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Legal FAQ's
Broker Business

Q: I’m a broker advertising an open house for one of my listings. At the open house, I’m planning to have a $500 cash drawing. Is this legally permissible? 

A: No. Games of chance are prohibited under Chapter 849, Florida Statutes. A broker who desires to have a cash giveaway at an open house could however do so where the winner is determined on a game of skill. 

Q: How many brokers may a brokerage have? 

A: There is no maximum number. There must be at least one, and under Section 61J2-5.016, Florida Administrative Code, every broker licensed with a brokerage must be registered as one of its officers, directors or general partners. 

Q: May a sales associate own a brokerage? 

A: Yes. A sales associate or a broker associate may own a brokerage. Keep in mind, though, that under Section 61J2-5.016, Florida Administrative Code, no sales associate or broker associate may be registered as an officer, director or general partner of a brokerage.

Q: Is it possible to run my brokerage from my home? 

A: Under Section 61J2-10.022, Florida Administrative Code, the required office can be in a residential location as long as it doesn’t violate local zoning ordinances. However, minimum office requirements and brokers’ signage requirements must still be met. If this type of office interests you, be certain to check with any homeowners’ association or condominium association. It’s possible that these associations prohibit such businesses. 

Q: If the listing broker fails to deliver my offer and claims to be doing so at the seller’s direction, may I demand a copy of the seller’s direction? 

A: You can make such a demand, but the listing broker has no obligation to provide it to you.  If you feel that the listing broker is breaching Section 475.278, Florida Statutes in failing to deliver the offer, you may file a complaint against her with the Florida Real Estate Commission (FREC), and a Department of Real Estate investigator will investigate. 

Q: May I serve a glass of wine to clients over age 21 who visit my office, similar to when a client visits an upscale hair salon? 

A: There’s no law prohibiting this activity; however, it’s not recommended for a number of reasons, including but not limited to premises liability issues and licensing law problems. For example, what happens if the client becomes tipsy at your office and is injured or gets behind the wheel of a car and causes an accident?

Moreover, what if the client enters into an exclusive representation agreement with you, agrees to accept your offer to list his or her property or decides to make an offer to purchase someone else’s property and later regrets the decision and accuses you of serving wine in an effort to influence the outcome? All of these scenarios could open the door to both personal and Florida Real Estate Commission liability. 

Q: As a broker for a real estate corporation, am I responsible for verifying that my sales associates renew their licenses? 

A: Yes. It’s the broker’s duty to ensure that all broker associates and sales associates hold current licenses. Pursuant to Section 475.25(1)(u) the FREC can discipline a broker if it is determined that he/she "has failed … to direct, control or manage a broker associate or sales associate employed by such broker." 

Q: I’m a broker of my own brokerage corporation, which currently handles only residential transactions. I want to set up a branch office to run the commercial side of my business. May I register a trade name for the branch office and continue to use the corporate name for my primary office? 

A: No. All branch offices must have the same corporate or trade name as the primary office. Also, no individual, partnership or corporation may be registered under more than one trade name. 

Q: Are some brokerage companies required by law to post an Equal Employment Opportunity poster? 

A: Yes. Employers with 15 or more employees during 20 weeks of the year are required to display the poster “Equal Employment Opportunity Is the Law” on their premises. The notice must be posted prominently, where employees and applicants for employment can readily see it.

The notice provides information concerning the laws and procedures for filing complaints of violations of employment laws. The Code of Federal Regulations (CFR) 1601.30, Federal Code 29, states, “Every employer … shall post and keep posted in conspicuous places upon its premises notices in an accessible format … Such notice must be posted in prominent and accessible places where notices to employees, applicants and members are customarily maintained …"

The poster can be downloaded via the U.S. Department of Labor Web site. 

Q: I’m a real estate broker and have been contacted by a residential homeowners’ association (HOA). They want me to manage the HOA. I’ll be responsible for doing things like preparing the HOA’s budget, noticing owners of meetings, and disbursing the HOA’s funds. Would I be required to obtain a Community Association Management (CAM) license before engaging in this activity? 

A: It depends. Community Association Management is defined in Section 468.431, Florida Statutes, as “any of the following practices requiring substantial specialized knowledge, judgment and managerial skill when done for remuneration and when the association or associations served contain more than 10 units or have an annual budget or budgets in excess of $100,000: controlling or disbursing funds of a community association, preparing budgets or other financial documents for a community association, assisting in the noticing or conduct of community association meetings, and coordinating maintenance for the residential development and other day-to-day services involved with the operation of a community association.”

If you’re conducting the types of activities outlined in the definition (which you would appear to be doing) for compensation and the association served contains more than 10 units or has an annual budget in excess of $100,000, you would be required to obtain a CAM license. This type of license may be obtained from the Department of Business and Professional Regulation (Web site: 

Q: I’m a broker for a large brokerage, and I just found out that one of my sales associates pled guilty to a felony drug charge. Do I have a duty to terminate her or to notify the Florida Real Estate Commission (FREC)? 

A: No. You have no duty to do either under the real estate license law. However, your sales associate has a duty to inform FREC, in writing, within 30 days of pleading guilty or nolo contendere to, or being convicted or found guilty of, any felony. 

Q: A bank has contacted me (a sales associate) and wants me to perform broker price opinions on its bank-owned properties. May I be paid directly for performing BPOs? 

A: No. If a sales associate is performing a BPO for compensation, this is real estate licensed activity that a sales associate may perform only through his or her registered broker. In addition, Section 475.42(1)(d), Florida Statutes, provides that it’s a violation of real estate licensing law for a sales associate to collect "any money in connection with any real estate brokerage transaction, whether as a commission, deposit, payment, rental, or otherwise, except in the name of the employer and with the express consent on the employer." 

Q: I am a broker and want to use my RV as my office. May I register it as my office? 

A: No. Pursuant to Section 475.22 (1), Florida Statutes, a broker’s office must consist of at least one enclosed room in a building of stationary construction. 

Q: Can a broker be liable for the negligent acts of a sales associate? 

A: Yes. A broker may be disciplined, pursuant to Section 475.25(1)(u), Florida Statutes, for failing to adequately direct, supervise, control or manage a broker-associate or a sales associate. 

Q: I’m a broker and want to set up a referral company. Does this referral company have to be registered with the Department of Business and Professional Regulation (DBPR)? 

A: Yes. The broker must set up the company and register it as a real estate brokerage with DBPR, since being paid for the referral of real estate business is real estate activity, pursuant to Section 475.01(1) (a), Florida Statutes. The broker must apply for a multiple license if he or she will be the broker for several real estate brokerages. 

Q: I am a broker and want to use my recreational vehicle (RV) as a branch office. May I do so? 

A: No. A branch office must meet the same requirements as a principal office, that is, it must have at least one enclosed room in a building of stationary construction with the proper signage. Since your RV is not a building of stationary construction, it does not meet the minimum office requirements and may not be registered as a branch office. 

Q: I own a real estate brokerage that specializes in auctions and property management. I’d like to use one trade name for the part of my brokerage that does auctions and a different trade name for the part that does property management. May a real estate brokerage use two trade names? 

A: No. Under the Florida Real Estate Commission (FREC) rules, a real estate company may be registered under only one trade name. 

Q: My buyer is interested in a for-sale-by-owner property. May I contact these owners/sellers if they are on the Do Not Call Registry? 

A: Yes. If you have an interested buyer, you may contact the owners/sellers—even if they’re on the Do Not Call Registry— since they’ve advertised their phone number. However, you may not contact the owners/ sellers if you are trying to solicit the listing. 

Q: May a Florida licensed real estate broker pay an out-of-state licensee a referral fee? 

A: Yes. Section 475.25(1)(h), Florida Statutes, allows a Florida licensed real estate broker to share compensation with a foreign licensee as long as the foreign licensee does not violate Florida law. The foreign licensee would not be permitted to come to Florida physically and engage in real estate activity as defined by Section 475.01(1)(a), Florida Statutes. Before paying the referral fee, the Florida licensed broker should verify that the foreign licensee is licensed to practice real estate in his or her state or foreign jurisdiction as the Florida licensee may need to pay the fee to the foreign licensee’s broker. 

Q: I’m a broker and have entered into an exclusive listing agreement with a developer who is developing a subdivision.  Several of my sales associates will be working out of the model home, where they’ll be meeting potential buyers, showing property and negotiating offers. Must I register the model home as a branch office? 

A: Whether a location must be registered as a branch office depends on the level and type of activity conducted there. Meeting buyers, negotiating offers or performing other similar activity would require registering the model home as a branch office with the Division of Real Estate. 

Q: I’m the broker of a small brokerage firm. We’ve been in business for a number of years and I’m running out of space to maintain the required business records in my office. I would like to hire a company to scan them onto a computer disk. Must I also maintain the original records? 

A: No. Legible copies or electronic versions of the records are sufficient. As an alternative, you may also maintain the required business records outside the office. However, they must be made readily available to FREC if you are audited. 

Q: I’m moving my brokerage firm to a new location. How long do I have to notify FREC of my new address? 

A: When a brokerage firm changes its business address, it must notify FREC on a form provided by the commission no later than 10 days after the change. 

Q: I own a brokerage firm and I also have an opportunity to become a broker for another brokerage corporation. If I apply for a multiple license, must I also have an ownership interest in this second brokerage corporation? 

A: No. A broker isn’t required to be a shareholder in a real estate corporation. However, every broker licensed with a corporation must be registered as an officer or director of the corporation. 

Q: May a real estate corporation have more than one trade name/DBA (doing business as)? 

A: No. Under FREC rules, no individual, partnership or corporation may be registered under more than one registered trade name. 

Q: May an individual who has obtained a judgment against a real estate licensee recover funds from the Real Estate Recovery Fund if the real estate licensee was also the seller in the transaction? 

A: No. According to Section 475.482(1)(b), FS, the Florida Real Estate Recovery Fund is not available in situations where the broker or sales associate was the seller, buyer, landlord or tenant in the transaction or an officer or director of a corporation, a member of a partnership, a member of a limited liability company or a partner of a limited liability partnership that was the seller, buyer, landlord or tenant in the transaction. 

Q: My sales associate recently suggested sending advertisements to potential buyers using a list of hundreds of fax phone numbers for our area. These numbers are exclusively used for fax machines, not telephones. Is this legal? 

A: No. Section 365.1657, Florida Statutes, makes it unlawful for any person to use fax machines for unsolicited advertisements for the sale of real property, goods or services. 

Q: I’m a broker who represented a seller now being sued by the buyer. Although I’m not a party to the lawsuit, I was served with a Subpoena Duces Tecum [a command to produce documents] from the buyer’s attorney. The court did not issue the subpoena. Must I comply? 

A: Either the attorney of record or the clerk of court may issue a Subpoena Duces Tecum. Unless the court quashes or modifies the subpoena, you must comply. 

Q: My wife and I are both sales associates.  We want to form a professional corporation (PA) and have our commissions from real estate transactions paid to the PA.  May we form just one PA for this purpose? 

A: No. Section 475.161, Florida Statutes, prohibits the two of you from forming a single PA.  You may, however, each form a separate PA in each of your legal names. 

Q: I’m a broker in the process of sorting through my brokerage business records. Must I retain copies of listing agreements even if the property never sold? 

A: Yes. Section 475.5015, Florida Statutes, provides that any listing agreement, offer to purchase, rental property management agreement, rental or lease agreement, or any other written or verbal agreement that engages the services of the broker must be retained for at least five years from the date of execution, even if no funds are entrusted to the broker. 

Q: I’m a broker of a new brokerage firm. The owner of the brokerage firm is not a real estate licensee. Must I, as the broker, be a signatory on the firm’s operating account? 

A: No. Rule 61J2-14.010(1), Florida Administrative Code, provides that at least one broker must be a signatory on all escrow accounts.  FREC does not regulate operating accounts. 

Q: I’m a broker associate, and I recently heard through a friend that a broker associate or a sales associate may set up a corporation in order to collect commissions. What kind of corporations am I, as a broker associate, permitted to form? 

A: Section 475.161, Florida Statutes, provides that FREC “shall license a broker associate or sales associate as an individual or, upon the licensee providing the commission with authorization from the Department of State, as a professional corporation, limited liability company or professional limited liability company. A license shall be issued in the licensee’s legal name only and, when appropriate, shall include the entity designation.” Thus, a broker associate or sales associate may create a limited liability company, a professional limited liability company or a professional corporation in the licensee’s legal name in order to collect his or her commission. 

Q: A jewelry storeowner wants me to list and sell his business. The sale won’t include any real property. May I sell a business enterprise that doesn’t include real property? 

A: Yes. Section 475.01(1)(a), Florida Statutes, authorizes a broker to sell a business opportunity or business enterprise.  475.01(1)(i) defines real property or real estate, in part, as “any interest in business enterprises or business opportunities …” Therefore, a real estate licensee may sell a business enterprise that doesn’t include land.