Florida real estate exam study guide

Florida's 100 questions mix national principles with Chapter 475 and Florida's own taxes. Start with the terms, then work the doc stamp and intangible tax math.

81 Florida vocabulary flashcards

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FREC: The Florida Real Estate Commission: seven members appointed by the governor. Four brokers, one broker or sales associate, two who were never licensed; one must be 60 or older.
DBPR: The Department of Business and Professional Regulation. It processes licenses and may inspect any brokerage office.
Sales associate: Florida's name for a salesperson. She may collect money only in her broker's name and with the broker's consent.
Transaction broker: Limited representation of a buyer, a seller or both, with no fiduciary loyalty. Florida presumes it unless another relationship is set up in writing.
Single agent: Represents one side as a fiduciary: loyalty, full confidentiality, obedience and full disclosure on top of the basic duties.
No brokerage relationship: Still owes honesty, disclosure of known defects that affect a home's value, and accounting for funds.
Dual agency: Not allowed in Florida, disclosed or not. A transaction broker can help both sides instead.
Consent to transition: A single agent may become a transaction broker only with the principal's written consent before the change.
Limited confidentiality: A transaction broker may not reveal that a seller will take less, a buyer will pay more, or a party's motivation.
Designated sales associates: Allowed only in nonresidential sales where buyer and seller each have assets of $1 million or more and ask for it.
Immediately (escrow): Earnest money goes into escrow by the end of the third business day after it is received.
Escrow disbursement order: One of four ways to settle conflicting demands for a deposit. The others are mediation, arbitration and litigation.
Broker funds in escrow: Up to $1,000 of the broker's own money in a sales escrow account, up to $5,000 in a property management one.
Prelicense course: 63 classroom hours of 50 minutes each for a sales associate; 72 for a broker.
Postlicense education: 45 hours before the first renewal. Miss it and the license becomes null and void.
Continuing education: 14 hours each renewal period after the first.
Recovery Fund: Pays unpaid damages from a licensee's misconduct: up to $50,000 a transaction and $150,000 a licensee.
Deed stamps: Documentary stamp tax on the deed: $0.70 per $100 of price or part of $100, outside Miami-Dade County.
Note stamps: Documentary stamp tax on the note: $0.35 per $100 of the loan or part of $100.
Intangible tax: 2 mills (0.002) on a new mortgage loan secured by Florida real property.
Homestead protection: Protected from forced sale up to half an acre inside a city and 160 acres outside, except for taxes and purchase or repair debts.
Homestead exemption date: You must hold title and make the home your permanent residence by January 1 of the tax year.
Save Our Homes: A homestead's assessed value may rise each year by the lower of 3% and the CPI change. It resets after a sale.
Radon gas notice: Statutory wording that must appear on at least one document signed at or before the contract.
Property tax disclosure summary: Tells a buyer not to rely on the seller's current taxes, because a sale can trigger reassessment.
Office sign: Each broker office needs a sign at its entrance with the broker's name and 'licensed real estate broker'.
Unlicensed activity: Acting as a broker or sales associate without an active license is a third-degree felony.
Fee simple absolute: The most complete ownership: no conditions, unlimited in time, and it passes to heirs.
Life estate: Ownership that lasts only for the length of a named person's life.
Easement appurtenant: A right to use a neighbor's land that benefits a parcel and passes with it when it sells.
Easement in gross: A right to use land that belongs to a person or company, such as a utility line, not to a parcel.
Encroachment: A building, fence or other improvement that extends onto a neighbor's land.
Fixture: An item once personal property that is attached to the land or building and now goes with the sale.
Trade fixture: Equipment a commercial tenant installs for business. The tenant may remove it before the lease ends.
Emblements: Yearly crops a tenant planted and tended. They are personal property.
Joint tenancy: Co-ownership with right of survivorship. It needs four unities: time, title, interest and possession.
Tenancy in common: Co-ownership with undivided shares, which may be unequal, and no right of survivorship.
Lien: A claim on property as security for a debt. A specific lien hits one property; a general lien hits all of a debtor's property.
Adverse possession: Gaining title by open, hostile and continuous use of another's land for the period state law sets.
General warranty deed: A deed in which the grantor guarantees the title against defects from any time, not just her own ownership.
Quitclaim deed: A deed that passes whatever interest the grantor has, with no promises about the title.
Recording: Filing a deed in the public records. It gives everyone constructive notice of the owner's interest.
Market value: The most probable price a property would bring in a competitive, open market.
Highest and best use: The legal, physically possible and financially feasible use that gives the land its highest value.
Substitution: A buyer will not pay more for a property than the cost of an equally good substitute.
Functional obsolescence: Lost value from an outdated design or feature inside the property, such as one bathroom for five bedrooms.
External obsolescence: Lost value from a cause outside the property, such as a new highway. The owner usually cannot cure it.
Bilateral contract: A promise in exchange for a promise, such as a purchase contract.
Unilateral contract: A promise in exchange for an act. An option binds only the seller.
Void contract: An agreement with no legal effect from the start, such as one for an illegal purpose.
Voidable contract: A valid contract one party may cancel, such as one signed by a minor.
Statute of frauds: The rule that a contract to sell real estate must be in writing and signed to be enforced.
Counteroffer: A new offer that changes the terms. It rejects the original offer, which cannot then be accepted.
Option: A right, bought for a fee, to buy at a set price within a set time. Only the seller is bound.
Liquidated damages: An amount the parties agree in advance will be the damages for a breach, often the earnest money.
Specific performance: A court order making a party carry out the contract as written.
Fiduciary duties: What an agent owes a client: obedience, loyalty, disclosure, confidentiality, accounting and reasonable care.
Special agent: An agent with authority for one task or one transaction, as a listing broker usually is.
General agent: An agent with broad authority over a range of matters, as a property manager usually is.
Exclusive right to sell: A listing that pays the broker whoever sells the property during the term, even the owner.
Exclusive agency listing: A listing that pays the broker unless the owner finds the buyer herself.
Open listing: A listing given to any number of brokers. Only the broker who brings the buyer is paid.
Net listing: The broker keeps whatever the price exceeds a set amount. Illegal or discouraged in most states.
Steering: Channeling buyers toward or away from areas because of a protected class.
Blockbusting: Pushing owners to sell by claiming a protected class is moving into the area.
Redlining: Refusing loans or insurance in an area because of the people who live there.
Loan-to-value ratio: The loan divided by the lower of the price and the appraised value.
Point: One percent of the loan amount, paid at closing.
Private mortgage insurance: Insurance that protects the lender, usually required on a conventional loan above 80% of value.
Acceleration clause: Lets the lender demand the whole balance at once if the borrower defaults.
Alienation clause: Lets the lender call the loan due when the property is sold. Also called due-on-sale.
Capitalization rate: Net operating income divided by value. Value = NOI ÷ cap rate.
Proration: Splitting a bill or income between buyer and seller by the days each owns the property.
Debit: On a closing statement, an amount a party owes.
Credit: On a closing statement, an amount a party has paid or is owed.
Mill: One tenth of a cent. A tax of 1 mill is $1 for every $1,000 of assessed value.
Lead-based paint disclosure: Required for housing built before 1978. Buyers get 10 days to test for lead unless they waive it.
CERCLA: The federal Superfund law. Owners can be liable for cleaning up hazardous waste even if they did not cause it.
Variance: Permission to depart from a zoning rule because following it would cause real hardship.
Nonconforming use: A use that was legal before new zoning banned it and is allowed to continue.
Antitrust: Federal law that bans brokers agreeing on commission rates, boycotting a competitor or splitting up markets.

What the Florida exam covers

One exam of 100 questions in 3 1/2 hours: principles, Florida law and math mixed together. You need 75.

Area	Where the law is
License law, FREC and the DBPR	Chapter 475
Brokerage relationships and disclosures	s. 475.278
Escrow accounts and settlement procedures	Rule 61J2-14
Violations, penalties and the Recovery Fund	Chapter 475
Homestead, documentary stamps and intangible tax	Florida tax law
Landlord and tenant	Chapter 83

10 Florida math questions, worked

Try each one, then open the working.

A home outside Miami-Dade County sells for $412,300. What is the documentary stamp tax on the deed?
Show the answer
$2,886.10
1. Count each $100 or part of $100: $412,300 ÷ 100 = 4,123.
2. 4,123 × $0.70 = $2,886.10.
A Florida condo outside Miami-Dade County sells for $289,950. What is the documentary stamp tax on the deed?
Show the answer
$2,030.00
1. $289,950 ÷ 100 = 2,899.5. A part of $100 counts as a whole one: 2,900.
2. 2,900 × $0.70 = $2,030.00.
A Florida buyer signs a note for $320,000. What is the documentary stamp tax on the note?
Show the answer
$1,120.00
1. $320,000 ÷ 100 = 3,200.
2. 3,200 × $0.35 = $1,120.00.
The same $320,000 loan is secured by a Florida mortgage. What is the intangible tax?
Show the answer
$640.00
1. The intangible tax is 2 mills: 0.002.
2. $320,000 × 0.002 = $640.00.
A Florida buyer borrows $256,000. What are the note stamps and intangible tax together?
Show the answer
$1,408.00
1. Note stamps: 2,560 × $0.35 = $896.00.
2. Intangible tax: $256,000 × 0.002 = $512.00.
3. Total: $896.00 + $512.00 = $1,408.00.
A Florida homestead was assessed at $300,000 last year. The CPI rose 4.1%. What is the highest its assessed value can be this year under Save Our Homes?
Show the answer
$309,000
1. The cap is the lower of 3% and the CPI change: 3%.
2. $300,000 × 1.03 = $309,000.
Another Florida homestead was assessed at $240,000. The CPI rose 1.8%. What is the highest its assessed value can be this year?
Show the answer
$244,320
1. The lower of 3% and 1.8% is 1.8%.
2. $240,000 × 1.018 = $244,320.
Florida taxes of $5,840 for the year are unpaid at closing on May 20. Use a 365-day year; the buyer owns the closing day. What is the proration, and who is debited?
Show the answer
$2,224, debit the seller
1. Seller's days, January 1 to May 19: 31 + 28 + 31 + 30 + 19 = 139.
2. Daily tax: $5,840 ÷ 365 = $16.
3. $16 × 139 = $2,224. Debit the seller, credit the buyer.
A Florida home sells for $450,000 at a 5% commission. The listing broker keeps half and pays her sales associate 60% of that half. What does the sales associate earn?
Show the answer
$6,750
1. Commission: $450,000 × 5% = $22,500.
2. Listing side: $22,500 ÷ 2 = $11,250.
3. Sales associate: $11,250 × 60% = $6,750.
A Florida home's price is $380,000 and it appraises at $370,000. The lender lends 90% of value. What is the most it will lend?
Show the answer
$333,000
1. Use the lower of price and appraisal: $370,000.
2. $370,000 × 90% = $333,000.

5 Florida practice questions

Question 1

Which is one of a Florida transaction broker's statutory duties?

Question 2

A Florida broker holds earnest money and receives conflicting demands from buyer and seller. What must the broker do?

Question 3

A Florida buyer takes out a $300,000 mortgage loan. What is the nonrecurring intangible tax on it?

Question 4

A Florida homestead's assessed value went up in a year when the CPI rose 5%. What is the most its assessed value can rise that year under Save Our Homes?

Question 5

When may a Florida broker designate separate sales associates to act as single agents for a buyer and a seller in the same transaction?

Next step

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Questions people ask

How do you calculate documentary stamps on a Florida deed?

70 cents for each $100 of the price, counting any part of $100 as a whole one, outside Miami-Dade County. A $412,300 sale pays $2,886.10.

What is the intangible tax in Florida?

2 mills, or 0.002, on a new mortgage loan. A $320,000 loan pays $640.

How many questions are on the Florida real estate exam?

100, with 3 1/2 hours. You need 75 to pass.