Level 5

Advertising rules:

-Establish regulations that protect customers -Balance free commerce and business competition -Advertising should be truthful and helpful, not misleading and hurtful.

Puffing

-Legal form of marketing -Ex. "The backyard offers an absolutely breathtaking view." - not a lie, just dramatic

We'll talk about partnerships, corporations, limited liability companies, and limited liability partnerships in great detail later. For now, just note that these business entities have their own signage requirements. Their signs should:

-List the trade name, if applicable -List the name of the business entity -Name at least one broker -Include the words ""Licensed Real Estate Broker" or "Lic. Real Estate Broker"

A general partnership may be created:

-Orally -In writing -Through implied actions of the parties A general partnership is a business entity consisting of two or more parties in which all co-owners actively share power, responsibilities, and profit.

Antitrust Behaviors

-Price fixing -Group boycott -Market or customer allocation -Tie-in agreements

To open up a branch office, a broker must:

-Register each new branch office -Pay the registration fees

You now know that the CAN-SPAM Act:

-Regulates email advertising -Dictates what can and can NOT be included in commercial emails -Has specific rules for sexually explicit content

Brokerage Offices MUST:

-Store records -Be registered with the Department of Business and Professional Regulation (DBPR) -Contain at least one room in a stationary building that will allow for the privacy while closing transactions

License holders CANNOT:

-Tell clients where they can and cannot live -Guarantee a specific price or value -Calculate property taxes for a client -Give legal advice

The FREC may require a brokerage to establish a branch office (rather than claiming a new, separate office, for example) if:

-They determine it is in the public's best interest to do so -The brokerage's advertising makes it appear that the same broker runs both locations

You are a broker. You receive a deposit check for $350. How long should you keep a record of these funds?

5 years

Firat is offering rental information for a small fee. He decides not to give his clients receipts for the rental information because the fee is so small. Evaluate Firat's decision.

A brokerage could offer rental information for a fee. If a broker does do this, they need to give the client a receipt that includes that the client will be repaid under certain circumstances.

Emanuel owns a brokerage. He is a minimalist and doesn't want to include the names of his sales associates on the sign. What should Emanuel do?

A brokerage sign does not need to include the names of all of the employed sales associates. It should include the name of the broker, however.

A commission is commonly a percentage of the:

A commission is a percentage of the sales price.

Define corporation (INC)

A corporation (INC) is a legally created business entity representing the interests of more than one person. "Inc." means incorporated and indicates a corporation. Public Private For profit Nonprofit The owners: Shareholders (or stockholders) own the corporation in stocks. The board: The owners of the company (shareholders) are represented by the board of directors, who are elected by shareholders. The managers: These corporate officers (president, vice president, treasurer, secretary) run the day-to-day operations of a corporation and do what the board says.

Define limited liability partnership (LLP)

A limited liability partnership (LLP) is a business entity in which parties are protected from some liabilities while retaining other liabilities. They are a kind of partnership arrangement and the partners are very similar to the partners in a limited partnership. However, no general partner is needed for an LLP.

What is a limited partnership

A limited partnership is a business entity composed of both general and limited partners. The general partners manage the business and assume most of the risk, while the limited partners are passive investors with limited risk.

Given that Zack is a limited partner and Zoe is a general partner, what kind of partnership are they most likely to have?

A limited partnership usually has at least one limited and one general partner.

What is a sole proprietorship

A sole proprietorship is a business organization form assumed by an individual (or legal spouses, they count as a single legal entity). As a sole proprietorship, a business operates as an extension of the owner — the business is incapable of owning real estate on its own.

Broker compensation:

Among other things, a broker's commission is negotiable between the parties. It does not have to be commission-based but can take multiple forms and must be based on a lawful condition.

Ostensible Partnerships definition

An ostensible partnership is the appearance that a partnership exists between two parties even though no partnership was intentionally created. An ostensible partnership is not allowed in Florida.

Price fixing is defined as:

Any effort made by competitors to jointly establish a fixed rate, price, or commission and is considered an antitrust violation is known as price fixing.

A buyer and a seller have conflicting demands regarding how their escrow funds will be dispersed. They try to sort out their demands via mitigation but don't come to a solution. They decide to present their case to a third party. Before doing so, they agree to adhere to the third party's decision, whatever it may be. They are agreeing to:

Arbitration

Joel is a broker. He wants his brokerage to be extra personable. To help his cause, he creates an advertisement for a residential home with the following information: Single-family home in the suburbs Pool in the backyard, BBQ pit on the side — it's a house for entertainers! Call Joel for more information. 999-999-9999 This is an example of:

Blind ad - does not disclose licensure

Which of the following is something TCPA and CAN-SPAM have in common?

Both TCPA and CAN-SPAM give people the option to refuse advertisements. They address "opt-out" options.

Aparna is a sales associate. She does not see why keeping records for five years is necessary. As her broker, evaluate which piece of advice would be most helpful to Aparna's work.

Brokerages are required by law to maintain records for five years. This is often because they may be needed in the event of litigation.

Difference between Commingling and Conversion?

Commingling is simply the mixing of funds. Even if a client's money is not spent, the mixing is still a no-go. Conversion occurs when funds (which have likely been commingled) are actually spent on something.

Tyrell is a broker. He deposits his personal paycheck into his brokerage trust account along with a client's earnest money. What is Tyrell guilty of doing?

Commingling is the mixing of personal funds with business funds and is illegal.

Asim and Heather work for two different brokerages. They sit down at their local McDonald's to eat french fries and talk about their work. They start talking about commission rates. Evaluate the scenario. Asim and Heather are:

Commission rates must always be negotiable between brokers and clients - it's the law!

What should all licensees remember when it comes to how compensation and duties relate?

Compensation ≠ loyalty, an agency relationship, or duty.

What are conflicting demands?

Conflicting demands are opposing, unresolvable demands made by the buyer and seller in a transaction regarding escrowed property disbursement.

Conversion definition

Conversion is a license holder's personal use or misuse of money belonging to others. Essentially, conversion is just a fancy word for stealing.

Consider that Big Bucks could have decided to work with Orion and two other investors to purchase Waterfront Towers. They could have: Registered all investors as one single entity in the eyes of the law Purchased Waterfront Towers and continued to do business together This would NOT have been a joint venture, but rather the formation of a:

Corporation

several business entities that are NOT allowed to register as a brokerage by law such as -

Corporation sole - Church entities Joint venture - At times, investors may merge their finances together for one project or venture. After the venture is finished, the investors part ways instead of continuing business together. This is called a joint venture. May last one transaction. Business trust - A business trust is a business entity that pools investor funds in order to buy, develop, or sell real estate. Unincorporated association - Unincorporated associations are groups of people who come together under a common purpose. (Maintenance committees, beautification groups, etc.)

Percy (a broker) incessantly calls Maynard (a homeowner) to ask if Percy can sell Maynard's home for him. Maynard requests to be taken off the company's call list seven times, but Percy ignores Maynard's request. Analyze Percy's behavior. Percy:

Customers who request to be removed from a brokerage's do not call list must be removed, regardless of what the brokerage desires.

Graciela is a broker based in Jacksonville. She wants to open up her own brokerage but she is concerned about the complications and liabilities of escrow accounts. What advice could you give to Graciela?

Florida does not require brokerages to maintain their own escrow accounts.

Mauro creates an online advertisement for his brokerage. He includes his brokerage's name at the end of the email but, because his advertisement is allowed a very limited wordcount, omits their point of contact information. Evaluate.

For online advertisements, point of contact information must be right next to the brokerage name. Therefore, Mauro's advertisement is NOT acceptable.

Malik is a broker who has opened an escrow account for his brokerage through a title company. Malik's sales associate receives funds on a Tuesday. The sales associate delivers the funds to Malik on Wednesday. Malik needs to deposit the funds by the end of which day? Does that day change because the escrow account is through a title company?

Friday, no.

Property management account Christopher is a property manager in charge of a property management account. He receives a $575 security deposit from Robin, his tenant. What should Christopher do with this money?

Holds deposits, etc. Deposit immediately into property management acct.

As a favor, you are helping your uncle sell his home. He gives you funds in check form and puts your name on the check. What should you do?

If a client delivers funds to you but puts your name on the check as the recipient, ask them to issue a new check or sign the check and add the words: "For Deposit Only to (your broker's escrow account)" and give the check to your broker.

How long must you keep records in Florida?

In Florida, the law states brokerages must maintain and have available books, accounts, and records for five years. The "five years" is from the date money, funds, or a deposit is received or five years from the date a contract is executed. If any contract or fund is involved in a legal proceeding, it must be kept for at least two years after the proceeding ends.

Odette is a broker. She is putting out several Facebook ads to help boost her business. She wants to include the following information: -Her brokerage's name. -Two pictures of ready-to-buy homes. -Point of contact information. -A personable blurb to draw in clients. However, Odette has a very limited amount of space in her ad. How should Odette prioritize the information she includes?

Internet ads must include the point of contact information right next to the brokerage's name.

Haley, Denis, and Bianca wish to register their general partnership as a brokerage. They: Are all licensed as sales associates Register their general partnership with the DBPR Evaluate whether or not their registration as a brokerage is legally acceptable.

It is not legally acceptable because they are not brokers.

What are kickbacks

Kickbacks are payments made to a licensee for a service unrelated to the real estate transaction or a service that does not fall under the responsibility of the licensee. Kickbacks are sometimes referred to as rebates.

A business entity in which parties are protected against personal liability for business debts is a:

LLC

participants are called "members"

LLC

all partners are partially shielded from liability

LLP

partnership where no general partner is required

LLP

You are a member of the FREC who is trying to decide if a brokerage's temporary shelter qualifies as a branch office. The temporary shelter: Has four sales associates who appear to be working there every day Has had three real estate transaction close there in the past week You decide the temporary shelter is:

Likely a branch office

What is the main difference between general and limited partnerships?

Limited partners have less liability.

Litigation

Litigation is the legal process of resolving a dispute in court that involves an interpleader or declaratory judgment. An interpleader is a court procedure meant to resolve a dispute when a party holds funds they know they do not own, but to which multiple other parties lay claim.

Mediation

Mediation is an informal negotiation held by an independent third party to settle a dispute such as conflicting demands. Essentially, this is like a supervised discussion between the parties.

The following relates to a brokerage in Sarasota: The employing broker's name is Miguel Zeballos. The employing broker's unofficial nickname is "Zeb." Miguel employs three sales associates: Chandler, Zelda, and Asia. Which of the following answers includes the information necessary to create a valid office sign?

Office signs should include the broker's name, the words "Licensed Real Estate Broker" or "Lic. Real Estate Broker," and the trade name, if applicable.

What are per se violations?

Per se violations are acts that are considered inherently illegal. They have been proved to be illegal time and time again.

Linus, Charlie, and Lucy are all agents in Crawlington. They agree to set their commission rates in the same range to even out the playing field (and hopefully earn each of them a higher commission). What illegal activity are Linus, Charlie, and Lucy engaging in?

Price fixing

Gonie Falik is a Florida sales associate looking to operate her real estate career in the most tax-friendly manner possible. She gets with her CPA, Mauro Garcia, to discuss the business forms she can operate under. If Gonie is like most licensees, her CPA will suggest that she operate as either of these two business entities:

Professional LLC or professional association

Ja Rule is advertising a home with a small, stone-bordered swimming pool in the back. In his advertisements, he says: "The home has a beautiful and luxurious swimming pool in the back with lovely stone detailing." Which of the following is Ja Rule utilizing:

Puffing

Sales associates should only receive compensation from:

Sales associates should only receive compensation from their sponsoring broker.

Jazmine moves from Miami to Sarasota where she accepts a job at a new brokerage. She starts her new job with her new employer but it takes her three months to notify the FREC about the change of employer. Evaluate.

She should have notified them within 10 days.

Arya is a broker. She recommends her buyer use her favorite, trusted contractor to renovate the floors in the home they just bought. She'll receive a kickback from this referral but she decides not to disclose the kickback because it's quite small. Evaluate Arya's choice.

She was wrong and was supposed to disclose the kickback

The TCPA applies to:

TCPA governs autodialers, fax machines, and voice messaging systems. It does NOT regulate emails or brochures.

Which act specifically addresses sexually explicit emails and states that messages with sexually oriented material must include the warning "SEXUALLY-EXPLICIT:" and have a "brown paper wrapper"?

The CAN-SPAM Act regulates sexually explicit emails with specific regulations and stipulations.

Trade names

The DPBR uses the term trade name in their laws and statutes. ---T/A, which means trading as ---D/B/A, which means doing business as If a brokerage or broker wishes to do business under a trade name, they must register it with the DBPR and DOS. This trade name must be registered under that person or entity's legal name. A person or brokerage can only have one trade name. Existing trade names can't be reused. Sales associates can't use a trade name and must register under their true name.

When discussing deposits in the state of Florida, depositing funds immediately means by the end of which business day after the sales associate or broker receives the funds?

The third business day

Which of the following is a commonly used tool for mitigating a brokerage's vicarious liability risks?

The use of a brokerage office policy manual is a great tool for mitigating a brokerage's vicarious liability risks.

Gail and Marilla form a limited partnership. Gail is a licensed sales associate and registered as a general partner. Marilla is a licensed broker and registered as a limited partner. Marilla focuses on advertising and Gail focuses on monetary brokerage services. Analyze Gail and Marilla's partnership. Are there any problems?

This is not legally valid. The general partner needs to be a licensed broker.

Commingle definition

To commingle, or commingling, is the illegal act of mixing personal funds with a client's funds.

A brokerage must account for the deposit and withdrawal of all funds either into or out of a trust account. This should include information like:

When the funds were received, When the funds were deposited, When the funds were withdrawn, From whom the funds were received, For whom the funds were received

What is collusion?

While each brokerage firm is free to determine the commission or fee it will charge clients for services, representatives of the brokerage firm may NOT discuss such matters with representatives of another brokerage firm. That's collusion!

Which of the following best describes a joint venture?

While in most partnerships, the partners will continue doing business together until they end the partnership, in a joint venture, investors plan to part ways after the stated venture is finished.

A broker, Rumpelstiltskin Johnson, has a broker's license associated with his full name. His full name, however, is quite hard for his clients to say. He starts going by "Stew Johnson" in all of his advertisements. Evaluate his decision. Rumpelstiltskin Johnson:

You must advertise using the name associated with your license unless you register another name or include your full name along with your nickname.

The CAN-SPAM Act governs the use of

commercial email advertising

consists of at least one general and one limited partner

limited partnership

general partner bears full personal liability for the business; limited parter is shielded from personal liability

limited partnership

Gregory is an agent helping Miranda sell her home. Gregory advertises Miranda's home as "For Sale by Owner," as he thinks this will draw in more customers. Evaluate what this is an example of and whether or not it is legal.

misrepresentation and illegal

one one person involved

sole prop.

owner bears full personal liability for business

sole prop.

Best practice for sales associates selling their own property is to:

-Immediately disclose to potential buyers that they are a license holder. -Document the disclosure of their licensure. -Check their brokerage policy regarding selling one's own property.

Point of contact information is a brokerage's or an individual's contact information in an advertisement, such as relevant addresses or fax and telephone numbers. Point of contact information includes:

-Mailing address -Street address -Email address -Telephone Number -Fax number

Price fixing

-Raise or fix prices for their goods or services -Set a minimum price they will not sell below -Reduce or eliminate discounts

If an active broker leaves an office vacancy, it must be filled within:

14 calendar days

What is a blind ad?

A blind ad is an ad in which a broker attempts to promote or solicit real estate activity without disclosing the fact that they are a licensed real estate broker. And I'll say it again: blind ads are illegal in Florida.

What is a deposit?

A deposit is a payment made from one party to another that shows a sincerity to fulfill the transaction. This is also called a binder deposit or good-faith deposit. -Usually earnest money

Escrow Disbursement Order (EDO)

If the escrow funds are in a brokerage's escrow account, the broker can request an escrow disbursement order (EDO) from the FREC. An EDO is the FREC's decision regarding who should receive disputed escrow funds held in a brokerage escrow account. Essentially, the broker is deferring to the FREC over going to court. The FREC will NOT issue an EDO for an escrow account opened through a title company or attorney. If the settlement is resolved or goes to court before the FREC issues the EDO, the broker has ten days to let the FREC know they're off the hook.

Arbitration

Arbitration is a process whereby the parties to a dispute present their conflict to a disinterested third party and honor the third party's binding judgment. Before beginning the arbitration, both parties have to agree, in advance, to consent to the decision of the disinterested third party.

What is an escrow account?

Funds are deposited, kept, and withdrawn from secure accounts called escrow accounts, or accounts that allow for a process in which funds and/or financial documents are held by a disinterested third party on behalf of the other two parties in the real estate transaction until specific conditions are satisfied. Escrow account can hold cash, check, deeds, property, etc. But their main purpose is to help mitigate liability and give brokers a safe place to store funds that aren't theirs but that they're in charge of and liable for.

MALE

M: Mediation A: Arbitration L: Litigation E: Escrow Disbursement Order (EDO)

Jayquan is a broker resolving a conflict between a buyer and seller around how escrow funds should be disbursed. To settle the conflict: Jayquan seeks out an independent third party. The parties complete an informal, non adversarial negotiation process. The parties reach an agreement within 90 days. Jayquan and his clients pursued:

Mediation

What protections do a sole proprietor's personal assets have from their business's losses and liabilities?

None. Sole proprietors are personally liable for their businesses.

You have worked for a brokerage for eight years. You created several call lists and collected rental information for listing services. When you leave the brokerage, you are:

Not allowed to take the records, even if you created them.

Margarita is opening a new brokerage office. She asks you what she needs to maintain a valid office. You tell her:

That office must store records, be registered with the Department of Business and Professional Regulation (DBPR), and contain at least one room in a stationary building that will allow for the privacy while closing transactions.

A violation of antitrust law in which competitors agree to portion the market amongst themselves is called:

market or customer allocation

A good-faith doubt could include:

-A transaction fails. The broker asks the seller how they want the escrow funds to be distributed. The seller never responds. -A buyer and seller give the broker different instructions on how to disburse the escrow funds. A good-faith doubt is a doubt that is honest, honors the business contract, is free of fraudulent motive, and implies an intent to fulfill the contract.

License holders CAN:Advise clients about changes in the market

-Advise clients about changes in the market -Discuss reasonable offers -Describe how real estate processes (such as property taxes or financing) work

What must be included on an office sign?

-Broker's name -Words "Licensed Real Estate Broker" or "Lic. Real Estate Broker" -Trade name, if applicable (we'll talk more about these in a bit)

There are three exceptions the FREC allows regarding settlement procedures:

-Earnest money that is part of a residential sale contract used by HUD is exempt from the settlement procedures if the property is HUD-owned. -Earnest money can be returned to condominium buyers without notifying the FREC or going through settlement procedures if the buyer gives the licensee written, timely notice of their cancellation. -Escrowed funds can be returned to a buyer if the buyer, in good faith, cannot obtain financing.

You are a broker who employs and oversees four sales associates. One of your newer sales associates, Diego, asks you for advice on the email marketing campaign he is working on. He asks you, "What should my emails look like?" Evaluate which piece of advice would be most helpful.

According to CAN-SPAM, it is prohibited to send undesired commercial messages to a customer's email or wireless device, have misleading header content, or have misleading subject content.

During calls, telemarketers are required to say:

According to the TCPA, telemarketers MUST say who they are, on behalf of whom they are calling, and how to contact them.

A broker's advertisement MUST include the broker's:

All broker advertisements MUST include the broker's phone number or address (contact information), the broker's name, and an identification of the advertised person as a real estate broker.