A Detailed Look at Florida Real Estate Licensing Law
Referral fees should flow through the brokerage company to the associate. The Florida Real Estate Commission (FREC) has said an associate may be paid directly at closing if a broker instructs the closing agent (in a specific writing) to authorize direct payment. FREC has not expanded this to include other situations. (Section 475.42(1)(d), Florida Statutes)
Florida licensees are not allowed to pay a fee or compensate someone for real estate services who doesn’t hold a real estate license in Florida or another state – this includes attorneys.
There is a very limited finder’s fee exception: a property management firm or landlord can pay up to $50 per transaction to an apartment tenant who refers another tenant to live in the same complex. (Sections 475.25(1)(h) and 475.011(13), Florida Statutes)
Designated Sales Associate law
- A single sales associate can act as an agent for both the buyer and the seller in a commercial transaction, as long as the buyer and seller each have assets of $1 million or more and have signed the required disclosures. (Sections 475.278 (5) (a) and 475.2755, Florida Statutes)
- In order for the buyer and the seller to prove that they each have assets of $1 million or more, they need to sign disclosures stating their assets meet the threshold. (Section 475.2755, Florida Statutes)
- The Designated Sales Associate law also applies to a commercial lease; one sales associate may act as the single agent for a landlord and a tenant. In a real property transaction, “buyer” means a transferee or lessee, and “seller” means the transferor or lessor. (Section 475.2755, Florida Statutes)
- The Designated Sales Associate law does not apply to residential sales, as defined in 475.278. Therefore, a broker’s office can only act as a single agent for one party, either the buyer or the seller. (Section 475.2755, Florida Statutes)
Determining and analyzing acceptable title is an extremely complex legal undertaking. A licensed attorney is the best person to offer an opinion that title to a property is good or merchantable. Real estate agents should advise prospective buyers to consult their attorney on the merchantability of the title or to obtain title insurance. Real estate agents or brokers can be subject to discipline (and could even have their license revoked) for rendering an opinion about a title. We recommend that real estate professionals avoid giving their customers opinions on title. (Section 475.25(j), Florida Statutes)
- An associate (whether sales associate or broker-associate) may not hold multiple licenses and may not work for more than one real estate company. (Section 475.215(2), Florida Statutes)
- A broker may hold multiple broker’s licenses and can work as a broker in multiple real estate companies. (Section 475.215(1), Florida Statutes)
- A Florida licensee may also have a real estate license in another state.
When an agent or broker changes their name legally, they must request that their real estate license be reissued in the new name. They must include a copy of the legal document that legally changed the name (e.g., a marriage license) in this request. (Rule 61J2-9.007, Florida Administrative Code)
Hiring someone new to the field
A new sales associate may not begin engaging in real estate activity until he/she has received a license number by the Florida Division of Real Estate (DRE) and the Department of Business and Professional Regulation (DBPR) database reflects the appropriate information.
Opening an office
- In Florida, only a broker can open an office. Each active broker must maintain an office and register that office with the Florida Real Estate Commission.
- Sales associates and broker-associates cannot establish their own real estate offices. Sales professionals must be registered with a broker, and to work out of the broker’s office. (Section 475.22, Florida Statutes)
- A broker may register an office outside Florida, as long as the broker agrees in writing to cooperate with any investigation initiated by the Department of Business and Professional Regulation (DPBR), including supplying any requested documents or appearing at any designated office of the department. (Section 475.22(2), Florida Statutes)
Broker price opinions
Broker price opinions (BPOs) are considered to be a real estate brokerage activity. Sales associates may not collect any money in connection with a real estate brokerage transaction, whether as commission or other payment, except in the name of their employer—the broker. (Section 475.42(1)(d), Florida Statutes). So if an associate performs a BPO, that associate can only collect a fee for that BPO through his or her broker.
A listing agreement cannot renew automatically. All listing agreements must contain a definite expiration date. (Section 475.25(1)(r), Florida Statutes)
Each regional MLS determines whether unlicensed assistants may have their own MLS ID. The Florida Real Estate Commission (FREC) has a list of informally approved activities an unlicensed assistant can perform. See the Unlicensed Assistants section for a list of permissible activities.
A sales associate may pay a licensed real estate assistant for activity that doesn’t require a real estate license to perform. For work requiring a real estate license to perform, the broker must pay the assistant.
- Brokers must keep at least one legible copy of all brokerage business books, accounts, and records for at least five years from the date of receipt of any money, fund, deposit, check or draft entrusted to the broker. When the broker does not receive any funds, he or she must keep any written agreement engaging the broker’s services (listing agreement, offer to purchase, rental property management agreement, rental or lease agreement,etc.) for at least five years from the date of execution by any party. (Section 475.5015, Florida Statutes)
- If there is litigation as a result of any transaction, the records must be maintained for at least two years after the conclusion of the civil action or the conclusion of any appellate proceeding, whichever is later, but in no case less than five years.
Displaying a real estate license
There is no legal requirement to display your license on the wall or anywhere else in your office.
Setting up a corporation
- An individual broker may use a trade name. That name must be disclosed on the request for a license and be placed on the registration or license. FREC will not issue a license if the trade name is the same as the real or trade name of another FREC registrant or licensee. (Rule 61J2-10.034, Florida Administrative Code)
- A sales associate or broker associate may incorporate as a limited liability company (LLC), professional corporation (PA) or professional limited liability company (PLLC), but must create that LLC, PA or PLLC in his or her licensed name only. (Section 475.161, Florida Statutes)
- If a broker sets up a separate company to engage in referrals of buyers and sellers to other brokerage firms, the broker must register this company with the DBPR/DRE as a real estate brokerage. Collecting compensation in connection with the referral of real estate business falls within the definition of real estate activity (Section 475.01(1)(a), Florida Statutes).
The Department of Business and Professional Regulation (DBPR), its employees and/or agents have the power to inspect and audit any broker or brokerage office in a lawful manner at all reasonable hours. Further, the DBPR can inspect a broker’s books, accounts and records to determine whether he/she is complying with regulations. (Sections 475.5015 and 475.5016, Florida Statutes)
If a sales associate’s license is inactive, that associate cannot receive compensation for any real estate work. Further, the agent is committing a third-degree felony by practicing real estate without a valid license. (Section 475.42(1)(a), Florida Statutes)
- If an agent or broker violates real estate license law in a state other than Florida and the state’s real estate license agency takes action against the agent’s license in that state, FREC may take action against the person’s Florida license. (Section 475.25(1)(g), Florida Statutes)
- If a sales associate enters into a listing agreement with a seller but fails to provide a legible, signed, true and correct copy of the listing agreement within 24 hours, the listing agreement is still enforceable. However, FREC may discipline a licensee for this. (Section 475.25(1)(r), Florida Statutes)
Listing and selling a mobile home
A real estate licensee may sell a mobile home and the land on which the mobile home is located without having a mobile home dealer’s license. If the seller does not own the land, the agent would probably first need to get a mobile home dealer’s license issued by the Department of Highway Safety and Motor Vehicles (DHSMV).
Auctioning real estate
Any real estate licensee can auction real property, even if they do not have an auctioneer’s license. (Section 475.01(1)(a), Florida Statutes)
Sharing office space
Two brokerage firms are legally entitled to share office space. However, the companies should make all efforts to keep their businesses completely separate from each other in order to avoid creating an ostensible partnership, created by public perception that the brokers or brokerages are working together as one entity. If an ostensible partnership is created, each broker or brokerage may be exposed to the other’s liability. Also, each brokerage must maintain a sign on or near the office entrance that is easily observed and read by anyone about to enter the office. (Section 475.22,Florida Statutes)
- A sales associate may choose to become voluntarily inactive and remain so indefinitely, as long as the person renews as inactive every two years and satisfies the continuing education requirements prescribed by the Florida Real Estate Commission (FREC).
- A license that is not renewed at the end of the license period as prescribed by the Department of Business and Professional Regulation “shall automatically revert to involuntarily inactive status.” (Section 475.182(3), Florida Statutes)
- After two years of involuntarily inactive status, the license shall automatically expire and that once it expires, “it becomes null and void without further action by the commission or the department.” (Section 475.183, Florida Statutes)
- Operating as a broker or sales associate without having a valid, current license is a third-degree felony, punishable by imprisonment up to five years. (Sections 475.42 (1)(a) and Section 775.082, Florida Statutes)
Operating without a license
- Any Florida licensee who helps an unlicensed agent is committing a FREC violation. Specifically, licensees cannot aid, assist, procure, employ, or advise any unlicensed person or entity to practice real estate. (Section 475.25(1)(a), Florida Statutes)
- FREC or the DBPR can refuse to issue a registration for a corporation if any individual having more than 40 percent ownership of the voting stock has had an injunction issued against him or her for the unlicensed practice of real estate. (Rule 61J2-5.014, Florida Administrative Code)
- Real estate agents, brokers, and appraisers must report any misdemeanor to the Florida Real Estate Commission (FREC) and the Florida Real Estate Appraisal Board (FREAB) within 30 days after the plea or after being found guilty. (Before Oct. 1, 2009, real estate licensees and appraisers had a duty to report only felonies to the FREC and the FREAB.) (Section 455.227(1)(t), Florida Statutes)
- Brokers are responsible for the real estate activities of all their sales associates. They must monitor their associates’ transactions and make sure the associates aren’t engaging in anything illegal. Failure to catch fraudulent activity before a transaction closed could expose the broker to liability — both in a lending fraud investigation and with FREC — if this matter is ever reported. FREC may discipline a broker who has failed “to direct, control or manage a broker associate or sales associate employed by such broker.” (Section 475.25(1)(u), Florida Statutes)
Crimes and related fees
- Someone convicted of a crime long ago may still apply for a real estate license. The applicant must disclose the conviction on their license application. In determining whether to approve the application, FREC will consider length of time between the conviction and the application, as well as severity of the offense.
- The Real Estate Recovery Fund is available to persons who have suffered due to acts of a real estate licensee; it is not intended to reimburse real estate licensees for damages a licensee incurred as a result of the licensee’s own negligence. (Section 475.482, Florida Statutes)
- When FREC imposes an administrative fine and costs, if any, for violation of Chapters 455 and 475, Florida Statutes, or the rules promulgated thereunder, the fine and costs shall be paid within 30 days of the filing of the final order unless directed otherwise by FREC. (Rule 61J2-10.031)
- FREC does report licensees’ real estate–related criminal activity to the proper authorities, such as the State Attorney’s Office. (Section 475.25(7), Florida Statutes)