Real Estate Pre-Licensing Intensive Lecture Notes

Jul 30, 2024

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Real Estate Pre-Licensing Intensive Lecture Notes

Chapter 1: Becoming a Real Estate Broker

Application Process

  • Social Security Number: Used to check child support.
  • Fingerprint Process: Mandatory.
  • Criminal Background Check: Required.
  • Summary of Applicants: Needed when something arises on background check requiring more information.
    • 30 days normal processing, 90 days for special cases, FRAC meets quarterly.
  • Reciprocity: Florida doesnā€™t have reciprocity with any states, except for armed service members and their spouses.
  • Non-resident Application: Resident defined as 4 months continuous and/or intention to live for 4 months.
  • Mutual Recognition: Recognizes some states' licenses with an additional 40-question state law exam.

Education Requirements

  • Real Estate Graduate: Covered throughout the curriculum with exceptions for CE.
  • Bar Member (Attorney): Needs to take FREC I (Basics) and post-licensing for brokerage.
  • License Renewal: Every 2 years. First cycle (18-24 months) requires 45 hours post-licensing. Missing it results in loss of license.

License Statuses

  • Active: Engaged in real estate activities.
  • Voluntarily Inactive: Education up-to-date, not currently practicing.
  • Involuntarily Inactive: Missing CE or fines, up to 28 hours for reactivation.
  • Reinstatement: Possible under hardship situations.

License Revocation and Suspension

  • Revocation: Permanent loss of license.
  • Suspension: Temporary, pending compliance check (e.g., paying back the Recovery Fund).
  • Revocation Without Prejudice: Administrative error correction without penalty.

Licensing, Registration, and Violations

  • Registration: Filing information with DBPR.
  • Licensing: Online form completion.
  • Unlicensed Activity: Felony, $5,000 fine, up to 5 years jail.
  • Misdemeanor (Rental Listings): $1,000 fine, 1 year jail.
  • Group vs Multiple Licenses: Group licenses for builders, multiple licenses for brokers.

Functions of a Real Estate Agent (A BAR SALE)

  • A BAR SALE: Advertising, Buying, Appraising, Renting, Selling, Auctioning, Leasing, Exchanging.
  • Compensation Rules: Need for proper licensing, no illegal activities.
  • Different Real Estate Areas: Residential, Commercial, Industrial, Agricultural, Business Brokers.
  • Exemptions to Real Estate License: Includes self-selling property, working for government agencies, dealing within law scope, etc.

Chapter 2: Opening a Real Estate Office

Business Structures

  • Allowed: Corporations, general/limited partnerships, LLCs, LLPs, sole proprietorships.
  • Not Allowed: Joint ventures, corporation sole, business trusts, Cooperative/Unincorporated associations.

Business Registration

  • Registering Trade Names: Via Secretary of State or SunBiz in Florida.
  • Broker Office Requirements: Three things on the sign: Broker name, company name, license real estate broker.
  • Team Advertising: Must have a designated team leader, cannot use terms like ā€œAssociatesā€ or ā€œProperties.ā€
  • Blind Advertising: Missing essential information like phone number or name.

Telecommunication Protections

  • Do Not Call (DNC): Restrictions 8 AM - 9 PM, exceptions for existing business relationships (18 months) and inquiries (3 months), compliance with registry updates.
  • Email Solicitations: Must have opt-out option, clear from/to information.

Chapter 3: Owning and Managing a Real Estate Office

Initial Costs

  • Setup Fees: Includes rent, legal fees, equipment, internet, supplies, joining the board of realtors.

Business Planning

  • Income Predictions: Goal and stretch goal setting.
  • Franchise vs Independent: Pluses and minuses of each.
  • Accounting Methods: Cash basis vs. accrual basis accounting.

Staffing and Operations

  • Support Staff: Decision on additional personnel, part-time vs full-time considerations.
  • Recruitment and Retention: Campaigns, culture compatibility, contractor agreements.
  • Administrative Details: HR files, office policies, non-competes.

Chapter 4: Escrow Management

Escrow Accounts

  • Types: Sales, Property Management, Combined.
  • Commingling Limits: $1,000 for sales and combined; $5,000 for Property Management.
  • Account Reconciliation: Monthly, broker ultimately responsible.

Depositing Rules

  • Timescales: Sales associateā€”1 business day; Brokerā€”3 business days.
  • Interest Bearing: Requires agreement between parties.

Conflict Resolution (M-A-L-E)

  • Mediation: Informal resolution process.
  • Arbitration: Binding third-party resolution.
  • Litigation: Court procedures (Interpleader if no financial interest, Declaratory judgment if there's a financial claim).
  • Escrow Disbursement Order (EDO): Filed through FREC, notification within 15 days.

Exceptions and Real Estate Recovery Fund

  • Condo Docs: Refund without cancellation if not provided as required.
  • Financing Contingency: Can refund if financing is denied.
  • Recovery Fund: Penalties up to $50,000 per transaction, total up to $150,000 per licensee.

Chapter 5: Disciplinary Process

Types of Penalties

  • Fines: Up to $5,000.
  • License Denials: Incomplete, unpaid fees, uncorrected errors, failed exams.
  • Administrative Actions: Letters of reprimand, citations, probation, suspension, revocation.

Complaint Process

  • Initial Complaint and Investigation: Probable cause determination.
  • Hearing Types: Informal (no contest) or formal.
  • Final Order: Issued by an administrative law judge, followed by possible judicial review.

Record-Keeping and Audits

  • Records: Maintain for 5 years, 7 years under litigation.
  • Audits: Confirm sign and license compliance, review escrow accounts, education updates.

Reporting Crimes

  • Mandatory Reporting: 30 days to report major crimes.

Note: This summary includes the core topics likely to be on the exam along with key regulatory details essential for managing a real estate business.