Practice of Real Estate Study Guide

Escrow Account Management

Brokers in Florida have strict responsibilities for managing escrow accounts, including monthly reconciliation and proper handling of trust funds.

Record Keeping Requirements

Florida brokers are required to maintain transaction records and escrow records for a minimum of five years.

Commingling and Conversion

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.

FREC Disciplinary Authority

FREC has the authority to impose fines and other disciplinary actions on licensees who violate real estate laws and rules.

License Requirements

License requirements are the mandatory qualifications—including pre-licensing education, examination, and background checks—that a person must satisfy before legally practicing real estate. These requirements are established and enforced by each state's real estate commission.

Continuing Education

Continuing education (CE) refers to the ongoing coursework that licensed real estate professionals must complete during each renewal cycle to maintain an active license. CE ensures agents stay current with changes in laws, regulations, and industry practices.

Broker Supervision

Broker supervision is the legal obligation of a designated or managing broker to oversee and be accountable for the real estate activities of all salespersons and associate brokers operating under their license.

Trust Account / Escrow Account

A trust account, also called an escrow account, is a separate bank account maintained by a broker to hold funds belonging to others, such as earnest money deposits, security deposits, or other client funds.

Commingling and Conversion

Commingling is the illegal act of mixing client funds with a broker's personal or business operating funds, while conversion is the unauthorized use of client funds for the broker's own benefit. Both are serious violations that can result in license revocation.

Independent Contractor vs Employee

In real estate, the distinction between an independent contractor and an employee determines tax treatment, liability, and the level of control a broker may exercise over the agent's daily activities. Most real estate agents operate as independent contractors.

Antitrust Violations

Antitrust violations in real estate occur when competing brokerages or agents engage in practices that restrain trade, reduce competition, or harm consumers through collusion. These violations are governed by the Sherman Antitrust Act and can result in severe penalties.

Price Fixing

Price fixing is an illegal antitrust practice in which competing real estate brokerages agree to charge the same commission rates, fees, or other pricing for their services. It is a per se violation of the Sherman Antitrust Act.

Market Allocation

Market allocation is an illegal antitrust practice in which competing real estate brokerages agree to divide markets among themselves by geographic area, property type, or price range, thereby eliminating competition.

Group Boycott

A group boycott is an illegal antitrust practice in which two or more competing real estate businesses agree to refuse to work with a specific person, company, or entity in order to harm that party's ability to compete.

Tie-In Arrangement

A tie-in arrangement is an illegal antitrust practice in which a seller conditions the purchase of one product or service on the buyer's agreement to purchase a separate product or service.

Advertising Regulations

Advertising regulations govern how real estate licensees may market properties and services, requiring truthful, non-deceptive advertising that includes proper identification of the brokerage.

Do Not Call Registry

The National Do Not Call Registry is a federal program administered by the FTC that allows consumers to opt out of receiving unsolicited telemarketing calls, including calls from real estate agents soliciting business.

License Renewal Requirements

Florida real estate licenses must be renewed biennially, and sales associates have specific post-license education requirements for their first renewal.