FREC Rules and Violations: What You Need to Know for the Florida Exam
FREC Is Not One Topic. It Is Woven Through Half the Exam.
The Florida Real Estate Commission does not have its own single content area on the exam. Instead, FREC rules, violations, and penalties appear across License Law, Brokerage Activities, Authorized Relationships, and several other content areas. A question about escrow deposits is a FREC question. A question about advertising rules is a FREC question. A question about disciplinary penalties is a FREC question. You cannot study FREC as one chapter and be done with it because FREC governs nearly every aspect of real estate practice in Florida.
This matters for exam preparation because students who study "FREC" as a standalone topic miss the connections. They memorize that FREC can suspend a license but cannot explain which specific violation triggers suspension versus revocation versus a fine. They know FREC exists but cannot work through a scenario where a licensee violates a rule and determine the correct regulatory outcome.
This post covers the FREC material the exam actually tests: the commission's structure and authority, the violations that appear most frequently, the penalty framework, the complaint and disciplinary process, and the specific rules that national prep tools miss entirely. Every section includes the Florida statute references the exam is built from.
The short version: FREC is a 7-member commission under DBPR that regulates Florida real estate licensees. The exam tests FREC material across multiple content areas, not as a single topic. The most frequently tested areas are: escrow deposit violations (F.S. 475.25(1)(k)), unauthorized practice, advertising rules, commingling, and the penalty framework (reprimand through revocation). The complaint process follows a specific sequence: complaint filed, investigation, probable cause, formal hearing, final order. Advertising requires the brokerage name in all formats (print, internet, social media, signs). Escrow disputes have exactly four resolution options: mediation, arbitration, interpleader, and escrow disbursement order (EDO). Returning the money to either party unilaterally is not one of them. Knowing the sequence and the penalty ranges is more valuable than memorizing individual rules because the exam tests application of the framework to scenarios.
What This Post Covers
- What FREC Is and How It Works
- The 10 Most Frequently Tested Violations
- The Penalty Framework: Reprimand Through Revocation
- The Complaint and Disciplinary Process
- FREC Advertising Rules
- FREC Escrow Rules
- License Status: Active, Inactive, Suspended, Revoked
- 5 Exam-Style Practice Questions
- Frequently Asked Questions
What FREC Is and How It Works
The Florida Real Estate Commission (FREC) is a regulatory body within the Department of Business and Professional Regulation (DBPR). It does not make laws. The Florida Legislature makes laws. FREC creates administrative rules that implement those laws and enforces them through disciplinary proceedings.
FREC Structure
| Detail | Fact |
|---|---|
| Number of members | 7 |
| Appointed by | The Governor |
| Confirmed by | The Florida Senate |
| Composition | 4 licensed brokers or sales associates, 1 licensed broker or sales associate who has held a license for at least 5 years, 2 consumer members (not licensed in real estate) |
| Term length | 4 years |
| Overseen by | DBPR |
| Authority source | Chapter 475, Florida Statutes |
What the Exam Tests About FREC's Structure
The exam occasionally asks about the composition (7 members, 4+1 licensed, 2 consumer), who appoints them (Governor), and who confirms them (Senate). These are recall-level questions and are among the easier FREC questions on the exam. Memorize the table above and you can answer them in seconds.
The harder questions test FREC's authority: what FREC can do (impose penalties, suspend/revoke licenses, issue cease and desist orders) versus what FREC cannot do (FREC cannot set commission rates, cannot require specific contract language beyond what the statute requires, and cannot award damages to injured parties; damage awards require a civil lawsuit, not a FREC action).
The 10 Most Frequently Tested Violations
These violations appear across multiple exam versions and content areas. Each one is linked to the specific Florida statute the exam references.
1. Failure to Deposit Escrow Funds on Time
Statute: F.S. 475.25(1)(k)
The broker must deposit earnest money into escrow by the end of the third business day after the sales associate receives it. Not after the broker receives it. The clock starts when the sales associate takes possession of the check. Weekends and holidays are not business days.
This is the single most tested FREC violation on the exam. The escrow rules guide covers the full timeline, business day counting, and who bears responsibility.
2. Commingling
Statute: F.S. 475.25(1)(k)
Commingling is mixing escrow funds with personal funds or the brokerage's operating funds. Escrow money belongs to the parties of the transaction, not to the broker. It must be held in a separate escrow account. A broker who deposits a buyer's earnest money into the brokerage's general operating account has committed commingling.
The exam distinguishes commingling from conversion. Commingling is mixing funds. Conversion is using escrow funds for personal benefit. Both are violations, but conversion is more severe and can result in criminal charges in addition to FREC discipline.
3. Fraud, Misrepresentation, and Concealment
Statute: F.S. 475.25(1)(b)
This is a broad violation that covers any dishonest dealing: making false statements to buyers or sellers, concealing material facts about a property, forging documents, or misrepresenting the terms of a transaction. The exam tests this through scenario questions where a licensee makes a statement or omits information and you must determine whether a violation occurred.
Key detail: a licensee who "did not know" the roof leaked may still face discipline if they should have known through reasonable diligence. "I didn't know" is not a complete defense. However, intentional fraud typically carries heavier penalties than negligent misrepresentation, and the exam may test whether you can distinguish between the two.
4. Operating Without a License or With an Expired License
Statute: F.S. 475.42
Practicing real estate without an active license is a third-degree felony. This includes:
- A sales associate whose license has expired and who continues to show properties
- A person who was never licensed negotiating a sale for compensation
- A sales associate operating without a sponsoring broker
The exam tests the distinction between practicing with an expired license (which the licensee can fix by renewing) and practicing without ever having been licensed (which is a criminal offense with no administrative remedy).
5. Failure to Disclose Brokerage Relationship
Statute: F.S. 475.278
Florida requires written disclosure of the brokerage relationship type. Transaction broker is the default, but the disclosure must still be provided. A licensee who works with a buyer or seller for weeks without providing written disclosure is in violation even though the default (transaction broker) would apply anyway.
The exam tests timing (when must disclosure be made), format (must be in writing), and what happens when no disclosure is provided (transaction broker duties apply by default, but the failure to disclose is still a violation).
See the brokerage relationships guide for the complete comparison of all four relationship types and their disclosure requirements.
6. Advertising Violations
Statute: F.S. 475.25(1)(c) and FREC Rule 61J2-10.025
All advertising by a licensee must include the licensed name of the brokerage. A sales associate cannot advertise under their own name without the brokerage name. A team cannot advertise under a team name without the brokerage name. An advertisement that includes only a personal phone number and name, without identifying the brokerage, is a violation.
The advertising section below covers this in detail.
7. Breach of Trust / Violation of Duty
Statute: F.S. 475.25(1)(b)
A licensee who breaches the duties owed under their brokerage relationship has committed a violation. For a transaction broker, this includes failing to disclose known material facts. For a single agent, this includes failing to provide full fiduciary loyalty. The exam tests whether you can identify which duty was violated based on the brokerage relationship type.
8. Failure to Maintain a License in Good Standing
Statute: F.S. 475.25(1)(a)
A licensee convicted of a crime of moral turpitude, or who has been found guilty of dishonest dealing in any business, can face FREC discipline. The exam tests whether you understand that FREC has authority over conduct outside of real estate transactions if that conduct reflects on the licensee's fitness to practice.
9. Failure to Complete Post-Licensing or Continuing Education
Statute: F.S. 475.182
New licensees must complete 45 hours of post-licensing education before their first renewal (18 to 24 months after activation). Failure to complete post-licensing by the renewal deadline results in the license becoming null and void. This is the most severe consequence of any administrative failure in the licensing system. Null and void means starting over: new pre-licensing course, new exam, new application.
After the first renewal, continuing education is 14 hours every 2 years.
10. Paying Commission to an Unlicensed Person
Statute: F.S. 475.42(1)(b)
A broker may not pay a referral fee, commission, or any compensation for real estate services to a person who is not a licensed real estate professional. The exam tests this through scenarios: a broker who pays a "finder's fee" to a neighbor who referred a buyer, or a sales associate who splits a commission with an unlicensed assistant.
The one exception students need to know: a broker CAN pay a referral fee to a licensed broker in another state, as long as that broker does not perform any real estate services within Florida.
The Penalty Framework: Reprimand Through Revocation
FREC has a range of disciplinary actions it can impose, from mild to severe:
| Penalty | Severity | What It Means |
|---|---|---|
| Reprimand | Lowest | A formal written notice of wrongdoing. The licensee's record reflects the violation, but no operational restriction is imposed. |
| Fine | Low to moderate | A monetary penalty up to $5,000 per count. The amount depends on the severity of the violation and any prior history. |
| Probation | Moderate | The licensee may continue to practice but under specific conditions set by FREC (e.g., additional education, supervision, reporting requirements). |
| Suspension | High | The licensee is prohibited from practicing for a specific period, up to 10 years. The license is not permanently revoked and can be reinstated after the suspension period. |
| Revocation | Highest | The license is permanently terminated. The licensee must wait at least 5 years before applying for a new license, and FREC is not obligated to approve the new application. |
What the Exam Tests
The exam tests whether you can match the severity of the penalty to the severity of the violation. A first-time minor advertising violation does not result in revocation. Conversion of escrow funds does not result in a reprimand. The questions are scenario-based: given this violation and these circumstances, which penalty is most likely?
Key penalty details:
- Maximum fine: $5,000 per count per violation
- Maximum suspension: 10 years
- Revocation minimum wait to reapply: 5 years
- Null and void (post-licensing failure): Not a penalty imposed by FREC. It is an automatic statutory consequence with no FREC hearing required.
- Citations: For minor violations, DBPR can issue citations with fines without a full FREC hearing. Citations are for technical violations, not substantive ones.
The Complaint and Disciplinary Process
The exam tests the sequence of the disciplinary process. Knowing the order matters because questions often ask "what happens next" after a specific step.
The Sequence
Step 1: Complaint is filed. Anyone can file a complaint with DBPR against a licensee. Complaints can come from consumers, other licensees, or DBPR itself. The complaint does not need to be in any particular format, but it must identify the licensee and describe the alleged violation.
Step 2: DBPR investigates. DBPR's Division of Real Estate investigates the complaint. The investigation determines whether there is sufficient evidence to proceed. The licensee is typically notified that a complaint has been filed and may be asked to respond.
Step 3: Probable cause determination. A probable cause panel (two FREC members) reviews the investigation and determines whether there is probable cause to believe a violation occurred. If no probable cause is found, the case is closed. If probable cause is found, the case proceeds to a formal hearing or settlement.
Step 4: Formal hearing or settlement. The licensee can accept a settlement (stipulation) offered by DBPR, or they can request a formal hearing before an Administrative Law Judge (ALJ) at the Division of Administrative Hearings (DOAH). Most cases settle rather than going to a full hearing.
Step 5: Final order. FREC issues a final order based on the hearing or settlement. The order specifies the penalty: reprimand, fine, probation, suspension, or revocation.
Step 6: Appeal (optional). The licensee can appeal the final order to the appropriate District Court of Appeal.
What the Exam Tests About the Process
- Who investigates: DBPR (not FREC). FREC adjudicates. DBPR investigates.
- Who determines probable cause: A probable cause panel of FREC members, not the full commission and not DBPR.
- What happens if no probable cause: Case is closed. No further action.
- Where formal hearings are held: DOAH (Division of Administrative Hearings), not FREC and not a regular court.
- The licensee's right to a hearing: The licensee has the right to a formal hearing before any penalty is imposed. FREC cannot revoke a license without giving the licensee an opportunity to be heard.
FREC Advertising Rules
Advertising violations are among the most frequently tested and among the easiest to get right if you know the core rule.
The Core Rule
Every advertisement by a licensee must include the licensed name of the brokerage firm.
That is the rule. Everything else is application of that rule to specific situations.
Common Exam Scenarios
| Scenario | Violation? | Why |
|---|---|---|
| Sales associate advertises a listing with only their personal name and phone number | Yes | Missing the brokerage name |
| Team advertises under "The Smith Team" with no brokerage name | Yes | Team names must include the brokerage name |
| Team advertises under "The Smith Team at Sunshine Realty" | No | Brokerage name is included |
| Broker advertises using a nickname (e.g., "Bob" instead of "Robert") | Depends | The name in the ad must be a name under which the licensee is registered with DBPR. If "Bob Smith" is the registered name, it is fine. If the registered name is "Robert Smith" and the ad says "Bob Smith," it may be a violation. |
| Internet ad on a personal website with no brokerage name | Yes | The rule applies to all advertising, including internet, social media, and print |
| "For Sale By Owner" sign on a licensed broker's own property | Depends | If the broker is selling their own property and not acting in a licensed capacity, the sign does not need to include the brokerage name. But the broker must disclose their license status to the buyer. |
What the Exam Tests
The exam tests whether you know that the brokerage name is required in all advertising and whether you can apply that rule to specific formats (print, internet, signs, social media, team advertising). The most common wrong answer is selecting a scenario as a violation when it actually complies because the brokerage name is included, or vice versa.
FREC Escrow Rules
Escrow rules are covered in full detail in the escrow and trust account guide. Here is the summary that the exam tests most frequently.
The Timeline
Earnest money must be deposited into escrow by the end of the third business day after the sales associate receives it. Not after the broker receives it. The broker bears the statutory responsibility even if the delay was caused by the sales associate.
Escrow Disputes
When a dispute arises over escrow funds (e.g., the deal falls apart and both the buyer and seller claim the deposit), the broker has four options under F.S. 475.25(1)(d):
- Mediation: If the contract requires mediation
- Arbitration: If both parties agree
- Interpleader: File a court action asking the court to decide who gets the money
- Escrow disbursement order (EDO): Request FREC to determine the proper disbursement
The broker must initiate one of these four options within a reasonable time. Sitting on disputed escrow funds without acting is itself a violation.
The Exam's Favorite Escrow Question
"A buyer and seller disagree about who is entitled to the earnest money deposit. What should the broker do?"
The wrong answer is: give it to the seller, give it to the buyer, or keep holding it indefinitely. The correct answer is: initiate one of the four dispute resolution options (mediation, arbitration, interpleader, or EDO). The exam tests whether you know that the broker cannot unilaterally decide who gets the money and must follow the statutory dispute resolution process.
License Status: Active, Inactive, Suspended, Revoked, Null and Void
The exam tests whether you can distinguish between these statuses and their consequences.
| Status | Meaning | Can Practice? | How to Fix |
|---|---|---|---|
| Active | License is current and registered with a broker | Yes | N/A |
| Inactive | License is current but not registered with a broker | No | Register with a broker (RE 11 form) |
| Involuntarily Inactive | License was not renewed by the expiration date | No | Complete continuing education, pay renewal fee within 2 years |
| Suspended | FREC has prohibited the licensee from practicing for a specified period | No | Wait for suspension period to end, comply with any conditions |
| Revoked | FREC has permanently terminated the license | No | Wait 5 years minimum, then apply for a new license (not guaranteed) |
| Null and Void | License was automatically terminated due to failure to complete post-licensing education by first renewal | No | Start over: new pre-licensing course, new exam, new application |
Key Distinctions the Exam Tests
Inactive vs Suspended: An inactive licensee chose not to register with a broker (or their broker relationship ended). They can reactivate at any time by registering with a new broker. A suspended licensee was ordered by FREC to stop practicing as a penalty for a violation. They cannot reactivate until the suspension period ends.
Revoked vs Null and Void: Both result in the loss of the license. Revocation is a FREC penalty imposed through the disciplinary process. Null and void is an automatic statutory consequence of failing to complete post-licensing education. There is no hearing for null and void because it is not a punishment. It is a deadline that was missed.
Involuntarily Inactive vs Null and Void: Involuntarily inactive means you missed a renewal deadline. You can fix it within 2 years by completing continuing education and paying fees. Null and void (first renewal only) means you missed the post-licensing education deadline. There is no fix. You start over.
5 Exam-Style Practice Questions
Question 1
A sales associate receives a $5,000 earnest money deposit from a buyer on Wednesday afternoon. The broker deposits the check into the escrow account the following Tuesday. Has a violation occurred?
Answer
Yes. The clock starts when the sales associate receives the deposit (Wednesday). The deadline is the end of the third business day: Thursday (day 1), Friday (day 2), Monday (day 3). The broker deposited on Tuesday (day 4). The deposit was one day late. The broker is in violation of F.S. 475.25(1)(k) even though the delay was only one day.
Question 2
A licensee posts a listing on social media with a photo of the property, the price, and the caption "Call me at 555-0199 for details!" The post does not mention the brokerage name. Is this a violation of FREC advertising rules?
Answer
Yes. All advertising by a licensee must include the licensed name of the brokerage firm. Social media posts are advertising. The post includes the licensee's contact information and promotes a listing but does not identify the brokerage. This violates F.S. 475.25(1)(c) and FREC Rule 61J2-10.025.
Question 3
A broker discovers that a sales associate in the office has been collecting earnest money deposits and keeping them in a desk drawer for several days before turning them over to the broker. The broker immediately deposits all funds into escrow. Is the broker in violation?
Answer
Yes. The broker is responsible for ensuring escrow deposits are made within the statutory timeline, regardless of what the sales associate does with the funds before turning them over. The clock starts when the sales associate receives the deposit. The broker's immediate corrective action may mitigate the penalty but does not eliminate the violation. The sales associate is also potentially subject to discipline.
Question 4
FREC revokes a licensee's real estate license. How long must the former licensee wait before applying for a new license?
(A) 1 year (B) 2 years (C) 5 years (D) The licensee can never obtain a new license
Answer
Answer: C. After revocation, the former licensee must wait a minimum of 5 years before applying for a new license. Applying does not guarantee approval. FREC evaluates the new application based on the circumstances of the original revocation, the time elapsed, and evidence of rehabilitation. Answer D is wrong because revocation is not a permanent lifetime ban, although FREC can deny the new application.
Question 5
All of the following are options available to a broker when an escrow dispute arises EXCEPT...
(A) Mediation (B) Interpleader (C) Returning the deposit to the buyer (D) Escrow disbursement order from FREC
Answer
Answer: C. The broker cannot unilaterally decide to return the deposit to either party. The four statutory options are mediation, arbitration, interpleader, and escrow disbursement order (EDO). Returning the funds to one party without the other party's agreement is not one of the options and could itself be a violation. This is an EXCEPT question testing whether you know the complete list of dispute resolution options.
Frequently Asked Questions
How many FREC questions are on the Florida real estate exam?
FREC-related questions do not have a single content area on the exam. They appear across License Law (6%), Brokerage Activities (12%), Authorized Relationships (7%), and Violations of License Law (2%). In total, FREC rules, violations, and penalties are directly or indirectly tested in roughly 15 to 25 of the 100 questions, making FREC material one of the highest-value study areas on the exam.
What is the maximum fine FREC can impose?
$5,000 per count per violation. Multiple violations in a single case can result in multiple $5,000 fines. FREC can also impose additional penalties (probation, suspension, revocation) alongside the fine.
Can FREC award damages to a consumer who was harmed by a licensee?
No. FREC can discipline the licensee (fine, suspend, revoke) but cannot award monetary damages to the injured party. To recover damages, the consumer must file a civil lawsuit or a claim against the Florida Real Estate Recovery Fund.
What is the Florida Real Estate Recovery Fund?
The Recovery Fund provides compensation to consumers who have been financially harmed by a licensee's violation and cannot collect from the licensee directly. The maximum payment is $50,000 per transaction and $150,000 per licensee. If a claim is paid from the Recovery Fund, the licensee's license is automatically suspended until they repay the fund plus interest.
What is the difference between DBPR and FREC?
DBPR (Department of Business and Professional Regulation) is the state agency that oversees all professional licensing in Florida, including real estate. FREC (Florida Real Estate Commission) is a commission within DBPR that specifically regulates real estate licensees. DBPR investigates complaints. FREC determines probable cause and imposes penalties. Think of DBPR as the department and FREC as the commission within it that handles real estate.
Can FREC set commission rates?
No. Commission rates are always negotiable between the parties. FREC has no authority to set minimum or maximum commission rates. Any exam question that implies a fixed or regulated commission rate is testing whether you know this. There is no standard 6% rate in Florida law.
What happens if a new licensee does not complete post-licensing education?
The license becomes null and void. This is the most severe administrative consequence in the licensing system. It is not a suspension or revocation. The licensee must start the entire process over: new pre-licensing course, new exam, new DBPR application. There is no appeal and no extension.
What is the probable cause panel?
A panel of two FREC members who review the results of a DBPR investigation and determine whether there is sufficient evidence (probable cause) to proceed with formal disciplinary action against a licensee. If they find probable cause, the case moves to a formal hearing or settlement. If they do not, the case is closed.
Pass Florida's question bank includes FREC rules and violations questions across every content area where they appear on the exam. The app tests whether you can apply FREC rules to scenarios, not just recall them. Download Pass Florida and practice FREC questions in context, the way the exam actually tests them.
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