Florida real estate exam study guide.
All 19 topics.

Seven questions test what counts as real property, how it differs from personal property, and the bundle of legal rights attached to ownership. Expect scenarios involving fixtures, land characteristics, and property rights that ask you to classify or apply the correct rule.

Real property includes land, anything permanently attached to it (improvements, trees, minerals), and the rights that come with ownership. Personal property (chattels) is anything movable. The distinction matters because real and personal property follow different legal rules for transfer, taxation, and financing. A typical question presents a scenario where an item's classification is ambiguous, such as a built-in bookshelf or a removable appliance, and asks whether it conveys with the sale.

The bundle of legal rights includes possession, control, enjoyment, exclusion, and disposition. These rights can be separated and transferred individually. A property owner can sell mineral rights while keeping surface rights, or lease the right to possession while retaining ownership. Exam questions often describe a property owner granting one right to another party and ask which rights remain.

Land has two sets of characteristics tested on the exam. Physical characteristics: immobility, indestructibility, and uniqueness (no two parcels are identical). Economic characteristics: scarcity, improvements, permanence of investment, and area preference (location). When the exam asks about the most important economic characteristic, the answer is area preference (location).

• Bundle of rights: possession, control, enjoyment, exclusion, disposition
• 3 physical characteristics: immobility, indestructibility, uniqueness
• 4 economic characteristics: scarcity, improvements, permanence of investment, area preference
• Area preference (location) is the most important economic characteristic
• Trade fixtures (business equipment) remain personal property and can be removed by a tenant before lease expires
• MARIA test determines fixtures: Method of attachment, Adaptability, Relationship of parties, Intent, Agreement
• Emblements (growing crops) are personal property even though attached to land

Seven questions give you property scenarios and ask which valuation approach applies, how to adjust comparables, or how to calculate value using the income method. You need the three approaches to value, the three types of depreciation, and the difference between market value and market price.

The sales comparison approach compares the subject property to recently sold similar properties (comparables). Adjustments go to the comparable: if the comparable is better, subtract value; if the comparable is worse, add value. Remember the phrase 'CBS' (Comparable Better Subtract). This is the go-to method for residential properties. A common question gives you a comparable with a pool and the subject without one, then asks which direction to adjust.

The cost approach estimates the cost to rebuild the improvements, subtracts depreciation, and adds land value. Depreciation comes in three forms: physical deterioration (wear and tear), functional obsolescence (outdated design like a 1-car garage in a 3-car neighborhood), and external obsolescence (outside forces like highway noise or a nearby landfill). This approach works best for new or unique properties like churches, schools, and government buildings with few comparable sales.

The income approach uses net operating income (NOI) divided by the capitalization rate to estimate value. It is the primary method for income-producing properties like apartments and office buildings. The gross rent multiplier (GRM) offers a simpler variation: sale price divided by gross annual rent. A common exam question gives you NOI and cap rate and asks for property value, or gives you two of the three and asks for the missing number.

• Sales comparison: best for residential; adjust the comparable (CBS: Comparable Better Subtract)
• Cost approach: best for new, unique, or special-purpose buildings
• Cost formula: Land Value + Replacement Cost - Depreciation = Property Value
• Income approach: best for rental/investment property; Value = NOI / Cap Rate
• 3 types of depreciation: physical deterioration, functional obsolescence, external obsolescence
• Only external obsolescence is always incurable (cannot fix a highway next door)
• Market value requires arm's-length transaction, informed buyers/sellers, reasonable market exposure
• GRM = Sale Price / Gross Annual Rent (uses gross, not net)

Seven questions cover mortgage instruments, loan programs, and what happens in default. You need to distinguish the note from the mortgage, identify which loan program fits a scenario, and calculate LTV ratios.

In Florida, a mortgage is a two-part instrument: the promissory note (the borrower's promise to pay) and the mortgage (the security instrument that pledges the property as collateral). Florida is a lien theory state, meaning the borrower holds title while the lender holds a lien. Foreclosure goes through the courts (judicial foreclosure). Expect questions asking which document creates the debt (the note) versus which creates the lien (the mortgage).

Conventional loans are not government-insured or guaranteed. FHA loans are insured by the Federal Housing Administration and require mortgage insurance premiums (MIP). VA loans are guaranteed by the Department of Veterans Affairs and require no down payment. USDA loans target rural areas. PMI (private mortgage insurance) is required on conventional loans with LTV above 80%. A typical exam question describes a buyer's military status, down payment, or credit score and asks which loan program applies.

An adjustable-rate mortgage (ARM) has a rate that changes based on an index plus a margin. The index is a market benchmark the borrower cannot control. The margin is the lender's fixed markup. Rate caps limit how much the rate can increase per adjustment period and over the life of the loan. Discount points reduce the interest rate (1 point = 1% of loan amount). You need to identify the difference between discount points (lower rate) and origination points (lender processing fee).

• Florida is a lien theory state with judicial foreclosure
• Note = debt obligation; Mortgage = security instrument (lien on property)
• FHA: insured, requires MIP, minimum 3.5% down with 580+ credit score
• VA: guaranteed, zero down payment, funding fee instead of mortgage insurance
• PMI required on conventional loans above 80% LTV; drops off at 78%
• ARM rate = Index + Margin; rate caps limit adjustments
• 1 discount point = 1% of loan amount (paid to lower rate); origination point = processing fee
• RESPA requires Loan Estimate within 3 business days of application
• Deficiency judgment: lender can pursue borrower for remaining balance after foreclosure sale

Seven questions test whether you can identify the duties owed to clients versus customers and pick the correct brokerage relationship for a given scenario. Expect scenarios where a licensee acts in a certain way and you must identify which relationship type applies or which duty was violated.

An agent owes fiduciary duties to the principal (client). The standard mnemonic is OLD CAR: Obedience, Loyalty, Disclosure, Confidentiality, Accountability, Reasonable care. These duties survive the termination of the agency relationship for confidential information. Customers (non-represented parties) are owed honesty, fair dealing, and disclosure of material facts. A common question describes a licensee sharing the seller's bottom-line price with the buyer and asks which duty was breached (confidentiality).

Florida recognizes three brokerage relationships: transaction broker (default), single agent, and no brokerage relationship. A transaction broker provides limited representation to one or both parties but does not owe full fiduciary duties. A single agent represents one party with full fiduciary duties. Disclosure of the brokerage relationship must happen before or at the time of entering into a listing or showing property. One key rule to know: a single agent can become a transaction broker with written consent, but a transaction broker cannot become a single agent mid-transaction.

Agency can be created by express agreement (written or oral), implied conduct, estoppel, or ratification. In Florida, all listing agreements must be in writing. Dual agency (representing both buyer and seller) is not permitted in Florida. Instead, transaction broker status handles situations where both parties work with the same brokerage. If the exam describes a licensee representing both sides, the answer involves either a violation or a transition to transaction broker status.

• Fiduciary duties (OLD CAR): Obedience, Loyalty, Disclosure, Confidentiality, Accountability, Reasonable care
• 3 brokerage relationships: transaction broker (default), single agent, no brokerage
• Dual agency is NOT permitted in Florida
• Transaction broker duties: deal honestly, disclose known facts, present all offers, exercise skill and care
• Single agent can transition to transaction broker (with written consent), but NOT the reverse
• Confidential information stays confidential even after the relationship ends
• Material facts affecting property value must always be disclosed regardless of relationship type
• No brokerage relationship: licensee owes only honesty, fair dealing, and disclosure of known facts

Eight questions make contracts the heaviest-weighted national section. Expect scenarios testing what makes a contract valid, how to classify them (bilateral vs. unilateral, void vs. voidable), and which remedy applies when a party breaches.

A valid contract requires competent parties, offer and acceptance (mutual assent), legal purpose, and consideration. For real estate contracts, the Statute of Frauds requires the agreement to be in writing and signed by the party being bound. Consideration does not need to be equal, but it must exist. Miss any one of these four elements and the contract is void, not voidable. A typical question describes a handshake agreement for the sale of land and asks about enforceability (answer: not enforceable under the Statute of Frauds).

Contracts can be classified as bilateral (both parties promise) or unilateral (one party promises, the other acts). A listing agreement is bilateral because both broker and seller make promises. An option contract is unilateral because only the seller is obligated to perform if the buyer exercises the option. Contracts are executory while obligations remain and executed once all terms are completed. Assignment transfers contractual rights to a third party unless the contract prohibits it. Novation replaces a party entirely and releases the original party from liability.

Contracts terminate through performance, mutual rescission, breach, impossibility, or expiration of time. When a buyer defaults, the seller can keep the earnest money as liquidated damages, sue for specific performance, or sue for actual damages. When a seller defaults, the buyer can sue for specific performance (forcing the sale) or seek damages. You need to pick the correct remedy for a given scenario, especially distinguishing specific performance (I want the property) from damages (I want compensation).

• 4 essentials: competent parties, mutual assent, legal purpose, consideration
• Statute of Frauds: real estate contracts must be in writing and signed
• Void = never valid; Voidable = valid until injured party elects to void
• Specific performance = court forces the sale; Liquidated damages = keep earnest money
• Time is of the essence: deadlines are strictly enforceable
• Earnest money is not required for validity but shows good faith
• Option contract: buyer pays for the right to purchase; seller must sell if exercised
• Assignment transfers rights; Novation replaces a party and releases the original
• Bilateral = promise for promise; Unilateral = promise for action

Seven questions present word problems covering commission splits, documentary stamp taxes, prorations, area conversions, the income approach, and loan-to-value ratios. No formulas are provided on test day. Every question requires setting up the right formula and solving with a calculator.

Commission math follows one core formula: Sale Price x Commission Rate = Commission. These problems frequently work backward: you get the agent's share and the split percentage and asks for the original sale price. Convert percentages to decimals before you multiply. A multi-step problem might give you the agent's net after a 60/40 split and ask you to find the property's sale price.

Florida documentary stamp tax on deeds is $0.70 per $100 of the sale price (round up to the nearest $100). Stamp tax on notes/mortgages is $0.35 per $100 of the loan amount. Intangible tax on new mortgages is 2 mills ($0.002) per dollar of the loan amount. Prorations divide annual expenses (taxes, insurance, HOA fees) between buyer and seller based on the closing date, using a 365-day year. A typical proration question gives you a closing date and an annual expense and asks for the seller's or buyer's share.

For area problems, know that 43,560 square feet = 1 acre. Price per square foot = Price / Square footage. The income approach uses NOI / Cap Rate = Value. The gross rent multiplier (GRM) = Sale Price / Gross Annual Rent. LTV = Loan Amount / Appraised Value (or sale price, whichever is lower). Write your formulas on the scratch board before question one so you can reference them throughout the exam.

• Deed stamps: $0.70 per $100 (round UP to nearest $100 before multiplying)
• Mortgage/note stamps: $0.35 per $100
• Intangible tax: 2 mills ($0.002) per dollar on new mortgages
• 43,560 sq ft = 1 acre; 1 section = 640 acres; 1 mile = 5,280 ft
• Proration uses a 365-day calendar year; seller owns the day of closing
• Cap Rate = NOI / Sale Price; Value = NOI / Cap Rate; NOI = Income - Expenses (no mortgage)
• GRM = Sale Price / Gross Annual Rent (uses gross rent, not net)
• LTV = Loan Amount / Appraised Value (or sale price, whichever is LOWER)

Eight questions make this the heaviest-weighted state section, covering who needs a license, exemptions from licensure, education requirements, renewal deadlines, and the penalties FREC can impose for Chapter 475 violations.

Any person who, for compensation, performs real estate services for another must hold an active Florida real estate license. This includes selling, buying, leasing, or appraising real property. Exemptions include property owners managing their own property, salaried employees of an owner (not a broker), attorneys acting within their practice, and certain government employees. Expect a scenario describing someone performing real estate activities and asking whether they need a license.

Florida offers three license types: sales associate, broker, and broker associate. A sales associate must work under a broker and complete a 63-hour pre-license course. A broker must have held an active sales associate license for at least 24 months within the preceding 5 years and complete a 72-hour broker pre-license course. All licenses renew every 2 years. First renewal requires 45 hours of post-license education. Subsequent renewals require 14 hours of continuing education. The DBPR must process a complete application within 30 days or issue a notice of deficiency.

FREC can impose penalties for violations of Chapter 475 including fines up to $5,000 per count, license suspension (up to 10 years), license revocation, and probation. Criminal penalties can include imprisonment for unlicensed activity. A licensee must notify the DBPR of an address change within 10 days and of a criminal conviction within 30 days. Mutual recognition agreements allow licensees from certain states to obtain a Florida license with reduced education requirements.

• Sales associate pre-license: 63 hours; Broker pre-license: 72 hours
• Broker requirement: active sales associate license for 24 months in preceding 5 years
• License renewal: every 2 years
• First renewal: 45 hours post-license education (failure = license voided)
• Subsequent renewals: 14 hours continuing education
• FREC fines: up to $5,000 per count
• Address change: notify DBPR within 10 days
• Criminal conviction: notify DBPR within 30 days
• DBPR must process complete application within 30 days
• Involuntary inactive for 2+ consecutive renewal periods = null and void
• Mutual recognition: certain states qualify for reduced education requirements

Five questions test how individuals and entities hold title. Expect ownership scenarios that ask you to identify the estate type, the co-ownership form, or what happens when an owner dies.

Freehold estates include fee simple absolute (highest form of ownership, indefinite duration), fee simple defeasible (ownership with conditions that can trigger forfeiture), and life estate (ownership for the duration of someone's life). A life estate holder must maintain the property and cannot commit waste. When the life estate ends, the property passes to the remainderman or reverts to the original grantor.

Co-ownership takes several forms. Tenancy in common means each owner holds an undivided interest that can be unequal and passes to heirs at death. Joint tenancy requires four unities (TTIP: Time, Title, Interest, Possession) and includes the right of survivorship. Tenancy by the entireties is available only to married couples in Florida and provides protection from individual creditors. A typical question describes two owners and asks which form of ownership applies based on the facts given.

Florida's homestead protection (Article X, Section 4 of the Florida Constitution) prevents forced sale of a primary residence by most creditors. The homestead property cannot be devised away from a surviving spouse or minor children without their consent. This protection is separate from the homestead tax exemption. Both concepts appear on the exam, so know whether the question is asking about creditor protection or tax reduction.

• Fee simple absolute: highest ownership, indefinite, fully transferable
• Life estate: measured by a life; remainder or reversion follows; cannot commit waste
• Joint tenancy requires TTIP: Time, Title, Interest, Possession
• Joint tenancy includes right of survivorship (property passes to surviving co-owners, not heirs)
• Tenancy by the entireties: married couples only in Florida; creditor protection for individual debts
• Tenancy in common: default co-ownership; no survivorship; interests can be unequal
• Florida homestead: protected from forced sale by most creditors; cannot be devised away from spouse/minor children

Five questions focus on listing agreements and antitrust law. Expect a brokerage scenario asking which listing type applies, or a conversation between brokers that may constitute an antitrust violation.

Listing agreements authorize a broker to market a property. An exclusive right-of-sale listing guarantees the broker a commission regardless of who finds the buyer. An exclusive agency listing allows the owner to sell independently without owing a commission. An open listing allows multiple brokers, with the commission going to the one who procures the buyer. Net listings (broker keeps everything above a minimum price) are legal but discouraged in Florida.

Antitrust violations in real estate include price-fixing (brokers agreeing on commission rates), market allocation (dividing territories), group boycotting (refusing to cooperate with a competitor), and tie-in arrangements (requiring purchase of additional services). Commission rates are always negotiable between broker and client. Any suggestion of a "standard" rate violates antitrust law.

Here are the scenario patterns that repeat across exams. If a seller finds a buyer without the broker's help, which listing still requires payment? Exclusive right-of-sale. If two brokers at a conference discuss keeping commission rates at 6%, what violation occurred? Price-fixing. If a broker tells a client they must use the brokerage's preferred title company, that is a tie-in arrangement. Know these three and you can answer most listing and antitrust questions.

• Exclusive right-of-sale: broker earns commission no matter who sells
• Exclusive agency: owner can sell without paying commission
• Open listing: multiple brokers; first to produce buyer earns commission
• Net listing: legal in Florida but discouraged; broker keeps surplus
• Commission rates are always negotiable (antitrust requirement)
• 4 antitrust violations: price-fixing, market allocation, group boycotting, tie-in arrangements
• Sherman Antitrust Act: violations carry criminal penalties including fines and imprisonment
• All listing agreements in Florida must have a definite expiration date

Five questions test government and private controls on land use. The exam asks you to distinguish police power from eminent domain, identify when a variance or nonconforming use applies, and determine which restriction wins when public and private rules conflict.

Government controls on land use fall under police power, which allows regulation for public health, safety, and welfare without compensation. Zoning ordinances divide areas into residential, commercial, industrial, and agricultural zones. A variance allows a property owner to deviate from zoning rules due to hardship. A nonconforming use (grandfathered use) allows an existing use to continue even after a zoning change but cannot be expanded.

Eminent domain is the government's power to take private property for public use, but it requires just compensation (Fifth Amendment). Inverse condemnation occurs when government action reduces property value without a formal taking, and the owner sues for compensation. Escheat transfers property to the state when an owner dies without heirs or a will. Private land use controls include deed restrictions (covenants, conditions, and restrictions) enforced by homeowners associations.

A common question presents a conflict between zoning and deed restrictions and asks which controls. The answer is always the more restrictive rule, regardless of whether it is the public or private restriction. For example, if zoning allows commercial use but the deed restricts the lot to residential, the deed restriction controls. Building codes regulate how structures are built (construction standards), while zoning regulates what a property can be used for.

• Police power: government regulates without compensation
• Eminent domain: government takes with just compensation (Fifth Amendment)
• Inverse condemnation: owner sues when government action reduces value without formal taking
• Escheat: property goes to state when owner dies with no will and no heirs
• Variance: relief from zoning for specific hardship; nonconforming use: grandfathered, cannot expand
• When zoning and deed restrictions conflict, the stricter rule always applies
• Building codes = construction standards; Zoning = land use regulations

Four questions test what a licensee must disclose and when. The exam covers federal requirements like lead-based paint and Fair Housing, plus Florida-specific obligations including the Johnson v. Davis standard, the mandatory radon notice, and the Seller's Property Disclosure form.

Federal law requires lead-based paint disclosure for residential properties built before 1978. Sellers must provide buyers with a lead-based paint pamphlet, disclose known lead hazards, and give buyers 10 days to conduct a lead inspection (buyers can waive this period). The Fair Housing Act prohibits discrimination based on race, color, religion, national origin, sex, familial status, and disability. A typical question describes a landlord or agent refusing service and asks which protected class was violated.

Florida law requires disclosure of material facts that affect property value. Licensees must disclose known defects even if the buyer does not ask. Johnson v. Davis (1985) established that sellers of residential property must disclose known material defects not readily observable by the buyer. Florida also requires disclosure of property tax information, homestead status, and radon gas (a required radon notice must be included in all sales contracts).

Florida does not require licensees to disclose that a property was the site of a homicide, suicide, or that a previous occupant had HIV/AIDS. These are considered stigmatized property issues and are excluded from mandatory disclosure. However, if a buyer asks directly about a material fact, the licensee cannot lie. You need to distinguish mandatory disclosures from stigmatized property exceptions.

• Lead-based paint: required for homes built before 1978; buyer gets 10 days for inspection (waivable)
• Fair Housing protected classes: race, color, religion, national origin, sex, familial status, disability
• Johnson v. Davis: seller must disclose known material defects not readily observable
• Radon gas disclosure required in all Florida real estate sales contracts
• Material facts affecting value must be disclosed regardless of brokerage relationship
• Stigmatized property: no required disclosure for homicide, suicide, or HIV/AIDS status in Florida
• Licensee cannot lie if buyer asks directly about a material fact

Five questions cover deed types, deed requirements, title insurance, and the recording system. Expect scenarios asking which deed provides the most or least protection, or whether a deed is valid without recording.

A deed transfers title from the grantor to the grantee. Valid deed requirements: competent grantor, identifiable grantee, legal description, granting clause (words of conveyance), consideration, grantor's signature, and delivery and acceptance. A deed does not need to be recorded to be valid between the parties, but recording provides constructive notice (legal presumption that the public knows about the transfer). The grantee's signature is not required.

Three deed types offer different levels of protection. A general warranty deed provides the greatest protection with covenants covering the entire chain of title. A special warranty deed only warrants against defects during the grantor's ownership period. A quitclaim deed offers zero warranties and simply transfers whatever interest the grantor holds, if any. A common question asks which deed a buyer should request (general warranty) or which deed clears a cloud on title (quitclaim).

Title insurance protects against defects in the title that existed before the policy date. An owner's policy protects the buyer for the purchase price. A lender's policy protects the mortgage holder for the loan amount. In Florida, the party who pays for title insurance varies by county (north Florida: seller pays; south Florida: buyer pays). A title search examines public records but cannot reveal all defects, which is why title insurance exists.

• General warranty deed: most protection; warrants entire chain of title
• Special warranty deed: warrants only during grantor's period of ownership
• Quitclaim deed: no warranties; used to clear clouds on title or transfer between family members
• Deed requirements: competent grantor, grantee, legal description, granting clause, consideration, signature, delivery
• Grantee's signature is NOT required on a deed
• Recording provides constructive notice; actual notice is personal knowledge of a fact
• Title insurance: owner's policy protects buyer; lender's policy protects mortgage holder
• Florida: who pays for title insurance varies by county (seller in north, buyer in south)

Five questions test advertising rules and escrow handling. Expect an ad or escrow scenario asking whether it complies with Florida law, or a broker's handling of funds that triggers a specific violation.

All real estate advertising in Florida must include the licensed name of the brokerage firm. A sales associate cannot advertise in their own name without the broker's name. Internet advertising, including social media, follows the same rules. Blind ads (advertising without the brokerage name) are a violation of Florida law. A typical question shows an ad and asks what is wrong with it. If the brokerage name is missing, the answer is blind ad.

Escrow account rules are strict in Florida. A broker must deposit earnest money into an escrow account within 3 business days of receiving it (or by the end of the next business day if the contract specifies). Commingling (mixing escrow funds with personal or business funds) is prohibited. A broker can keep up to $1,000 of personal or business funds in the escrow account to cover bank fees. Escrow disputes can be resolved through mediation, arbitration, interpleader (court holds funds), or requesting an Escrow Disbursement Order (EDO) from FREC.

You need to distinguish commingling from conversion. Commingling is placing escrow funds in the same account as personal or business funds. Conversion is taking escrow funds and using them for personal benefit. Conversion is the more serious violation and can result in criminal charges. A broker who deposits a client's earnest money into the brokerage operating account has commingled. A broker who spends that money has converted.

• All advertising must include the brokerage firm's licensed name
• Blind ads (no brokerage name) violate Florida law, including on social media
• Earnest money: deposit within 3 business days of receipt
• Broker may keep up to $1,000 personal/business funds in escrow account
• Commingling: mixing escrow with personal funds (prohibited)
• Conversion: using escrow funds for personal use (prohibited, criminal penalties)
• Escrow dispute resolution: mediation, arbitration, interpleader, or EDO from FREC
• Sales associate must include broker's name in all personal advertising

Four questions cover broker liability for associate actions, how compensation must flow, record-keeping timelines, and escrow account reconciliation. Expect a brokerage scenario asking who is responsible or what the correct procedure requires.

A broker is responsible for all acts of sales associates and broker associates operating under their license. Sales associates and broker associates must be registered under one broker and cannot receive compensation from anyone other than their employing broker. A broker must maintain a definite office and display their license and the licenses of all associates.

Required records must be maintained for at least 5 years from the date of any transaction, listing, or deposit. This includes contracts, closing statements, escrow records, and trust account reconciliation statements. Brokers must reconcile escrow accounts monthly and maintain written records of the reconciliation.

Watch for scenarios testing the compensation flow rule. If a grateful seller hands a sales associate a $500 bonus check at closing, can the associate accept it? No. All compensation must flow through the employing broker. If a referring broker in another state wants to pay a Florida associate directly, that also violates the rule. The associate must direct all compensation through their broker, who then pays them.

• Broker is responsible for all acts of associates performed under the broker's license
• All compensation flows through the employing broker, including referral fees and bonuses
• Records must be kept for 5 years from the transaction date
• Escrow accounts must be reconciled monthly with written records
• Broker must maintain a registered office with displayed licenses
• Sales associate must register under one broker at a time
• Broker associate: a licensed broker who chooses to work under another broker
• When a sales associate changes brokers, the new broker must register them with the DBPR

Three questions test the structure and authority of the Florida Real Estate Commission. Expect questions about who sits on the board, who appoints them, and whether a given action falls under FREC's authority or the Legislature's.

FREC consists of 7 members appointed by the Governor and confirmed by the Senate. Four members must be licensed brokers or sales associates who have held active licenses for at least 5 years. Two members must be consumer (non-licensee) representatives. One member must be a licensed broker who also operates as a real estate school. Members serve 4-year terms.

FREC has authority to adopt rules implementing Chapter 475, issue and revoke licenses, impose administrative penalties, and approve real estate education courses. FREC does not create laws (the Florida Legislature does). FREC can impose fines, suspension, revocation, and probation. The Division of Real Estate (DRE) under DBPR handles the day-to-day administration and investigation of complaints.

Questions draw a clear line between FREC's role and the Legislature's role. If the question asks who writes Chapter 475 statutes, the answer is the Florida Legislature. If the question asks who adopts rules to implement those statutes, the answer is FREC. If the question asks who investigates a complaint against a licensee, the answer is the DRE. This three-way distinction appears regularly.

• 7 members: 4 licensed RE professionals, 2 consumer members, 1 RE school operator
• Appointed by the Governor, confirmed by the Senate
• 4-year terms for members
• FREC operates under DBPR (Department of Business and Professional Regulation)
• DRE (Division of Real Estate) investigates complaints and handles day-to-day operations
• FREC can fine, suspend, revoke licenses, and place licensees on probation
• FREC adopts rules; the Florida Legislature writes statutes; DRE investigates

Four questions cover ad valorem taxation, the millage rate formula, early payment discounts, and how the two-part homestead exemption actually works. Expect a question giving you an assessed value and millage rate and asking for the tax amount, or testing your understanding of the homestead exemption structure.

Florida has no state income tax. Property taxes (ad valorem taxes) are assessed by the county property appraiser based on the property's just value (market value) as of January 1 each year. Taxes are paid in arrears. The millage rate determines the tax amount: assessed value x millage rate / 1,000 = annual tax. Discounts apply for early payment: 4% in November, 3% in December, 2% in January, 1% in February. Taxes are due by March 31; delinquent April 1.

The Florida homestead exemption provides up to $50,000 off assessed value for a primary residence. The first $25,000 applies to all taxing authorities. The second $25,000 applies only to non-school taxes and requires assessed value above $50,000. The Save Our Homes cap limits annual assessed value increases to 3% or the CPI, whichever is less, for homesteaded properties.

A typical problem gives you an assessed value, a homestead exemption, and a millage rate, then asks for the annual property tax. The calculation: subtract the exemption from the assessed value to get the taxable value, then multiply by the millage rate and divide by 1,000. For a home assessed at $310,000 with a $50,000 exemption and a 20-mill rate: ($310,000 - $50,000) x 20 / 1,000 = $5,200.

• Florida has no state income tax
• Property taxes assessed based on January 1 value; paid in arrears
• Millage formula: (Assessed Value - Exemptions) x Millage Rate / 1,000 = Tax
• Early payment discounts: 4% Nov, 3% Dec, 2% Jan, 1% Feb
• Taxes due March 31; delinquent April 1
• Homestead exemption: first $25K applies to all taxes; second $25K applies to non-school taxes only (for values above $50K)
• Save Our Homes: caps annual assessed value increase at 3% or CPI (whichever is less)
• Doc stamps on deeds: $0.70 per $100; on mortgages: $0.35 per $100
• Intangible tax: 2 mills ($0.002) per dollar on new mortgages

Three questions test the legal difference between condos and co-ops, buyer rescission periods, and association disclosure rules. Expect a purchase scenario asking which cancellation period applies or what type of ownership the buyer holds.

A condominium owner holds fee simple title to their unit and an undivided share of the common elements. A cooperative (co-op) owner holds shares in a corporation that owns the building and receives a proprietary lease for their unit. This distinction matters for financing: condos can be mortgaged like houses, while co-ops involve share loans. A typical question asks which form of ownership applies when someone buys a unit in a building.

Florida provides buyer protections for new condo purchases. Buyers of new condos have a 15-calendar-day right of rescission after signing the contract or receiving all required documents, whichever is later. Buyers of resale condos have a 3-business-day right to cancel after receiving the condo association documents. HOAs must provide a disclosure summary to buyers, who then have 3 days to cancel after receipt.

Condo creation requires recording a declaration of condominium, which establishes the condo legally. The declaration includes the legal description, percentage of common element ownership for each unit, and the association's governing rules. Common elements (pools, lobbies, parking areas) are owned collectively by all unit owners. Limited common elements (assigned parking spaces, storage lockers) are reserved for specific units but still owned collectively.

• Condo: fee simple title to unit + undivided share of common elements
• Co-op: stock ownership in corporation + proprietary lease
• New condo rescission period: 15 calendar days
• Resale condo cancellation: 3 business days after receiving condo docs
• HOA disclosure: buyer has 3 days to cancel after receipt
• Condo creation requires recording a declaration of condominium
• Common elements: owned collectively (pool, lobby); Limited common elements: reserved for specific units
• Condo association can have right of first refusal for resale units

Three questions cover property management, commercial leases, and business brokerage. The exam tests licensing requirements for managers, the differences between lease types, and when a business sale requires a real estate license.

Property management involves operating rental property on behalf of the owner. A property manager needs a real estate license in Florida (unless they are a salaried employee of the property owner, not a management company). The management agreement should specify the manager's authority, compensation, property maintenance responsibilities, and trust account handling.

Net leases shift operating expenses to the tenant. A single net lease requires the tenant to pay property taxes. A double net lease adds insurance. A triple net lease (NNN) requires the tenant to pay taxes, insurance, and maintenance, leaving the landlord with only the mortgage payment. A gross lease keeps all expenses with the landlord. A percentage lease charges base rent plus a percentage of the tenant's gross sales and is common in retail. The exam describes a lease and asks you to identify the type.

Business brokerage involves selling businesses as going concerns. A real estate license is required when the sale includes real property. If the sale involves only business assets (inventory, equipment, goodwill) and no real estate, no license is needed. Commercial property valuation relies heavily on the income approach (NOI and cap rate). The exam may describe a transaction and ask whether a license is required.

• Property managers need a RE license in FL (exception: salaried employees of the owner only)
• Single net: tenant pays taxes; Double net: taxes + insurance; Triple net (NNN): taxes + insurance + maintenance
• Gross lease: landlord pays all operating expenses
• Percentage lease: base rent + percentage of tenant's gross sales (common in retail)
• Business brokerage requires RE license only when real property is included in the sale
• Commercial valuation primarily uses the income approach (NOI / Cap Rate)

Three questions test CERCLA liability for contamination, common environmental hazards, and Florida-specific concerns like the mandatory radon notice and coastal construction setback lines. Expect a scenario describing a property with an environmental issue and asking who is liable or what disclosure is required.

CERCLA (Comprehensive Environmental Response, Compensation, and Liability Act) establishes Superfund liability for contaminated properties. Liability is strict, joint and several, and retroactive. This means a current property owner can be held responsible for contamination caused by a previous owner. The innocent landowner defense requires proof that the buyer conducted appropriate due diligence (Phase I Environmental Site Assessment) before purchase. A Phase I ESA is a records review and site inspection; a Phase II involves actual soil and water testing.

Common environmental hazards on the Florida exam include asbestos (friable is dangerous, encapsulation or removal required), lead-based paint (pre-1978 homes), radon gas (colorless, odorless gas from soil; Florida requires disclosure in all sales contracts), underground storage tanks (petroleum leaks), and mold. You need to identify which hazard matches a description or which requires specific disclosure.

Florida-specific environmental concerns include wetland protection, coastal construction setback lines (CCCL) for beachfront property, and the five Water Management Districts that regulate water use and drainage. The CCCL establishes a building line beyond which construction is prohibited or restricted to protect beaches and dunes. Watch for questions describing a property near the coast and asking about construction limitations.

• CERCLA: strict, joint and several, retroactive liability for contamination
• Innocent landowner defense requires Phase I ESA (records review) before purchase
• Phase I = records and inspection; Phase II = soil and water testing
• Asbestos: only dangerous when friable (crumbly); encapsulate or remove
• Lead-based paint: disclosure required for pre-1978 homes
• Radon: colorless, odorless; disclosure required in all FL sales contracts
• Underground storage tanks: must be registered; owner liable for leaks
• CCCL (Coastal Construction Control Line): restricts building on beachfront property
• Florida has 5 Water Management Districts regulating water use and drainage