything beyond a CMA, no matter what it is called, requires compliance to USPAP. 

This session of Questions & Answers discusses the use of Online Sunshine in relation to real estate license law.  Online Sunshine may be accessed from the links section of this site.

Q:
I want to print a copy of Chapter 475, F.S. How can I print the entire Chapter without having to print each section separately? 

A:
Once you are connected to the Internet, go to Online Sunshine at http://prod.leg.state.fl.us/. Click on "Statutes and Constitution". Scroll down to "Statutes" and click on "1998 Florida Statutes (Full Volume)." You will open "1998 Florida Statutes—Individual Text of Sections". Immediately below the title click on "View Full Chapters". Scroll down to Chapter 475 and click on the statute number. The entire text will come up and can be saved to a file or printed. (Approximately 49 pages.) 

Q:
How can I track the legislative action taking place pertaining the real estate license law? 

A:
Once you are connected to the Internet, go to Online Sunshine at http://prod.leg.state.fl.us/. This is the official guide of the State of Florida Legislature. Scroll down and click on "1999 Daily Bill Information Citator" (http://prod.leg.state.fl.us/session/1999/citator/index.html). The Citator gives you information about legislation filed for the 1999 session. It is available in "as printed" format, using Acrobat Reader. 

Click on "Statute/Constitution Citations". The Citator in updated daily (see the date in the upper left hand corner.) The Citator is organized by statute number. For example—go to Chapter 475 which is on page 27. Use the scroll bar at the left of your screen to move quickly by page. Scroll to page 27 and click on the page. Bills which have passed both chambers are underlined. These are the bills of interest. After a bill is passed, it is signed by the presiding officers of the house and senate as well as the Secretary of the Senate and Clerk of the House. Once signed, it is presented to the Governor. The Governor can either sign the bill, veto it, or simply let it become law without his signature. When presented with a bill, the Governor has 7 days within which to act if the Legislature is still in session or 15 days if the Legislature has adjourned. Once final action is taken by the Governor, it will be indicated to the right of the bill number; for example, (VETOED) or (99-7), which indicates that the bill became law in 1999, Chapter 7). 

As of June 4, 1999, three bills pertaining to Chapter 475, F.S. had passed both chambers, however, they have not yet become law. The bills are: H417, S1566 and S2426. Senate bills 1566 and 2426 were signed by the officers on May 25th and May 28th respectively. The Governor has 15 days from each of those dates to sign or veto. If he does neither, each will become law without his signature after the 15 days with the effective date being as specified in each bill, usually the last section of the bill, in this case, July 1, 1999. House bill 417 was signed by the officers on Friday, June 4th. The Governor has 15 days to act. If bill 417 becomes law, it will have an effective date of October 1, 1999. 

To view the bills, return to the Online Sunshine home page. Click on the graphic "House" and "Bills". This will take you to "Florida Legislature Online Sunshine". Under House Bills 1999, click on "Bills". At the top of the page a green ruler bar of numbers will appear. To find H417, click on "4." Scroll down to H0417, entitled Relating to Real Estate Brokers and Salespersons. Last Action: 4/27/99 H Ordered enrolled - HJ01479. (Enrolled means passed.) 

Now click on "H0417" which will take you to the bill information history. To see the bill text, scroll down to "Bill Text". Go to HB0417er (the enrolled version). This will take you to the bill text with a strike out version of Chapter 475, F.S. changes. You can save the text version of the bill to a file or print it from here. 

 This issue of Questions and Answers concerns escrow management. At the FREC Instructor Seminar held in West Palm Beach, several questions were posed by real estate instructors regarding escrow management. We have asked Asst. Attorney James Mitchell to respond to those questions so that we could share his responses with you.

Q:
If a broker receives a post-dated check as an earnest money deposit, does the broker have to report the amount in his or her trust liability? And if the check has not yet been deposited at the end of the banking period, would the amount be identified as a shortage on the bank reconciliation statement? (Of course, the broker must first secure the seller's permission to accept the post-dated check.) 

A:
The postdated check needs to be shown in the broker's trust liability.  Even though it will appear as a shortage in the BANK escrow account, the broker's TRUST account (which encompasses items not necessarily in the bank, i.e., safe, safe deposit box, etc.) will not be short. 

Q:
Is it reasonable to assume that when 61J2 refers to a shortage in the escrow account that results in a citation, that it means an "unexplained" shortage or an actual shortage of funds that have been received, and not a shortage resulting from a post-dated check or other trust liability that either has not or cannot be deposited into an escrow account? 

A:
The broker should note on the monthly reconciliation why the bank balance appears short and no citation should be issued. 

Q:
Once the post-dated check becomes payable, does the broker have three business days to deposit the check, or must the broker deposit the post-dated check on the date indicated on the instrument? 

A:
If the date on the check is beyond the original three day period, then the broker must deposit the check on the date indicated on the check, and is not given an additional three days. 

Q:
If a broker receives something like a title to a car to hold, can the broker list the item on his or her trust liability with a nominal cash value or does the broker need to determine the estimated value? 

A:
Neither the rules or statute address how a broker is to account for the value, however, I (Jim Mitchell) would say that the value would be equivalent to the deposit amount shown on the contract and that would constitute the trust liability. This assumes, of course, that the actual value equals or exceeds the amount of deposit shown on the contract. The broker will need to ascertain the value for purposes of determining whether it will cover the deposit at the appropriate time. Then the broker, once this is done, would only need to show the value equal to the trust liability. 

Q:
Question 15 in Chapter 10 of Florida Real Estate Principles, Practices and Law (PPL), 22nd edition, concerns real estate commission. I think the answer is A, however, your answer key indicates that the correct answer is D. Can you explain this question? 

A:
We asked Assistant Attorney General James (Jim) Mitchell to review this question for us, and here is his interpretation of the review question: 

Regarding my reasons for the answer D; The stem of the question does not state that the buyer was ready, willing and able to purchase the property.  Unless and until that is shown, the broker would not be entitled to a commission on the full term offer.  This is what the broker would have to prove in a civil court to be able to recover the full commission.  With that element missing, we cannot say the broker is entitled to a commission from the first offer.  That being said, the more correct and better answer is D. (Asst. Attorney General James Mitchell) 

A:
A unilateral contract obligates only one party to an agreement without any obligation on the other party. With an open listing, the seller is saying to one or more brokers, if you bring a ready, willing and able buyer, I will pay you a commission. So the seller is making a promise (obligation); however, the broker is not obligated to perform any contractual obligations. If the broker finds a ready, willing an able buyer, the seller has promised to pay a commission; but the seller cannot complain (in the legal sense) against the broker if he or she does not find (or even seek) a buyer. In contrast, an exclusive right of sale listing is generally a written contract signed by both parties wherein both parties (seller and broker) have obligations; the broker promises to do certain acts in an attempt to find a buyer and the seller agrees to pay a commission if the broker performs. And so an exclusive right of sale listing is a bilateral agreement (obligates both sides) between the seller and broker. 

Q:
The textbook (PPL) states that exclusive right of sale listings must be in writing. Is there a statute that requires this? 

A:
There is no law or rule that requires exclusive right of sale listings to be in writing, however, according to Carolyn Gardner at FAR, the MLS will only accept exclusive right of sale and exclusive agency listings which have been signed by the seller. 

Q:
We used to teach that a contract required valuable consideration, while good or valuable consideration would be acceptable on a deed.  The latest edition of your book (PPL) says that good or valuable consideration is acceptable for a contract.  Is this a change, or were we wrong in the past? 

A:
PPL was revised to reflect that a contract requires good or valuable consideration based on conversations with Asst. Attorney Generals Manuel Oliver and James Mitchell. According to James Mitchell, a contract simply requires consideration, therefore, it is appropriate to say good or valuable consideration. A contract does not require money or something measured by money to form the consideration.