Florida real estate practice workbook

C. Receive, record, and deposit earnest money for the brokerage

FREC's guidance permits an unlicensed assistant to receive, record, and deposit earnest money for the brokerage. It also allows handing out materials at an open house and answering objective listing questions from employer-approved printed information. That does not authorize subjective advice, such as recommending an offer price, or negotiating transaction terms. An assistant cannot substitute for a licensee at a showing.

Watch for: Look at the task itself. Handling a deposit can be permitted; showing the home or negotiating the deal requires a license.

• FREC, Permissible Activities of an Unlicensed Assistant

D. A Home Equity Conversion Mortgage (HECM)

The HECM is FHA’s insured reverse mortgage for eligible borrowers age 62 or older. It permits borrowing against home equity without required monthly principal-and-interest payments while applicable conditions are met. It is still a loan, and property charges and maintenance remain obligations. A non-borrowing spouse’s protection is conditional and differs from being a co-borrower.

Watch for: “No monthly principal-and-interest payment” is not “no bills” or “no repayment ever.”

• HUD: FHA Home Equity Conversion Mortgages
• CFPB: HECM age, equity, and counseling requirements
• CFPB: reverse mortgage borrower responsibilities
• CFPB: HECM co-borrowers and eligible non-borrowing spouses

D. At or before the time the sales contract is executed

F.S. 689.302 requires the residential seller to complete and provide the flood disclosure at or before contract execution. The current form covers known flooding that damaged the property during the seller’s ownership, flood-related insurance claims, and assistance received for flood damage. Its insurance warning explains that homeowners insurance does not cover flood damage. A flood-zone label does not decide whether this disclosure is required.

Watch for: This is a pre-contract disclosure. Waiting until closing is too late, and the statute does not make the duty depend on a flood-zone label.

• F.S. 689.302

A. $6,000, and it lowers the interest rate

One discount point costs 1% of the loan amount. Here, $300,000 × 0.02 = $6,000. The borrower pays that upfront amount for the lower rate offered by the lender. The rate reduction per point is not fixed across loans. An origination charge compensates the lender for making the loan and is not automatically a rate buydown.

Watch for: Use the loan amount, not the purchase price. Two points cost 2% of the loan; they do not necessarily reduce the rate by two percentage points.

• Truth in Lending Act, finance charge disclosures

B. Required above 80 percent LTV; automatic termination at 78 percent

PMI commonly applies above 80% initial LTV. Under the general federal rule, automatic termination is tied to the date the scheduled principal balance reaches 78% of original value, if the borrower is current. Borrower-requested cancellation is a separate route at 80%, including earlier principal reduction through extra payments, subject to the required conditions. FHA MIP and lender-paid insurance have different rules.

Watch for: 80% is the general request threshold; 78% is the scheduled automatic threshold. Neither is simply a percentage of today’s higher market value.

• CFPB, PMI cancellation and termination
• CFPB, mortgage insurance by loan type

A. A package mortgage

A package mortgage includes both real and personal property. Here, the condominium is real property and the specified movable furniture is personal property. Merely including an attached fixture would not establish the same distinction because a fixture may be part of the real estate.

Watch for: Use the stated property classification. Not every appliance is automatically personal property.

• FREC Course I syllabus: Sections 12 and 13

C. The borrower holds title and the lender holds a lien enforced through judicial foreclosure

F.S. 697.02 treats a mortgage as a lien, not a conveyance of title or possession. The borrower retains title in this purchase. F.S. 702.01 requires mortgage foreclosure through an equity action in court. Judicial foreclosure is the process for enforcing the mortgage after default, not an immediate transfer of ownership to the lender.

Watch for: Use two Florida rules together: the mortgage creates a lien, and mortgage foreclosure proceeds through court.

• F.S. 697.02, mortgage as a lien
• F.S. 702.01, judicial foreclosure

D. The deed can be valid between the parties, although failure to record creates third-party risks

Recording is not ordinarily a condition of validity between the grantor and grantee when the conveyance is otherwise valid, delivered, and accepted. F.S. 695.01 addresses protection against the specified creditors and subsequent purchasers for value without notice. Leaving a deed unrecorded can therefore create serious priority risks. Recording does not cure a forged or otherwise invalid conveyance.

Watch for: A valid deed and a recorded deed answer different questions. Neither “unrecorded means void” nor “recording first always wins” is reliable.

• F.S. 695.01, recording and purchasers without notice
• FREC Course I syllabus, Section 9

A. A person negotiating the sale of another owner’s property in expectation of a fee

Negotiating a covered sale for another in expectation of compensation falls within the broker definition. F.S. 475.42 requires a valid, current, active license, and a sales associate must operate under the required registered employment arrangement. Payment need not already have occurred. F.S. 475.01(3) makes a single covered act sufficient; there is no five-sale minimum.

Watch for: Identify the activity, acting for another, and expected compensation. Then check a specific exemption. A job offer or an exam pass does not activate a license.

• F.S. 475.01, definitions and the single-act rule
• F.S. 475.42, active licensure and registered employment
• F.S. 475.011, exemptions from real estate licensure

D. specific performance

Specific performance asks a court to require the promised conveyance. Real property is treated as unique, so money may not provide an adequate remedy. The buyer still must prove entitlement to this equitable relief; it is not automatic. F.S. 95.11(6)(a) places an action for specific performance in the one-year limitations category, separate from the usual five-year rule for actions founded on a written contract.

Watch for: The requested outcome controls the answer. A buyer seeking the property itself is asking for specific performance, not a money remedy.

• F.S. 95.11(6)(a)
• Salazar v. Ortiz (2026), uniqueness of land

A. Most housing built before 1978

Most pre-1978 housing is covered. Before the buyer or tenant becomes bound, the required package includes the EPA pamphlet, known lead information, available reports, and the required contract warning and acknowledgments. Buyers ordinarily receive a 10-day inspection opportunity, which may be changed by written agreement or waived by the buyer. Renters do not receive that buyer inspection right. The disclosure rule itself does not require testing or lead removal.

Watch for: Pre-1978 is the coverage clue. Disclosure, inspection opportunity, and removal are different duties.

• EPA: lead disclosures in sales and rentals

C. An owner’s title insurance policy

An owner’s policy insures the named owner’s interest against covered title risks, subject to the amount of insurance, exclusions, exceptions, and conditions. A lender’s policy protects the lender’s insured interest, even if the buyer pays its premium. Title insurance commonly addresses existing title problems; the specific form and endorsements control, so saying it never covers any post-policy matter is too broad.

Watch for: Ask whose interest is insured. The person paying the premium is not necessarily the insured owner.

• Florida DFS, title insurance overview
• Florida OIR, 2021 ALTA owner's policy with Florida modifications

C. Decline dual agency and explain an available transaction-broker arrangement with limited representation

Florida prohibits disclosed and undisclosed dual agency. Transaction brokerage can provide limited representation to both sides without making the brokerage the fiduciary of both. The designated-sales-associate structure does not apply to this ordinary residential sale. One brokerage may also represent a seller as single agent while having no brokerage relationship with an unrepresented buyer, if the applicable requirements are met.

Watch for: Neither consent, separate associates, nor one-sided payment authorizes residential dual agency. Transaction brokerage is one lawful structure, not the only way one firm can encounter both parties.

• F.S. 475.278, relationships, duties, and disclosures
• F.S. 475.2755, designated sales associates
• F.S. 475.255, compensation does not determine agency

D. subtract the pool's value from the comparable, because the comparable is superior in that feature

Subtract the pool’s $20,000 contribution from the comparable’s sale price. The comparable has a superior feature, so a downward adjustment makes it more like the subject. In the standard comparison grid, adjustments are made to comparables. The amount comes from market evidence, not automatically from the owner’s installation cost.

Watch for: Superior comparable feature: subtract. Inferior comparable feature: add. First establish that the market actually values the difference; a pool is not automatically worth the same amount in every market.

• Fannie Mae, adjustments to comparable sales
• FREC Course I syllabus, Sections 1 and 16

D. novation

A novation replaces an original party or obligation with the consent required for the substitution and releases the original party. An assignment transfers contractual rights, while related duties may be delegated. Neither step alone proves that the other contracting party released Buyer A. The express three-party release does.

Watch for: Look for consent and release. An assignment can transfer rights without erasing the assignor's potential liability.

• Schroer v. Crumdale Partners, LLC (Fla. 4th DCA 2024)

C. Honest and fair dealing; disclosure of known, nonobservable material residential-property facts; accounting for entrusted funds

The statute lists three duties: deal honestly and fairly, disclose known facts materially affecting residential property value that are not readily observable to the buyer, and account for entrusted funds. These duties exist despite the absence of representation. Other laws still apply, so this is not a general exemption from professional responsibility.

Watch for: No representation does not mean no duties. The duty to disclose known hidden material residential-property facts appears in all three statutory duty lists.

• F.S. 475.278, relationships, duties, and disclosures
• F.S. 475.25, misconduct, listing agreements, and supervision

C. An FHA loan

FHA insures loans made by approved lenders. A qualifying buyer can make a down payment as low as 3.5%. Most standard FHA forward loans charge upfront MIP and annual MIP, with the annual premium collected in monthly installments. The program is not limited to first-time buyers, and the stated down payment does not by itself establish loan approval.

Watch for: FHA insures; VA guarantees. FHA MIP is different from conventional PMI and follows different cancellation rules.

• HUD, FHA-insured loans
• CFPB, mortgage insurance by loan type

D. No, because an electronic record and signature can satisfy writing and signature requirements when the governing conditions are met

Florida's Uniform Electronic Transaction Act provides that a record, signature, or contract may not be denied legal effect solely because it is electronic. When the parties have agreed to transact electronically, an electronic record can satisfy a writing requirement and an electronic signature can satisfy a signature requirement.

Watch for: Electronic form does not erase other contract requirements. The agreement still needs valid terms, attribution, and compliance with any law that applies to the transaction.

• F.S. 668.50(5) and (7), Uniform Electronic Transaction Act

B. Upward price pressure as buyers compete for fewer homes

A decrease in supply with demand unchanged tends to put upward pressure on prices. Buyers compete for fewer available properties. That is a directional conclusion; it does not establish how much any listing will sell for.

Watch for: A supply change and a demand change are different. The question holds demand constant.

• Federal Reserve Education: market equilibrium
• FREC Course I syllabus, Section 15 (printed pages 46–47)

D. Adopting an authorized administrative rule and entering a disciplinary order

FREC can adopt rules within its delegated authority and decide disciplinary matters under the governing statutes and procedures. It also certifies qualified applicants and prescribes or approves education. The Legislature enacts statutes, while criminal sentences come from courts. FREC’s public-protection role does not give it unlimited authority over every real estate issue.

Watch for: FREC implements the powers the law grants. It cannot create new statutory authority for itself.

• F.S. 475.05: rulemaking and questions of practice
• F.S. 120.536: limits on delegated rulemaking
• F.S. 475.25: commission disciplinary authority
• F.S. 475.04: commission education duties
• F.S. 475.181: certification and license issuance

A. General and involuntary

A judgment lien is classified as general and involuntary because it can reach qualifying property of the debtor and is imposed without a consensual security grant. F.S. 55.10 requires the prescribed recording in the county for a real-property lien, including the creditor-address requirement. Personal-property judgment liens follow separate filing rules under F.S. 55.202. General does not mean every asset: exemptions, including protected homestead, can prevent attachment.

Watch for: General describes the potential property reached, not automatic attachment to all assets statewide. One debt can support a general lien.

• F.S. 55.10, judgment liens on real property
• F.S. 55.202, judgment liens on personal property
• Florida Constitution, Article X, Sections 4 and 6
• FREC Course I syllabus, Section 9

D. No, because the seller's counteroffer rejected and terminated the original offer

A counteroffer ordinarily rejects the original offer and proposes new terms. The Friday deadline does not keep the original offer alive after the seller communicates the counteroffer. The parties could make a new agreement at $320,000, but the seller cannot bind the buyer by accepting an offer that has already been terminated.

Watch for: An expiration date matters only while the offer remains alive. A counteroffer terminates it before that date.

• Behnke v. Bank of New York Mellon (Fla. 4th DCA 2023), counteroffers

D. seek a deficiency judgment against the borrower for the remaining balance

The lender may seek a deficiency judgment; an award is not automatic. F.S. 702.06 leaves the decision to the court’s discretion. For owner-occupied residential property, the statutory ceiling uses the judgment amount minus the property’s fair market value on the sale date. A low foreclosure bid is therefore not automatically the measure of the recoverable deficiency.

Watch for: Separate three figures: judgment amount, sale proceeds, and fair market value. Seeking a deficiency is not the same as receiving one.

• F.S. 702.06, deficiency decree

D. the sales comparison approach

With a typical home and many recent, comparable sales, sales comparison is the strongest fit among these choices. The appraiser analyzes relevant sales and adjusts for meaningful differences. The assignment may still call for other approaches; the property label alone does not decide every appraisal.

Watch for: Choose the approach supported by the stated evidence. Do not assume that every home requires only sales comparison or that every rental can be valued from income alone.

• Fannie Mae, sales comparison approach
• Fannie Mae, cost and income approaches

C. the owner's net proceeds from the disposition

Under the sales commission lien act, the lien is against the owner's net proceeds from the commercial sale, not the real estate itself. The act's written-agreement, notice, and timing requirements still apply. Do not transfer this rule to a commercial leasing lien, which is governed by a different part of Chapter 475.

Watch for: Recording a commission notice in the county records does not turn it into a lien on title to the real estate.

• F.S. 475.703(1)
• F.S. 475.705(2)

C. Competent parties, mutual assent (offer and acceptance), legal purpose, and consideration

A valid contract needs competent parties, mutual assent, a legal purpose, and consideration. A contract for the sale of an interest in real property must also meet the Statute of Frauds to be enforceable, generally requiring a writing signed by the party to be bound. That writing rule does not apply to every agreement connected with real estate.

Watch for: Earnest money is not an essential element. Consideration is required, but the deposit itself is not.

• FREC Course I syllabus, Section 11, essential elements

A. have the trade name noted in the commission's records and placed on the broker's license

Florida does not allow a broker to operate under an unregistered trade name. The trade name must be noted in the Florida Real Estate Commission's records and placed on the broker's license before it is used for brokerage operations. A separate fictitious-name filing does not replace the real estate licensing requirement.

Watch for: A Department of State filing and a DBPR real estate registration serve different purposes. Completing one does not automatically complete the other.

• F.S. 475.42(1)(j)

A. $4,204.60

For non-school levies, subtract both exemptions: $285,000 - $25,000 - $26,411 = $233,589 taxable value. Then $233,589 × 18 ÷ 1,000 = $4,204.602, or $4,204.60. Florida DOR sets the 2026 additional exemption at $26,411.

Watch for: $4,230 uses the old combined $50,000 exemption. $5,130 ignores exemptions. The additional exemption does not reduce school taxes, so the school taxable value would be $260,000; this question supplies a non-school rate only.

• Florida DOR, 2026 additional homestead exemption
• F.S. 196.031, homestead exemptions and school levies

D. The primary mortgage market

The primary market is where the borrower obtains a newly originated loan from a lender. A later sale of that existing mortgage is secondary-market activity. The lender may instead retain the loan in its portfolio. Origination, ownership, and servicing are related but distinct roles.

Watch for: Identify what is happening in the transaction, not just the company’s name.

• Fannie Mae: loan purchases and mortgage-backed securities
• FREC Course I syllabus: Sections 12 and 13
• Federal Reserve: monetary policy

A. Adverse possession

Adverse possession can support a claim to ownership only when the governing requirements are met. F.S. 95.16 addresses possession under color of title; F.S. 95.18 addresses possession without it and adds tax-payment, return-filing, and possession requirements. Seven years alone does not establish title. A prescriptive easement concerns a use right and generally requires 20 years of qualifying adverse use in Florida.

Watch for: Distinguish ownership by adverse possession from a prescriptive right to use land. Permission defeats the adverse character of the use while it continues.

• F.S. 95.16, adverse possession with color of title
• F.S. 95.18, adverse possession without color of title
• Lincolnshire Maximo v. Marina Walk (2d DCA, March 25, 2026)

C. Section 8 of RESPA

RESPA Section 8, implemented through Regulation X, prohibits giving or accepting a thing of value under an agreement or understanding for a covered settlement-service referral. A gift card counts. Telling the buyer about it does not cure the prohibited arrangement. Bona fide compensation for actual services and the regulation’s specified exceptions require a different analysis.

Watch for: A thing of value plus a covered settlement referral is the core warning sign. No minimum-dollar safe harbor applies to this fact pattern.

• 12 C.F.R. 1024.14: RESPA referral fees

D. $360,000

Area is 150 ft × 200 ft = 30,000 sq ft. At $12 per sq ft, 30,000 × $12 = $360,000. The square-foot units cancel, leaving dollars. You would convert to acres first only if the price were stated per acre.

Watch for: Length × width gives area. Adding side lengths does not. Identify whether the price is per square foot or per acre before multiplying.

• FREC Course I syllabus, computations and related math objectives

A. a unilateral option contract, because only the seller is bound to perform if the buyer chooses to exercise

Before exercise, the option gives the buyer a choice and binds the seller to honor that choice under the agreed terms. The $2,000 supports the option; it does not obligate the buyer to purchase. A proper, timely exercise changes the relationship into a bilateral purchase contract. Read how and when the option must be exercised, not just its price.

Watch for: Before exercise: a right to buy. After proper exercise: a binding purchase obligation for both sides.

• Florida contract law, option contracts

D. 8%

Divide annual NOI by price: $48,000 ÷ $600,000 = 0.08 = 8%. This is a property income ratio before financing. It is not the investor’s cash-on-cash return or a promise of total return after appreciation, sale costs, and taxes.

Watch for: To estimate value instead, reverse the setup: value = NOI ÷ cap rate expressed as a decimal.

• OCC Commercial Real Estate Lending: NOI, cap rates, and expenses
• IRS IRM 4.48.6: real property valuation

B. The third township tier south of the base line and second range east of the principal meridian

Township designations run north or south of the base line. Range designations run east or west of the principal meridian. Florida’s survey origin is in Tallahassee. The numbers identify township tiers and ranges, not individual miles or sections.

Watch for: The meridian runs north–south, but ranges are counted east or west from it.

• FREC Course I syllabus: Section 10, Legal Descriptions
• F.S. 258.08: Florida's survey origin in Tallahassee

B. $7,560

First find the total commission: $420,000 × 0.06 = $25,200. The listing brokerage’s half is $25,200 × 0.50 = $12,600. The associate receives $12,600 × 0.60 = $7,560. The 6% rate and both splits are assumed terms for this problem, not legally required commission rates.

Watch for: Read what the question asks for. 25,200 is the total, 12,600 is the brokerage's half, and 15,120 would be 60 percent of the whole commission. The agent's share is 7,560.

• FREC Course I syllabus, computations and related math objectives

C. 20 acres

Locate the southwest quarter first: 640 × ¼ = 160 acres. Its northeast quarter is 160 × ¼ = 40 acres. The west half of that parcel is 40 × ½ = 20 acres. In square feet, 20 × 43,560 = 871,200.

Watch for: Read from right to left to find the land. Multiply all three fractions to find its area.

• FREC Course I syllabus: Section 10, Legal Descriptions
• BLM Specifications for Descriptions of Land (2017)

A. Complete the form's factual blanks without giving legal advice or charging a separate drafting fee

A licensee may complete the factual blanks of a sale contract as an incident to a transaction the licensee handles, without a separate drafting charge. That limited role does not authorize legal advice, deciding disputed rights, or preparing deeds and mortgages for others merely because they relate to the sale. Send questions about custom legal wording or legal remedies to an attorney.

Watch for: Permission to complete a sale contract is limited. It does not turn a real estate license into authority to practice law.

• Keyes Co. v. Dade County Bar Ass'n, 46 So. 2d 605 (Fla. 1950)

D. 640 acres

A standard section covers one square mile, or 640 acres. A quarter-section is 160 acres and a half-section is 320. Actual surveyed sections can have more or less acreage; use the problem’s stated area for an irregular parcel.

Watch for: 5,280 is feet in one mile. It is a length, not an acreage.

• FREC Course I syllabus: Section 10, Legal Descriptions
• BLM Manual of Surveying Instructions (2009): rectangular surveys

B. Undivided loyalty as the fiduciary of one party

A transaction broker does not represent the customer as a fiduciary and does not owe undivided loyalty. Skill and care, accounting, and timely offer presentation are in the transaction-broker duty list. Limited confidentiality still applies. The written-direction exception for offers is narrow; it does not permit ignoring offers simply because the broker considers them unattractive.

Watch for: Read NOT carefully. Limited representation reduces fiduciary obligations but does not eliminate care, honest dealing, or the obligation to handle offers properly.

• F.S. 475.278, relationships, duties, and disclosures

D. $240,000

Use the lower amount specified: $300,000 appraised value, not the $310,000 price. $300,000 × 0.80 = $240,000 maximum loan. The price balance is $310,000 − $240,000 = $70,000, before closing costs, the deposit, and other credits. The lower-value basis is the usual Fannie Mae purchase calculation, with program-specific exceptions.

Watch for: Do not use the higher contract price. 310,000 times 0.80 gives 248,000, but the lender uses the lower 300,000 value.

• Fannie Mae, purchase loan-to-value calculation

C. The grantee’s signature on the deed

The grantee ordinarily does not sign the deed to receive title. For this individual freehold conveyance, F.S. 689.01 requires a writing signed by the conveying party in the presence of two subscribing witnesses. The other requirements, including proper delivery and acceptance, still matter. Acknowledgment or authorized proof for recording is a separate issue. Entity conveyances and qualifying electronic execution have their own statutory provisions.

Watch for: Grantor gives; grantee receives. Do not copy the signature requirements of a purchase contract onto the deed.

• F.S. 689.01, conveyance and witness requirements
• FREC Course I syllabus, Section 9
• F.S. 695.03, acknowledgment and proof for recording

A. remainder, and the nephew is the remainderman

The nephew holds a remainder. A remainder follows the life estate and belongs to someone other than the grantor. If the grantor had retained the future interest, it would be a reversion. Elena’s estate is measured by her life, even if she later transfers her life-estate interest to someone else.

Watch for: Ask two questions: whose life sets the duration, and who holds the future interest? A right merely to live somewhere is not always a life estate; this question expressly grants one.

• FREC Course I syllabus, Section 8

D. a comparative market analysis, not an appraisal

These facts describe a comparative market analysis to inform a listing-price decision. F.S. 475.612(3) permits a broker or sales associate to perform a CMA or price opinion in the ordinary course of business, but it must not be referred to or construed as an appraisal. A sales associate works under the employing broker. Calling the work certified would also misrepresent the stated service.

Watch for: The data can overlap with an appraisal, but the service and its permitted representation still matter. A brokerage license does not automatically confer an appraiser credential.

• F.S. 475.612, valuation services, CMAs, and price opinions
• F.S. 475.25(1)(t), appraisal standards and the CMA/BPO exception
• FREC Course I syllabus, Sections 1 and 16

C. The most recently adopted comprehensive plan

The most recently adopted comprehensive plan governs action on the application during the inconsistency. The land development regulation must be brought into conformity. A favorable plan designation still does not dispense with the other applicable approvals.

Watch for: A future land use map and a zoning map do different work. Do not treat either as a building permit.

• F.S. 163.3194: plan consistency; see session law for delayed subsection (7)

D. The rule requiring a true, signed copy within 24 hours

F.S. 475.25(1)(r) requires both the terms of a written listing and delivery of a legible, signed, true and correct copy to the principal within 24 hours of obtaining it. Thursday is too late for a listing obtained Monday. A written listing must also have a definite expiration date and cannot require the principal to give cancellation notice after that date.

Watch for: Do not stop after checking the contract terms. Florida tests both what must be in a written listing and when the principal must receive a copy.

• F.S. 475.25(1)(r)

B. voidable by the minor, rather than automatically void

A minor’s nonessential contract is generally voidable at the minor’s election, rather than void from the start. The minor may disaffirm it, subject to the rules on exceptions and ratification. The adult seller does not gain the same right to cancel simply because the buyer is a minor. Florida’s general age of majority is 18; older court decisions may discuss the former age of 21.

Watch for: Void and voidable are not synonyms. A voidable agreement remains capable of being affirmed or avoided by the protected party.

• Lee v. Thompson, voidability and ratification
• F.S. 743.07, age of majority

C. 24 months of active sales associate work in one or more licensed brokers’ offices during the preceding 5 years

This path requires at least 24 qualifying active months during the five years before application. The months may be in one or more licensed brokers’ offices and need not all be with one employer. F.S. 475.17 also recognizes specified salaried government-employment and outside-jurisdiction broker-license experience. Required sales associate postlicense education must also be completed when applicable.

Watch for: Use qualifying active experience, not merely time since the license was issued. The 72-hour course does not replace the experience requirement.

• F.S. 475.17, qualifications, experience, and postlicense education

B. The MLS must not accept listings containing compensation offers to other participants or subscribers

NAR Policy 8.11 excludes these offers from the MLS, including broker-only fields. It does not ban all buyer-broker compensation. Payment terms belong in the appropriate agreements and must meet the applicable rules.

Watch for: Seller approval does not create an exception to the MLS content restriction.

• NAR MLS Policy 8.11: compensation offers
• NAR MLS Policy 8.13: written buyer agreements

B. 3 days after receiving the HOA disclosure summary, or before closing, whichever comes first

If the required HOA disclosure summary was not provided before the buyer executed the contract, the buyer may cancel in writing within 3 days after receiving it or before closing, whichever occurs first. The right cannot be waived and terminates at closing.

Watch for: The missing summary is the trigger. Do not give every home buyer an automatic three-day cancellation right, and do not replace this rule with the condominium resale period.

• F.S. 720.401, missing HOA disclosure summary

A. 14 hours: 3 Core Law, 3 Ethics and Business Practices, and 8 specialty hours

The ordinary continuing-education requirement is 14 hours in each later two-year renewal period. Rule 61J2-3.009 and DBPR’s education guidance specify 3 hours of Core Law, 3 hours of Ethics and Business Practices, and 8 specialty hours. Required categories count within the 14-hour total. Renewing the license and paying the fee remain separate obligations.

Watch for: The equation is 3 + 3 + 8 = 14. Do not add the Core Law and ethics hours on top of 14, or use 45-hour postlicense or 28-hour reactivation education indiscriminately.

• F.A.C. 61J2-3.009, continuing education
• DBPR, education requirements and exemptions
• F.S. 475.182, renewal and continuing education

B. The Florida Real Estate Recovery Fund

The Real Estate Recovery Fund may pay eligible unpaid actual or compensatory damages when the statutory transaction, judgment, collection, timing, and claimant conditions are met. Claims from one transaction share a $50,000 ceiling. Payments on judgments against one licensee also face a $150,000 aggregate cap. An unpaid judgment alone does not establish eligibility.

Watch for: Check eligibility first. The $50,000 limit belongs to the transaction, not separately to each claimant.

• F.S. 475.482: Recovery Fund purpose and covered transactions
• F.S. 475.483: Recovery Fund conditions and exclusions
• F.S. 475.484: fund payment caps and automatic suspension

C. A salaried employee of an apartment-community owner who works in that community’s onsite rental office in a leasing capacity

F.S. 475.011(4) exempts a salaried employee of the apartment-community owner, or of the owner’s registered broker, who works in that community’s onsite rental office in a leasing capacity. The location, employment relationship, pay structure, and activity all matter. The statute does not exempt everyone who is salaried or everyone who manages property.

Watch for: Apartment community, salaried employee, onsite rental office, and leasing capacity are the facts to match. Do not borrow the separate condominium-manager exemption.

• F.S. 475.011, exemptions from real estate licensure
• F.S. 475.01, definitions and the single-act rule

B. The buyer may cancel and recover the earnest money, because the financing contingency was not satisfied

The facts satisfy the stated financing contingency and its notice requirement. The buyer applied and cooperated in good faith, the specified financing was unavailable, and the buyer properly elected to cancel. The clause therefore allows the deposit to be returned. F.S. 475.25(1)(d)1. also permits a licensee holding escrow to return it for a good-faith failure to satisfy a financing clause without the usual FREC notice and settlement procedures. A loan denial alone does not establish compliance with every contract.

Watch for: Never assume every financing clause works the same way. Read the application, notice, timing, and refund language given in the question.

• Contract terms; F.S. 475.25(1)(d)1.

C. the cost approach

Cost is the best fit on these facts: the building is new and the sales and rental evidence is limited. Estimate supported land value, add reproduction or replacement cost of improvements, and deduct accrued depreciation. Special-purpose use is a useful clue, but adequate cost, land, and depreciation evidence is still needed.

Watch for: New does not always mean zero depreciation. Functional or external obsolescence can affect a new building, too.

• IRS real property valuation guidelines, 4.48.6.2.4
• FREC Course I syllabus, Sections 1 and 16

B. disclose the known material fact to the buyer

Under Johnson v. Davis, a residential seller who knows of a fact that materially affects the property's value, is not readily observable, and is not known to the buyer must disclose it. A concealed defect that causes serious leaks fits the facts the rule is designed to address.

Watch for: An as-is clause or the buyer's inspection opportunity does not create a safe answer when the question gives all elements of the Johnson disclosure duty.

• Johnson v. Davis, 480 So. 2d 625 (Fla. 1985)

A. tenancy by the entireties

Tenancy by the entireties is an estate spouses hold as a single legal unit, with survivorship. It generally protects the property from a creditor of only one spouse. It does not provide the same protection against a joint creditor of both spouses. Marriage alone does not establish every required feature or convert all property into an entireties estate.

Watch for: Spouses may hold other forms of title. Under F.S. 689.15, divorce converts an existing entireties estate to a tenancy in common.

• Florida Supreme Court, Beal Bank v. Almand (2001)
• F.S. 689.15, survivorship and divorce

A. a blind ad that violates Florida law because it omits the registered brokerage name

Florida advertising must make it clear that the public is dealing with a real estate licensee and must include the licensed brokerage name. For internet advertising, that name must appear adjacent to, immediately above, or immediately below the contact information. A personal social account is not an exception.

Watch for: The associate's own name and phone number do not cure the omission. The licensed brokerage name is the required identifier.

• F.A.C. 61J2-10.025(1) and (3)

C. highest and best use

Highest and best use identifies the reasonably probable use that passes all four tests: legal permissibility, physical possibility, financial feasibility, and maximum productivity. Analyze the site as if vacant and, where relevant, as improved. The answer is not automatically the current use or the use with the highest gross income.

Watch for: A profitable-looking plan still fails if it cannot legally or physically be carried out. A reasonably probable change in restrictions requires support, not a guess.

• Fannie Mae, site analysis and highest and best use
• FREC Course I syllabus, Sections 1 and 16

C. 8.0

Annual GRM = price ÷ gross annual rent. Here, $480,000 ÷ $60,000 = 8.0. If the same rent were expressed as $5,000 per month, the monthly GRM would be 96. Use the same period and income basis for the multiplier and any subject rent to which it is applied.

Watch for: GRM uses gross rent before expenses and is a multiplier, not a percentage. An 8.0 GRM is not an 8% capitalization rate.

• FREC Course I syllabus, Sections 1 and 16

A. The owner must comply with both; zoning permission alone does not remove the enforceable covenant

Public zoning and enforceable private restrictions can apply to the same parcel. Permission under zoning does not by itself extinguish a valid private covenant. In Riviera-Fort Myers Master Association v. GFH Investments, the Second DCA recognized that private restrictions may be more stringent than municipal zoning. The question expressly supplies enforceability; recording alone would not prove that every covenant is lawful or still enforceable.

Watch for: Check both systems. Private permission also cannot authorize a use that public law forbids.

• Riviera-Fort Myers Master Association v. GFH Investments (2d DCA, 2020)
• FREC Course I syllabus, Section 9

A. a bundle of separable rights, including possession, control, enjoyment, exclusion, and disposition

The bundle describes possession, control, enjoyment, exclusion, and disposition. Property interests can be separated: the owner can convey an interest in minerals while retaining the surface interest. The deed and applicable law determine the precise rights conveyed, including any access or use limitations.

Watch for: Separate ownership of minerals does not mean unrestricted extraction rights. Read the conveyance and the stated limits.

• FREC Course I syllabus, Section 8

B. both the associate for the violation and the broker for failure to supervise

FREC may discipline the associate for the underlying violation. It may separately discipline a broker who fails to direct, control, or manage registered associates. Here the absence of any review or compliance system supplies the missing supervision fact, so lack of personal knowledge does not end the analysis.

Watch for: A broker is not automatically liable for every act by an associate. The tested violation here is the broker's own failure to direct, control, or manage.

• F.S. 475.25(1)(u)

C. Confidentiality

The seller’s private bottom line is confidential negotiating information. A single agent owes confidentiality to the principal, and disclosing this information without authority breaches that duty. Loyalty may also be affected, but confidentiality most directly describes the information released. A required property-fact disclosure is a different issue.

Watch for: Distinguish the seller’s negotiating position from a known hidden fact affecting the property’s value. Keeping one private does not authorize concealing the other.

• F.S. 475.278, relationships, duties, and disclosures
• F.S. 475.01, customer, principal, and licensee definitions

A. condominium, with fee simple title to the unit and a shared interest in the common elements

This is a fee-simple condominium parcel: the individually owned unit comes with an undivided interest in the common elements. That is the arrangement expressly given here. In a cooperative, an entity holds legal title and the owner’s beneficial use is evidenced by an association interest and a lease or other title document. Florida law expressly treats an interest in a cooperative unit as real property.

Watch for: Do not use “all condos are fee simple” or “co-ops are only personal property” as blanket rules. F.S. 718.103 recognizes leaseholds within condominium property, and F.S. 719.103(26) classifies a cooperative unit interest as real property.

• F.S. 718.103, condominium ownership and common elements
• F.S. 719.103, cooperative ownership and unit interests

A. The seller gives written consent using the required transition disclosure

The existing principal is the seller, so the brokerage must obtain the seller’s prior written consent and use the statutory transition disclosure. The consent must be initialed or signed before the new role begins. If the buyer also had an existing single-agent relationship with the brokerage, that relationship would need to be addressed as well.

Watch for: A change in the brokerage’s plans is not the principal’s consent. Verbal permission, silence, and a signature obtained afterward do not satisfy prior written consent.

• F.S. 475.278, relationships, duties, and disclosures

A. commingling, because escrow funds were placed with business funds

Putting a buyer's earnest money into the brokerage's operating account mixes entrusted funds with business funds. That is commingling even if the money is never spent. The facts do not establish conversion, which involves unauthorized use or taking. The limited allowance for a broker's own money in a proper escrow account does not permit client money in an operating account.

Watch for: Commingling does not require spending the money. Mixing it into the wrong account is enough.

• F.A.C. 61J2-14.008
• F.S. 475.25(1)(k)

C. Florida's constitutional homestead protection under Article X, Section 4

Article X, Section 4 protects a qualifying homestead from forced sale, subject to listed exceptions, and restricts devise when the owner is survived by a spouse or minor child. If there is a surviving spouse but no minor child, the owner may devise the homestead to the spouse. This protection is separate from the property-tax exemption in Article VII.

Watch for: Constitutional homestead protection and the homestead tax exemption serve different purposes. Protection addresses forced sale and devise; the tax exemption reduces taxable value.

• Florida Constitution, Article X, Section 4
• F.S. 196.031, homestead tax exemption
• F.S. 193.155, Save Our Homes assessment limits

A. joint tenancy with right of survivorship

These facts describe joint tenancy with right of survivorship. The standard exam unities are time, title, interest, and possession, remembered as TTIP. F.S. 689.15 requires express survivorship, except for an estate by the entireties. If the joint tenancy remains intact, a deceased owner’s interest passes to the surviving joint tenant.

Watch for: Equal shares and the same deed are not enough by themselves. The express survivorship language is the deciding fact here.

• F.S. 689.15, survivorship and divorce
• FREC Course I syllabus, Section 8

D. Within 30 days of the plea

The felony provision requires written notice within 30 days of the plea, conviction, or finding of guilt. Do not wait for sentencing or renewal. The broader duty in 455.227(1)(t) covers a crime in any jurisdiction, regardless of adjudication, and includes misdemeanors. Adjudication being withheld does not remove that reporting duty.

Watch for: The felony question tests 30 days. It does not mean only felonies must be reported.

• F.S. 475.25: grounds, penalties, and complaint time limit
• F.S. 455.227(1)(t): reporting a crime regardless of adjudication

B. fee simple absolute, the highest and most complete form of ownership

Fee simple absolute is the broadest ownership estate and has no built-in ending date or defeasance condition. It differs from a life estate measured by a life, a leasehold, and a fee subject to a condition. It remains subject to applicable public and private restrictions, including taxes, zoning, liens, and homestead rules.

Watch for: Absolute describes the estate. It does not mean the owner can ignore land-use rules or devise a protected homestead however they wish.

• FREC Course I syllabus, Section 8
• Florida Constitution, Article X, Section 4

A. It becomes null and void, and the person must requalify to practice as a sales associate

F.S. 475.17(3)(c) makes the sales associate license null and void when the required postlicense education is not completed before the first renewal. Requalification requires satisfactory completion of the sales associate prelicense course and passage of the state exam. The question excludes an education exemption or approved physical-hardship extension. Paying the fee does not replace the education.

Watch for: Missing required postlicense education is different from ordinary later nonrenewal. Do not substitute the 14-hour CE course or a late fee for requalification.

• F.S. 475.17, qualifications, experience, and postlicense education
• F.A.C. 61J2-3.020, postlicense education

A. external obsolescence, which is generally incurable

The documented loss comes from an influence outside the property, so it is external, or economic, obsolescence. Physical deterioration concerns wear or damage; functional obsolescence concerns design or utility. External obsolescence is generally incurable by the owner, which matches the highway-noise facts.

Watch for: Curable means economically justified to correct, not merely possible to change. Physical deterioration and functional obsolescence can each be curable or incurable.

• FREC Course I syllabus, Sections 1 and 16
• IRS real property valuation guidelines, 4.48.6.2.4

D. 63 hours

The standard sales associate prelicense requirement is a 63-hour FREC-approved course. The course completion is valid for two years under DBPR’s checklist. An applicant may submit the licensing application before completing the course, but must have valid course completion before sitting for the state exam unless exempt. Course completion alone is not an active license.

Watch for: Sales associate: 63 before the exam, 45 before the first renewal, then 14 for later renewal periods. A broker’s ordinary prelicense course is 72 hours.

• DBPR, standard sales associate application checklist
• F.A.C. 61J2-3.008, prelicense education
• F.S. 475.17, qualifications, experience, and postlicense education

D. To the point of beginning

For this closed-perimeter exercise, the final call returns to the point of beginning. A separate point of commencement may be used to locate that beginning. Closure is a geometric check, not the sole test of a real description’s legal sufficiency. Some other forms, such as centerline strip descriptions, work differently.

Watch for: The approach from a point of commencement is not an extra boundary side.

• FREC Course I syllabus: Section 10, Legal Descriptions
• BLM Specifications for Descriptions of Land (2017)

B. $980

$280,000 ÷ 100 = 2,800 units. Multiply by $0.35 to get $980. This is below the $2,450 cap for notes under F.S. 201.08(1)(a). The recorded-mortgage provision has no cap, and the statute supplies payment rules when a note and mortgage evidence the same debt.

Watch for: Using the deed rate of 0.70 gives 1,960, which is double the correct note tax. The note rate is 0.35 per 100.

• F.S. 201.08, notes, recorded mortgages, and prior payment
• Florida DOR, documentary stamp rates and examples

B. A blanket mortgage with a partial release clause

A blanket mortgage covers multiple parcels. A partial release clause provides for releasing a specified parcel from that mortgage when the stated conditions are met. The release payment comes from the agreement; it is not automatically an equal fraction of the loan balance. Releasing this lien does not establish that all other title matters are clear.

Watch for: Blanket describes the multiple parcels. Partial release describes how one parcel can leave that lien.

• FREC Course I syllabus: Sections 12 and 13

D. Generally no, because a land-sale contract requires a signed writing to be enforceable and no exception is shown

F.S. 725.01 generally requires a land-sale agreement, or a sufficient note or memorandum of it, to be in writing and signed by the party against whom enforcement is sought. The question supplies neither a signed writing nor facts supporting a recognized exception. A qualifying claim of part performance can change the analysis, so do not turn this general rule into a statement that every oral land agreement is void.

Watch for: Unenforceable and void mean different things. Also check whether the question supplies facts supporting an exception.

• F.S. 725.01
• Salazar v. Ortiz (2026), part performance

A. $3,771.78

The first exemption is $25,000. For 2026, the additional non-school exemption is up to $26,411 on assessed value above $50,000. This property has enough value to use both in full. Taxable value is $240,000 − $25,000 − $26,411 = $188,589. Then $188,589 × 20 ÷ 1,000 = $3,771.78. School levies would use a different taxable value.

Watch for: For an explicitly stated 2026 roll, use $26,411 for the additional exemption. Do not replace the question’s tax year with an older $50,000 total shortcut.

• Florida DOR: 2026 additional exemption, $26,411
• F.S. 196.031: standard homestead exemptions

B. Quasi-legislative power

Adopting administrative rules is a quasi-legislative function. The commission implements specific statutory powers and duties through rules; it does not become the Legislature. Deciding a disciplinary matter is commonly described as quasi-judicial. Carrying out assigned administrative responsibilities is executive. Match the label to the action stated in the question.

Watch for: Rulemaking: quasi-legislative. Deciding a disciplinary case: quasi-judicial. Administering assigned duties: executive.

• FREC Course I syllabus: Section 3 objectives
• F.S. 475.05: rulemaking and questions of practice
• F.S. 120.536: limits on delegated rulemaking

B. The buyer does not become personally liable for the existing debt, but the lender can still foreclose the property after default

Taking title subject to the mortgage does not, by itself, make the buyer personally liable for the existing note. The property remains collateral and can still be foreclosed. An express assumption adds a promise to pay the existing debt. Neither a deed nor an assumption automatically releases the original borrower; a release must be established separately. Transfer restrictions and lender requirements also need to be checked.

Watch for: Ownership, personal liability, lender consent, and release of the seller are four separate questions.

• Carus v. VRMTG Asset Trust (2021)
• CFPB, mortgage transfers and personal liability
• 12 U.S.C. 1701j-3, due-on-sale exceptions

B. notify FREC in writing within 15 business days after Wednesday and institute an authorized settlement procedure within 30 business days after Wednesday

Wednesday's demand creates the conflict. The broker must notify FREC in writing within 15 business days and start an authorized settlement procedure within 30 business days of that last demand. The four routes are an escrow disbursement order, arbitration with all parties' consent, litigation, or mediation with all parties' written consent. The 30-day clock does not restart when the 15-day notice is sent.

Watch for: Identify who holds the funds. These FREC procedures address broker-held escrow, not an attorney's or title company's own escrow account. Special statutory and HUD-contract exceptions require separate analysis.

• F.A.C. 61J2-10.032
• F.S. 475.25(1)(d)

C. It is six miles square and contains 36 sections

A standard township has six-mile sides: 6 × 6 = 36 square miles. It contains 36 sections, totaling 23,040 acres in the standard model. “Six miles square” and “six square miles” are different measurements.

Watch for: Multiply the side lengths. A township is not just six sections.

• FREC Course I syllabus: Section 10, Legal Descriptions
• BLM Manual of Surveying Instructions (2009): rectangular surveys

A. The qualifying rental building, but not the land

A qualifying rental building has a cost-recovery period; land is not depreciable. Allocate the basis between the land and the building using the applicable rules. Depreciation begins when the property is placed in service, meaning ready and available for its rental use, rather than automatically on the purchase date. Depreciation allowed or allowable generally reduces adjusted basis.

Watch for: Tax depreciation is not proof that the property’s market value fell. A building can appreciate while its owner claims eligible depreciation.

• IRS Publication 527: rental income, expenses, and depreciation
• IRS Publication 551: cost and adjusted basis

C. The associate delivers it to the broker by Tuesday's end, and the broker places it in escrow by Thursday's end

Florida treats Monday as the brokerage's receipt date because the sales associate received the check then. The associate must deliver it to the broker by the end of the next business day, Tuesday. The broker must place it in escrow by the end of the third business day after Monday, which is Thursday when no holiday intervenes.

Watch for: The broker does not receive a fresh three-day period after the associate hands over the check. The broker's clock began when the associate received it.

• F.A.C. 61J2-14.008(3)
• F.A.C. 61J2-14.009

B. due-on-sale (alienation) clause

A due-on-sale clause, also called an alienation clause, generally allows the lender to accelerate repayment after an unauthorized transfer. Federal law protects certain transfers from enforcement, including some family transfers and transfers into qualifying trusts. This question asks for the clause name, not whether a particular transfer is exempt.

Watch for: An acceleration clause is the general power to demand the full balance. A due-on-sale clause is the specific version triggered by transfer of the property.

• 12 U.S.C. 1701j-3, due-on-sale clauses and protected transfers

B. $125,000

Gain is amount realized minus adjusted basis: $460,000 − $335,000 = $125,000. Adjusted basis generally starts with acquisition cost, adds qualifying costs and capital improvements, and subtracts applicable reductions such as allowed or allowable depreciation. The seller’s mortgage payoff affects the cash remaining at closing; it is not another deduction in this gain formula.

Watch for: Gain, cash proceeds after debt payoff, and taxable gain after an exclusion are separate amounts.

• IRS Publication 523: home-sale gain and adjusted basis

C. An appurtenant easement, with Lot A dominant and Lot B servient

An appurtenant easement benefits another parcel. Lot A receives the benefit and is the dominant estate; Lot B bears the burden and is the servient estate. The benefit generally passes with Lot A unless the creating terms provide otherwise. Lot B’s owner retains ownership subject to the defined use right. The easement does not authorize uses beyond its scope.

Watch for: Dominant receives the benefit. Servient supplies the burdened land. Do not reverse them just because the driveway is on Lot B.

• SHM Cape Harbour v. Realmark META (2d DCA, 2022)
• FREC Course I syllabus, Section 9

B. Current ownership can create cleanup liability even if the buyer did not cause the contamination, subject to statutory defenses and protections

CERCLA identifies several potentially responsible parties, including current owners and operators. Liability can be strict and retroactive. It can also be joint and several when the harm is indivisible. A current owner’s lack of involvement in the original disposal does not, by itself, establish a defense. Statutory landowner protections and defenses have conditions; disclosure alone does not establish them.

Watch for: Not causing the contamination does not automatically remove current-owner exposure.

• EPA: Superfund liability

B. Protect the seller’s bottom line unless the seller waives confidentiality in writing

Limited confidentiality specifically protects a seller’s willingness to accept less than the asking or listed price unless the party waives the protection in writing. It also protects a buyer’s willingness to pay more than a written offer, motivation, alternative financing terms, and other information requested to remain confidential. Assisting both sides does not make their private negotiating information public.

Watch for: The waiver must be written. A direct question from the other party does not create permission to disclose.

• F.S. 475.278, relationships, duties, and disclosures

C. market price, the amount actually paid in a specific transaction

Market price is the amount actually paid in a specific transaction. A market-value opinion applies stated assumptions about motivation, knowledge, exposure, and terms as of an effective date. An unusual buyer may pay more or less than the market-value indication. An appraisal is an opinion supported by analysis, not a guarantee of a future sale price.

Watch for: A completed sale is evidence to analyze. It does not automatically prove that its price equals market value under the assignment’s definition.

• Fannie Mae, definition of market value
• FREC Course I syllabus, Sections 1 and 16

D. A DOAH administrative law judge

A formal hearing on disputed material facts ordinarily goes to an administrative law judge at the Division of Administrative Hearings. The ALJ issues a recommended order. FREC enters the final agency order, subject to Chapter 120’s limits on changing findings of fact. When material facts are not disputed, an informal FREC hearing may be appropriate.

Watch for: A formal administrative complaint is the charging document. Whether the hearing is formal depends on disputed material facts.

• F.S. 120.57: formal and informal hearings
• F.S. 455.225: complaints, investigation, and discipline

B. Transaction brokerage, providing limited representation

F.S. 475.278(1)(b) presumes transaction brokerage unless single agency or no brokerage relationship is established in writing. Helping a buyer does not automatically create a fiduciary relationship. This presumption is separate from any applicable requirement for a written buyer agreement before touring a home.

Watch for: Identify the established relationship. A written services or compensation agreement does not automatically mean single agency.

• F.S. 475.278, relationships, duties, and disclosures
• NAR, written buyer agreements and MLS practice rules

B. collect it only in the employing broker's name and with that broker's express consent

A sales associate may collect money connected with a brokerage transaction only in the employer's name and with the employer's express consent. The seller tied the bonus to real estate services, so calling it a gift does not remove those requirements. There is no small-bonus exception.

Watch for: The label does not control. A transaction-related 'gift' or 'bonus' is still compensation for brokerage services.

• F.S. 475.42(1)(d)

D. The index moves with the market and the margin is the lender's fixed markup

The index reflects a market benchmark. The margin is the lender’s add-on, fixed in the loan agreement after closing. Adding them gives the fully indexed rate; caps can limit the rate actually charged at an adjustment. A borrower may negotiate the margin when shopping for a loan, but cannot reset it after closing simply because market rates changed.

Watch for: Index plus margin gives the target rate before caps. Initial, subsequent, and lifetime caps can produce a different rate at the next adjustment.

• CFPB, ARM index and margin
• CFPB, ARM adjustment caps

A. $220,000

The ordinary single-taxpayer limit is up to $250,000 of eligible gain. Since this seller has only $220,000 of gain and meets the stated conditions, the full $220,000 can generally be excluded. The basic ownership and use tests are two years within the five years ending on the sale. The ceiling does not create a deduction larger than the actual eligible gain.

Watch for: Compute the gain first. An exclusion cannot exceed the gain eligible for exclusion.

• IRS Topic 701: principal-residence exclusion
• IRS Publication 523: home-sale gain and adjusted basis

C. 14 calendar days

The vacancy must be filled within 14 calendar days by appointing and registering an active or temporary broker under the rule. Until that happens, the brokerage and its registered licensees may not perform new brokerage business. The brokerage must notify FREC immediately. Missing the 14-day deadline cancels the brokerage registration and makes its associates' licenses inactive.

Watch for: The 14 days are time to fill the vacancy, not permission to keep taking new business without an active or temporary qualifying broker.

• F.A.C. 61J2-5.018

D. price-fixing, an antitrust violation, even though the rate sounds standard

The brokers are competitors, and they agreed on the price of their services. That is horizontal price-fixing under the Sherman Act. The agreement is unlawful even if the rate is common in the market, clients remain free to reject it, or nothing is put in writing.

Watch for: The problem is the agreement between competitors. A broker may independently choose a fee and negotiate it with a client, but competing firms may not coordinate their fees.

• Sherman Act, 15 U.S.C. § 1

B. a buyer credit because it reduces the cash the buyer must bring

The $8,000 deposit is a buyer credit because it has already been paid toward the transaction and remains available. It reduces the remaining cash to close. The full price is still a buyer debit and seller credit; the deposit is not a second seller credit. If part of a deposit was already used for a closing charge, follow the Closing Disclosure rules so that amount is not counted twice.

Watch for: A prior payment is not charged twice. The buyer receives credit for the deposit already made.

• CFPB, 12 C.F.R. 1026.38 Closing Disclosure entries
• CFPB, how to check a Closing Disclosure

C. A VA-backed loan, which generally uses a one-time funding fee instead of monthly mortgage insurance

A VA-backed purchase loan fits these facts. It can provide no-down-payment financing and does not charge monthly mortgage insurance. A funding fee usually applies and can be financed, but qualifying borrowers are exempt. Eligibility for the benefit is separate from meeting the lender’s underwriting and property requirements.

Watch for: No down payment does not mean no closing costs. A funding fee is also not mandatory for every VA borrower.

• VA, purchase-loan requirements
• VA, funding fees and exemptions