© 2009 by south-western, cengage learning samirlander chapter 5

© 2009 by South-Western, Cengage Learning

SAMSAMIRLANDERIRLANDER

Chapter 5Chapter 5

Florida Real Estate:Florida Real Estate: Principles, Practices and Principles, Practices and

License LawLicense Law

Chapter 5Chapter 5

Operation of a Broker’s OfficeOperation of a Broker’s Office



Key TermsKey Terms

Arbitration

Blind ad

Commingle

Conflicting demands

Conversion

Corporation

Deposits

Double taxation

Earnest money

Escrow account

EDO

General partnership

Good-faith doubt

Interpleader

Limited liability company

Limited liability partnership

Limited partnership

Mediation

Ostensible partnership

Point of contact information

Sole proprietorship

Trade name


The Broker’s OfficeThe Broker’s Office

Principal place of business

Registered with DRE

Stationary buildingMobile home does not qualify


Change of AddressChange of Address

Written notification to DRE within 10 days

License ceases to exist until notification received

Associates not movingInvoluntary inactive


Change Employing BrokerChange Employing Broker

DRE notified within 10 days

License ceases to exist until notification

Records belong to broker

May not remove or copy


Branch OfficesBranch Offices

Registered as branch office

Temporary shelter is a branch office if:

Transactions closed in office

Associates are permanently assigned to office


SignageSignage

All offices must have signName

Trade name

“licensed real estate broker”

“lic. real estate broker”

Name of partnership or corporation


SignageSignage

Clear distinction between broker and…

Broker associates

Sales associates

Zoning and license laws

ADA


AdvertisingAdvertising

False or misleading ads prohibited

Media includes:Newspapers

Magazine ads

Fliers

Television

Radio

Internet

Billboards

Yard Signs

Benches



Blind ads: Blind ads: don’t indicate ad was placed by broker

Ads must include: Firm name

Contact person - surname



Internet AdBroker firm name immediately above, below, or adjacent to point of contact informationpoint of contact information

Method of contact

E-mail address

Mailing address

Street address

Phone number

Fax number


Escrow (Trust) Accounts in Escrow (Trust) Accounts in FloridaFlorida

Deposits: Deposits: money or other valuable consideration belonging to others

Escrow (trust) account: Escrow (trust) account: holds funds entrusted to the broker



Immediately deposit trust funds

Sales or broker associate must pass to broker

Within next business day

Broker must deposit in escrow account

3rd business day following receipt



Earnest money:Earnest money: deposit to demonstrate buyer’s intention of completing the sale

Commingle: Commingle: mixing of business and personal funds

Exceptions:

$5,000 – Property management account

$1,000 - Sales escrow account



Conversion: Conversion: broker uses others funds for personal use

Must be deposited:Savings bank

Florida title company

Florida attorney

Specified in contract



Multiple escrow accounts provided:

Broker is signatory on all

Accounts available to DBPR

Records kept minimum of 5 years from conclusion

Lawsuit: records kept additional 2 years



Broker given reasonable time to correct error if:

No shortage of funds

No threat of economic harm to public

May be interest bearing if:All parties agree in writing

Written disclosure on who is paid interest



Escrow Dispute and Escrow Dispute and Disposition of FundsDisposition of Funds

Conflicting demands: Conflicting demands: parties don’t agree on dispersal of funds

Licensee immediately notifies broker

FREC notified within 15 days from last demand



EDO: EDO: FREC instructions to disperse to one party

3 Disposition options

(30 days from last demand)

Mediation

Arbitration

Litigation



Mediation: Mediation: NonbindingCompleted within 30 days

Arbitration: Arbitration: Binding

LitigationLitigationInterpleader: Interpleader: Broker petitions court to determine outcome



LL

AA

MM

EE

itigationitigation

rbitrationrbitration

ediationediation

scrowscrow



Good-Faith Doubt: Good-Faith Doubt: Intention to conduct business honestly and according to contract?

Closing passed with no instruction from the parties

Closing has not passed but one party does not intend to close

No instruction from the parties



Good-Faith DoubtGood-Faith DoubtBroker notification to FREC within 15 days

Must initiate within 30 days:

Request for EDO

Mediation

Arbitration

Court of law


Rental Information or Rental Rental Information or Rental ListsLists


License vs. RegistrationLicense vs. Registration

License: License: Individual

Registration: Registration: Business entity

Permitted Registrations

Sole proprietorships

PartnershipGeneral

Limited

Limited liability partnership

Corporations

Limited liability companies



Sole Proprietorships: Sole Proprietorships: Sole owner is licenseeDoes business in his name

Does business in d/b/a: name

d/b/a must be registered with FREC

Unlimited liability

Comp/personal assets at risk

Responsible for all licensees

Taxes paid as individual



General Partnerships: General Partnerships: 2 or more by expressed agreement

Joint and several liabilityUnlimited liability for debt

Partner must have broker’s licenseSale and broker associates

may not be partners



General Partnerships:General Partnerships:Name must receive registration from FREC

If only active broker/partner resigns, is terminated, or dies

Replaced within 14 days

If more than 1 active

broker/partnerSubstitute

Notify FREC



Limited Partnerships:Limited Partnerships:General Partners: make decisions and manage business

Limited Partners: passive investors

Written agreement filed with Florida secretary of state

General Partners: full liability

Limited Partners: limited

liability



Limited Partnerships:Limited Partnerships:One general partner must have brokers license

Sales and broker associates may not be partners

Name must receive registration from FREC

Active broker/partner resigns,

is terminated, or diesSame as general

partnership



Ostensible Partnerships:Ostensible Partnerships:

Appears to be a partnership but is not

Deceitful and prohibited

Limited Liability PartnershipsLimited Liability Partnerships

No unlimited liability

Must include “LLP”



Corporation: Corporation: Legal person or entity organized under the lawShareholders elect BOD

Officers run the business

Asset protection

Double taxationDouble taxationTax paid on corporation

profit

Tax paid on income to

shareholders



CorporationCorporationFormed under articles of incorporation

Domestic corporation: Formed under FL. laws

Foreign corporation: Formed under laws of another state

Registered with FREC

Officer or director must

hold active broker’s license



CorporationCorporationSales and broker associates may not be officers or directors

If only 1 active broker any change of statusReported to FREC

Replacement registered

within 14 calendar days

Status not affected if

more than 1 active broker



Limited Liability CompaniesLimited Liability CompaniesFull liability protection

Members

No double taxation

Managing members

LLC included in name



Entities That May Not RegisterEntities That May Not Register

Joint Ventures: Arrangement designed for a specific purpose

Trusts: Transactions which involve its own property

Corporate Sole: Not for profit

Associations: Condominium

and cooperative

© 2009 by south-western, cengage learning samirlander chapter 5

Documents

cengage learning slide

broker slide

office slide

corporation slide

broker ads

receipt slide

sales escrow account

involuntary inactive