Laws and Requirements for Florida Real Estate Brokers and Brokerages
Brokerage ownership and brokers
A brokerage must have at least one broker, and every broker licensed with a brokerage must be registered as one of its officers, directors or general partners. There is no maximum number of brokers a brokerage can have. (Section 61J2-5.016, Florida Administrative Code)
A sales associate or a broker associate may own a brokerage. However, no sales associate or broker associate may be registered as that brokerage’s officer, director or general partner. (Section 61J2-5.016, Florida Administrative Code)
A broker must maintain an office, which shall consist of at least one enclosed room in a building of stationary construction. (Section 475.22 (1), Florida Statutes) So a broker’s office cannot be in an RV or a houseboat.
A broker’s office can be in a residence as long as it doesn’t violate local zoning ordinances and is permitted by the homeowners’ association or condominium association. Additionally, all associates must be registered and work out of an office maintained and registered in the name of the broker/brokerage. Home-based brokerages must still meet minimum office requirements and brokers’ signage requirements. (Section 475.22, Florida Statutes, and Section 61J2-10.022, Florida Administrative Code)
When a brokerage firm changes its business address, it must notify FREC no later than 10 days after the change, using a form provided by the commission.(Section 475.23, Florida Statutes)
Broker responsibilities regarding sales agents
Brokers may be disciplined for failing to direct, control or manage their associates in conducting their real estate activities. We recommend that all brokers have and maintain a Policy & Procedures manual clearly outlining the brokerage’s practices and functions. (Section 475.25(1)(u), Florida Statutes)
Sales associates may not 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.” (Section 475.42(1)(d), Florida Statutes)
If a broker’s agent or sales associate is convicted of a felony, the broker is not required to terminate the associate or notify the Florida Real Estate Commission (FREC). However, if a licensee pleads guilty or nolo contendere to a crime in any jurisdiction, or is convicted or found guilty of a crime, the licensee must inform FREC of this, in writing, within 30 days. (Section 455.227(1)(t), Florida Statutes)
A referral-only company must be registered as a real estate brokerage with the Department of Business and Professional Regulation (DBPR) since being paid for the referral of real estate business is real estate activity. The broker must apply for a multiple license if he or she will be the broker for several real estate brokerages. (Section 475.01(1) (a), Florida Statutes)
To become a broker for another brokerage corporation, a broker must apply for a multiple license. (Section 475.215, Florida Statutes) He or she isn’t required to have an ownership interest in the second brokerage corporation, but must be registered as an officer or director of the corporation. (Section 61J2-5.016, Florida Administrative Code)
All branch offices must have the same corporate or trade name as the primary office, regardless of their geographic location within the state of Florida. Also, no individual, partnership or corporation may be registered under more than one trade name. (Rule 61J2-10.034, Florida Administrative Code)
Working with real estate agents outside of Florida
A broker licensed in Florida can share compensation with a broker located outside of Florida as long as that person is properly licensed where he or she is located and does not violate Florida law by physically engaging in real estate activity in Florida. Before paying compensation, the Florida licensed broker should verify that the out-of-state agent is complying with the law regarding real estate services in his or her state or jurisdiction. (Section 475.25(1)(h), Florida Statutes)
Brokers do not have to keep paper versions of required business records. Legible copies or electronic versions of the records are sufficient. Brokers may also maintain the required business records outside the office. However, they must be made readily available to DBPR in case of an audit. If a broker maintains electronic records, it is recommended that a backup of those records is also kept.
Each broker shall keep books, accounts and records to enable to the DBPR to determine whether such broker is in compliance with Section 475 of the Florida Statutes. This can include obvious records like listing agreements, sales contracts and leases, but could also include emails or other forms of communication that an office may have to show why or how certain actions were taken during the course of a transaction. It is recommended that all brokers establish a clear record retention policy for their office(s). (Section 475.5015, Florida Statutes)
Each broker shall maintain a sign on or about the entrance of all offices, principal and branch, that can be easily observed and read by any person about to enter said office. For an individual broker, the sign must contain the name of the broker, along with any applicable trade name. If it is a brokerage firm, the licensed name of that brokerage must appear, along with the name of at least one broker. Further, at a minimum, the words "licensed real estate broker" or "lic. real estate broker" must appear on the office entrance signs. (Section 475.22(1), Florida Statutes).
Brokers who have at least 15 employees during at least 20 weeks of the year must display the “Equal Employment Opportunity Is the Law” poster (available to download at www1.eeoc.gov/employers/poster.cfm) on their premises. The notice must be posted prominently, where employees and employment applicants can readily see it. The notice provides information concerning the laws and procedures for filing complaints regarding violations of employment laws. (Code of Federal Regulations (CFR) 1601.30, Federal Code 29)
Selling business enterprises
Brokers are authorized to sell a business opportunity or business enterprise. This applies to businesses that don’t include real property or land – for example, a retail store. The statute’s definition of real property or real estate includes “any interest in business enterprises or business opportunities …” (Section 475.01(1)(a), Florida Statutes)
Sales associates forming a professional corporation
Sales associates and broker associates are able to create a professional corporation (P.A.), limited liability company (LLC) or professional limited liability company (PLLC) in their licensed name only. Sales/broker associates who are married to one another are not permitted to form a single professional corporation and have commissions from both associates for real estate transactions paid to the one entity. However, each one may form an individual corporation through which they can be paid by their broker. (Section 475.161, Florida Statutes)