Real estate sale associate pre license course exam prep (GOLD COAST HIGHLIGHTS)

Estate In Severalty

sole ownership of the entire bundle of rights

PUD-Planned Unit Development

"Cluster zoning" To compensate developers for reserving land for common use, they are allowed a certain percentage of the development to include Zero Lot Lines and patio homes to be built besides: Buffer Zone (bushes) Permits a mix of land uses along with a heigh density of residential units

Escalation Clause

"Escalator" Allows lenders to increase the interest rate based on the occurrence of an event, such as a change in the use in property or consistently late payments

General Partnership

"Partnership" Business formation in which two or more people agree to share the profits or losses of a business. Agreement Can be expressed, implied, orally, or in writing No documents need to be filed with the state to create a partnership

Plat Method

"Recorded plat" method, or "Lot and block Method", A Method of legal description used to identify small parcels of property in subdivided areas and cities

Superior Liens- Real Estate Property Taxes

(Specific Lien) Also known as property taxes, Are assessed and become a lien on JAN 1 of each year. Even though the owner does not know the amount until the tax bill is received after November 1st. Because of this, taxes are paid in arrears (payment made after charges incurred)

Superior Lien- Special Assessments Lien

(Specific Lien) Lien For improvements, such as road paving, sidewalks, and sewers attach to a property until the full amount of the lien has been paid

General agent

...Of his or her broker or owner developer.. (Sales associate or broker associate)

Subsequent renewal

14 hr CE Failure to do so results in null and Void license The licensee may not practice real estate while his or her license is involuntary inactive. The license can remain in this statutes for up to two years

Referral Fees

A Florida broker may pay a referral fee to, or share a commission with, a broker licensed or registered by another state or foreign country. The out of state or foreign broker may accompany the customer to Florida, but may not participate in the transaction in any manner. If the out of state or foreign broker comes into Florida and provides real estate services, within the transaction, no referral fee or commission can be paid A Florida broker may not pay compensation, fees, or share commission with unlicensed individuals In exchange for soliciting or referring business. Includes gifts or reimbursement of expenses. The sharing of a brokerage compensation by a licensee with a party to the transaction with full disclosure to all interested parties is not considered a violation

Option Contracts

A Right to buy property property during a specified period of time, at a specified price. Unilateral Contract since the party who acquires the right has not promised to buy the property.

Payment of Commision

A borrowers earns the right to compensation by performance. Once the broker has performed, the employer owes a commission to the broker even if the employer fails to conclude the transaction. If commission amount hasn't been specified by terms of an employment contract, a customers commission rate would be due based on the type of property and fee the broker would normally charge

Multiple licenses

A broker can be issued additional licenses in two or more capacities by requesting... NOT available to sales associates or broker associates *broker cannot own stock in any of the corporations

Illegal commission

A broker cannot collect a commission from both both parties in a transaction without the knowledge and consent of both parties

Rendering an Opinion of Title

A broker cannot render a opinion that the title to the property being sold is good or merchantable Could be considered as practicing law, which is beyond the scope of a real estate license.

Office Signs

A broker is required to have a sign on or about the entrance to the office and all branch offices, where it can be easily observed and ad by persons entering the office. Placed on either exterior or interior.

Transaction broker

A broker who provides limited representation to a buyer, a seller, or both, in a real estate transaction, but does not represent either in a fiduciary capacity or as a single agent *provide limitless confidentiality unless waived in writing by a party. *the licensee has a duty not to discuss price (other the price quoted in the listing), motivation, terms, or other information a party deems to be confidential, which may harm that parties bargaining position Duties: Deal honestly and fairly Account for all funds Disclose all known facts that affect the value of residential property Skill, care, and diligence Present all offers and counteroffers Limited confidentiality Additional agreed duties

Moral Turpitude

A conduct that is considered contrary to standards of justice, honesty, good moral

Deed

A document that conveys title from one party to another when real property is sold or conveyed by gift. Most common document used to transfer title (Voluntary alienation)

Will

A document that provides the transfer of title upon the death of an individual (decedent) who dies restate (left a will). ((Voluntary alienation)

Void Contract

A inherently unenforceable contract. Cannot be performed under the law *It requires a party to perform an act that is impossible or illegal

Net Lease

A lease in which the tenant pays a fixed rent plus all or portion of the operating costs such as real estate taxes, insurance, And maintenance. Commercial and Industrial lease (typically)

Adverse Possession

A legal principle under which an owner may lose title to another person who has taken control of the property. New owner must enter into open, hostile, adverse, and exclusive possession of the property for a period of 7 continuous years

External Obsolescence

A loss in value caused by factors beyond the boundaries of the subject property. ( property near landfill, ugly house across the street) Problem is beyond the control of property owner

APN- Assessors Parcel Number

A number that is assigned to a parcel of real property by a county property assessor to uniquely identify that property within the jurisdiction County appraiser officers use many different terms interchangeably, including ID Number, Folio Number, Assessor Identification Number (AIN), Parcel Identification Number(PIN), and Parcel Control Number(PCN). These terms are used synonymously with APN

Broker

A person who performs services of real estate as an agent for another and receives compensation for those services either directly or indirectly

Suit For Cancellation (rescission)

A remedy for breach of contract

Depositing Escrow Fund

A sales or broker associate who receives a earnest money deposit on behalf of his or her employer must deliver the deposit to the employer no later than the end of the next business day following receipt Broker must "immediately"( no later than the end of the third business day) place the earnest money deposit in an escrow or trust account following receipt If in form of securities, the conversion to cash should be made at the earliest practical with the proceeds immediately placed into the escrow account. Broker who receives deposit must keep an accurate account of each escrow deposit transaction

Group license

A single real estate license that can be obtained if the sales associate or broker associate works for one owner developer with affiliated organizations, which provides real estate services in different geographic areas

Joint Venture

A temporary business that involves a single transaction or a predetermined number of transactions No documents must be filed with the Secretary of State and not required to register with the department since the brokers are already licensed and permitted to perform services of real estate

Third Degree felony

Acting as a broker or sales associate without being the holder of a valid and current active license 5,000 fine and/or imprisonment up to 5 years

Condemnation Proceeding (government)

Action to Enforce a sale. Owner cannot refuse to sell their property.

Additional applicants who qualify to apply for a brokers license [F.A.C.61J2-2.027(1)(b)]

Actively licensed real estate sales associates from another STATE OR NATION who have been Licensed for at least 24 months during the preceding 5 yrs

Real Estate Offices

All Real Estate offices must register with "DBPR" department of business professional regulation

Condominiums, Cooperatives, and Timeshares

All considered real estate; therefore,a real estate license is required to sell or lease these types of properties unless the individual works directly for the owner developer and is paid a salary.

Continuing education

All licensees active or inactive, broker or sales assoc., must complete 14 hrs of commission approved continuing education and pay a renewal fee during each license renewal period, excluding the first renewal period of their current license. If CE requirements are no met within the renewal deadline, the licensees license will be changed to INVOLUNTARY INACTIVE CE courses may be completed by classroom or distance learning(online)

Post licensing course

All licensees, whether active or inactive, must satisfactorily complete a Commission prescribed post licensing course before the first renewal expiration date, following initial licensure.

Quasi judicial powers

Allow the commission to impose disciplinary action for violations of laws and rules. Similar to the actions of a court of law. The commission has the authority to deny an application, and to reprimand , fine, or place a licensee on pro a Tiod, or suspend or revoke a license

RESPA- Real Estate Settlement Procedure Act

Allows brokers to pay referral fees between real estate agents and brokers without disclosure,

Lien Theory

Allows the borrower to retain the ownership of the property during the loan period

Habendum Clause

Also called "to-have-and to-hold clause", specifies the legal rights being conveyed. The portion of the bundle of legal rights being conveyed is described in this clause such as "fee Simple forever" or "in a life estate"

Sales Comparison Approach

Also referred to as the "Comparable Sales Approach", is used to estimate the value indicated by the recent sales of comparable properties in the market. This approach is a direct application of the Principal of Substitution.

Free Hold Estate

An Estate involving ownership. Anyone who owns real property has a free hold estate. - Has no specified time for the rights to expire Two types: Fee Simple Estate and Life Estate

Florida real estate license requirements

An applicant for a Florida real estate license requirements is NOT required to be a resident of the state of Florida, or to be a citizen of the United States

Corporation For Profit

An artificial person created by law. Owners of the corp are issued shares of stock in the corp and are known as "STOCK HOLDERS" if created under Florida law, known as Domestic Corporation ( any other state, "foreign corporation" ,other country "alien corporation") Name must include words "Corporation", "company" , "incorporated" or the abbrev. Corp, Inc, or Co No business is allowed to use the word "Company" in its name, unless it is formed legally as a corporation or unless the words "not inc" are added

Dual Agency

An attempt to represent both parties in a transaction would create a dual agency

Tenancy By The Entireties

An estate for a husband and wife only. Marriage is the owner of the property in which each spouse has a right of survivorship. Upon the death of one spouse, the surviving spouse will own the property in fee simple as an estate in severally. Created automatically whenever a husband and wife purchase property at the same time if both names appear on the deed and no other ownership form is specified. If divorced, the ownership convert to a Tenancy in Common

Non Freehold Estate (Leasehold)

An estate in which the tenant does not have an ownership interest in the property.

Acretion

An increase in land area as solid deposits in other than its original location. Opposite of erosion

Blinds Ads

Any real estate advertisement that does not contain the registered or trade name of the broker, or for which there is doubt that the ad is that of a real estate broker.

Non resident licensee

Any resident who becomes non resident must notify the commission of the change in residency within 60 days and comply with non residential standards

Triggering Terms

Anything that has to do with % or $

Bilateral Contract

Both parties are required to perform

Special agent

Authorized under agency law by the employer to perform a single act.

Exempt From pre license course

Bachelors Degree in real estate or higher

Exclusive Right of Sale Listing

Bilateral Contract In which the property owner promises to pay a commission regardless of who sells the listed property. If the seller himself, another broker or employed broker sells it, the broker who was employed under the exclusive right of sale contract is still entitled to a commission. This contract gives the broker the best protection of the three types of residential listing contracts

BRRLAP: The six ways in which a CONTRACT can be terminated are:

Breach Renunciation Revocation Lapse of time Abandonment Performance

Conversion

Broker cannot or will not produce money or property belonging to another when required, failure to account would occur. If a broker failed to disburse another brokers or sales associate commission due.

Escrow Agent

Broker is escrow agent for both parties Until a binding contract has been entered into, the funds remain the property of the buyer. Broker has no rights to the escrow funds until contract ( signed by both parties). At that point the deposited funds are under joint control of both parties but the broker must continue to hold the funds. If buyer defaults contract, seller would be entitled to deposit, and broker entitled to a commission when the transaction closes

Record Keeping

Brokers books and records must be preserved for a minimum 5 yrs from the date escrow funds were received. If record was subject of evidence in litigation- at least 2yrs after conclusion of litigation Broker is ultimately responsible for funds in escrow account and must be a signatory on all such accounts

Contras for Deed

Buyer makes payment directly to the seller, when paid off seller delivers the deed

Functional obsolescence

Can be caused by a deficiency or an over improvement (or super adequacy) An investment made to the property that doesn't make the best use of the property or is excessive in comparison with the improvement of similar properties. May suffer from this, since it won't sell in the market for the amount invested.

Executive powers

Can be exercised by the chairperson acting alone or can be delegated by quorum vote to any other commission member

Administrative Law Judge

Can issue subpoenas for witnesses and compel attendance of a witness. A respondent may request that a admin law judge subpoena a witness

Sole Proprietor Broker

Can register and operate as a real estate broker if her or she has a current active and valid brokers license

Fiduciary duties owed by a broker to principal

Confidentiality- required to keep any harmful information received from the principal confidential, even after relationship ends. Obedience- an agent must obey all legal instructions of the principal or withdraw from the relationship. If Illegal instruction is given and principal persists, agent must withdraw. Loyalty- may not place the interest of anyone else above those of the principal. Full disclosure- required to report any fact or rumor to the principal that may affect his or her decision

Limited Partnership

Consists of at least one General Partner- jointly and severally liable just as a general partner in a general partnership and at least one Limited Partner- has limited liability.

Quit Claim Deed

Contains no warrants of any kind Rarely used in day to day sales and transfers of ownership Most frequently used to CURE DEFECTS in title.

Binder deposit

Credit the buyer

Second degree misdemeanor

Criminal violation of FS 475 by a licensee Penalties up to $500 or imprisonment for up to 60 days *disseminating false or misleading advertising.

Prepaid Interest

Debit the buyer

Gross Lease

Defined as "a lease in which the tenant agrees to pay a fixed rental amount, and the landlord pays all expenses related to the property such real estate taxes, insurance, and maintenance costs." Residential lease

Section subdivided

Each section is 1 sq mile, or 640 acres When a section is subdivided into quarters, each resulting subsection contains 160 acres (1/4 of 640 acres)

FHA LOAN

Ensures the loan Down payment required Max loan amount Pre payment clause

Step 2/6: cost depreciation Approach

Estimate the cost to replace or reproduce the main improvements by using one of three different methods Quantity survey method Unit in place method Unit Of Comparison Method- a cost per square foot or per cubic foot of an entire building

Subsequent renewal

Every 2 years

Promissory Note

Evidence of a personal debt, and contains the names of the parties, the rate interest, amount of money borrowed and the loan repayment terms.

Example: Calculating the Area Of A Rectangle

Example: A 2 acre lot has a front foot measurement of 120'. Find the depth of the license lot.. Solution: 1. Convert acres to square feet, since the front foot measurement is in feet: 2 Acres x 43,560 square feet per acre= 87,120 sq ft 2. Divide the square footage by the unknown front foot measurement to find the depth of the property: 87,120 sq / 120 front feet= 726 feet (depth)

Implied Contract

Exists when some or all of the terms and conditions can be assumed by the nature of the agreement or the words and actions of the parties *Can be oral or written, or implied provision of another contract

Civilian rights act 1968

Expanded on the 1966 act. Makes discrimination in the showing, renting, negotiations etc of a dwelling prohibited when based race color, sex, religion or national origin

Sub agent

Extension of another agency, a party who has been granted authority to act on behalf of another agent. NOT a type of agency What a sales associate is to his or her broker, and automatically becomes to all of the brokers principals *Under agency law a sub agent has the same duties to the principal as the agent who was empowered by the principal.

Florida Estate License Law

F. S. 475

Purpose of the law

F.S. 475 to protect the public

Concealment or Breach of trust

Failure to present an offer. Could result in disciplinary action against the broker

Farm area or target market

Finding and specializing in a particular neighborhood or type of property. Considered to be one of the best ways to succeed in the real estate business

Static Risk

Fire, flood, etc... Insurable

Homestead Rights

Florida constitution exempts these property from the execution and forced sale of the property to satisfy personal judgement liens, such as loans or credit card debt, which are held against the head of the household. The rules override any attempted disposition in a will, with only one exception

Florida Mutual recognition

Florida has entered into "Contractual agreements" with 7 states that recognize the similarity in the content of their mutual education and experience requirements for real estate licensing. Alabama Arkansas Connecticut Georgia Mississippi Illinois Nebraska

Compensating broker or sales associate

Florida real estate license law requires a sales or broker associate to be employed as an agent of either a broker or owner developer before performing real estate services for compensation. They may NOT be directly compensated for real estate services by a member of the public. Only their employing broker or owner developer

ADA- Americans with Disabilities Act

For existing owners: required to make necessary modifications when readily achievable and economically feasible

Form #1 DBPR RE 1 "Have you ever been convicted or found guilty of, or entered a plea of Nolo contendere (no contest) or guilty to, regardless of adjudication, a crime in any jurisdiction, or are you currently under criminal investigation?" The question further defines which offenses are covered

For practical purposes, this question requires the disclosure of any criminal convictions, including felony or misdemeanor convictions or pleas ( other than minor traffic offenses). DUI is not a minor traffic offense and must be disclosed

Life Estate

Free hold estate. Created when an owner of an fee Simple estate conveys ownership to another, but only for the balance of the lifetime of the party to whom the property is conveyed Upon the death: the grantor may wish to have the property ownership returned to him (reversion estate). The grantor may instead wish to have the property passed to another person or entity named in the original deed i.e. Heirs.(Remainder estate)

Escrow Funds

Funds held by a third party on behalf of two parties in a transaction In real estate transactions, the real estate broker may act as the third party escrow service, or funds may be held by another escrow service such as a title company. Must be Maintained separately from the brokers business and personal funds The misuse, commingling, or intermingling of, or failure to account for funds or property entrusted to any licensee is a form of fraud.

Local level

Government Regulation: At the local level, planning and zoning, property taxation, building, and health codes and regulations, and building moratoriums that affect development, play a significant role in the cost and desirability of real estate

IRV Formula

I/ R = V Income divided by Rate= Value

IRMA: Four tests used by courts to distinguish between real and personal property.

INTENT OF THE PARTIES- by reviewing the listing and sales contract, the courts may be able to decide what was intended. The words before during and after the sale may be considered in making decision RELATIONSHIP- Terms of a lease. METHOD OF ANNEXATION- How an article is attached to the property. Typically if tools are used for removal, or damage may occur, it is classified as part of the real estate ADAPTION- If the item is necessary to fulfill the purpose and utility for which the building was constructed, court will usually decide the item is real property.

Variance

If Hardship Allows property owner to vary from strict compliance with codes

Cancelled licensed

If a licensee no longer wishes to practice real estate, they can return their license to the department. The license would be...

Surplus funds

If all liens funds have been paid from the proceeds of the foreclosure sale, any surplus funds remaining are paid to the mortgagor (borrower)

Application Denial

If an application to take state exam is denied, the applicant will be notified in writing. The notification will identify the reasons for denial and advise the applicant they they have 21 days from the date of receipt to request a formal hearing before an administrative law judge

Branch Office Requirements

If conducting business from more than one office each additional office and office location must be registered individually as a branch office with the appropriate fees paid. If broker closes a branch office, the registration of the branch office cannot be transferred If closed, then later reopened in the Same Location during the Same Two Year License Period, a reissue of the license may be requested, without the need to pay an addtl fee If Branch office is moved, a new application for registration and payment of the proper fee are required for the new location.

Oral Contract "Parol"

If contract is entirely oral, action must be brought within four years (Under the statute of limitations)

Step 7 of Disciplinary Action: Judicial Review

If the licensee does not agree with final order of the commission File a petition for review within 30 days of final order

Investment Analysis Disadvantages

Illiquidity- not easily converted into cash

Separate Property

In Florida husband and wife are permitted to own property separately from the marriage. Property owned In one spouses name before the marriage or acquired by gift or inheritance during the marriage. The owner can convey it without the consent of their spouse.

Requirements for Options Contract

In Writing Price and Terms Length Of Time Legal Description Consideration (money)

Real Estate disadvantages in investing

Include the illiquidity of property ( it cannot be bought or sold as quickly as other assets)

Real Property

Includes the physical land, and improvements (real estate) together with legal rights to own or use the property

Voluntary inactive

Individual who had attained their license but does not wish to engage actively in real estate can request a voluntary inactive. May remain In this status indefinitely

Block Busting

Inducing an owner to sell on basis that neighborhood is deteriorating or minority's moving in

Statue of Frauds

It requires a contract for the transfer of a right or interest in land to be in writing in order to be enforceable Protection against fraud

Referral fees

Licensee may share compensation with the parties of the transaction Must have full disclosure to all parties involved

Personal Transactions

Licensees should make known: They are dealing on their own account and not acting on behalf of others. Their status as licensees to members of the public. This disclosure should take place prior to entering into serious serious negotiations, but is not required in the preliminary stages of a transaction, such as a newspaper advertising. The licensee should also ensure that this disclosure is in writing in the Purchase and Sale Contract

Save our homes act

Limited the amount tax can be incread

Exculpatory Clause

Limits lenders the rights in a foreclosure to the amount received from the sale of the foreclosed property. If the balance on the promissory Note has not been paid in full from the proceeds of the sale, the lender can not obtain a deficiency judgement for the unsatisfied amount. (Referred to as nonrecourse financing since the lender has no recourse against the borrower for the unsatisfied portion of the loan

Recovery fund

Made to reimburse this persons who suffered from monetary damages As result of licensee Fine and fees paid by licensees Reimbursement for a single judgement max $50,00 or unsatisfied portion of the judgement whichever is less Multiple judgements awarded against the licensee. Max reimbursement limited to $150,000 A fee of 3.50 per year added to the license fee for both new and renewal brokers licenses Collection is discontinued when fund reaches 1,000,000 If funds fall below 500,000 collection starts again

A guilty licensee

May receive one of the following disciplinary actions Issued a reprimand or admin. fine up to $5,000 per offense Be placed on probation Or Have their license suspended for up to ten years or permanently revoked

Limited Liability Brokerage Partnership

May register with the department and operate as a brokerage partnership under the same requirements as a general partnership

License

Means any permit, registration, certificate, or license issued by the department

Taking (eminent domain)

Must only be for a public use, such as build highways, school, railroads, or public projects The owner must be paid a just compensation for the property The owner may negotiate with the condemning authority and may even reach an acceptable price

Limited Liability Partnership (LLP)

Must register with the Secretary of State Words " Limited Liability Partnership, or L.L.P, LLP" must be included in the name of the partnership Required to carry liability insurance in a minimum amount equal to 100,000 for each partner

Promissory Note

My personal Promise to pay debt

Title insurances

Never prorated Sellers pays(on test)

MEAL: four dispute settlement procedures are:

Mediation- third party to assist reaching an agreement Has no power to impose decision on parties Must be completed within 90 days of last demand, or broker must employ next Arbitration- Parties agree in advance by contract to abide by the arbitrators decision. After hearing, with both parties heard, the arbitrator decides how the funds should be disbursed and issues an award Award is binding and can be enforced in a civil law suit if the responsible party fails to abide by the decision Litigation- 2 methods avail Broker files bill of interpleader if he or she does not claim any rights to the deposit under dispute. Escrowed funds would be turned over to the registry of the court, pending a settlement. The broker may be awarded court costs and attorneys fees since the broker is making no claim for any of the funds in dispute. Declaratory decree- requested if broker feels that he or she is entitled to some or all of the deposit in dispute ESCROW DISBURSEMENT ORDER- commission issues an order, the broker by law must follow it or be in violation of the law. The parties are advised of the decision by the commission. If they disagree, they may file an appeal with the district court. Should the appeal be upheld, the broker could be subject to civil damages for disbursing the funds, even though they were legally required by the escrow disbursement order to do so. If the dispute is subsequently settled or goes to court before the order is issued, the broker must notify the commission within 10 business days of such event

Consideration

Money coming in. Money or anything of value that can be converted to money.

Housing Expense Ration

Monthly PITI PAYMENT / Monthly Gross Income = HER 1/12 of annual PRINCIPAL Payment TAXES Interest Insurance

General Warranty Deed

Most common type of deed. Provides the best protection to the grantee of any deed

Sales associate

Must be employed by a real estate broker or owner developer to practice real estate *must complete all pre license requirements to obtain their initial license as a sales associate

Escrow account

Must be held in a title company,banking institution, credit union, or savings and loan association that is located and doing business in Florida. A broker is authorized to place and maintain up to 1,000 of personal or business funds in a sales escrow account, And Up to 5,000 of personal or business funds in a property management escrow account for the purpose of opening the account, keeping the account open, and paying for ordinary service charges. Broker is ultimately responsible for funds in escrow account and must be a signatory on all such accounts

Legal Advertising

Must be in the name of the broker & under the supervision of the broker

Requirements for a valid deed

Must be in writing Consideration Signed by the grantor, and witnessed by two persons (grantee is NOT required to sign deed) Deed is voluntarily delivered and accepted (title does not transfer UNTIL this takes place)

Brokerage Partnership or Corp Sign

Must contain the name of the partnership or corporation, along with the name of at least one broker and the words "Licensed or Lic. Real Estate Broker" I.e. EVERGLADES REALTY, INC. Bea Dandy Licensed Real Estate Broker

Real Estate Brokerage Limited Partnership

Must have at least one general partnership Only brokers

Real Estate Brokerage Partnership

Must have at least one partner licensed as an active broker. Anyone who provides real estate services to the public, directly or indirectly must have brokers license Sales or brokers associate CANNOT be in this partnership.

A Sales Associate transitioning to a Broker

Must have been employed under one or more actively licensed brokers for at least 24 months writhing the last 5 yrs before becoming eligible to take the state broker examination

Real Estate Advertising

Must include the Registered Name or Trade Name of the brokerage firm. If a licensee includes his or her personal name, the licensees last name must appear exactly as it is registered with the commission.

Tenancy For Years

Non freehold estate. Tenant in lawful possession of the property under an agreement with the landlord for a specified time. Definite beginning and ending date for the rights to exist; dates must be specified.

Frecs Range Of penalties

Notice of non compliance Reprimand Probation Fine Suspension max 10yr Revocation or denial Max admin fine per violation of F.S. 475 is $5,000

Businesses that may perform Brokerage services

ONCE REGISTERED WITH THE DEPARTMENT Sole Proprietorship Corporation For Profit Not For Profit Corporation Limited Liability Company General Partnership Limited Partnership Limited Liability Partnership

Conealmeant

Occurs when a broker fails to disclose info

Salaried employees

Of an owner, or of a registered broker for an owner, of an apartment community who work in an onsite rental office of the apartment community in a leasing capacity

Essentials of a valid contract

Offer And Acceptance- There must be an offer and acceptance agreement, or meeting of the minds Consideration- Contract must specify a sufficient consideration. Either valuable or good consideration Valuable consideration(money or anything that can be converted to money)

Essentials Of A Valid Contract

Offer and Acceptance: There must be an offer and acceptance, agreement , or meeting of the minds Consideration: A

Common Area Measurments

One acre contains 43,560 sq ft One section contains 640 acres One township is six miles square, contains 36 square miles, 36 Sections

Intangible tax

Only on new mortgage loan .002 X new loan

Culpable Negligence,

Operating in a reckless, careless and excessively negligent manner

Cost Depreciation Approach

Or Cost Approach, is used to estimate the current cost of reproducing or replacing a building, minus an estimate for depreciation, plus the value of the land. This approach is also based on the principle of substitution. Best used to estimate the value of newer properties, property proposed for new renovation, insurance purposes, and properties infrequently exchanged or sold in the real estate market. May be the only Approach available to estimate the value of special purpose properties (schools, churches)

Title

Ownership (Car Title)

PITT: The four unities required to create a joint tenancy

POSSESSION INTEREST TIME TITLE

Attorney-in-fact

Persons who are granted authority under a power of attorney to act for others in some capacity, such as signing documents

Step 3/6: Estimate the amount of accrued depreciation in the main improvement.- 3 categories of depreciation

Physical Deterioration Functional Obsolescence - can be caused by either a deficiency or an over improvement (or super adequacy) External Obsolescence- a loss in value caused by factors beyond the boundaries of the subject property

Seal or L.S. (Locus Sigilli)

Placement of the word... or Letters , following the signatures of the parties

Direct Capitalization Technique

Proforma Income Statement. Math *Formula in which future income is converted into a present value STEP 1: FORECAST THE POTENTIAL GROSS INCOME (PGI), which is the total annual income for the coming year. (The 2 types of gross income that must be considered are contract rent and market rent) STEP 3: V&C - PGI= (EGI) V&C- VACANCY & COLLECTIONS losses, represent income that the owner will not receive. PGI- POTENTIAL GROSS INCOME, (This is the actual amount the owner can expect to receive from the operation of the property for one year into the future.) STEP 4: ESTIMATE OPERATING EXPENSES 3 types of operations expenses: (FE) FIXED EXPENSES , (VE) VARIABLE EXPENSES , (R) RESERVES FOR REPLACEMENTS STEP 5: SUBTRACT ALL 3 TYPES OF OE's FROM THE EGI TO CALCULATE THE (NOI) Net Operating Income STEP 7: ESTIMATE THE VALUE OF THE SUBJECT PROPERTY. NOI / Capitalization Rate (R) = VALUE (V) PGI -V&E +OI ______________ EGI -OE (FE+VE+R) ______________ NOI NOI/CR=V

ECOA- Equal credit opportunity act

Prohibits discrimination when getting loans

Mortgagor (borrower)

Property owner, the party who gives the mortgage to the lender to secure the loan Pledges the property as security to the mortgagee. Owns the real property, while the mortgagee owns the mortgage; which is personal property

Federal income tax deductions

Property taxes Mortgage interest Home equity interest

Elective Share

Provides for a surviving spouse to be entitled to 30% of the decedents real and personal property owned at the time of death. Purpose is to prevent a spouse from being harmed by an unfair will.

Statute Of Limitations

Provides time limits during which parties are allowed to bring legal action to enforce their rights under a contract

FREC Powers: Executive

Publish book and newsletters to further education Chairperson acting alone may exe

Real Estate Corporation Vs Real Estate Brokerage Corporation

Real estate corp. may buy and sell real estate for its owns purposes, but may not provide real estate brokerage services

Bundles Of Rights: 5 Large Sticks

Real property laws in the United States are based on the allodial system, which allows private citizens the right to own land. Each stick representing a separate transferable right: POSSESSION- A. Owner has a right to possess or occupy the property DISPOSITION- An owner generally has the right to sell the property, to give it away, or leave it in a will. (with exceptions) ENJOYMENT "Use"- An owner has the right to quiet use and enjoyment of the property without disturbance by hostile claimants EXCLUSION- CONTROL- An owner has the right to determine how the property will be used.

Principal of Substitution

Recognizes that no one would pay more for a property than the amount necessary to acquire an acceptable substitution.

Licensee

Refers to any person to whom a permit, registration, certificate or license is issued by the department

Commission or FREC

Refers to the Florida real estate commission

Department or DBPR

Refers to the department of business and professional regulation

Division or DRE

Refers to the division of real estate

Redlining

Refusal by a lender to approve a mortgage loan based on a property being based in a certain area, the age of property, the income level of residents, or racial composition of area.

Truth In Lending Act

Regulation Z- requires disclosure of APR True cost of credit

FREC disciplinary authority

Reprimand Admin fine up to 5,000 Probation

Statute Of Frauds

Requires a contract for the transfer of a right or interest in land to be In writing in order to be enforceable

Zoning based on Density

Residential

Step 1 of Disciplinary Process: Complaint Analyst

Reviews the complaint form or letter that describes the alleged violation to determine if the complaint is legally sufficient Legally sufficient- contains sufficient supporting evidence The division must investigate legally sufficient complaint

Calculating Commission

SALE PRICE X BROKERS COMMISSION RATE = Total Commission Due TOTAL COMMISSION DUE X SALES ASSOCIATES COMMISSION RATE= Sales Associate Share Of Commission

Sales associate first renewal

Sales associate must complete a 45 hour post license course. Failure to complete this requirement will result in licensee being out of business and voided license

Lotteries

Selling or chancing property to induce people to buy real estate

Joint Tenancy

Shared by two more persons who must have equal and undivided interest. All tenants must have equal rights of use, and possession,equal and undivided interests, and have acquired their ownership at the same time by the same deed or conveyance. Distinctive characteristic is The Right Of Survivorship (upon the death of a joint tenant, the interest of the descendent does not pass according to the will or by descent and distribution; it passes instead to the joint tenants. In Florida, a joint tenancy can only be created if the right of survivorship is clearly expressed in the deed or conveyance. If not, a Tenancy in Common results

Earnest Money Deposit

Shows good faith on the part of the buyer usually accompanies an offer, if no contract results, the deposit is returned to the buyer. The deposit protects the seller in the event the buyer later defaults. Default by buyer requires the deposit to be forfeited; compensates the seller for having to remove the property from the market ( liquidated damages) * posted dated check are considered earnest money and can be accepted with the sellers approval When deposits are placed or to be placed with a title company or attorney, The licensee who prepared or presented the sales contract shall indicate on the contract the Name, address, and telephone number of the title company or attorney with whom the deposit was placed. Within 10 business days after each deposit is due under the sales contract, the licensees broker shall make a written request to the title company or attorney to provide written verification of receipt of the deposits.

Township

Six miles square, and contains 36 square miles In the government survey method, a township is further subdivided into 36 sections (Starting at 1 in the top right hand corner and zig zagging back and forth til 36)

Broker Associate

Someone who is qualified to receive a broker license but chooses instead to be employed under the direction, control and management of an actively licensed broker or owner developer. In this capacity the broker acts as a sales associate NOT as a broker

Principal of Highest and Best use

States that the best use for the property, known as its highest, best, and most profitable use, is that which will most likely produce the greatest net return to the land over a given period of time. This net return is realized in terms of money or other amenities.

Examples of administrative agencies empowered by statutes

Statutes can authorize the creation and operation of administrative agencies to administer and enforce certain laws. The DBPR created by F.S. 455 FREC created by F.S. 475 are examples.

Steering or Channeling

Steering an individual away from a neighborhood, of location on the basis of race, color, origin, religion, sex .... etc

Suspended brokers license

Suspended, revoked, or otherwise void or ineffective brokers license results in all persons license who are employed under such broker to become automatically inactive

Percentage Lease

Tenant pays a monthly base rent + a % of the annual or monthly gross sales of goods sold on the premises Common in retail centers and Malls

Liquidation Value

Th amount that remains after all assets of a business have been sold in a hurried, but not forced, sale and all liabilities have been paid. The value of a failing business that is not expected to continue. It can also be used to estimate the minimal value of a Profitable business.

Effective Age

The age something appears to be

Price

The amount that is actually paid in a real estate transaction. Amount that the buyer is willing to pay and the amount the seller is willing to accept

Listing contract

The brokers employment contract. When a broker is employed to find a purchaser, he or she is entitled to compensation when a ready, willing, and able buyer has met all of the sellers requirements. This is accomplished when the buyer makes an offer in accordance with the terms of the listing agreement, whether or not a sale is consummated.

Real Estate Brokerage Corporation

The corporation and the names of all officers and directors of the corporation use be registered. At least 1 corporate officer must have an active brokers license. If that only broker is removed from the position (any reason), the vacancy must be filled within 14 calendar days. During this time period, the corp. may not acquire any new business until a new broker is appointed, but may conclude existing business. Failure to appoint new broker within 14 Day period, will result in cancellation of the corporation register Real estate licenses of corporate officers, directors, and sales associates will automatically be placed in an involuntarily inactive status.

Powers of the "Department or DBPR"

The department does not have the authority to issue injunctions against unlicensed persons, but may seek an injunction from the courts for failure to follow a department order. The department also has the power to issue a cease and desist order against an unlicensed party for violation of any rule or law under its administration

Single agency relationship

The employer becomes the principal , who authorizes the broker as an agent to perform certain services on his or her behalf. The party whom the broker does not represent as an agent, and with whom the broker attempts to be successful in achieving the purpose of his or her employment by the principal, is the brokers customer. The brokers sales associate is now their general agent, and becomes a subagent of all the brokers principals

Reproduction Cost

The estimated cost to construct at current prices an exact duplicate or replica of the building that is being appraised by using the same materials, design, and layout of the subject property. Preferred in appraisals of historic properties

Reliction

The exposure of dry land once covered by water when the level in a lake recedes, or a river or stream changes course

Eminent Domain

The governments right to take private property, through a process called condemnation

Check

The intersection of guide meridians and correction lines that forms a 24 mile square. Called a ....

If Net Operating Income increases, & CR Remains Constance?

The value will increase

ECOA- Equal Credit Opportunity Act

The lender cannot refuse to consider income because of the source. Lenders cannot discriminate against borrowers on the basis of race, color, religion, national origin, sex, martial status, age, or receipt of income from public assistance programs.

Mortgagee

The lender. The party who receives the mortgage from the property owner. Owns the mortgage(personal property); while the mortgagor own the real property

Market Value

The market value of a property is the most probable price at which specified property rights should sell. The most common type of value

Misrepresentation

The misstatement or omission of facts. Can lead to fraud if statements are intentional and relied upon

A BAR SALE

The most common services of real estate: Appraising Buying Auctioning Renting Selling Advertising Leasing Exchanging

Surveyors Method (Metes and Bounds)

The oldest method of land description and provides the most accurate type of legal description.

Defeasance Clause

The only legally necessary clause in a mortgage. Provides protection for the borrower, as it requires the lender to acknowledge performance by the borrower. Clause holds the lenders rights in check as long as the borrower performs as agreed in the note and mortgage.

Premises (granting) Clause

The only legally necessary clause required in a deed

Optionor

The only party who is obligated either to do or not to do something. The property owner who gives the rights

Example: surveyors method (metes and bounds)

The opposite of north 37 degrees East is South 37 degrees West

Employment by owner developer

The owner developer must register with the department but does not receive a real estate license

Fee Simple Estate

The owner has a complete bundle of rights. The simplest and yet the most comprehensive estate in the land. Most desirable and most common type of estate May be held 4 ways: -Estate In Severalty- sole ownership of the entire bundle of rights -Tenancy In Common- "estate in common". Held by two or more persons. All have an undivided interest in the property Ownership can be created by the same or different deeds, at the same or different times, with equal or unequal shares of ownership. All owners, however, have equal rights of use and possession. Owner may sell their interest during their lifetime without the consent of the other owners, or affecting any other owners rights May leave interest in will. If owner dies intestate, the interest will go to the owners heirs Joint Tenancy- Shared by two more persons who must have equal and undivided interest. All tenants must have equal rights of use, and possession,equal and undivided interests, and have acquired their ownership at the same time by the same deed or conveyance. Distinctive characteristic is The Right Of Survivorship (upon the death of a joint tenant, the interest of the descendent does not pass according to the will or by descent and distribution; it passes instead to the joint tenants. In Florida, a joint tenancy can only be created if the right of survivorship is clearly expressed in the deed or conveyance. If not, a Tenancy in Common results. Tenancy By The Entireties- An estate for a husband and wife only. Marriage is the owner of the property in which each spouse has a right of survivorship. Upon the death of one spouse, the surviving spouse will own the property in fee simple as an estate in severally. Created automatically whenever a husband and wife purchase property at the same time if both names appear on the deed and no other ownership form is specified. If divorced, the ownership convert to a Tenancy in Common

Optionee

The party who has the legal right and can elect to purchase the property by exercising the option at any time within the specified option period. Once this party notifies the optionor of the intention to proceed with purchase, the option becomes a purchase and sale contract, and is binding on both parties

Suit for Specific Performance

The party who is not in default asks the court to require the other party to perform as agreed in the contract. This remedy is usually available in connection with the sale of real estate. Usually a remedy taken by the buyer

Brokers customer

The party whom the broker does not represent as an agent, and with whom the broker attempts to be successful in achieving the purpose of his or her employment by the principal.

Mortgage Underwriting

The process of qualifying the applicant and the property.

Net Listings

The property owner agrees to a accept a stipulated amount, and no less, upon sale of the property (sellers net) The broker retains all money over the sellers net 1) OWNERS REQUIRED NET SALES PRICES + ESTIMATED CLOSING COSTS (Not incl. brokers commission) _________________________________ NET SALE + C/C 2) 100% - COMMISION RATE(%) = ?% (If Splitting between 2 brokers: COMMISSION RATE/ 2= %ea If paying sales associate: %ea X 3). NET SALE+ C/C / ?% =. SALE PRICE (Listing Price)

Effective yield

The rate actually received by the lender. Varies depending on amount of point paid, discount, length of time of loan. Rule of thumb Each point charged by lender = 1/8%

Escheat

The reversion of property to the state if someone dies intestate (without a will) and has no known heirs

Equity of Redemption

The right of a borrower to cure the default before foreclosure rather than lose the property. Borrower must pay entire balance of debt plus any interest costs that has accrued since the default. Exists in Florida up to the moment of foreclosure

Littoral Rights

The rights of a owners property bordering non flowing water, such as an ocean, sea or lake. Theses rights generally give the property owner rights only to the shoreline or high water mark. In case of ocean or gulf front properties, the ownership extends to the mean high tide mark.

Riparian Rights

The rights of an owner whose property borders a flowing waterway such as a river or stream

Assignment

The sale, transfer, or subrogation of rights in a contract is called....

As is Contracts

The seller is under no obligation to make any repairs to the property that are discovered during the inspection process Although they're Required to disclose any material defects (Any fact that could affect the property's value)

Point of Beginning

The survey begins by giving directions from the monument to the edge of the property, which is called the Point Of Beginning. When the survey returns to the POB it is called a closing In essence, a person starts at a known point, goes to POB on the property, and walks around the property until returning to the POB.

Highest and Best Analysis

This assists in determining whether the present use is the best use, or if an alternative should be considered to maximize the value of the land and improvements of the property (property value)

Liquidated damged

Those that are agreed upon in the contract. I.e. Deposit The parties have agreed to the penalty to be imposed in the event of a breach by either party. Usually when buyer backs out, seller gets to keep deposit

FHA LOAN

To qualify: A borrower must not exceed a housing expense ratio of 31% And Total Obligations Ratio of 43%

Escrow disputes

Under the control of buyer and seller. Broker holds funds. Conflicting demands for escrowed funds or if broker has good faith doubt as to which person is entitled to the escrowed property, Broker must give written notification to the commission within 15 business days from the date of the last party's demands Also required to institute a authorized settlement procedure to resolve the dispute within 30 Days.

Temporary Shelter

Used by a broker as a protection for sales associates and customers is not considered to be a branch office. The permanence, Use of location, and th character activities conducted there determine whether registration is required or not.

(GRM) Gross Rent Multiplier technique

Used for monthly rental properties and is derived from comparable properties which are rented at the time of sale by using the following formula: Comparable Sales Price/ Gross Monthly Rent= GRM

Income Approach

Used to estimate the value that a property's net earning power will support. This approach is used to estimate the value of income producing property and for the valuation of a business. This approached is based on the appraisal principals of substitution & anticipation (Direct Capitalization & Gross Multiplier are two techniques applied for this approach)

Liquidation value

Value of failing business

First degree misdemeanor

Violating the requirements concerning rental lists, information, and contracts 1,000 and/or imprisonment not to exceed 1 year

Single Agent or Single agency

When a broker accepts employment under a.... A broker may represent a seller or a buyer, or a land lord or tenant. Any attempt to represent both parties in a transaction would create an illegal dual agency Duties: Deal honestly and fairly Account for all funds Disclose all known facts that affect the value of residential property Skill, care, and diligence Present all offers and counters offers Confidentiality Obedience Loyalty Full disclosure

Tract building

When a developer acquires a large tract of land, records a subdivision plat map, and uses a model center from which sales may be made

Satisfaction of Mortgage

When a loan has been paid in full in a lien theory state (FL), the mortgagor (borrower) should receive a letter of satisfaction from the mortgagee within 60 days of the loan payoff

Escrow Disbursement Exemptions

When a sales contract is subject to financing, and the broker is acting as an escrow agent, the broker may refund the deposit to the buyer without notification to the commission if the financing cannot be obtained.

Non representation (No Brokerage relationship)

When in this relationship, a broker may provide specified services for a fee. Care must be taken not to confuse or mislead the customer by inappropriate words or acts that could suggest the licensee has assumed a role that is different from the one originally agreed upon. A customer may choose not to be represented, in which cases the broker must provide the customer with a No Brokerage Relationship Notice (usually a for sale by owner) Duties: Deal honestly and fairly Account for all funds Disclose all known facts that affect the value of residential property

Wild Card: The ways in which an OFFER can be terminated

Withdrawal Insanity Lapse Of Time Death of Either Party Counteroffer Acceptance Rejection Destruction of the property

Principal Office Requirements

active broker requirements: Open and maintain an office, (registered with DBPR) Office must consist of at least 1 closed room in a building of stationary construction (for privacy or negotiations and closing) A principal registration is transferable to a new location for the remainder of the current registration period. A broker must maintain books, records, and files that pertain to transactions of others in the brokers office for at least 5 years

Step 3: Adjust the comparable sales price

adjustments are always made to the Comparable property, but never to the Subject property If the Comparable property is superior to the subject property, the comparable sales price is adjusted downward by the value of the superior features; superior means subtract. If the comparable property is inferior to the subject property, the comparable sales price is adjusted upward by the value of the inferior features; inferior means increase.

Tenancy In Common

estate in common". Held by two or more persons. EQUAL or UNEQUAL SHARES OF OWNERSHIP All have an UNDIVIDED INTEREST IN THE PROPERTY. Ownership can be created by the same or different deeds, at the same or different times, with EQUAL or UNEQUAL shares of ownership. All owners, however, have equal rights of use and possession. Owner may sell their interest during their lifetime without the consent of the other owners, or affecting any other owners rights May leave interest in will. If owner dies intestate, the interest will go to the owners heirs

Farming

licensee concentrate on one type or style of property or on one particular neighborhood

LTV Ratio

loan / Value = LTV Ratio (Value and Purchase Price are the same thing)

Consent to transition to Transaction Broker

may be change at any time during the relationship between an agent and principal, provided the agent gives the written disclosure required and the principal gives his or her written consent before a change in the relationship occurs. Must be in writing to the principal as a separate and distinct document or included as part of other documents such as listing agreement or others agreement for representation.