© 2009 by South-Western, Cengage Learning SAMIRLANDER Chapter 5

Florida Real Estate: Principles, Practices and License Law Chapter 5 Operation of a Broker’s Office © 2009 by South-Western, Cengage Learning

Key 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

© 2009 by South-Western, Cengage Learning The Broker’s Office Principal place of business Registered with DRE Stationary building Mobile home does not qualify

© 2009 by South-Western, Cengage Learning Change of Address Written notification to DRE within 10 days License ceases to exist until notification received Associates not moving Involuntary inactive

© 2009 by South-Western, Cengage Learning Change Employing Broker DRE notified within 10 days License ceases to exist until notification Records belong to broker May not remove or copy

© 2009 by South-Western, Cengage Learning Branch Offices Registered as branch office Temporary shelter is a branch office if: Transactions closed in office Associates are permanently assigned to office

© 2009 by South-Western, Cengage Learning Signage All offices must have sign Name Trade name “licensed real estate broker” “lic. real estate broker” Name of partnership or corporation

© 2009 by South-Western, Cengage Learning Signage Clear distinction between broker and… Broker associates Sales associates Zoning and license laws ADA

© 2009 by South-Western, Cengage Learning Advertising False or misleading ads prohibited Media includes: Newspapers Magazine ads Fliers Television Radio Internet Billboards Yard Signs Benches

© 2009 by South-Western, Cengage Learning Advertising Blind ads: Blind ads: don’t indicate ad was placed by broker Ads must include: Firm name Contact person - surname

© 2009 by South-Western, Cengage Learning Advertising Internet Ad point of contact information Broker firm name immediately above, below, or adjacent to point of contact information Method of contact address Mailing address Street address Phone number Fax number

© 2009 by South-Western, Cengage Learning Escrow (Trust) Accounts in Florida Deposits: Deposits: money or other valuable consideration belonging to others Escrow (trust) account: Escrow (trust) account: holds funds entrusted to the broker

© 2009 by South-Western, Cengage Learning Escrow (Trust) Accounts in Florida Immediately deposit trust funds Sales or broker associate must pass to broker Within next business day Broker must deposit in escrow account 3 rd business day following receipt

© 2009 by South-Western, Cengage Learning Escrow (Trust) Accounts in Florida 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

© 2009 by South-Western, Cengage Learning Escrow (Trust) Accounts in Florida Conversion: Conversion: broker uses others funds for personal use Must be deposited: Savings bank Florida title company Florida attorney Specified in contract

© 2009 by South-Western, Cengage Learning Escrow (Trust) Accounts in Florida 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

© 2009 by South-Western, Cengage Learning Escrow (Trust) Accounts in Florida 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

© 2009 by South-Western, Cengage Learning Escrow (Trust) Accounts in Florida Escrow Dispute and Disposition 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

© 2009 by South-Western, Cengage Learning Escrow (Trust) Accounts in Florida EDO: EDO: FREC instructions to disperse to one party 3 Disposition options (30 days from last demand) Mediation Arbitration Litigation

© 2009 by South-Western, Cengage Learning Escrow (Trust) Accounts in Florida Mediation: Mediation: Nonbinding Completed within 30 days Arbitration: Arbitration: BindingLitigation Interpleader: Interpleader: Broker petitions court to determine outcome

© 2009 by South-Western, Cengage Learning Escrow (Trust) Accounts in Florida LAME itigation rbitration ediation scrow

© 2009 by South-Western, Cengage Learning Escrow (Trust) Accounts in Florida 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

© 2009 by South-Western, Cengage Learning Escrow (Trust) Accounts in Florida Good-Faith Doubt Broker notification to FREC within 15 days Must initiate within 30 days: Request for EDO Mediation Arbitration Court of law

© 2009 by South-Western, Cengage Learning Rental Information or Rental Lists Selling information to prospective tenants Must provide an agreement or receipt If unable to rent from list Licensee must return at least 75 % within 30 days

© 2009 by South-Western, Cengage Learning Rental Information or Rental Lists If list is outdated or inaccurate Full refund If intentionally outdated or inaccurate License infraction 1 st degree misdemeanor Suspension or revocation Fine of $1,000 Imprisonment

© 2009 by South-Western, Cengage Learning License vs. Registration License: License: Individual Registration: Registration: Business entity Permitted Registrations Sole proprietorships Partnership General Limited Limited liability partnership Corporations Limited liability companies

© 2009 by South-Western, Cengage Learning License vs. Registration Sole Proprietorships: Sole Proprietorships: Sole owner is licensee Does 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

© 2009 by South-Western, Cengage Learning License vs. Registration General Partnerships: General Partnerships: 2 or more by expressed agreement Joint and several liability Unlimited liability for debt Partner must have broker’s license Sale and broker associates may not be partners

© 2009 by South-Western, Cengage Learning License vs. Registration 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/partner Substitute Notify FREC

© 2009 by South-Western, Cengage Learning License vs. Registration 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

© 2009 by South-Western, Cengage Learning License vs. Registration 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 dies Same as general partnership

© 2009 by South-Western, Cengage Learning License vs. Registration Ostensible Partnerships: Appears to be a partnership but is not Deceitful and prohibited Limited Liability Partnerships No unlimited liability Must include “LLP”

© 2009 by South-Western, Cengage Learning License vs. Registration Corporation: Corporation: Legal person or entity organized under the law Shareholders elect BOD Officers run the business Asset protection Double taxation Tax paid on corporation profit Tax paid on income to shareholders

© 2009 by South-Western, Cengage Learning License vs. Registration Corporation Formed 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

© 2009 by South-Western, Cengage Learning License vs. Registration Corporation Sales and broker associates may not be officers or directors If only 1 active broker any change of status Reported to FREC Replacement registered within 14 calendar days Status not affected if more than 1 active broker

© 2009 by South-Western, Cengage Learning License vs. Registration Limited Liability Companies Full liability protection Members No double taxation Managing members LLC included in name

© 2009 by South-Western, Cengage Learning License vs. Registration Entities 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