LEVEL 5: REAL ESTATE BROKERAGE ACTIVITIES AND PROCEDURES.

What is a deposit?

A deposit is a payment made from one party to another that shows a sincerity to fulfill the transaction.

What is commingling?

Commingling is the illegal act of mixing personal funds with a client's funds.

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?

Emanuel should not include the sales associates' name if he does not want to because doing so is not a signage requirement.

Olivia receives escrow funds on Friday. She gives them to her broker on Monday, by when must the broker deposit the funds?

Escrow funds must be deposited by the end of the third business day after receipt. It does not matter whether the sales associate or broker receives the funds - the funds must be deposited three business days after they are received. Three business days after Friday is Wednesday.

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

Her 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.

What is the main difference between general and limited partnerships?

In limited partnerships, the limited partners have less personal liability than have general partners.

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?

Miguel Zeballos; Lic. Real Estate Broker; 999.829.2827

Clarissa and Miguel, who are not spouses, create a temporary business arrangement to complete a single business transaction. They want to register as a brokerage. Is this allowed?

No, they cannot register as a broker because they created a joint venture.

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.

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.

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 word count, omits their point of contact information. Is this acceptable?

This is not acceptable advisement because it lacks required information.

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.

"Providing records might become necessary if a legal issue comes up. We need to be prepared for the FREC to call us up in the event of a litigation."

Alondra is a licensed broker. She wants to start her own brokerage and considers doing so out of an available rental space down the street. She asks you for advice and you tell her:

"That seems like a good idea, just make sure to store your accounting and transaction records there."

Cooperative Association

-A corporation formed under Florida statutes to engage in limited commercial business. -It may buy, sell, and lease real estate for its own use. -May not register as a brokerage.

Unincorporated Association

-A group of people associated together for some common, noncommercial purpose. -May not register as a brokerage.

Joint Venture (JV)

-A new corporate entity created and jointly owned by two or more parent companies. -May not register as a brokerage.

Which of the following best describes a joint venture?

-After the business goal is finished, the investors part ways instead of continuing business. -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.

General partnership

-All partners are personally open to liability from the business. -All partners must be active participants. -May register as a brokerage.

Corporation Sole

-An entity formed under common law principles for religious purposes. -It can buy and sell real estate for its own use. -May not register as a brokerage.

Business Trust

-Business organization governed by group of trustees, who operate trust for beneficiaries. -May not register as a brokerage.

It is illegal:

-Entity defined as the appearance a partnership exists even though no partnership exists. -Ostensible partnership.

Corporation

-From a legal standpoint, a corporation is considered to be a person. -May register as a brokerage.

Limited Partnership

-General partner bears full personal liability for the business; limited partner is shielded from personal liability. -Consist of at least one general and one limited partner. -May register as a brokerage.

Sole Proprietorship

-Only one person is involved. -Owner bears full personal liability for business.

LLC (Limited Liability Company)

-Participants are called "members" -Shield members from personal liability. -May register as a brokerage.

LLP (Limited Liability Partnership)

-Partnership where no general partner is required. -All partners are partially shielded from liability. -May register as a brokerage.

PA

-Professional Association (ex. doctor, lawyer) -Entity typically created between sales associates for income tax purposes..

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

14 calendar days

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:

A blind ad; because Joel is not disclosing he is a license holder.

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:

A branch office.

Doug is a sales associate. When Doug collects fees paid by prospective rental tenants in exchange for rental information, he spends the money from the fees right away to help pay off his car. Evaluate Doug's actions.

A brokerage can charge a fee for rental information - it is not illegal in Florida. According to Florida law, clients are entitled to 75% of the fee they paid to the broker in exchange for rental information if they do not obtain a rental, and 100% of their fee if the information is incorrect or outdated.

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.

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

A limited liability company (LLC) is a business entity in which parties are protected against personal liability for business debts. An LLC is kind of like the best of both worlds between a corporation and a partnership.

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

A violation of antitrust law in which competitors agree to portion the market amongst themselves is called market or customer allocation.

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.

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.

Advertising a home as "For Sale by Owner" when it is not, in fact, up for sale by the owner without the help of a licensee, is misrepresentation and is illegal.

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.

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.

A blind ad is an ad in which a(n):

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. Blind ads are illegal in Florida.

An account that holds something (an asset) on behalf of one party until a transaction is completed and that something can be given to the other party is a(n):

An escrow account holds funds on behalf of one person until a real estate transaction is completed.

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

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.

Arya is wrong. She should of disclosed the kickback. 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.

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.

Bradley and Alejandra are making paper brochures to advertise their brokerage. Bradley says they must include the brokerage's phone number, by law. Alejandra states they don't need to include it and can just provide the email address. Who is correct?

Bradley is correct-print advertisements are required to include the brokerage's phone number.wrong.

For how long does a brokerage office need to retain their records?

Brokerages need to keep their records for five years.

The TCPA applies to:

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

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.

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

Compensation ≠ loyalty, an agency relationship, or duty. A licensee can represent a buyer and be paid by the seller or visa-versa. Typically, agents for both the buyer and the seller are paid a commission expressed as a percentage of the final sales price of the seller's property.

What are conflicting demands?

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

A buyer and a seller are arguing about how their escrowed money should be disbursed. The buyer's and seller's opposing, unresolvable requests are also known as:

Conflicting demands.

What is conversion?

Conversion is a license holder's personal use or misuse of money belonging to others.

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.

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.

Erika is a broker who receives escrow funds on Tuesday. In order to behave lawfully, Erika needs to deposit the funds by the end of the day on:

Friday; the broker has until the end of the third business day to deposit escrow funds.

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?

Funds must be deposited immediately, meaning by the end of the third business day after the sales associate or broker receives the funds. This applies to all trust accounts and does not vary.

Gracie establishes a brokerage but, soon after, the FREC shuts her business down. What is one reason her brokerage may have been shut down?

Gracie did not register her office with the Department of Business and Professional Regulation (DBPR).

Mike is sending out several solicited faxes to prospective clients. He has several data points he wants to include in the fax: -The date he sends the fax -The time he sends the fax -His legal name -His nickname -His phone number -Two property descriptions -Two sentences of promotional content Mike wants to keep his fax to one page. He must delete two data points to make it all fit. Which two data points should Mike choose to omit?

His nickname and two property descriptions. Fax advertisements are governed by the Junk Fax Prevention Act. Faxes need to include the date and time the fax is sent, the sender's legal name, and the sender or sending machine's phone number.

As a favor, you are helping your uncle purchase a 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.

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?

Immediately means by the end of the third business day after the sales associate or broker receives the funds.

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:

In danger of price fixing. Commission rates must always be negotiable between brokers and clients - it's the law!

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.

Broker Blessing is caught in the middle of a buyer's and seller's claims that they have the right to the escrow money. While the buyer and seller resolve their disputes in court, Blessing knows she has no claim to the escrow funds. Blessing pursues a(n):

Interpleader; 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.

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

Limited partnership.

Greg and Josefina are the two parties to a transaction. They cannot agree on how their escrow funds should be disbursed, so they go to court to resolve the conflict. This is an example of:

Litigation; the process of resolving a dispute in court.

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

No, Jazmine should have notified the FREC within ten days.

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 these records with you, even if you created them.

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.

Not legally acceptable because none of them are licensed brokers. If a general partnership wishes to register as a real estate brokerage, they must register with the DBPR under the partnership's name, ensure at least one partner is a licensed broker, ensure any partners providing real estate services are licensed as brokers, and prohibit sales and broker associates from registering as general partners.

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 is any effort made by competitors to jointly establish a fixed rate, price, or commission and it is considered an antitrust violation. It occurs when competitors agree to do things like standardize commission rates.

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 legal structure 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 association or professional LLC.

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?

Property management accounts are a type of trust account that usually hold property management funds, such as security deposits.

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 is the use of exaggerated claims (technically opinions) to achieve a sale.

What is puffing?

Puffing or puffery is the making of exaggerated claims (technically opinions) in order to achieve a sale or some other objective.

Gonie decides to use a friend's temporary shelter as a brokerage office: -She and her sales associates are permanently assigned there. -Real estate transactions close there. The temporary shelter:

Qualifies as a branch office; if sales associates are permanently working there and transactions close there.

Sales associates should only receive compensation from:

Sales associates should only receive compensation from their sponsoring broker.

A commission is commonly a percentage of the:

Sales price.

Graciela is leaving Atlas Realty and moving to another brokerage. She can't wait to tell her new brokerage all the details about her most recent transaction at her old brokerage. Graciela should remember:

She must keep confidential information confidential even after her employment terminates.

The CAN-SPAM Act governs the use of:

The CAN-SPAM Act regulates commercial email advertising.

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.

Dean owns a brokerage. His graphic designer tells him to put his name on the entrance sign and nothing else. However, Dean must include:

The words "Licensed Real Estate Broker" or "Lic. Real Estate Broker"

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. General partner needs to be a licensed broker. If a limited partnership wishes to register as a real estate brokerage, they must ensure at least one general partner is a licensed broker, ensure any general partners providing real estate services are licensed as brokers, and prohibit sales and broker associates from registering as general partners.

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

When a broker receives money — deposits, checks, funds, you name it — they must keep a record of that money for at least five years from the date they received it.

Candi offers rental information for a fee. Does Candi need to provide these clients with a receipt?

Yes, Candi is legally obligated to provide a receipt.

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.