Florida Real Estate Sales Associate License, Practice Exams

A home was the site of a suicide two years ago. Must the seller's licensee disclose it to buyers?

1. Yes, as a known fact affecting the value of the home.
2. Yes, if the death happened within the last three years.
3. Only if the buyer asks about it in writing.
4. No; it is not a material fact that must be disclosed. ✓

Why: Section 689.25(1)(b) provides that THE FACT THAT A PROPERTY WAS, OR WAS AT ANY TIME SUSPECTED TO HAVE BEEN, THE SITE OF A HOMICIDE, SUICIDE, OR DEATH IS NOT A MATERIAL FACT THAT MUST BE DISCLOSED in a real estate transaction, and (2) bars any cause of action against a chapter 475 licensee for not disclosing it.

What does the grantor convey by the statutory quitclaim deed?

1. A warranted fee simple title free of all encumbrances.
2. Title warranted only against the grantor's own acts.
3. All the right, title and interest the grantor has, if any. ✓
4. A life estate, with the remainder retained by the grantor.

Why: Section 689.025(1) prescribes a form by which the grantor DOES HEREBY REMISE, RELEASE, AND QUITCLAIM unto the grantee ALL THE RIGHT, TITLE, INTEREST, CLAIM, AND DEMAND WHICH THE SAID FIRST PARTY HAS in the land. It carries no warranty, so it conveys nothing if the grantor has nothing.

What may a private club not open to the public do with lodgings it provides for other than a commercial purpose?

1. Limit their rental or occupancy to its members, or prefer members. ✓
2. Nothing different; the Act treats it like any other landlord.
3. Refuse to rent them to families with children under 18.
4. Limit occupancy to members of a single national origin.

Why: 42 U.S.C. 3607(a) provides that nothing in the Act prohibits A PRIVATE CLUB NOT IN FACT OPEN TO THE PUBLIC, which AS AN INCIDENT TO ITS PRIMARY PURPOSE provides lodgings IT OWNS OR OPERATES FOR OTHER THAN A COMMERCIAL PURPOSE, FROM LIMITING THE RENTAL OR OCCUPANCY OF SUCH LODGINGS TO ITS MEMBERS OR FROM GIVING PREFERENCE TO ITS MEMBERS.

A seller's offer says, "If I hear nothing by Friday, I will take it that you accept." The buyer says nothing. Is there a contract?

1. Yes; silence is acceptance once a deadline passes.
2. Generally no; silence is not acceptance. ✓
3. Yes, if the seller sends a written confirmation.
4. No, unless the buyer's broker was also silent.

Why: The Reference Book explains that GENERALLY, SILENCE IS NOT REGARDED AS AN ACCEPTANCE, BECAUSE THE PARTY MAKING THE OFFER CANNOT FORCE THE OTHER TO MAKE AN EXPRESS REJECTION. Silence may be acceptance only where the circumstances or a previous course of dealing put the offeree under a duty to act.

A licensee arranges to receive a payment from a title company for steering closings to it. When is that not a violation?

1. When the payment is under $500 for each transaction.
2. When all affected parties were fully told of it beforehand. ✓
3. When the title company is owned by the licensee's broker.
4. When the payment is made to the brokerage, not to the licensee.

Why: Rule 61J2-10.028(1) treats any kickback or rebate for the placement of business incident to a licensee's transaction as a violation of section 475.25(1)(b) or (d), UNLESS PRIOR TO THE TIME OF THE PLACEMENT the licensee SHALL HAVE FULLY ADVISED THE PRINCIPAL IF ANY AND ALL AFFECTED PARTIES of all facts about the arrangement. Federal settlement law may impose further limits.

A developer records a covenant requiring 1% of the price to be paid to it on every future sale. Is it binding on later owners?

1. Yes, if it was recorded in the county public records before the first sale of each lot.
2. Yes, as a recorded restrictive covenant it runs with the title to each lot.
3. No; transfer fee covenants recorded since July 1, 2008 do not run with the land. ✓
4. No, unless the homeowners' association consents to it.

Why: Section 689.28(3) provides that A TRANSFER FEE COVENANT RECORDED IN THIS STATE ON OR AFTER JULY 1, 2008, DOES NOT RUN WITH THE TITLE TO REAL PROPERTY AND IS NOT BINDING ON OR ENFORCEABLE AT LAW OR IN EQUITY AGAINST ANY SUBSEQUENT OWNER, purchaser or mortgagee.

What is the criminal penalty for operating as a sales associate without a license?

1. A misdemeanor of the second degree.
2. A felony of the third degree. ✓
3. A misdemeanor of the first degree.
4. An administrative fine only.

Why: Section 475.42(1)(a) provides that a person MAY NOT OPERATE AS A BROKER OR SALES ASSOCIATE WITHOUT BEING THE HOLDER OF A VALID AND CURRENT ACTIVE LICENSE, and that violating that paragraph IS A FELONY OF THE THIRD DEGREE. Every other violation of subsection (1) is, under subsection (2), A MISDEMEANOR OF THE SECOND DEGREE unless a different punishment is prescribed.

To which conveyances does the 21-year limit on reverter provisions NOT apply?

1. Conveyances to governmental, charitable or nonprofit bodies. ✓
2. Conveyances between members of the same family, by gift or sale.
3. Conveyances of land zoned and used for agricultural purposes.
4. Conveyances recorded within 30 days of execution.

Why: Section 689.18(5) EXCEPTS from the section ALL CONVEYANCES TO ANY GOVERNMENTAL, EDUCATIONAL, LITERARY, SCIENTIFIC, RELIGIOUS, PUBLIC UTILITY, PUBLIC TRANSPORTATION, CHARITABLE OR NONPROFIT CORPORATION OR ASSOCIATION. A reverter in such a conveyance is not cut off after 21 years.

An advertisement says, "Only $1,850 a month!" What else must it then state?

1. Nothing more, as a payment figure is not a triggering term.
2. The downpayment, repayment terms and the APR. ✓
3. Only the lender's license number and address.
4. The borrower's minimum credit score and income.

Why: A payment amount is a triggering term under 12 CFR 1026.24(d)(1), so under (d)(2) the advertisement must state THE AMOUNT OR PERCENTAGE OF THE DOWNPAYMENT, THE TERMS OF REPAYMENT including any balloon, and THE "ANNUAL PERCENTAGE RATE," USING THAT TERM, and whether it may increase.

An elderly client signs a sale to a trusted adviser who used that trust to secure a grossly unfair price. What obstacle to genuine assent does this show?

1. Menace.
2. Mutual mistake.
3. Lack of consideration.
4. Undue influence. ✓

Why: The Reference Book defines UNDUE INFLUENCE as UNFAIR ADVANTAGE TAKEN BY SOMEONE WHO HAS THE CONFIDENCE OF ANOTHER, or real or apparent authority over another, most often in CONFIDENTIAL RELATIONSHIPS such as broker and principal or attorney and client. MENACE is a THREAT to commit duress. The contract is voidable.

In a Florida cooperative, who holds legal title to the property?

1. Each unit owner, as a tenant in common.
2. Each unit owner, for his or her own unit.
3. The association, a corporation. ✓
4. The developer, until every unit is sold.

Why: Section 719.103 defines a COOPERATIVE as the form of ownership WHEREIN LEGAL TITLE IS VESTED IN A CORPORATION OR OTHER ENTITY AND THE BENEFICIAL USE IS EVIDENCED BY AN OWNERSHIP INTEREST IN THE ASSOCIATION AND A LEASE or other muniment of title granted by the association.

What does the grantor promise in the statutory warranty deed form?

1. To fully warrant title and defend it against all lawful claims. ✓
2. To defend the title only against claims arising through the grantor.
3. To convey whatever interest the grantor may have, if any.
4. To refund the price if title fails within 7 years.

Why: The form in section 689.02(1) states that the grantor DOES HEREBY FULLY WARRANT THE TITLE TO SAID LAND, AND WILL DEFEND THE SAME AGAINST THE LAWFUL CLAIMS OF ALL PERSONS WHOMSOEVER. Conveying only whatever interest the grantor has is the language of a quitclaim.

How many commission members must be persons who have never held a real estate license?

1. Two. ✓
2. One.
3. Three.
4. None.

Why: Section 475.02(1) requires that TWO MEMBERS MUST BE PERSONS WHO ARE NOT, AND HAVE NEVER BEEN, BROKERS OR SALES ASSOCIATES. The other five are licensees: four brokers with 5 years' active licensure and one broker or sales associate with 2 years'. The consumer members are there so the commission is not wholly the profession regulating itself.

Annual property taxes are $3,650, unpaid. Using a 365-day year, the seller is charged for 120 days. What is the seller's share?

1. $1,200 ✓
2. $1,217
3. $2,450
4. $3,650

Why: At $3,650 / 365 = $10.00 a day, 120 days is $1,200. Because Florida taxes are unpaid until due on November 1 (section 197.333), this is a debit to the seller and a credit to the buyer.

Which exchange can qualify for non-recognition of gain under section 1031?

1. A personal residence for a vacation home used personally.
2. A developer's lots held for sale for another developer's lots.
3. Real property for shares of stock in a corporation.
4. A rental building for vacant land held for investment. ✓

Why: 26 U.S.C. 1031(a)(1) provides that NO GAIN OR LOSS SHALL BE RECOGNIZED ON THE EXCHANGE OF REAL PROPERTY HELD FOR PRODUCTIVE USE IN A TRADE OR BUSINESS OR FOR INVESTMENT exchanged SOLELY FOR REAL PROPERTY OF LIKE KIND held for the same purposes. Paragraph (2) excludes REAL PROPERTY HELD PRIMARILY FOR SALE.

What does a transaction broker's limited confidentiality prevent them disclosing?

1. The existence of any offer made by another buyer.
2. Any material defect in the property known to the licensee.
3. The terms of the listing agreement with the seller.
4. That the seller would accept less than list price. ✓

Why: Section 475.278(2)(f) provides that LIMITED CONFIDENTIALITY, UNLESS WAIVED IN WRITING, prevents disclosure THAT THE SELLER WILL ACCEPT A PRICE LESS THAN THE ASKING OR LISTED PRICE, THAT THE BUYER WILL PAY MORE THAN THE WRITTEN OFFER, THE MOTIVATION OF ANY PARTY, that either will agree to OTHER FINANCING TERMS, or any other information a party asks to be kept confidential. It does NOT cover material defects, which paragraph (2)(d) requires to be disclosed.

Which part of section 3604 still binds an owner who qualifies for a section 3603(b) exemption?

1. The ban on refusing to rent after a bona fide offer.
2. The ban on discriminatory terms or conditions of sale.
3. The ban on advertising that indicates a discriminatory preference. ✓
4. None of it, as the exemption covers all of section 3604.

Why: 42 U.S.C. 3603(b) provides that NOTHING IN SECTION 3604 (OTHER THAN SUBSECTION (C)) shall apply to the exempt dwellings. Subsection 3604(c) forbids any NOTICE, STATEMENT, OR ADVERTISEMENT THAT INDICATES ANY PREFERENCE, LIMITATION, OR DISCRIMINATION on a protected basis, and it binds exempt owners too.

How long is each side of a quarter section?

1. 660 feet
2. 1,320 feet
3. 2,640 feet ✓
4. 10,560 feet

Why: The Reference Book describes a section as a square one mile, 5,280 feet, on each side. A quarter section is half a mile each way: 5,280 / 2 = 2,640 feet.

In a condominium, what is a "unit"?

1. A part of the condominium property subject to exclusive ownership. ✓
2. A part of the property subject to exclusive use under a lease.
3. A share in the association that carries a right of occupancy.
4. Any portion of the property not included in the common elements, and its air space.

Why: Section 718.103 defines a UNIT as A PART OF THE CONDOMINIUM PROPERTY WHICH IS SUBJECT TO EXCLUSIVE OWNERSHIP. In a cooperative, by contrast, a unit is subject to exclusive USE AND POSSESSION, because title is held by the association.

What contribution to loan documents does the Reference Book credit to Fannie Mae?

1. Standardized forms, including the 1003 application. ✓
2. The Truth in Lending disclosure forms required by federal law.
3. The HUD-1 settlement statement used at loan closings.
4. The FHA mortgage insurance certificate issued with each loan.

Why: The Reference Book states that FNMA HAS PLAYED A MAJOR ROLE IN THE DEVELOPMENT OF STANDARDIZED LOAN ORIGINATION DOCUMENTS, INCLUDING THE 1003 LOAN APPLICATION FORM, PROMISSORY NOTES AND DEEDS OF TRUST, AND UNIFORM RESIDENTIAL APPRAISAL REPORTS, also approved by Freddie Mac.

A broker sells a restaurant business with an established customer following. What is that following called?

1. Leverage.
2. Equity.
3. Liquidity.
4. Goodwill. ✓

Why: The Reference Book defines GOODWILL as AN INTANGIBLE BUT SALABLE ASSET OF A BUSINESS DERIVED FROM THE EXPECTATION OF CONTINUED PUBLIC PATRONAGE, a typical element of value in a business opportunity sale.

An improvement costs $240,000 new, has a 40-year life and an effective age of 10 years. What is its accrued depreciation?

1. $6,000
2. $24,000
3. $36,000
4. $60,000 ✓

Why: At 100% / 40 = 2.5% a year, 10 years of effective age is 25%. The Reference Book deducts ACCRUED DEPRECIATION (percent x cost new): 0.25 x $240,000 = $60,000, leaving a depreciated value of $180,000.

A seller knows the privately owned pipe from the house to the main sewer is cracked. What must the seller do?

1. Nothing; the utility owns and must repair the pipe.
2. Disclose the defect before the contract is signed. ✓
3. Disclose it only if the buyer orders an inspection.
4. Repair it before closing, without needing to disclose.

Why: Section 689.301 requires that BEFORE EXECUTING A CONTRACT FOR SALE, A SELLER SHALL DISCLOSE ANY DEFECTS IN THE PROPERTY'S SANITARY SEWER LATERAL WHICH ARE KNOWN TO THE SELLER, defining the lateral as THE PRIVATELY OWNED PIPELINE CONNECTING A PROPERTY TO THE MAIN SEWER LINE.

What is the chief responsibility of the Federal Reserve System?

1. To regulate money and credit for growth and stability. ✓
2. To insure the deposits customers hold in member banks.
3. To buy residential mortgages from lenders in the secondary market.
4. To set the interest rate on each home loan.

Why: The Reference Book states that THE CHIEF RESPONSIBILITY OF THE FED IS TO REGULATE THE FLOW OF MONEY AND CREDIT TO PROMOTE ECONOMIC GROWTH AND STABILITY, with a monetary policy encouraging high employment and stable prices. It does not set individual loan rates or buy home loans as its ordinary business.

What does section 475.25(1)(o) reach, besides a course of dishonest conduct?

1. Any second complaint filed against the licensee.
2. A second guilty finding of suspendable misconduct. ✓
3. A second failure to complete continuing education on time.
4. Any second finding of probable cause against the licensee.

Why: Section 475.25(1)(o) reaches a licensee who HAS BEEN FOUND GUILTY, FOR A SECOND TIME, OF ANY MISCONDUCT THAT WARRANTS SUSPENSION, or found guilty of A COURSE OF CONDUCT OR PRACTICES showing they are so INCOMPETENT, NEGLIGENT, DISHONEST OR UNTRUTHFUL that the money, property and rights of investors may not safely be entrusted to them. A complaint or a probable cause finding is not a finding of guilt.

Does a Florida deed need a seal to be valid?

1. Yes, the grantor's personal seal.
2. Yes, a notary's seal on the deed itself.
3. No; no seal is necessary. ✓
4. Only when the grantor is a corporation.

Why: Section 689.01(1) provides that NO SEAL SHALL BE NECESSARY TO GIVE VALIDITY TO ANY INSTRUMENT EXECUTED IN CONFORMITY WITH THIS SECTION. Corporations may convey under this section or ss. 692.01 and 692.02. A notary's seal belongs to the certificate of acknowledgment needed for recording, not to validity.

What must an owner have on January 1 to qualify for the homestead exemption?

1. Title recorded for at least one full year before that date.
2. Legal or beneficial title, and it is their permanent residence. ✓
3. A Florida driver's license and voter registration at that address.
4. Title free of any mortgage, and residence for six months.

Why: Section 196.031(1)(a) grants the exemption to A PERSON WHO, ON JANUARY 1, HAS THE LEGAL TITLE OR BENEFICIAL TITLE IN EQUITY TO REAL PROPERTY IN THIS STATE AND WHO IN GOOD FAITH MAKES THE PROPERTY HIS OR HER PERMANENT RESIDENCE, or that of dependants. The deed must be recorded before the exemption is granted.

Against whom may a sales associate sue for an unpaid commission?

1. Their registered employer at the time. ✓
2. The seller or buyer who benefited from the sale.
3. Any party to the transaction who promised to pay.
4. Their current employer, whoever employed them at the time.

Why: Section 475.42(1)(d) provides that NO SALES ASSOCIATE, licensed or not, SHALL COMMENCE OR MAINTAIN ANY ACTION FOR A COMMISSION OR COMPENSATION AGAINST ANY PERSON EXCEPT A PERSON REGISTERED AS THEIR EMPLOYER AT THE TIME THE SALES ASSOCIATE PERFORMED THE ACT OR RENDERED THE SERVICE. The claim runs through the broker, not to the parties, and not to a later employer.

When must a buyer of residential property be given the property tax disclosure summary?

1. At closing, with the settlement statement.
2. At or before execution of the contract for sale. ✓
3. Within 10 days after the contract is signed.
4. Only when the buyer applies for a homestead exemption.

Why: Section 689.261(1) provides that A PROSPECTIVE PURCHASER OF RESIDENTIAL PROPERTY MUST BE PRESENTED A DISCLOSURE SUMMARY AT OR BEFORE EXECUTION OF THE CONTRACT FOR SALE, warning that the BUYER SHOULD NOT RELY ON THE SELLER'S CURRENT PROPERTY TAXES, because A CHANGE OF OWNERSHIP OR IMPROVEMENTS TRIGGERS REASSESSMENTS.

A deed reserves "all minerals" to the seller and is silent on anything else. Which of these does the reservation include?

1. Topsoil and sand, but not common clay.
2. Neither topsoil, sand nor clay, unless stated. ✓
3. Everything beneath the surface, including topsoil and sand.
4. Common clay only, being a mineral in law.

Why: Section 689.20 provides that WHENEVER THE WORD "MINERALS" IS USED IN ANY DEED, lease or written contract, IT SHALL NOT INCLUDE TOPSOIL, MUCK, PEAT, HUMUS, SAND, AND COMMON CLAY, UNLESS EXPRESSLY PROVIDED in the instrument.

In which of these ways may a Florida landlord hold a tenant's security deposit?

1. In the landlord's own operating account, if an accounting is kept.
2. In any federally insured account, in Florida or elsewhere.
3. In cash at the rental office, if a receipt is given.
4. In a separate Florida account, or by a surety bond. ✓

Why: Section 83.49(1) requires the landlord either to HOLD THE TOTAL AMOUNT IN A SEPARATE NON-INTEREST-BEARING ACCOUNT IN A FLORIDA FINANCIAL INSTITUTION, to hold it in A SEPARATE INTEREST-BEARING ACCOUNT in a Florida institution, or to POST A SURETY BOND with the clerk of the circuit court. The landlord SHALL NOT COMMINGLE the money or use it until actually due.

A licensee's misconduct caused no loss, or the loss was repaid once discovered. Is that a defense?

1. Yes, where the loss was repaid before any complaint.
2. Yes, where the victim was not a customer of the licensee.
3. No; neither affects guilt under section 475.25(1)(b). ✓
4. No, but it limits the penalty to a reprimand.

Why: Section 475.25(1)(b) makes a licensee guilty of FRAUD, MISREPRESENTATION, CONCEALMENT, FALSE PROMISES, DISHONEST DEALING, CULPABLE NEGLIGENCE OR BREACH OF TRUST in any business transaction, and then declares IT IS IMMATERIAL TO GUILT THAT THE VICTIM SUSTAINED NO DAMAGE OR LOSS, THAT THE LOSS WAS SETTLED AND PAID AFTER DISCOVERY, or that the victim was a customer, a person in confidential relation, or a member of the public.

What may a certified residential appraiser appraise?

1. Residential property of one to four units, of any value or complexity. ✓
2. Any type of real property, residential or commercial, of any value.
3. Only single-family homes below a set transaction value.
4. Only residential property in the county where the appraiser is licensed.

Why: Section 475.611 defines a CERTIFIED RESIDENTIAL APPRAISER as one QUALIFIED TO ISSUE APPRAISAL REPORTS FOR RESIDENTIAL REAL PROPERTY OF ONE TO FOUR RESIDENTIAL UNITS, WITHOUT REGARD TO TRANSACTION VALUE OR COMPLEXITY, or as federal regulation authorizes. A CERTIFIED GENERAL appraiser may appraise ANY TYPE of real property.

Under an exclusive right to sell listing, the owner finds the buyer during the listing term. Is the listing broker paid?

1. Yes; the commission is due whoever sells. ✓
2. No, because the broker did not procure the buyer.
3. Only if the broker showed the property to that buyer.
4. Only if the buyer came through the MLS.

Why: The Reference Book explains that under an exclusive right to sell listing A COMMISSION IS DUE TO THE BROKER NAMED IN THE CONTRACT IF THE PROPERTY IS SOLD WITHIN THE TIME LIMIT BY THE SAID BROKER, BY ANY OTHER BROKER, OR BY THE OWNER.

Which failure is a separate ground for disciplining a broker, apart from mishandling escrow funds?

1. Failing to earn interest on the escrow account for the parties.
2. Failing to use a Florida title company for every deposit.
3. Failing to send the commission a copy of each reconciliation.
4. Failing to review trust accounting procedures. ✓

Why: Section 475.25(1)(v) makes it a ground for discipline that a broker HAS FAILED TO REVIEW THE BROKERAGE'S TRUST ACCOUNTING PROCEDURES IN ORDER TO ENSURE COMPLIANCE WITH THIS CHAPTER. Paragraph (k) separately covers failing to place funds in escrow immediately.

Why must a deed be acknowledged or proved under section 695.03?

1. To make it valid between the parties.
2. To transfer possession to the grantee.
3. To entitle it to be recorded. ✓
4. To satisfy the two-witness rule for conveyances.

Why: Section 695.03 opens: TO ENTITLE ANY INSTRUMENT CONCERNING REAL PROPERTY TO BE RECORDED, THE EXECUTION MUST BE ACKNOWLEDGED BY THE PARTY EXECUTING IT, PROVED BY A SUBSCRIBING WITNESS, or legalized or authenticated. Validity between the parties rests on the writing and witnesses required by 689.01.

Which licensee's acts may give rise to a claim on the Real Estate Recovery Fund?

1. Any licensee, whatever role they played in the transaction.
2. One who was the buyer or seller in the transaction.
3. One acting solely as a licensee. ✓
4. One whose license was inactive at the time of the act.

Why: Section 475.482(1) makes the fund available where the damage was caused by a broker or sales associate who WAS AT THE TIME THE HOLDER OF A CURRENT, VALID, ACTIVE LICENSE, WAS NEITHER THE SELLER, BUYER, LANDLORD OR TENANT in the transaction nor an officer or member of an entity that was, and WAS ACTING SOLELY IN THE CAPACITY OF A REAL ESTATE LICENSEE, provided the act violated section 475.25 or 475.42.

How much may the assessed value of a homestead rise in a year under section 193.155?

1. The higher of 3% of the prior year's assessed value or the CPI change
2. The lower of 3% of the prior year's assessed value or the CPI change ✓
3. 10% of the prior year's assessed value
4. Any amount, up to the property's just value

Why: Section 193.155(1) provides that any change on annual reassessment SHALL NOT EXCEED THE LOWER OF (a) THREE PERCENT OF THE ASSESSED VALUE OF THE PROPERTY FOR THE PRIOR YEAR; or (b) THE PERCENTAGE CHANGE IN THE CONSUMER PRICE INDEX. Under subsection (2), assessed value can never exceed just value.

A $250,000 loan at 6% has a monthly payment of $1,500. How much of the first payment reduces principal?

1. $1,250
2. $250 ✓
3. $1,500
4. $15

Why: The first month's interest is $250,000 x 0.06 / 12 = $1,250, using the Reference Book's simple interest method. The rest of the payment reduces principal: $1,500 - $1,250 = $250.

A home's taxable value is $250,000 and the combined rate is $18 per $1,000. What is the annual tax?

1. $450
2. $4,500 ✓
3. $1,800
4. $45,000

Why: The Reference Book's PROPERTY TAX FORMULA is TAX = ASSESSED VALUE X RATE. At $18 per $1,000, the tax is 250 x $18 = $4,500.

An owner says the house is worth $395,000, but buyers can get an equally useful substitute for $370,000. What is its value likely to be?

1. About $370,000. ✓
2. About $395,000.
3. About $382,500.
4. About $425,000.

Why: Under the principle of substitution, the Reference Book explains, VALUE WILL TEND TO BE SET BY THE COST OF ACQUIRING AN EQUALLY DESIRABLE SUBSTITUTE: a buyer will pay no more than the price of an equivalent substitute, so this house is worth about $370,000. Its own example values a $95,000 claim at the $90,000 substitute price.

A deed conveys the SE 1/4 of the NE 1/4 of the SE 1/4 of Section 8. How large is the parcel, in acres?

1. 2.5 acres
2. 10 acres ✓
3. 40 acres
4. 160 acres

Why: Using the Reference Book's 640-acre section, 640 divided by 4 is 160, divided by 4 again is 40, and divided by 4 a third time is 10 acres. Each further "1/4" in a description divides the area by four.

What is the prelicense course for sales associates called, and what does it cover?

1. Course I: principles and practices, basic real estate, and license law. ✓
2. Course II: appraisal, investment, finance and brokerage operation matters.
3. Course I: appraisal, finance and brokerage management operations.
4. The Core Law course: license law, agency law and commission rules.

Why: Rule 61J2-3.008(1) requires a person seeking a sales associate license to complete COURSE I, 63 hours of 50 minutes inclusive of examination, IN THE BASIC FUNDAMENTALS OF REAL ESTATE PRINCIPLES AND PRACTICES, BASIC REAL ESTATE AND LICENSE LAW. COURSE II, 72 hours, is the broker course, covering APPRAISING, INVESTMENT, FINANCING, AND BROKERAGE AND MANAGEMENT OPERATIONS.

To which levies does the additional homestead exemption, on value above $50,000, apply?

1. School district levies only.
2. All levies, including special benefit assessments.
3. Only levies of the county in which the home is located.
4. All levies other than school district levies. ✓

Why: Section 196.031(1)(b) gives every person entitled to the first exemption AN ADDITIONAL EXEMPTION OF UP TO $25,000 ON THE ASSESSED VALUATION GREATER THAN $50,000 FOR ALL LEVIES OTHER THAN SCHOOL DISTRICT LEVIES. The additional amount is adjusted each January 1 for inflation.

Which of these is NOT a penalty the commission may impose under section 475.25?

1. Imprisonment for up to one year. ✓
2. Suspension of the license for up to 10 years.
3. An administrative fine of up to $5,000 per count.
4. Probation, or a reprimand.

Why: Section 475.25(1) lets the commission DENY an application or renewal, place a licensee ON PROBATION, SUSPEND A LICENSE FOR NOT MORE THAN 10 YEARS, REVOKE it, impose an ADMINISTRATIVE FINE NOT EXCEEDING $5,000 FOR EACH COUNT OR SEPARATE OFFENSE, and ISSUE A REPRIMAND, any or all of them. Imprisonment is a criminal sanction a court imposes under section 475.42, not an administrative penalty the commission can order.

A buyer, in good faith, cannot obtain the financing the contract requires, and asks for the deposit back. What may the broker do?

1. Return it only after the commission issues an escrow disbursement order.
2. Return it without notice to the commission or a settlement procedure. ✓
3. Hold it until the seller agrees in writing to its release.
4. Notify the commission within 15 business days, then return it.

Why: Section 475.25(1)(d)1 provides that IF THE BUYER OF REAL PROPERTY IN GOOD FAITH FAILS TO SATISFY THE TERMS IN THE FINANCING CLAUSE, THE LICENSEE MAY RETURN THE ESCROWED PROPERTY TO THE PURCHASER WITHOUT NOTIFYING THE COMMISSION OR INITIATING ANY OF THE PROCEDURES. The same applies where a condominium buyer cancels under section 718.503.

How is the new rate on an adjustable rate mortgage set at each adjustment?

1. By the lender's discretion on each adjustment date.
2. By adding the agreed margin to the index. ✓
3. By subtracting the margin from the prime rate.
4. By averaging the rates of the last five years.

Why: The Reference Book explains that on each adjustment LENDERS WOULD ADJUST THE INTEREST RATES BASED UPON A PRE-AGREED MARGIN ADDED TO AN IDENTIFIED CURRENT INDEX TO ARRIVE AT THE BORROWERS' NEW INTEREST RATES for the next period.

In a township's section numbering, which section lies directly south of section 1?

1. Section 12 ✓
2. Section 13
3. Section 18
4. Section 24

Why: The Reference Book's township plat numbers sections in a serpentine pattern: the top row runs 6 to 1 from west to east, and the second row runs 7 to 12 from west to east. Section 1 is in the north-east corner, so section 12 lies directly below it.

How does a timeshare estate differ from a timeshare license?

1. An estate is a right to use personal property; a license is a right to use land.
2. A license is always perpetual; an estate always ends after 30 years.
3. An estate carries a freehold, estate for years or unit ownership. ✓
4. There is no legal difference; the terms are interchangeable in chapter 721.

Why: Section 721.05 defines a TIMESHARE ESTATE as a right to occupy a timeshare unit COUPLED WITH A FREEHOLD ESTATE OR AN ESTATE FOR YEARS WITH A FUTURE INTEREST, or with an OWNERSHIP INTEREST IN A CONDOMINIUM UNIT, and a TIMESHARE LICENSE as a right to occupy WHICH IS NOT A PERSONAL PROPERTY TIMESHARE INTEREST OR A TIMESHARE ESTATE.

How must a Florida deed conveying a freehold estate be executed?

1. In writing, signed before two witnesses. ✓
2. In writing, signed and sealed, with one witness.
3. In writing, signed by the grantor and the grantee.
4. In writing or orally, if the buyer takes possession.

Why: Section 689.01(1) provides that no estate of freehold, or term of more than 1 year, shall be created or transferred OTHER THAN BY INSTRUMENT IN WRITING, SIGNED IN THE PRESENCE OF TWO SUBSCRIBING WITNESSES by the party conveying or their lawfully authorized agent, and that NO SEAL SHALL BE NECESSARY.

A deed omits the property appraiser's parcel identification number. What is the effect?

1. The deed is void until a corrective deed adds the number.
2. No effect on validity or recording. ✓
3. The clerk must refuse to record the deed.
4. The parcel number must then replace the legal description.

Why: Section 689.02(2) requires a blank space for the PARCEL IDENTIFICATION NUMBER, but provides that FAILURE TO INCLUDE IT, OR AN INCORRECT NUMBER, DOES NOT AFFECT THE VALIDITY OF THE CONVEYANCE OR THE RECORDABILITY OF THE DEED, and that the number IS NOT A PART OF THE LEGAL DESCRIPTION and MAY NOT BE USED AS A SUBSTITUTE for it.

A licensee wants CE credit for attending a legal agenda session of the commission. What is required?

1. Notice to the division 7 days ahead; credit once per cycle. ✓
2. Notice to the division within 7 days after attending; credit each year.
3. Attendance as a party to a disciplinary case being heard.
4. Nothing; attendance earns 3 hours automatically.

Why: Section 475.182(1)(b) lets the commission accept, AS A SUBSTITUTE FOR 3 CLASSROOM HOURS, ONE TIME PER RENEWAL CYCLE, attendance at one legal agenda session. To obtain credit THE LICENSEE MUST NOTIFY THE DIVISION AT LEAST 7 DAYS IN ADVANCE, and A LICENSEE MAY NOT EARN CREDIT FOR ATTENDING AS A PARTY TO A DISCIPLINARY ACTION.

What is the relationship between the promissory note and the mortgage?

1. The note evidences the debt; the mortgage makes the property security for it. ✓
2. The mortgage evidences the debt; the note secures it with the property.
3. They are the same instrument under different names.
4. The note is recorded; the mortgage is kept by the borrower.

Why: The Reference Book explains that THE PROMISSORY NOTE IS THE EVIDENCE OF THE INDEBTEDNESS and the borrower's promise to pay, while THE DEED OF TRUST OR MORTGAGE IS THE SECURITY INSTRUMENT THAT MAKES THE REAL PROPERTY THE SECURITY (COLLATERAL) FOR THE DEBT.

An elderly owner wants income from home equity without making loan payments. Which product fits?

1. A reverse mortgage. ✓
2. A graduated payment mortgage.
3. A shared appreciation mortgage.
4. A blanket mortgage.

Why: The Reference Book explains that under a HECM REVERSE MORTGAGE, AN FHA INSURED PRODUCT, THE HOMEOWNER IS NOT REQUIRED TO MAKE LOAN PAYMENTS and may receive monthly income or a lump sum; THE LOAN BALANCE INCREASES each month, and it is due when the last borrower permanently leaves or on death or sale.

When does a HECM reverse mortgage become due and payable?

1. After 10 years, whatever the owner's circumstances.
2. On the last borrower's death, sale or move-out. ✓
3. When the loan balance reaches the home's value.
4. On each anniversary, unless the owner renews it.

Why: The Reference Book states that HECM REVERSE MORTGAGES ARE DUE AND PAYABLE WHEN THE LAST QUALIFIED BORROWER PERMANENTLY LEAVES THE PROPERTY OR ON A SPECIFIED EVENT, SUCH AS DEATH OF THE HOMEOWNER OR A SALE. FHA insurance covers any shortfall if the balance exceeds the home's value.

The parties agree in writing to mediate an escrow dispute. What if it is not completed in time?

1. Another procedure must be used if not done within 90 days. ✓
2. It may continue indefinitely while both parties still consent.
3. The broker must return the deposit to the depositor.
4. The commission automatically issues an escrow disbursement order.

Why: Section 475.25(1)(d)1.d provides that THE MEDIATION PROCESS MUST BE SUCCESSFULLY COMPLETED WITHIN 90 DAYS FOLLOWING THE LAST DEMAND OR THE LICENSEE SHALL PROMPTLY EMPLOY ONE OF THE OTHER ESCAPE PROCEDURES. Payment for mediation is as the parties agree in writing.

A licensee is temporarily unable to act safely because of drug use. For how long may the license be suspended on that ground?

1. For a fixed period of 2 years.
2. For up to 10 years, as with any suspension.
3. Only for the period of the incapacity. ✓
4. Until the licensee retakes the state examination.

Why: Section 475.25(1)(i) reaches a licensee who has become TEMPORARILY INCAPACITATED from acting with safety to investors or those in a fiduciary relation because of DRUNKENNESS, USE OF DRUGS OR TEMPORARY MENTAL DERANGEMENT, but provides that SUSPENSION IN SUCH A CASE SHALL BE ONLY FOR THE PERIOD OF SUCH INCAPACITY. It is the one ground where the statute ties the length of the sanction to the cause.

A landlord renting 12 units takes a deposit. By when must the tenant be given written notice of how and where it is held?

1. Within 15 days after receiving it
2. Within 30 days after the tenant moves in
3. In the lease, or within 30 days of receipt ✓
4. Only when the tenant asks for the information

Why: Section 83.49(2) requires the landlord, IN THE LEASE AGREEMENT OR WITHIN 30 DAYS AFTER RECEIPT OF ADVANCE RENT OR A SECURITY DEPOSIT, to GIVE WRITTEN NOTICE including the depository's name and address or the bond, and whether interest is payable. The subsection DOES NOT APPLY TO ANY LANDLORD WHO RENTS FEWER THAN FIVE INDIVIDUAL DWELLING UNITS.

What does a Florida mortgage give the lender?

1. A specific lien, not title or possession. ✓
2. Legal title to the property until the loan is repaid.
3. The right to possession of the property from closing.
4. Equitable title, with legal title held by a trustee.

Why: Section 697.02 provides that A MORTGAGE SHALL BE HELD TO BE A SPECIFIC LIEN ON THE PROPERTY THEREIN DESCRIBED, AND NOT A CONVEYANCE OF THE LEGAL TITLE OR OF THE RIGHT OF POSSESSION. That is the lien theory: the borrower keeps title, and the lender holds a lien.

What is the area, in acres, of the N 1/2 of the NE 1/4 of the SE 1/4 of a section?

1. 2.5 acres
2. 10 acres
3. 20 acres ✓
4. 40 acres

Why: Working backwards from the Reference Book's figures: the SE 1/4 of a 640-acre section is 160 acres, the NE 1/4 of that is 40 acres, and the N 1/2 of that is 20 acres. A QUARTER OF A QUARTER-SECTION IS 40 ACRES, so half of one is 20.

Unknown to both parties, the house under contract burned down the day before they signed. What is the effect?

1. The contract binds, and the buyer must pay the full price.
2. No contract; the subject matter had ceased to exist. ✓
3. The contract binds, but the price is reduced by the insurance.
4. The contract is voidable only by the seller.

Why: The Reference Book explains that WHERE THE SUBJECT MATTER OF THE AGREEMENT HAS, UNKNOWN TO THE PARTIES, ALREADY CEASED TO EXIST, SO THAT PERFORMANCE OF THE CONTRACT WOULD BE IMPOSSIBLE, THERE IS NO CONTRACT. Likewise where both parties are mistaken as to the identity of the subject matter.

When is a firm an "appraisal management company" under Florida law?

1. Whenever it employs at least one certified appraiser on staff.
2. When it oversees over 15 appraisers in a state in 12 months. ✓
3. When it performs more than 100 appraisals a year.
4. Only when it calls itself an appraisal management company.

Why: Section 475.611 defines an APPRAISAL MANAGEMENT COMPANY as a person who, WITHIN A 12-MONTH PERIOD, OVERSEES AN APPRAISER PANEL OF MORE THAN 15 state-certified or state-licensed APPRAISERS IN A STATE, OR 25 OR MORE IN TWO OR MORE STATES, and performs appraisal management services, REGARDLESS OF THE TERM it uses.

A private owner of one single-family house lists it with a broker. Can the owner rely on the federal single-family house exemption?

1. Yes, since the owner owns no more than three such houses.
2. No; using a broker's services removes the exemption. ✓
3. Yes, provided the owner lived in the house most recently.
4. No, because the exemption applies only to rentals.

Why: 42 U.S.C. 3603(b)(1) exempts a single-family house sold or rented by an owner of no more than three such houses ONLY IF SUCH HOUSE IS SOLD OR RENTED WITHOUT THE USE IN ANY MANNER OF THE SALES OR RENTAL FACILITIES OR THE SALES OR RENTAL SERVICES OF ANY REAL ESTATE BROKER, AGENT, OR SALESMAN, and without discriminatory advertising. Attorneys, escrow agents and title companies may still be used.

A limited partnership acts as a broker. Which of its partners must be licensed brokers?

1. Every partner, general and limited.
2. Only the limited partners who take part in management.
3. At least one partner, whichever that is.
4. Only the general partners. ✓

Why: Section 475.15 requires each partnership, limited liability partnership, limited liability company or corporation acting as a broker to REGISTER WITH THE COMMISSION and renew the licenses of its members, officers and directors, but provides that IF THE PARTNERSHIP IS A LIMITED PARTNERSHIP, ONLY THE GENERAL PARTNERS MUST BE LICENSED BROKERS or registered brokerage corporations.

What counts as an "appraisal report" under Part II of chapter 475?

1. Only a written report on the uniform residential form.
2. Only a report signed and sealed by a certified appraiser.
3. Any written or oral communication of an opinion of value. ✓
4. Only a report prepared for a federally related transaction.

Why: Section 475.611 defines an APPRAISAL REPORT as ANY COMMUNICATION, WRITTEN OR ORAL, OF AN APPRAISAL, APPRAISAL REVIEW, APPRAISAL CONSULTING SERVICE, ANALYSIS, OPINION, OR CONCLUSION relating to the nature, quality, value or utility of identified real property, REGARDLESS OF TITLE.

A married couple meeting all the tests sells their home for a $620,000 gain. How much gain is not excluded?

1. $120,000 ✓
2. $250,000
3. $370,000
4. $620,000

Why: 26 U.S.C. 121(b)(2)(A) allows a $500,000 exclusion for qualifying joint filers: $620,000 - $500,000 = $120,000 of gain is not excluded.

A resident licensee moves out of Florida. What must they do?

1. Notify the commission within 60 days and meet nonresident requirements. ✓
2. Surrender the Florida license and reapply for one as a nonresident.
3. Nothing until renewal, when the license converts to nonresident status.
4. Nothing; a license is unaffected by the holder's residence.

Why: Section 475.180(2)(a) requires ANY RESIDENT LICENSEE WHO BECOMES A NONRESIDENT, WITHIN 60 DAYS, TO NOTIFY THE COMMISSION OF THE CHANGE IN RESIDENCY AND COMPLY WITH NONRESIDENT REQUIREMENTS, and makes failure to do so a violation subject to the penalties in section 475.25. Subsection (1) lets the commission enter mutual recognition agreements with other jurisdictions.

What does an open-end mortgage allow?

1. The borrower to walk away without liability.
2. Future advances without losing priority. ✓
3. The interest rate to change at the lender's discretion.
4. Several parcels to be released one by one.

Why: The Reference Book defines an OPEN-END DEED OF TRUST OR MORTGAGE as a loan arrangement WHEREBY ADDITIONAL AMOUNTS OF MONEY MAY BE LENT IN THE FUTURE (AN ADVANCE) WITHOUT AFFECTING THE PRIORITY OF THE SECURITY INSTRUMENT. Florida's section 697.04 gives future advances that priority for 20 years.

A title company offers a sales associate $100 for each buyer referred, fully disclosed to the buyer. The buyers use federally related mortgage loans. Which is correct?

1. It is lawful, because the fee has been disclosed.
2. RESPA forbids the payment, even with disclosure. ✓
3. It is lawful if paid to the broker, not the associate.
4. It is lawful if the fee is under $250 a referral.

Why: 12 CFR 1024.14(b) provides that NO PERSON SHALL GIVE AND NO PERSON SHALL ACCEPT ANY FEE, KICKBACK OR OTHER THING OF VALUE for the referral of settlement service business involving A FEDERALLY RELATED MORTGAGE LOAN, and that A REFERRAL IS NOT A COMPENSABLE SERVICE. Disclosure may satisfy Florida's kickback rule, but it does not cure a RESPA violation.

A broker took a listing but received no funds. How long must the listing agreement be kept?

1. At least 3 years from the listing's expiry
2. At least 2 years from the date the agreement was signed
3. At least 5 years from the date the agreement was signed ✓
4. Until the listing expires or the sale closes

Why: Section 475.5015 requires each broker to preserve records FOR AT LEAST 5 YEARS FROM THE DATE OF RECEIPT OF ANY MONEY entrusted or, IN THE EVENT NO FUNDS ARE ENTRUSTED, FOR AT LEAST 5 YEARS FROM THE DATE OF EXECUTION BY ANY PARTY OF ANY LISTING AGREEMENT, offer, management agreement, lease, or other agreement engaging the broker's services.

An offer to buy says nothing about how long it stays open. When does it lapse?

1. After 24 hours, by operation of law.
2. Never, until the buyer withdraws it.
3. After a reasonable time passes. ✓
4. At the end of the third business day.

Why: The Reference Book explains that an offer lapses if not accepted within the time it prescribes, and IF THE OFFER DOES NOT INCLUDE A DEADLINE, THE LAPSE OF A REASONABLE TIME WITHOUT COMMUNICATION OF ACCEPTANCE may end it. What is reasonable is a QUESTION OF FACT dependent on the circumstances.

How may a registered trainee appraiser work and be paid?

1. Independently, on residential property of up to four units.
2. Independently, once the trainee has two years' experience.
3. Under any broker's supervision, paid by the client.
4. Only under a certified appraiser's direct supervision. ✓

Why: Section 475.611 defines a REGISTERED TRAINEE APPRAISER as a person qualified TO PERFORM APPRAISAL SERVICES ONLY UNDER THE DIRECT SUPERVISION OF A CERTIFIED APPRAISER, and section 475.612(1) provides that A REGISTERED TRAINEE APPRAISER MAY ONLY RECEIVE COMPENSATION FOR APPRAISAL SERVICES FROM HER OR HIS AUTHORIZED CERTIFIED APPRAISER.

The Reference Book's table gives $8.44 a month per $1,000 for a 15-year loan at 6.0%. What is the payment on $200,000?

1. $844
2. $1,200
3. $1,688 ✓
4. $16,880

Why: From the Reference Book's TABLE OF MONTHLY PAYMENTS TO AMORTIZE $1,000 LOAN, 15 years at 6.0% is 8.44. $200,000 is 200 thousands: 200 x $8.44 = $1,688 a month.

Which body provides the record-keeping, examination and investigative services under chapter 475?

1. The Florida Real Estate Commission itself.
2. The Department of Law Enforcement.
3. The Office of the Attorney General.
4. The Division of Real Estate. ✓

Why: Section 475.021(1) provides that ALL SERVICES CONCERNING THIS CHAPTER, INCLUDING RECORD-KEEPING, EXAMINATION, LEGAL AND INVESTIGATIVE SERVICES, SHALL BE PROVIDED BY THE DIVISION OF REAL ESTATE, and subsection (2) funds the division from the commission's fees and assessments, to be USED ONLY TO FUND REAL ESTATE REGULATION. The commission sets policy and disciplines; the division does the work.

In which transactions must brokerage relationship disclosure documents be retained?

1. Those that result in a written contract to buy and sell. ✓
2. Every transaction, whether or not a contract was ever signed.
3. Only those in which the licensee acted as a single agent.
4. Only those in which the licensee received an escrow deposit.

Why: Section 475.5015 provides that DISCLOSURE DOCUMENTS REQUIRED UNDER SS. 475.2755 AND 475.278 SHALL BE RETAINED BY THE REAL ESTATE LICENSEE IN ALL TRANSACTIONS THAT RESULT IN A WRITTEN CONTRACT TO PURCHASE AND SELL REAL PROPERTY, under the same retention periods as other brokerage records.

Section 475.182(2) requires the department to adopt rules providing for license renewal how often?

1. Every year, on the anniversary of initial licensure.
2. At least every 6 years.
3. Only once the licensee's CE is complete.
4. At least every 4 years. ✓

Why: Section 475.182(2) requires the department to ADOPT RULES ESTABLISHING A PROCEDURE FOR THE RENEWAL OF LICENSES AT LEAST EVERY 4 YEARS. The statute sets the outer limit only; the renewal cycle itself is fixed by rule. The CE requirement is framed separately, as 14 hours during EACH BIENNIUM of a license period.

A broker has a good faith doubt about who is entitled to escrowed funds, though no one has made conflicting demands. What must the broker do?

1. Nothing, until a party makes a written demand for the funds.
2. Return the deposit to the buyer, who is presumed to be entitled.
3. Notify the commission and institute a settlement procedure. ✓
4. Decide which party is entitled and disburse within 30 days.

Why: Rule 61J2-10.032(1)(b) requires a broker WHO HAS A GOOD FAITH DOUBT as to whom is entitled to trust funds to PROVIDE WRITTEN NOTIFICATION TO THE COMMISSION WITHIN 15 BUSINESS DAYS AFTER HAVING SUCH DOUBT and to INSTITUTE ONE OF THE SETTLEMENT PROCEDURES WITHIN 30 BUSINESS DAYS. Section 475.25(1)(d)1 treats doubt and conflicting demands alike.