1. A Florida broker serves as a single agent for a seller and receives an offer from a buyer who is also represented by the same broker acting as a single agent for the buyer. Neither party has consented to transition to transaction broker. Under Florida law, which of the following correctly describes the broker's situation?
- A. The broker may proceed as a disclosed dual agent, because Florida recognizes dual agency for experienced brokers.
- B. The broker is in an undisclosed dual agency situation, which is an illegal form of representation prohibited under Florida Statute 475.278, and must take corrective action such as obtaining consent to transition to transaction broker or withdrawing from one side. ✓
- C. The broker may continue representing both parties as single agents simultaneously, provided both parties are aware of the situation.
- D. The broker must immediately refer one client to another brokerage without disclosing the reason.
Florida Statute 475.278 does not recognize or permit dual agency — a licensee cannot simultaneously act as a fiduciary single agent for both the buyer and the seller in the same transaction. This creates an illegal undisclosed dual agency. The legally compliant resolution is to obtain written consent from both parties to transition to transaction broker (with the required notice), use the designated sales associate provision if applicable, or withdraw from representing one party.
2. Under Florida Statute 475.25, FREC may deny an application for licensure based on a finding that the applicant lacks 'good moral character.' Which of the following factors is LEAST relevant to FREC's good moral character determination?
- A. A prior felony conviction for which civil rights have not been restored
- B. A pattern of dishonest dealing in prior business transactions unrelated to real estate
- C. The applicant's current marital status and personal lifestyle choices that do not involve fraud or dishonesty ✓
- D. A prior real estate license revocation in another state based on fraudulent misrepresentation
Under Section 475.17 and 475.25 F.S., FREC's good moral character determination focuses on a person's honesty, truthfulness, trustworthiness, and their history of lawful conduct. An applicant's marital status or personal lifestyle choices that do not involve dishonesty, fraud, or violation of law are not relevant factors. By contrast, unrestored felony convictions, patterns of dishonest business conduct, and out-of-state license revocations for fraud are all directly relevant to the character assessment.
3. A Florida seller of a residential property receives two competing written offers simultaneously. Seller accepts Buyer A's offer and executes the FAR/BAR contract. Seller then accepts Buyer B's offer as a backup contract using the FAR/BAR Residential Contract with Backup Addendum. Buyer A subsequently defaults and the seller declares Buyer A in default in writing. Under the Backup Contract Addendum, what event triggers Buyer B's contract becoming the primary contract?
- A. Buyer A's inspection period expires without cancellation
- B. The seller delivers written notice to Buyer B that the primary contract has been terminated ✓
- C. Buyer B delivers written notice to the seller electing to move to primary status
- D. The original closing date stated in Buyer A's contract passes without closing
Under the FAR/BAR Residential Contract Backup Addendum, the backup contract automatically becomes the primary contract upon the seller delivering written notice to the backup buyer that the primary contract has been terminated. Buyer B's contract does not self-activate upon Buyer A's default alone; the seller must provide written notification of the primary contract's termination to trigger Buyer B's contract becoming the operative primary contract.
4. A Florida seller knows that the property was previously subject to a recorded lis pendens related to a mortgage foreclosure action, which was resolved and released five years ago. The seller does not disclose the prior foreclosure proceeding to the buyer. Under Florida law, which statement is most accurate?
- A. The seller must disclose the prior foreclosure proceeding because any prior legal action affecting the property is a required disclosure.
- B. No disclosure is required because the lis pendens has been released, the foreclosure was resolved, and the matter no longer affects the property's title or value. ✓
- C. The seller must disclose the prior foreclosure only if the buyer's lender specifically requests a litigation history.
- D. The seller must disclose the prior foreclosure proceeding only if it occurred within the past three years.
Florida's disclosure duty applies to facts that currently and materially affect the value of the property. A resolved and released foreclosure proceeding that no longer clouds title and has no ongoing effect on the property does not constitute a known material defect requiring disclosure. Florida Statute 689.25 addresses specific psychological facts (death, crime, disease) that are expressly not required to be disclosed; similarly, prior resolved legal proceedings that have been fully discharged do not create a current material effect on property value. The distinguishing principle is that current material impact — not historical events with no present effect — drives the disclosure obligation.
5. Under Florida law, a licensed mortgage broker negotiates a loan for a borrower and earns a fee from the lender. The borrower later discovers the broker also received a yield spread premium (YSP) from the lender that was not disclosed. Under Chapter 494, F.S., which statement best describes the broker's obligation regarding this compensation?
- A. The broker is required to disclose all compensation received from any source, including yield spread premiums, to the borrower in writing. ✓
- B. Yield spread premiums paid by lenders to brokers are exempt from Florida disclosure requirements because they are paid by the lender, not the borrower.
- C. Florida law only requires disclosure of fees paid directly by the borrower; lender-paid compensation to the broker need not be disclosed.
- D. A mortgage broker may accept undisclosed lender compensation provided it does not exceed two percent of the loan amount.
Under Section 494.0038, F.S., a mortgage broker must disclose to the borrower all compensation the broker receives or expects to receive in connection with the loan, regardless of whether it comes from the borrower or the lender. Failure to make this written disclosure constitutes a violation of Chapter 494 and can result in license suspension, revocation, or civil penalties. There is no exemption for yield spread premiums or lender-paid fees from this disclosure requirement.