Question 1: During the week, Janet works for Wonder Works Realty, Inc. as a sales associate. On weekends, she holds open houses for Schultz Homes, and is paid a 2% commission directly by Sam Schultz on any sales she helps procure. Which is correct?

• This is a violation of FTC rule 21V-1.46 stating a sales associate may have only one real estate employer.
• She can work for both companies provided full disclosure is made and both parties agree in writing.
• She may do this provided the companies obtain a group license.
• This is an illegal arrangement. (Correct answer)

Correct answer: This is an illegal arrangement.

A real estate sales associate can only be employed by and receive compensation from one sponsoring broker at a time. Receiving a commission directly from an owner (Sam Schultz) for sales procured while licensed under a different broker (Wonder Works Realty, Inc.) is a violation of licensing laws. All commissions for a sales associate must be paid through their sponsoring broker.

Question 2: A sales associate properly licensed with a broker may

• open his own branch office with permission from his broker.
• manage a branch office. (Correct answer)
• not manage a branch office.
• open his own office.

Correct answer: manage a branch office.

While a sales associate cannot operate independently or open their own brokerage, they can be authorized by their sponsoring broker to manage a branch office. This role involves overseeing the daily operations of that specific office under the broker's ultimate supervision. The sales associate remains licensed under the broker and does not operate as an independent broker.

Question 3: Who can receive compensation directly from an owner?

• a broker (Correct answer)
• a sales associate, if licensed with a broker
• a broker associate, if licensed with a broker
• all of the above

Correct answer: a broker

In real estate, only a licensed broker can receive compensation directly from an owner for real estate services. Sales associates and broker associates must receive their compensation through their sponsoring broker, who then pays them their agreed-upon share. This structure ensures proper oversight and adherence to state licensing laws regarding commission payments.

Question 4: Which is correct about a group license?

• It is issued to sales associates who work for several employers.
• A broker may have as many as she has offices.
• It is issued to sales associates who work for several entities with a comm ownership. (Correct answer)
• It is issued to brokers for each branch office.

Correct answer: It is issued to sales associates who work for several entities with a comm ownership.

A group license is a specific type of license issued to sales associates or broker associates who are employed by an owner-developer that owns multiple affiliated entities. This license allows the individual to work for all entities under that common ownership, rather than being restricted to just one. It streamlines the licensing process for those working within a complex corporate structure.

Question 5: Which of the following is a legal brokerage office? I. permanent building with at least one office II. sign at or about entrance with "Licensed Real Estate Broker" or REALTOR III. names (but not license status) of all licensees of the firm.

• I only (Correct answer)
• I and II
• I, II and III
• I and III

Correct answer: I only

A legal brokerage office fundamentally requires a permanent physical location, typically a building with at least one enclosed office space. While other elements like signs and displaying licensee names are often required for proper identification and transparency, the existence of a permanent, established place of business is a core regulatory requirement for a brokerage office.

Question 6: Required brokerage relationship disclosures must be retained by the broker for:

• five years (Correct answer)
• three years
• two years
• one year

Correct answer: five years

Real estate brokers are legally required to retain records of brokerage relationship disclosures and other transaction documents for a specific period to ensure accountability and allow for regulatory review. In many jurisdictions, including Florida (often implied by these questions), this retention period is five years, ensuring that a comprehensive audit trail is available.

Question 7: Which of the following best describes the relationship of a broker and his principal?

• caveat emptor
• limited duties
• fiduciary duties (Correct answer)
• confidentiality until the listing expires

Correct answer: fiduciary duties

The relationship between a broker (agent) and their principal (client) is one of utmost trust and confidence, known as a fiduciary relationship. This means the broker owes the principal specific, elevated duties, including loyalty, obedience, disclosure, confidentiality, accounting, and reasonable care and skill, always acting in the client's best interest.

Question 8: A sales associate's license has expired. The sales associate is called by a buyer who wants to see property. The sales associate shows the property, but does not write a contract until he has renewed his license. The sales associate

• is able to do this since the contract was not written during the time of inactivity
• is entitled to receive a commission
• has violated Chapter 475 (Correct answer)
• is able to discuss real estate with prospective buyers, but may not show or sell it

Correct answer: has violated Chapter 475

A sales associate must hold an active license to perform any real estate services, including showing property to prospective buyers. Even if a contract is not written until the license is renewed, performing licensed activities like showing property while the license is expired constitutes unlicensed activity. This is a violation of Chapter 475 of Florida Statutes, which governs real estate professional regulation.

Question 9: A licensee fails to renew his license at renewal time, and desires to become active again 16 months later. What must he do?

• Reinstate by filing a renewal request with a late fee
• Reinstate by taking 14 hours of continuing education and paying a late fee
• Reactivate by taking a 28-hour reactivation education course and paying a late fee (Correct answer)
• Take the sales associate course and the state exam all over again

Correct answer: Reactivate by taking a 28-hour reactivation education course and paying a late fee

If a real estate license expires and remains inactive for an extended period, typically beyond 12 months but less than two years in many states like Florida, simply renewing with a late fee is insufficient. The licensee usually needs to complete a specific reactivation education course, such as a 28-hour course, in addition to paying any required fees, to restore their active status.

Question 10: John Harrison, a sales associate, leaves the employ of Gilbert Miller, a licensed real estate broker. John wrote a sales contract prior to his termination, and the transaction closed after he left Miller. The amount of the gross commission was $3,700, and John was on a 50/50 commission split. There is no office policy which covers this situation. John demands his portion of the commission. What should Mr. Miller do?

• Refer the matter to arbitration at the Board of Realtors.
• Pay $1,850 to John. (Correct answer)
• Explain that the law allows him to pay only sales associates licensed with the firm at the time of closing.
• . Deduct 25% of John's portion as administrative expense and pay John the balance.

Correct answer: Pay $1,850 to John.

A sales associate earns their commission when they procure a ready, willing, and able buyer, and the transaction closes, regardless of whether they are still employed by the broker at the exact moment of closing. If John was licensed with Mr. Miller when the contract was written and the transaction subsequently closed, he is entitled to his agreed-upon share of the commission.

Question 11: A Kentucky lawyer and a Florida broker joint venture to sell property in Florida for a friend of the Kentucky lawyer. What can the Kentucky lawyer receive?

• a commission provided he doesn't come to Florida
• a referral fee if he doesn't come to Florida
• a commission if he actually performs services in the transaction
• no part of the real estate commission (Correct answer)

Correct answer: no part of the real estate commission

Real estate licensing laws generally prohibit unlicensed individuals from receiving compensation for performing real estate services that require a license. A Kentucky lawyer is not licensed as a real estate broker in Florida, so they cannot legally receive any portion of a real estate commission for a transaction in Florida, even if they refer a client or assist in some capacity.

Question 12: Joyce owns property in Tallahassee which is 100 feet on the road and 125 feet deep. The city paves the street and agrees to pay 25% of the cost. The cost per running foot is determined to be $54. How much is Joyce’s special assessment?

• $2,025 (Correct answer)
• $2,700
• $3,456
• $4,050

Correct answer: $2,025

Special assessments for street paving are often calculated based on a property's frontage, with the property owner typically responsible for half the street's width along their property line. If the cost per running foot ($54) is for the full street, Joyce's share for her 100-foot frontage before the city's contribution is (100 ft * $54/2) = $2,700. With the city paying 25%, Joyce's assessment is 75% of that amount: $2,700 * 0.75 = $2,025.

Question 13: Hinson forms a limited partnership to develop and sell real property. Hinson will be the general partner will do all the work. Bailey buys units as a limited partner and invests $100,000. Hinson defrauds several purchasers who bring suit against the partnership and get judgments for amounts in excess of $300,000. The partnership funds are wiped out. Which is correct?

• Hinson is liable for the same amount as Bailey.
• Hinson is not liable because of the limited partnership status.
• Hinson is liable for the unpaid judgments, Bailey is not. (Correct answer)
• Bailey is jointly and severally liable as a partner.

Correct answer: Hinson is liable for the unpaid judgments, Bailey is not.

In a limited partnership, the general partner (Hinson) has unlimited personal liability for the partnership's debts and obligations, including those arising from fraud. Conversely, limited partners (Bailey) have liability restricted solely to the amount of their investment. Therefore, Hinson is personally responsible for the unpaid judgments beyond the partnership's funds, while Bailey's liability is capped at his $100,000 investment.

Question 14: A Fort Walton Beach real estate broker is the property manager for several condos on the beach which rent for $1,000 per month. He also manages several (which are rented) that rent for $850 per month. The broker advertises beach front condos (which are unavailable) at a price of $850, and has a good response rate. He is usually able to explain the better quality of the $1,000 per month rentals and rents them quite fast. The broker

• has no problem. He actually manage units which rent for $850 per month
• has acted with bad faith, but is not guilty of a violation of Florida law
• has no problem if he can show all customers were satisfied
• is guilty of fraudulent and misleading advertising (Correct answer)

Correct answer: is guilty of fraudulent and misleading advertising

Advertising unavailable properties at an attractive price to lure in potential clients, only to then 'switch' them to more expensive or different properties, is a classic example of bait-and-switch advertising. This practice is considered fraudulent and misleading, violating real estate advertising laws and ethical standards. It misrepresents the availability and pricing of properties to gain an unfair advantage.

Question 15: Jill sells commercial property exclusively. Which is correct about her brokerage relationships?

• She may have "no official brokerage relationship" status, may be a single agent or may be a transaction broker
• Her broker may appoint her to be a “designated salesperson” for one party, and another person in the firm to be a “designated salesperson” for the other party in the transaction
• She must provide the Notice of Nonrepresentation at first contact with potential buyers and sellers
• a and b (Correct answer)

Correct answer: a and b

In Florida, real estate licensees can operate under different brokerage relationships, including 'no brokerage relationship,' single agent, or transaction broker, making option 'a' correct. Additionally, for commercial transactions, a broker may appoint 'designated salespersons' within the firm to represent the buyer and seller separately, allowing for single agency representation for each party while avoiding dual agency for the broker, making option 'b' correct. Therefore, both 'a' and 'b' are correct.

Question 16: Which of the following is most correct?

• All sales associates work for brokers.
• All brokers have sales associates.
• All brokers are Realtors.
• All Realtors must be members of NAR. (Correct answer)

Correct answer: All Realtors must be members of NAR.

The term 'Realtor' is a registered trademark of the National Association of Realtors (NAR). To use this title, a real estate licensee must be a member in good standing of NAR and adhere to its strict Code of Ethics. This membership distinguishes Realtors from other licensed real estate professionals.

Question 17: An example of institutional advertising would be

• an ad about a private hospital for sale
• an ad about the outstanding service offered by a real estate firm (Correct answer)
• an ad describing a duplex for sale in the northern part of the county
• an ad describing a private academy for sale

Correct answer: an ad about the outstanding service offered by a real estate firm

Institutional advertising focuses on promoting the image, reputation, or services of the firm itself, rather than specific properties. Its goal is to build brand recognition and goodwill, highlighting the company's professionalism, expertise, or customer service. An ad describing the outstanding service offered by a real estate firm directly aligns with this objective.

Question 18: Which of the notices shown below MUST be signed by a buyer or a seller

• Transaction Broker Notice.
• Single Agent Notice.
• Consent to Transition to Transaction Broker Notice. (Correct answer)
• Notice of Nonrepresentation.

Correct answer: Consent to Transition to Transaction Broker Notice.

When a single agent relationship transitions to a transaction broker relationship, it represents a significant change in the level of fiduciary duties owed to the client. Because this change impacts the client's representation, Florida law requires the client's explicit, written consent, typically obtained through a 'Consent to Transition to Transaction Broker Notice,' ensuring they understand and agree to the altered relationship.

Question 19: John and Edward were brokers with their own firms. An economic downturn made them decide to share office space. They did not put up signs which described that the public was actually dealing with two separate firms. A BPR investigator made a routine office inspection visit. The investigator would probably issue a citation stating that this I. is an ostensible partnership. II. is a general partnership. III. is a violation.

• I only
• I and II
• I, II, and III
• I and III (Correct answer)

Correct answer: I and III

When two brokers share office space and do not clearly differentiate their separate firms to the public, they can create an 'ostensible partnership' (or partnership by estoppel). This means the public could reasonably believe they are operating as a single entity, which is a violation of real estate licensing laws. Such misrepresentation can mislead consumers and is subject to regulatory action.

Question 20: A broker decides to go to work for an owner-developer, and will be compensated on a salary plus commission basis. Which is correct?

• She must be licensed as a sales associate.
• She must be licensed as a broker.
• She need not be licensed if she confines her sales activity to the one employer.
• She must be registered as a broker-sales associate.

When a licensed broker chooses to work for an owner-developer and is compensated on a salary plus commission basis, they must be registered as a broker-sales associate. While an owner-developer can employ unlicensed individuals to sell their own property if they are paid a salary only, the moment compensation includes commissions or other transaction-based pay, a real estate license is required. A broker working in this capacity essentially acts as a sales associate under the owner-developer's umbrella, hence the 'broker-sales associate' registration.