Florida · broker exam · area I, brokerage and escrow
Brokerage and escrow, the broker side of area I
The second half of DBPR area I is the part only a broker answers for: registering the firm, the office and its sign, advertising, running the business, and the escrow account. Area I as a whole is 43% of the exam. Escrow is the densest part: most of its deadlines are counted in business days.
Updated Oct 24, 2026 · Not affiliated with any state commission or test provider.
43%area I, with license law
20questions on this page
What the area covers
DBPR outline I.B to I.D, grouped:
Brokerage entities: sole proprietor, partnerships, corporations, LLCs; which register with DBPR and need an active broker.
Office and advertising: the office and entrance sign, branch offices, trade names, blind ads, team names.
Running the firm: start-up budgets, fixed and variable costs, employees vs independent contractors, policy manuals, antitrust.
Escrow: deposit deadlines, commingling and conversion, reconciliations, conflicting demands and settlement procedures.
The escrow deadlines
Sales associate to employing broker: by the end of the next business day after receipt (61J2-14.009).
Broker into escrow, "immediately": by the end of the third business day after receipt (61J2-14.008).
Deposit held by a title company or attorney: the broker asks in writing for proof of receipt within 10 business days after the deposit is due (61J2-14.008).
Conflicting demands or good-faith doubt: notify FREC within 15 business days, and start a settlement procedure within 30 business days (61J2-10.032).
Saturdays, Sundays and legal holidays are not business days. Personal or brokerage money in escrow is capped at $1,000 per sales escrow account and $5,000 per property management account (61J2-14.010).
20 brokerage and escrow questions
0 of 20 answered · 0 correct
Question 1 of 20 · Brokerage operations and escrow
Broker Ivan moves his brokerage office to a new address on June 1. By when must he notify DBPR of the change?
Answer and explanations
Incorrect: Fifteen business days is the escrow-dispute notice period, not the address-change deadline.
Correct: Under 475.23 a broker who changes the business address must notify the Commission within 10 days on the prescribed form.
Incorrect: Thirty days is the deadline for reporting a felony plea, not an address change.
Incorrect: Waiting until renewal leaves the license out of force; a change of business address ends the license until the change is filed.
Question 2 of 20 · Brokerage operations and escrow
A new brokerage has fixed operating costs of $180,000 per year. After paying its associates, the firm keeps $3,000 per closed transaction. How many transactions per year must it close to break even?
Answer and explanations
Incorrect: 54 closings × $3,000 = $162,000, which leaves $18,000 of fixed costs uncovered.
Incorrect: 72 would be the answer at $2,500 per deal; at $3,000 per deal 72 closings cover more than the fixed costs.
Correct: Break-even = fixed costs ÷ company dollar per deal: $180,000 ÷ $3,000 = 60 closings.
Incorrect: 600 comes from dividing by $300 instead of $3,000, a misplaced zero.
Calculation steps
1Fixed costs per year$180,000
2Company dollar per closing$3,000
3Closings to break even180,000 ÷ 3,00060
Question 3 of 20 · Brokerage operations and escrow
When a broker prepares the operating budget for a new brokerage, which expense is a variable expense?
Answer and explanations
Incorrect: Office rent is set by the lease and does not change with sales, a fixed expense.
Correct: Associate commissions rise and fall with closed sales, which makes them a variable expense.
Incorrect: A salary is paid at the same level regardless of sales volume, a fixed expense.
Incorrect: The insurance premium is owed whether the firm closes one sale or a hundred, so it is fixed.
Question 4 of 20 · Brokerage operations and escrow
Broker Alicia is setting up her new office. What must the sign at the office entrance show?
Answer and explanations
Correct: Section 475.22 requires the broker's name, the trade name if one is used, and the words "licensed real estate broker" or "lic. real estate broker."
Incorrect: Associates' names are not required, and the broker's name and the licensed-broker words are missing.
Incorrect: A registered trade name still has to appear together with the broker's own name and the required words.
Incorrect: The sign needs the words "licensed" or "lic." real estate broker; a license number does not replace them.
Question 5 of 20 · Brokerage operations and escrow
Broker Ray converts his sole proprietorship into Coastline Realty, LLC, and plans to keep brokering through the new company. What does Chapter 475 require?
Answer and explanations
Incorrect: A personal broker license does not register a separate legal entity; the LLC needs its own registration.
Incorrect: A broker associate works under another broker; Ray is the broker of his own firm and stays a broker.
Incorrect: A group license is for an owner-developer with several entities, not for a broker who forms a brokerage LLC.
Correct: A brokerage entity must register with DBPR under 475.15, and at least one of its members or managers must be an active broker.
Question 6 of 20 · Brokerage operations and escrow
Mike is a limited partner in a development limited partnership. He invested $600,000 and takes no part in management. The partnership owes contractors $900,000 more than its assets. What is Mike's exposure?
Answer and explanations
Incorrect: Unlimited liability for the whole shortfall falls on the general partner, not on a passive limited partner.
Incorrect: Splitting the shortfall in half treats Mike as a general partner sharing the debt, which a limited partner is not.
Incorrect: Losing nothing at all is wrong: limited liability caps the loss at the amount invested but does not protect the investment itself.
Correct: A limited partner who stays out of management risks only the capital contributed, here $600,000.
Question 7 of 20 · Brokerage operations and escrow
Sales associate Dev receives a buyer's $10,000 deposit check on Thursday afternoon. By when must he deliver it to his employing broker?
Answer and explanations
Incorrect: Tuesday is the deadline for the broker's third-business-day escrow deposit, not the associate's delivery.
Incorrect: Same-day delivery is allowed but not required; the rule gives until the end of the next business day.
Incorrect: Monday is the second business day after receipt, one day too late.
Correct: A sales associate must turn over a deposit to the employing broker by the end of the next business day; after Thursday that is Friday.
Question 8 of 20 · Brokerage operations and escrow
Sales associate Ben receives a buyer's deposit check on Friday morning and gives it to Broker Ana that afternoon. The following Monday is a legal holiday. By the end of which day must the deposit be placed in her escrow account?
Answer and explanations
Incorrect: Tuesday is only the first business day after Friday's receipt.
Incorrect: Wednesday would be the third business day only if the Monday holiday were counted.
Correct: Receipt by the associate counts as receipt by the broker (61J2-14.009), so the count starts Friday: Tuesday, Wednesday, and Thursday are the three business days, since Monday is a holiday.
Incorrect: The following Friday is the fourth business day, one day past the deadline.
Question 9 of 20 · Brokerage operations and escrow
When opening a real estate brokerage, which business structure gives all its owners pass-through taxation while maintaining limited liability, similar to an LLC?
Answer and explanations
Incorrect: A C corporation limits liability but is taxed at the entity level and again on dividends, so income does not pass through.
Incorrect: A limited partnership passes income through, but its general partner has unlimited liability, so not all owners are protected.
Incorrect: A sole proprietor is taxed on the income directly but has unlimited personal liability.
Correct: An S corporation passes income through to all shareholders and still shields them from the firm's debts, the same pairing an LLC offers.
Question 10 of 20 · Brokerage operations and escrow
In which situation may a broker refund a buyer's escrow deposit without notifying FREC or using a settlement procedure?
Answer and explanations
Incorrect: The seller disputes the buyer's good faith, so the broker faces conflicting demands and must use the escrow-dispute procedure.
Incorrect: A buyer who backs out after the inspection period with the seller claiming the money is a dispute, not a refund case.
Correct: Section 475.25(1)(d)1 lets the broker return the deposit without notifying FREC when the buyer in good faith fails to meet the financing clause.
Incorrect: The seller's default claim creates conflicting demands, which require notice to FREC and a settlement procedure.
Question 11 of 20 · Brokerage operations and escrow
A broker's monthly reconciliation shows a bank statement balance of $52,300, deposits in transit of $4,000, and outstanding checks of $6,100. Total trust liability is $50,700. What does the reconciliation show?
Answer and explanations
Incorrect: $1,600 is the raw statement balance minus the liability, ignoring deposits in transit and outstanding checks.
Correct: Adjusted bank balance = $52,300 + $4,000 − $6,100 = $50,200, which is $500 less than the $50,700 trust liability.
Incorrect: $3,700 comes from adding the outstanding checks instead of subtracting them.
Incorrect: The $500 difference is right, but the bank side is lower than the liability, which is a shortage.
Calculation steps
1Bank statement balance$52,300
2Add deposits in transit+ 4,000$56,300
3Less outstanding checks− 6,100$50,200
4Compare with trust liability50,200 − 50,700−$500 (shortage)
Question 12 of 20 · Brokerage operations and escrow
A sales associate's website lists homes for sale and shows her name, email, and phone as the point of contact. Where must the brokerage firm's licensed name appear?
Answer and explanations
Incorrect: A firm name tucked on a separate page is not next to the contact information, so the ad is still effectively blind.
Incorrect: The rule ties placement to the associate's contact information, not to pages with prices or addresses.
Correct: For internet ads, FREC rule 61J2-10.025 requires the licensed brokerage name adjacent to, or immediately above or below, the point of contact.
Incorrect: An associate's personal site that advertises listings is brokerage advertising and needs the firm name.
Question 13 of 20 · Brokerage operations and escrow
Sales associate Tara runs a newspaper ad: "Lakefront 3/2, $389,000. Call Tara, 555-0142." The ad names no brokerage. What is this ad?
Answer and explanations
Incorrect: The associate's name and phone do not replace the brokerage's licensed name.
Incorrect: A license number is not what the rule requires; the firm name is.
Incorrect: FREC rules have no exception for listings an associate personally obtained; all advertising goes out in the broker's name.
Correct: An ad without the licensed name of the brokerage is a blind ad, and FREC rules prohibit it.
Question 14 of 20 · Brokerage operations and escrow
Broker Rosa received a buyer's deposit in June 2020 for a sale that later went to litigation; the lawsuit ended in September 2025. Until when must she keep the transaction records at minimum?
Answer and explanations
Incorrect: Adding 5 years to the end of the lawsuit overstates the rule; the post-litigation period is 2 years.
Incorrect: Five years from the deposit would be enough without litigation, but the lawsuit extends the period.
Incorrect: One year after the lawsuit is short of the 2-year litigation rule.
Correct: Records used in litigation are kept at least 2 years after the case ends, and at least 5 years in total: September 2025 plus 2 years is the later date.
Question 15 of 20 · Brokerage operations and escrow
A home sells for $180,000 with a 6% commission split equally between the listing and selling brokers. Each broker pays its sales associate 50% of the firm's share. How much does the listing associate receive?
Answer and explanations
Incorrect: $3,000 does not follow from the 6% rate and the two 50% splits.
Incorrect: $5,400 is the listing firm's share before the associate split.
Incorrect: $2,250 comes from a 5% commission, not the 6% in the listing.
Correct: $180,000 × 6% = $10,800; the listing firm's half is $5,400, and the associate's 50% is $2,700.
Calculation steps
1Total commission180,000 × 6%$10,800
2Listing firm's half10,800 × 50%$5,400
3Listing associate's share5,400 × 50%$2,700
Question 16 of 20 · Brokerage operations and escrow
Two competing brokers agree that one will take listings only east of the highway and the other only west of it. Which antitrust violation is this?
Answer and explanations
Incorrect: A tie-in conditions one service on buying another; nothing here is tied.
Correct: Dividing territory between competitors so each stays out of the other's area is market allocation, a per se Sherman Act violation.
Incorrect: Price fixing is an agreement on commission rates or fees; these brokers agreed on territory.
Incorrect: A group boycott is competitors agreeing to refuse to deal with a third party, not splitting a territory.
Question 17 of 20 · Brokerage operations and escrow
Which money received by broker Ivy must be placed in her sales escrow account?
Answer and explanations
Incorrect: An earned commission is the broker's own money and goes to the operating account.
Incorrect: Desk fees are brokerage income, not trust funds.
Correct: A buyer's deposit is money held in trust for others, so it belongs in the sales escrow account.
Incorrect: Her own loan to the firm is brokerage money, not money held in trust for others.
Question 18 of 20 · Brokerage operations and escrow
Two brokers plan to open a brokerage and want to protect their personal assets from the firm's business debts. Which registrable entity would NOT give them that protection?
Answer and explanations
Incorrect: LLC members are shielded from the company's debts, so an LLC does protect them.
Correct: General partners are each personally liable for the partnership's debts, so this form gives no protection.
Incorrect: Shareholders of a corporation are not liable for its debts beyond their investment.
Incorrect: An LLP protects its partners from the firm's debts, which is the purpose of the form.
Question 19 of 20 · Brokerage operations and escrow
Broker Kim keeps some of her own money in her sales escrow account to cover bank service charges. Under FREC rules, what is the most personal or brokerage money she may keep in that account?
Answer and explanations
Incorrect: $5,000 is the limit for a property management escrow account, not a sales escrow account.
Correct: Rule 61J2-14.010(2) and 475.25(1)(k) let a broker keep up to $1,000 of personal or brokerage funds in each sales escrow account.
Incorrect: $500 is below the limit; the rule allows up to $1,000 in a sales escrow account.
Incorrect: $2,500 is not a limit in the escrow rule; anything above $1,000 in a sales account is commingling.
Question 20 of 20 · Brokerage operations and escrow
Broker Dana sells lots in a new subdivision. On site she uses a small temporary shelter where her associates meet buyers out of the weather; no sales are closed there and no associate is permanently assigned to it. How does Florida law treat the shelter?
Answer and explanations
Incorrect: The county does not matter: an office in the same or another county is registered alike, and this shelter is not a branch office in either.
Correct: Rule 61J2-10.023(2) says a temporary subdivision shelter where transactions are not closed and associates are not permanently assigned is not a branch office.
Incorrect: Treating it as a registrable branch office ignores the exemption: meeting buyers at a temporary shelter, with no closings or assigned associates, does not make it one.
Incorrect: Florida has no temporary branch permit; the shelter is simply outside the branch office definition.
Answer every question to see your score
The four ways out of an escrow dispute
When buyer and seller both claim a deposit, the broker cannot simply pick a side. The settlement procedures in § 475.25(1)(d)1 are an escrow disbursement order from FREC, arbitration with the consent of all parties, a court action such as interpleader, or mediation with the written consent of all parties, which must be completed within 90 days of the last demand. The statute itself lets the broker return a deposit without notice or a settlement procedure when a condominium buyer cancels under § 718.503 or a buyer in good faith fails the financing clause; rule 61J2-10.032(5) adds HUD contracts.
The office and the sign
Each active broker keeps an office of at least one enclosed room in a building of stationary construction, with a sign at the entrance that shows the broker’s name and any trade name, the firm name and at least one broker for a partnership or corporation, and the words "licensed real estate broker" or "lic. real estate broker" (§ 475.22). Advertising has to show the brokerage name; a team name may not be printed larger than it (61J2-10.025, 10.026).
Monthly reconciliation, signed by the broker
Once a month the broker compares the trust liability with the reconciled bank balance of every escrow account, and signs and dates the statement (61J2-14.012). When the two do not agree, the statement has to explain the difference and what was done about it. A shortage or an overage is a finding either way.
What does "immediately" mean for a Florida escrow deposit?
No later than the end of the third business day after the broker receives it (rule 61J2-14.008). A sales associate has until the end of the next business day to hand it to the broker.
What is an escrow disbursement order?
An order FREC can issue when a broker asks it to decide who gets disputed escrow funds. It is one of four settlement procedures, with mediation, arbitration and a court action.
Can a broker keep personal money in the escrow account?
Only up to $1,000 in a sales escrow account and $5,000 in a property management account. Anything else is commingling.