HISTORY AND PURPOSES OF
REAL ESTATE LICENSE LAWS
History of Florida’s real estate license law
Purpose of regulation
Important Florida real estate statutes and rules
History of Florida’s
real estate license
law In the early 1900s, the Florida Legislature determined it was necessary to protect public welfare by regulating the real estate industry. As a result, Florida put into place laws and authorities to regulate the licensing and practices of real estate brokers, sales associates, and schools in the state.
In 1923, the Legislature passed Chapter 475 and added it to the Florida Statutes as the first real estate license law.
Department of Business and Professional Regulation (DBPR). The DBPR was created and structured by Title IV, Section 20.165 of the Florida Statutes and is governed by Chapter 120, F.S.
Division of Real Estate (DRE). As a division of the DBPR, the Division of Real Estate provides all the services necessary to administer Chapter 475. The DRE establishes both the Florida Real Estate Appraisal Board and the Florida Real Estate Commission.
Florida Real Estate Commission (FREC). To further administer the license law and regulate real estate professionals, the Florida Legislature established the FREC in 1925 under Chapter 475 and gave it the authority to establish rules necessary to perform its duties.
The above organizations are covered in detail in a later section.
regulation When the Florida Legislature determined that the public needed protection when engaging in real estate transactions, it put several regulations, laws, and rules into place for that purpose. The purpose of all Florida real estate regulations is consumer protection.
Caveat emptor. Caveat emptor means “buyer beware” and signifies that buyers purchase properties at their own risk regarding the condition of the property. Florida subscribed to caveat emptor until 1985, when a buyer sued a seller for not disclosing the property’s defective roof. Under caveat emptor, the buyer would have been out of luck. However, the Florida Supreme Court ruled in favor of the buyer, thereby reversing Florida’s use of caveat emptor. Section 2: Real Estate License Law / Qualifications for Licensure 23
This ruling showed the need for further regulation in real estate sales and established that a seller has a duty to disclose known defects. As indicated in Chapter 455, Section 201 of Florida statutes, this ruling and subsequent rulings laid out that a seller must disclose defects if all four of the following elements are present:
the seller has knowledge of a defect in the property
the defect materially affects the value of the property
the defect is not readily observable and is not known to the buyer
the buyer establishes that the seller failed to disclose the defect
With caveat emptor, if the buyer asked, the seller was required to answer honestly. However, if the buyer didn’t ask, then the seller had no obligation to disclose. With this change of regulation, sellers are now required to disclose defects in the property whether or not the buyer asks.
real estate statutes
and rules As mentioned earlier, the Florida legislature saw a need to protect consumers during real estate transactions from unethical and illegal practices such as fraud. Legislators also did not want to make it unreasonably difficult for an individual to enter into the real estate profession. Consequently, they established specific laws to meet these needs. The statutes are updated annually to create, amend, transfer, or repeal statutory material.
Chapter 20 of the Florida code covers the organizational structure of the Executive Branch of the state government. It is the statute that created the Department of Business and Professional Regulation and established the Divisions within the DBPR, such as the Division of Real Estate. This statute also established the organizational structure of the DBPR.
Chapter 475 is divided into four parts and provides regulations for brokers, sales associates, appraisers, and schools. Part I created the FREC and includes its organization, powers, and duties. It also covers regulations for licensure and brokerage practices, including violations and penalties.
Part II provides regulations for appraisers. Part III is known as the Commercial Real Estate Sales Commission Lien Act and provides regulations for a broker’s lien for unpaid sales commission. Part IV is known as the Commercial Real Estate Leasing Commission Lien Act and provides regulations for a broker’s lien for unpaid commission earned by a lease of commercial real estate.
Chapter 455, or the Business and Professional Regulation: General Provisions, is the law used by the DBPR in regulating the professions under the Department’s auspices. It outlines the legislative intent in regulating these professions and includes restrictions on deterring qualified individuals from entering any of the chosen professions. It specifically holds that non-U.S. citizens may not be 24 Principles of Real Estate Practice in Florida
disqualified from practicing any of the professions regulated by the DBPR and covers the required qualifications to do so.
Chapter 455 also includes the powers and duties of the DBPR and the organizational and operational requirements of the boards under the DBPR. This chapter covers general licensing provisions; education requirements; licensure examinations and testing services; disciplinary grounds, actions, procedures, and penalties; and legal and investigative services. Section 455.02 provides guidelines for licensure of members of the armed forces and their spouses.
Chapter 120 is known as the Administrative Procedure Act and provides procedures for government agencies to exercise their specified authority, including rulemaking authority, procedures, requirements, and challenges. It also covers licensing requirements, along with disciplinary procedures and enforcement. Exemptions and exceptions from this Act are also included.
Chapter 61J2 contains the Florida Real Estate Commission’s (FREC) rules. These rules cover licensure and education requirements, non-resident licensure, brokerage operation and business practices, trust fund handling, and disciplinary matters and procedures.
Other state statutes regulate taxation and collections, construction standards, lien foreclosures, and tax breaks for undeveloped land used for agricultural purposes (Florida Greenbelt Law of 1959). The Online Sunshine website provides access to these and other applicable Florida statutes.
Florida offers real estate licenses that fall into one of three categories: broker, sales associate, and broker associate. A broker associate and a sales associate may be licensed as an individual or as a professional corporation, limited liability company, or professional limited liability company, if the individual has obtained authorization to do so from the Department of State. A broker associate and sales associate may not be licensed as a general partner, member, manager, officer, or director of a brokerage firm.
Broker A broker is someone who is licensed to perform real estate services for another person for compensation or the expectation of compensation. Compensation can be monetary or anything else of value.
Real estate services include the sale, exchange, purchase, rental, appraisal, auction, advertising of real property, business enterprises, or business Section 2: Real Estate License Law / Qualifications for Licensure 25
opportunities or the offer to perform any of these services. Services also include procuring sellers, buyers, lessors, or lessees.
Although a broker may “appraise” property, such appraising does not equate to appraisal services that must be performed by a registered or licensed appraiser.
The broker category of licensure also includes any individual who is a general partner, officer, or director of a partnership or corporation that acts as a broker.
Sales associate A sales associate is someone who performs the same real estate services as a broker but who works under the direction, control, and management of a specified broker or owner-developer. A sales associate must meet additional licensure requirements to become a broker or broker associate.
Broker associate A broker associate is someone who has obtained a broker license but performs real estate services as a sales associate under the direction, control, and management of a specified broker.
GENERAL LICENSURE PROVISIONS
Reasons for denial
qualifications To qualify for a real estate license in Florida, an individual must be at least 18 years old; hold a high school diploma or its equivalent; and be honest, truthful, trustworthy, and of good character. He or she must have a good reputation for fair dealing and be competent to handle real estate transactions. Being a U.S. citizen or a Florida resident is not a requirement for licensure as long as the individual meets all other requirements of licensure. However, applicants must have a Social Security number. A Social Security number or equivalent is not required for tax purposes but to ensure that the applicant is not behind on spousal or child support.
disclosures An applicant must disclose any alias or also-known-as (aka) name. The applicant must also disclose whether he or she
is under investigation for any crime or violation
has been convicted or entered a plea of nolo contendere, no contest, or guilty for any crime
has been denied licensure or registration for a regulated profession
has been disciplined or is pending discipline in any jurisdiction
has surrendered a license or had a license suspended or revoked
has been guilty of any conduct that would be grounds for license suspension or revocation. (F.S. 475)
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Reasons for denial An applicant may not qualify for licensure if he or she has been denied a license, had a license revoked or suspended, or has committed offenses that would be grounds for license revocation or suspension. In such cases, when considerable time has passed since the offense or if the applicant has since demonstrated conduct good enough to assure he or she is of no danger to the public, the FREC may determine that he or she is then qualified to apply for licensure.
The applicant may also be denied licensure if the applicant acted as a licensee in performing real estate activities or presented him- or herself as a licensee within one year prior to applying for a license.
Applicants may not be denied licensure based on conviction of a crime that occurred five or more years prior to submission of the application unless the crime was related to the practice of real estate or related to the absence of good moral character