For a real estate agent to qualify as an independent contractor under IRS rules, three conditions must be met: the agent must hold a valid real estate license, the agent's compensation must be based on production (commissions) rather than hours worked, and there must be a written agreement stating the agent is not an employee. The broker can set company policies and require legal compliance but cannot dictate the specific hours the agent works.
Broker Johnson has a written independent contractor agreement with Agent Lee stating that Lee's compensation is 100% commission-based. Johnson can require Lee to follow fair housing laws and use approved contracts but cannot mandate that Lee work specific office hours.
The exam tests the three IRS requirements for independent contractor status—know them precisely: licensed agent, commission-based pay, and a written agreement. Remember that a broker controls what must be done (legal compliance) but not how the agent does it.
Related Terms
Related Concepts
Brokers in Florida have strict responsibilities for managing escrow accounts, including monthly reconciliation and proper handling of trust funds.
Florida brokers are required to maintain transaction records and escrow records for a minimum of five years.
Commingling is the illegal act of mixing client trust funds with a broker's personal or business operating funds; conversion is the misappropriation of those funds.
Florida real estate licenses must be renewed biennially, and sales associates have specific post-license education requirements for their first renewal.
FREC has the authority to impose fines and other disciplinary actions on licensees who violate real estate laws and rules.
Frequently Asked Questions
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