CHANGE OF EMPLOYER OR ADDRESS
Prohibitions during changeover
Change of address
FREC notification If a sales associate or broker associate changes employing brokers, he or she must notify the FREC of the change within 10 days after the change. The licensee is required to use the FREC’s Change of Status for Sales Associates or Broker Sales Associates (DBPR RE 11) form found online at
If the licensee chooses to use the printable form, it must be signed by the new employing broker and submitted to the FREC. Rather than using the printable form, the new employing broker can add the licensee to his or her own license through the broker’s online account. The licensee’s license ceases to be in force until a new license is issued under the new broker.
broker change Violation of the obligation of confidentiality. When a licensee changes employing brokers, he or she is still held to the duty of confidentiality to transaction principals and to the former employing broker. That duty does not end with the end of employment with a broker.
Duplication of records. When a licensee changes employing brokers, he or she may not duplicate records to take the copies to the new employing broker. Doing so is a breach of trust and violation of license law, even if the records were originated by the licensee. 100 Principles of Real Estate Practice in Florida
Removal of records from previous broker’s office. When a licensee changes employing brokers, he or she may not remove records from the former broker’s office. Doing so constitutes theft and is punishable as such.
Change of address Florida license law requires all licensees to submit their current mailing address to the FREC. If a licensee changes mailing addresses, he or she must notify the FREC within 10 days of the change. The licensee is required to use the Demographic Changes for Real Estate Individuals (DBPR RE 10) form found online at
Broker change of business address. If a broker changes business address, the broker must notify the FREC within 10 days of the change. The broker must use the required form found online at
and include the names of all sales associates and broker associates who remain in the broker’s employ and those who are no longer employed by the broker. The form serves to notify the FREC of the business address change for those remaining associates. The broker and sales associates’ licenses cease to be in force until new licenses are issued for the new address.
BUSINESS ENTITY LICENSING & REGISTRATION
May register as brokerage
May not register as brokerage
May register as
brokerage Sole proprietorship. A business or brokerage that is owned by one individual is called a sole proprietorship. A licensed broker may form a sole proprietorship by filing with the Florida Department of State (FDOS) and registering with the DBPR. The sole broker is responsible for all business and employee activities.
General partnership. Two or more individuals may form a general partnership and share in the business activities, finances, and profits of the partnership. The partnership must be registered with the DBPR. At least one partner must be a licensed broker, and all partners who deal with the public to perform real estate services must hold valid and current broker licenses. Every active broker partner is responsible for making sure that each partner who must be registered and licensed is indeed registered and licensed.
If the only licensed broker dies or withdraws from the partnership, another licensed broker must be appointed within 14 days or the partnership’s registration Section 5: Real Estate Brokerage Activities and Procedures 101
will be cancelled and all licenses within the partnership will be placed on involuntary inactive status. New brokerage business may not be performed during those 14 days until the new licensed broker is appointed. The FREC must be notified immediately of the death or removal of the licensed broker and what steps were taken to fill the vacancy.
Limited partnership. Limited partnerships are created by filing with the FDOS and must be registered with the DBPR. They must include at least one general partner, with all general partners required to register with the DBPR. At least one general partner must be a licensed broker. All general partners who deal with the public to perform real estate services also must be licensed brokers. The limited partnership must also include at least one limited partner who must invest cash or property but not services. Limited partners are not liable for the partnership’s debts unless their names are part of the partnership’s name or they participate in managing the business.
Ostensible partnerships are prohibited because they are not actually partnerships. Instead, they occur when two or more people deceive others by acting as though a business partnership really exists. For example, if two unassociated brokers work in the same office but do not have separate signs, they are giving the appearance of a business partnership when one does not exist.
For profit corporation. A corporation is created by one or more individuals who file articles of incorporation with the FDOS and who are the owners and stockholders of the corporation. Corporations may be domestic or foreign. Domestic corporations are incorporated in Florida and conduct business within Florida. Foreign corporations, on the other hand, are incorporated outside of Florida but conduct business within Florida. The corporation is managed by a board of directors elected by the owners/stockholders.
To become a real estate brokerage, the corporation must register with the DBPR as a brokerage entity by submitting a brokerage corporation application. The corporation is required to have at least one of the officers or directors licensed as an active broker. The corporation may have licensed, unlicensed, and inactive brokers serve as officers or directors, but all who provide real estate services to the public must be licensed active brokers. The corporation must also register all unlicensed officers and directors for identification purposes. The brokerage corporation application includes a section for this purpose.
If the brokerage does not have at least one registered licensed active broker, the corporation’s registration will be automatically canceled until the license and registration are deemed in force.
Sales associates and broker associates may not be officers or directors within a corporation, but they may be shareholders.
Not for profit corporation. Florida not for profit corporations are created by filing a Florida Not for Profit Corporations application. The specific purpose of 102 Principles of Real Estate Practice in Florida
the corporation must be included, as well as whether or not the corporation will be seeking 501(c)(3) federal tax-exempt status. The corporation is required to file an annual report to maintain its active status. Failure to file the report will result in the corporation being administratively dissolved.
The corporation may have one or more classes of members or no members at all, but it must have at least three directors. Unlike for profit corporations, these corporations are prohibited from paying dividends or any part of their income or profit to the corporation’s members, directors, or officers.
Limited liability company (LLC). LLCs are separate and distinct legal entities wherein the owners are not personally liable for the entity’s debts and liabilities. It allows owners to separate their business dealings from their personal affairs. Like other business entities, an LLC must be filed with the FDOS.
An LLC can be taxed as a pass-through entity like a sole proprietorship or partnership or as a regular corporation. With the pass-through, the owners pay taxes only once on the profits, whereas a regular corporation’s income is taxed twice – once on its net income and then again on the profit distribution to stockholders.
LLCs can be converted to corporations if the owners so choose.
Limited liability partnership (LLP). An LLP is a business entity that requires a written partnership agreement between the partners. Unlike limited partnerships, all partners in an LLP can participate in managing the business with no one partner having explicit control. New partners can be added and others removed according to the provisions of the partnership agreement. Liability is split among the partners in that each partner is liable for his or her own acts and those of the partner’s employees, and no partner is responsible for the errors or acts of another partner. The partners are not liable for debts incurred by another partner.
The LLP is a pass-through entity wherein the partners receive untaxed profits and then pay their own income taxes. As with other entities, an LLP must be registered with the FDOS.
Sales associates and broker associates are prohibited from being officers, members, managers, or directors in a real estate brokerage corporation or a general partner in a brokerage limited or general partnership.
Broker associates or sales associates are licensed as individuals, but can be licensed as a professional corporation, limited liability company, or professional limited liability company if the licensee submits authorization from the Department of State to the FREC.
The new broker’s name must be placed on the business through the Florida Department of State (FDOS). Because this process takes time, FREC now allows a temporary broker to be named and registered with DBPR within 14 days. This Section 5: Real Estate Brokerage Activities and Procedures 103
temporary broker may remain in place for 60 days. Within that timeframe, a new broker must be registered with the FDOS and DBPR.
May not register
as brokerage Corporation sole. A corporation sole is made up of one individual occupying one incorporated office and may consist of only one member at a time. This one member is typically a bishop or other church official. While the corporation sole is typically a church organization, it can also be a political organization.
The purpose of the entity is to ensure the continuity of ownership of property that has been dedicated to the benefit of a particular religious organization. The one member holds title to the property but does not personally own the property. If the one member dies or is removed, the property title is passed on to a successor and not to the previous member’s heirs.
Corporation soles are not recognized in all states, and while the Supreme Court of Florida does recognize them, they cannot be registered as real estate brokers.
Joint venture. This business arrangement is formed when two or more individuals or entities join together to carry out a single business activity or a designated number of activities. The arrangement is not permanent and requires the participating individuals to have joint control and to share in the profits and losses. Under Florida law, each partner owes the duties of care and loyalty to the venture and the other partners.
In a real estate joint venture, each individual must be an active licensed broker. Consequently, the venture is not registered as an entity with the FDOS because there is no written arrangement and the licensed brokers are already registered.
Business trust. A business trust is typically set up when the assets and property of a business corporation are entrusted to an appointed trustee. The trustee then manages the operation and assets of the business for the benefit and profit of the beneficiaries.
A real estate business trust is used for transactions involving the trust’s own property. Each individual invests in the entity so the trust can buy, develop, and/or sell property. The title to any property purchased is filed in the trustee’s name, but the property does not belong to the trustee. All property and assets belong to the trust itself.
While every participant in the trust who performs real estate services must be licensed and registered, the trust itself does not register with the DBPR as a real estate broker.
Cooperative association. A cooperative association is a business organization that is formed, owned, and operated by its members for their mutual benefit. The association may buy or sell its own property, but it is not registered as a real estate broker. Each member is a shareholder who has equal ownership and equal 104 Principles of Real Estate Practice in Florida
control of the association, with each shareholder having one vote. Profits earned by the association are divided among the shareholders.
Unincorporated association. An unincorporated association is a group of people who form the association for a common non-business purpose and to create a legally binding relationship among themselves. The associations are easy to form and extremely flexible. They can, for example, be a small neighborhood group or a national organization.
Because they are unincorporated, they are not permitted to own property in their own name or to enter into contracts. Consequently, they may not register as a real estate broker.