Prepare for the Florida Real Estate Sales Associate exam with these practice questions and answers. This guide covers property law, contracts, closing procedures, financing, and Florida-specific regulations.
Q: Joint Ventures
Answer: is a temporary form of business arrangement often encountered in real estate business.
Q: Trade Names
Answer: is a business name other than the legal name of the person doing business. The letters T/A are used to indicate “trading as.”
Q: Chapter 120, F.S.
Answer: Administrative Procedures Act
Q: Chapter 455, F.S.
Answer: Regulation of Professional and Occupations
Q: Chapter 28, Sections 101-110
Answer: Division of Administrative Hearings (DOAH Rules), Florida Administrative Code (F.A.C.)
Q: Chapter 61J2
Answer: Florida Real Estate Commission, Fl Administrative Code (F.A.C.)
Q: Recovery Fund
Answer: Claim must be paid with in 2 yrs.Max payment $50,000 (single transaction)Max payment on multiple $150,000Punitive Damages and Interest CANNOT be reimbursed from fund
Q: Accumulation of the Recovery Fund
Answer: total of $1 million is the limit for fund at any one time.Accumulated by charging Licensees a Recovery Fund Fee when a new lic is issued or renewed. Fines imposed by FREC and collected by DBPR. Collection stops when limit is reached and restarts when amount drops below $500k. At that time, a fee of $3.50 per yr. for brokers and $1.50 per year for sales Assoc. is added to Lic fee.
Q: Civil Rights Act of 1964 (Titles II and III)
Answer: ended racial segregation in schools, the work place, and public accommodations.
Q: Civil Rights Act of 1968: The Fair Housing Act
Answer: Prohibits discrimination on the basis of Race, Color, Religion, Sex and National Origin when selling or renting residential property.
Q: 7 Protected Classes (FRSH CRN aka Fresh Corn)
Answer: RaceColorReligionSexHandicap Status (mental or physical)Familial Status (18 or younger or Pregnant Women)National Origin
Q: Blockbusting
Answer: Use the entry, or rumor of the entry, of a protected class into the neighborhood to persuade owners to sell
Q: Steering
Answer: Channel Home seekers to or away from a particular neighborhood because they are members of a protected class
Q: Redlining
Answer: Deny loans or insurance coverage by a lender or insurer that presents different terms or conditions for homes in certain neighborhoods
Q: Americans with Disabilities Act of 1990
Answer: removes barriers that prevent qualified individuals with disabilities from enjoying the same opportunities that are available to persons without disabilities. The Act prohibits discrimination in places of PUBLIC ACCOMIDATIONS and in commercial facilities.
Q: Truth in Lending Act (TILA) and Regulation Z
Answer: is intended to inform the borrower of the true cost of obtaining a loan.
Q: Required Disclosures
Answer: Annual % Rate (APR)Finance ChargeAmount FinancedTotal Payments
Q: Timing of disclosures
Answer: Must be sent to borrower with in 3 business days of application, and @ least 7 business days before consummation. Lenders must deliver to the borrower a copy of the appraisal report 3 business days before closing the loan.
Q: Triggering Terms
Answer: Anything with number’s is considered a triggering term.
Q: 3-Day Right of Rescission
Answer: The borrower has the right to rescind (cancel) the loan contract up to midnight of the third business day following the signing of the loan documents.
Q: Time Periods regarding Tenants Deposits
Answer: 30 days: landlord must notify tenant of how holding deposits15 days: to return security deposit30 days: if landlord making claim on the deposit15 days: after receiving Notification of landlords claim, the tenant has 15 days to object in writing to the claim
Q: Eviction Process
Answer: notice allowing 3 dayslandlord may begin legal action by filing with courtslandlord must notify tenant in writing, then tenant has 5 days to respond in writing to the court.if tenant does not respond, judgment the goes against them, and court issues writ of possession to the sheriff. sheriff notifies tenant that eviction will take place after 24 hours notice was posted.
Q: Definition of Real Property
Answer: means any interest or estate in land and any interest in business enterprises or business opportunities, including and assignment leasehold, sublease hold, or mineral rights; however the term does not include cemetery lot or renting mobile home lot or recreational vehicle lot in a mobile home park or travel park.
Q: Terms with Water Rights
Answer: AccretionAlluvionErosionReliction
Q: Personal Property
Answer: Property that is not real property (also known as CHATTEL)
Q: Test for Fixtures (IRMA)
Answer: Intent of the partiesRelationship between partiesMethod of annexationAdaption of the artical
Q: Bundle of Rights (DUPE)
Answer: Disposition (sell or give away)Use (Control)Possession (occupy)Exclusion (quiet enjoyment)
Q: Freehold Estates:
Answer: Fee simpleLife Estate
Q: Nonfreehold Estate
Answer: Estate for YearsTenancy at WillTenancy at Sufferance
Q: Four Unities of a Joint Tenancy (PITT)
Answer: PossessionInterestTitleTime
Q: Definition of a Cooperative
Answer: means that form of ownership of real property wherein legal title is vested in a corporation or other entity and beneficial use is evidenced by a ownership interest in the owner of all the cooperative property.
Q: Prospectus
Answer: A document prepared by a developer of 20 or more new condo units that summarize some of the major points contained in the condo docs.
Q: Voluntary Alienation
Answer: DeedWill
Q: Involuntary Alienation
Answer: DescentEscheat to State
Q: Conditions for Alienation by Adverse Possession (HOT CAN)
Answer: Hostile possessionOpen PossessionTaxes PaidClaim of TitleAdverse PossessionNotorious
Q: Lis Pendens
Answer: (Latin for Action Pending) is a notice recorded in the public records of a pending legal action that involves real estate.
Q: Abstract of Title
Answer: is a summary report of what the title search found in public record. The person who prepares this report is called an ABSTRACTOR.
Q: Title Insurance
Answer: is a contract that protects the policyholder from losses arising from defects in the title.
Q: Two type’s of Title Insurance
Answer: Owner’s policy: is issued for the total purchase price of the propertyLenders Policy: is issued for the unpaid mortgage amount
Q: Deed
Answer: is a written instrument that conveys title to real property. The two parties to a deed are the Grantor, owner, and the Grantee, new owner.
Q: Elements of a Deed (CEDDING)
Answer: Consideration (Valuable or good)Execution (signed by competent grantor and 2 witnesses)Description of PropertyDelivery and AcceptanceInterest or estate being conveyed ( Habendum Clause)Names of a Grantee and GrantorGranting and other appropriate clauses
Q: Granting Clause
Answer: The provision in a deed that specifies the names of the parties involved, the words of conveyance, and a description of the property.
Q: Habendum Clause
Answer: The provision in a deed to real property that stipulates the estate or interest the grantee is to receive and the type of title conveyed.
Q: Covenant of Seisin
Answer: is a promise that the Grantor owns the property and has the right to convey title.
Q: General Warranty deed
Answer: contains all the Covenants and warranties available to give the grantee every possible future guarantee to title protection.
Q: Government Restrictions (PET)
Answer: Police PowerEminent DomainTaxation
Q: Private Restrictions (DELL)
Answer: Deed RestrictionsEasementLeasesLiens
Q: 5 Types of Lease Agreements
Answer: Gross leaseNet LeasePercentage LeaseVariable LeaseGround Lease
Q: Specific Liens
Answer: Property tax and special assessment LienMortgage LienVendor LienConstruction Lien
Q: The primary purpose of a Legal Description
Answer: is to describe a particular piece of property in a way that uniquely identifies that parcel from any other parcel.
Q: 3 Types of Legal Descriptions used today:
Answer: Metes-and-BoundsGovernment Survey SystemLot and Block Description
Q: What is a Monument
Answer: A visible Marker the surveyors use to identify each corner of the parcel.
Q: Principal Meridian
Answer: an intersection of a North/South line.
Q: Base Line
Answer: an intersection of a East/West line.
Q: Range
Answer: In the government survey system of land description, a vertical strip of land 6 miles wide located between 2 consecutive sub meridians or range lines. Range lines run Vertical North/south
Q: Township
Answer: A square tract of land measuring 6 miles on each side and including 36 sections. Formed by the crossing of range and township lines. Township line run horizontal East/West.
Q: Sections
Answer: One of the Primary units of measurement in the government survey system of land description. A section is 1 square mile and contains 640 acres.
Q: Measures and terms associated with the government survey system
Answer: CheckTownshipSectionQuarter SectionGovernment Lot
Q: Check
Answer: A square 24 miles on each side creates by intersecting guide meridians and correction lines, used to adjust the grid pattern of squares because of the CURVATURE of the EARTH. A check contains 16 townships.
Q: Additional Survey Measures and Terminology
Answer: Acres: 43,560 square feetBench MarkMile: 5,280 feet
Q: Unenforceable Contracts
Answer: is a contract that cannot be proved or will not be recognized by a court. Such as not in writing, or because the property has been destroyed.
Q: Void Contracts
Answer: A void contract does not meet all of the required elements of a valid contract and, therefore, has no legal effect.
Q: Voidable Contracts
Answer: is a contract, but because of the manner or method in which it was brought about, one of the parties is permitted to avoid any contractual duties. A minor’s contract is voidable because the minor can choose to void a contract.
Q: Ways an offer is Terminated (WILD CARD)
Answer: Withdrawal by OfferInsanityLapse of TimeDeathCounterofferAcceptanceRejectionDestruction of Property
Q: Remedies for Breach of Contract (SLRC)
Answer: Specific PerformanceLiquidated DamagesRescissionCompensatory Damages
Q: Assignment
Answer: refers to a transfer of rights and duties under a contract
Q: Novation
Answer: is the substitution of a new party for the original one.
Q: Disclosures
Answer: Material Defects DisclosureRadon Gas DisclosureLed Base Paint DisclosureEnergy Efficiency BrochureHomeowner’s Association DisclosureProperty Tax DisclosureBuilding Code Violation Disclosure
Q: Promissory Note
Answer: A written promise to pay a specific amount.
Q: Deed in lieu of Foreclosure
Answer: A friendly foreclosure in which the mortgagor gives title to the Mortgagee.
Q: Important Mortgage Clauses
Answer: AccelerationDefeasanceDue-on-SaleEscalatorExculpatoryOpen-endPrepaymentPrepayment PenaltyReceivershipSubordination
Q: Blanket Mortgage
Answer: One debt instrument covering 2 or more parcels.
Q: Conventional Loan
Answer: is one that is not insured or guaranteed by a government agency. Lender assumes the full risk of default.
Q: Mortgage insurance premium or MIP
Answer: Currently, the MIP is 1.25 percent of the base loan amount on a 30 year residential loan with the required minimum down payment.
Q: 4 ways to purchase a Mortgaged Property
Answer: CashSubject the MortgageAssumption of an existing mortgageNovation: both parties responsible unless you have a novation
Q: The reasons for qualifying potential buyers fall into 4 areas:
Answer: Saves TimeIncreases confidence in Sales AssociateFits buyers to PropertiesRetains Buyers
Q: Loan-to-Value- Ratio
Answer: Loan Amount divided by Price or value equals Loan-to-value ratio (LTV)
Q: How to obtain your credit report
Answer: www.annualcreditreport.com “free credit report”
Q: What is the Maximum amount of a VA Loan is:a. $417,000b. $104,250c. $89,912d. not a legislated limit for qualified borrowers
Answer: d. not a legislated limit for qualified borrowers
Q: The demand for Mortgage money is increased or decreased by the following 6 major influences:
Answer: changes in the number and size of householdsshifts in geographic preferences for householdsExisting inventory of structuresChanges in employment rates and incomeChanges in cost of real property services, taxes, and maintenanceChanges in construction costs
Q: Federal Reserve System Economic Tools to Influence Money Supply
Answer: 1. Open-Market Operations: (most often used) Feds purchase and sell Securities2. Discount Rates: (2nd most used) Discount Rates Increase or Decrease3. Reserve Requirement: (3rd) Reserve Requirement Increases and decreases
Q: Primary Mortgage Market
Answer: is the market where securities or goods are actually created. (where money originates) Example: if a commercial bank lends a homebuyer the money to buy a house via the use of a mortgage loan, that would be a primary market activity.
Q: The SAFE Act
Answer: is intended to improve the accountability and tracking of residential mortgage loan originators. Helps to prevent fraudulent brokers, realtors, appraisers etc….
Q: Who are the Mortgagors or borrowers:
Answer: HomebuyersInvestorsBusinessesSponsors/Developers
Q: Who are the Primary Mortgage Market:
Answer: Commercial BanksSavings AssociationsMutual Savings BanksLife Insurance CompaniesRural Housing ServiceMortgage Companies
Q: Who are the Secondary Mortgage Market:
Answer: Fannie MaeGinnie MaeFreddie MacOther Entities
Q: 30-day-month Method
Answer: this method is also called the Statutory month method. All months are considered to have 30 days (even Feb) To use (360-day year) determine the yearly cost of the item, next divide by 12 to find the cost per month, then divide by 30 to find the cost per day.
Q: State Transfer Taxes (SNI)
Answer: Stamps on Deed $.70 per $100Note, Stamps on notes $.35 per $100Intangible on new mortgages $.002 per $1 of debt
Q: 5 rules of thumb for proper preparation of instruments:
Answer: Sellers closing StatementBuyer’s Closing statementALL entries from total purchase price down through prorated itemsALL ExpensesALL items are subject to negotiation between contracting parties.
Q: Cost, Price and Value
Answer: Cost: Create: Expenditures to CREATE an improvement including materials, labor and landPrice: Paid: The amount PAID in a particular transaction; the contract priceValue: VVorth: The WORTH of something between many market participants
Q: Charactistics of Value (DUST)
Answer: DemandUtilityScarcityTransferability
Q: CBS vs CIA
Answer: CompBetterSubtractvs.CompInferiorAdd
Q: Gross Rent Multiplier (GRM)
Answer: Sale Price divided by Gross Monthly Rent equals Gross Rent Multiplier (GRM)
Q: Direct Capitalization Relationships: IRV Formulas
Answer: Income = Rate times ValueRate= Income divided by ValueValue= Income divided by Rate
Q: Gross Income Multiplier (GIM)
Answer: Sale price divided by Gross annual income equals Gross income multiplier (GIM)
Q: GRM is used to estimate the subject property’s market value (formula)
Answer: Rental income Times Market Area GRM equals Estimated Market Value
Q: Categories of Comparable:
Answer: Sold within the previous 12 months (best indicator)Currently on the MarketExpired during the Previous 12 months
Q: Lot Types:
Answer: Corner LotInterior LotT-intersection LotCul-de-sac LotFlag LotKey Lot
Q: Types of Footer and Foundations
Answer: PierSlab-on-grade
Q: Types of Framing
Answer: PlatformBalloonPost-and-beam