Florida broker exam practice test, every option explained

Incorrect: The informal hearing is for licensees who do not dispute the facts.

Incorrect: The probable cause panel's finding is not reheard on the licensee's request.

Correct: A licensee who disputes material facts in a formal complaint is entitled to a formal hearing before an ALJ of the Division of Administrative Hearings.

Incorrect: The case is between DBPR and the licensee; the complainant is not a party to mediation.

Incorrect: $150,000 is the per-licensee ceiling, but the per-transaction caps bring the total below it.

Incorrect: $170,000 pays every judgment in full and ignores both caps.

Incorrect: $50,000 is the cap for one transaction; three separate transactions each carry their own cap.

Correct: Each claim is capped at $50,000 per transaction ($50,000 + $50,000 + $40,000 = $140,000), which stays under the $150,000 limit per licensee.

Incorrect: The statute sets a 30-day deadline, not a renewal-time disclosure.

Incorrect: Ten days is the address-change deadline.

Correct: Section 475.25(1)(p) requires written notice to the Commission within 30 days of a guilty plea to any felony, related to real estate or not.

Incorrect: Fifteen business days is the escrow-dispute notice period.

Incorrect: Core Law is taken once per renewal period; she has already done it.

Correct: The 14 hours are 3 Core Law, 3 Business Ethics, and 8 specialty; she is missing only Business Ethics.

Incorrect: Her 8 specialty hours are complete; another specialty course cannot stand in for Business Ethics.

Incorrect: Post-licensing was due before the first renewal; this is her second.

Incorrect: Giving an inspector access is an errand, not brokerage.

Correct: Showing property and describing it to a prospect is licensed activity, even when the associate is running late.

Incorrect: Handing out prepared information the broker approved is permitted for unlicensed staff.

Incorrect: Phoning the associate is a clerical courtesy that needs no license.

Incorrect: An out-of-state license does not allow brokerage activity inside Florida.

Correct: Section 475.011(1) exempts a personal representative acting under an appointment by will, even when paid for the work.

Incorrect: Finding a buyer for a fee is brokerage, so the neighbor needs a license.

Incorrect: Pay tied to closed sales is compensation for brokerage, which requires a license.

Correct: Leasing and managing rentals for others for a percentage of rents without any license violates 475.42(1)(a), a third-degree felony.

Incorrect: Second-degree misdemeanors apply to other 475.42 violations, not to practicing without a license.

Incorrect: The statute does not treat unlicensed brokerage as a first-degree misdemeanor.

Incorrect: Unlicensed practice is a crime, not only an administrative matter.

Incorrect: A final order comes only after a hearing or a settlement, not right after probable cause.

Incorrect: Probable cause does not suspend the license; an emergency suspension needs a separate order.

Incorrect: A citation replaces the formal complaint process for minor listed violations; after probable cause the case goes to a formal complaint instead.

Correct: Once the panel finds probable cause, DBPR files a formal administrative complaint, which starts the disciplinary case.

Incorrect: The 28-hour course works only for 12 to 24 months of involuntary inactivity.

Correct: A license that has been involuntarily inactive for more than 2 years expires and becomes null and void under 475.183(2)(b).

Incorrect: Fourteen hours reactivates a license inactive for 12 months or less.

Incorrect: The statute makes the license void automatically; there is no reinstatement hearing.

Incorrect: A private loss-sharing agreement does not protect a general partner from the firm's creditors.

Incorrect: A silent general partner is still a general partner, with unlimited liability.

Correct: As a limited partner who stays out of management, Thomas risks only his capital, while Emily as general partner runs the firm.

Incorrect: The general partner carries unlimited liability, the opposite of what Thomas wants.

Incorrect: $14,700 applies her 70% to the whole commission instead of the listing side.

Incorrect: $3,150 is the broker's 30% of the listing side, not her share.

Correct: $350,000 × 6% = $21,000; the listing firm's half is $10,500; her 70% is $7,350.

Incorrect: $10,500 is the listing firm's share before her split.

Incorrect: The period runs from receipt of the deposit, not from the closing date.

Correct: Without litigation, records are kept at least 5 years from the date the escrow deposit was received: June 1, 2021 plus 5 years.

Incorrect: Three years is too short; Florida requires 5.

Incorrect: This uses both the wrong start date and a 3-year period.

Incorrect: Monday is the first business day; the rule allows three.

Incorrect: Tuesday is the second business day, one day short of the deadline.

Correct: A broker must deposit escrow funds by the end of the third business day after receipt; after a Friday that is Monday, Tuesday, Wednesday.

Incorrect: Friday is the fifth business day, two days past the limit.

Incorrect: An escrow disbursement order settles a dispute; here there is none.

Incorrect: No release is needed in this case, and the seller is not objecting anyway.

Incorrect: The 15-business-day notice applies to conflicting demands or good-faith doubt, which this case does not have.

Correct: When the buyer in good faith cannot meet the financing clause, 475.25(1)(d)1 lets the broker return the deposit without notice to FREC or a settlement procedure.

Correct: Section 475.15 requires a brokerage entity to register with DBPR and to have at least one active broker as member or manager.

Incorrect: Members need no sales associate license, and a branch registration applies only to extra offices.

Incorrect: The LLC must still register with DBPR before it may broker.

Incorrect: Only one broker is required; other members may be associates or unlicensed.

Incorrect: Monday is a legal holiday, not a business day.

Incorrect: Saturday is not a business day, so it is not the deadline either.

Correct: A sales associate must deliver a deposit by the end of the next business day; with Monday a legal holiday, that day is Tuesday.

Incorrect: Wednesday is the second business day after receipt.

Incorrect: The 'Licensed Real Estate Brokerage Office' wording is close, but the sign leaves out the name of a broker.

Incorrect: The registered corporate name is missing, and so are the licensed-broker words.

Incorrect: This sign has neither a broker's name nor the required words.

Correct: For a corporation the sign must show the firm name, the name of at least one broker, and "licensed" or "lic." real estate broker.

Incorrect: Fifteen business days applies only when the broker holds the disputed deposit.

Incorrect: Thirty business days is the deadline to start a settlement procedure for funds the broker holds.

Correct: The FREC notice and settlement rules apply to deposits the broker holds; a title company escrow agent handles its own dispute.

Incorrect: Procuring the contract does not make the broker responsible for funds held by someone else.

Incorrect: Withholding income tax is what an employer does, the opposite of contractor status.

Correct: IRS rules treat licensed agents as independent contractors when nearly all pay comes from sales and a written contract says they are not employees for tax purposes.

Incorrect: Hours worked are not part of the qualified real estate agent test.

Incorrect: A fixed weekly payment cuts against the rule, which needs pay tied to sales output.

Incorrect: Adding her own name does not replace the trade-name registration.

Incorrect: FREC does not pre-approve advertising.

Correct: A broker may use a trade name only after it is registered with DBPR on her license, and the name must then appear in her advertising and on her sign.

Incorrect: A state fictitious-name filing alone does not register the name with the real estate regulator.

Correct: An agent must account for money handled for the principal, and refusing a statement of rents and expenses breaches that duty most directly.

Incorrect: Refusing her request touches obedience, but the specific duty about funds is accounting.

Incorrect: Confidentiality protects the principal's information from others; Susan is asking about her own money.

Incorrect: Nothing suggests the management work was careless; the problem is the refusal to report the money.

Correct: Johnson v. Davis covers known defects that are not readily observable; a crack the buyer walked over twice is open to view.

Incorrect: The duty is limited to latent defects, not every defect the seller knows of.

Incorrect: A waiver is not needed for a defect the buyer could plainly see.

Incorrect: No 5% value test exists; what matters is whether the defect was observable.

Correct: Florida's statute of frauds, 725.01, requires a writing for leases longer than one year, so a one-year lease may be oral.

Incorrect: Any contract for the sale of land must be in writing to be enforceable.

Incorrect: A two-year lease runs longer than one year, so it must be written.

Incorrect: An option is a contract about an interest in land and has to be in writing.

Incorrect: Lou represents the other side, and the broker may not carry one customer's secrets across to the other side's associate.

Incorrect: Nothing requires withdrawing the designations: hearing confidential information for advice is what the statute permits.

Correct: Under 475.2755 a designated sales associate may share a customer's confidential information with the broker for advice, and the broker must keep it confidential and may not use it against the other party.

Incorrect: The broker owes the buyer no duty to reveal the seller's bottom price; the statute forbids using it against the seller's counterpart.

Incorrect: Only the party whose information it is needs to waive; the buyer's signature adds nothing.

Incorrect: A written offer from the buyer has nothing to do with the seller's waiver.

Incorrect: The statute itself says limited confidentiality applies unless waived in writing by a party.

Correct: Limited confidentiality applies unless a party waives it in writing; the seller has signed one, which lets the broker share the price flexibility.

Correct: The brother agreed to perform, so he is liable, and the buyer stays liable because the seller never released her; only a novation would free her.

Incorrect: Making the brother alone liable ignores that consent to an assignment is not a release; the original buyer remains bound.

Incorrect: Leaving the brother out ignores that he took on the contract by agreeing to perform it, so he is liable too.

Incorrect: Consenting to an assignment keeps the contract alive with a new performing party.

Incorrect: Unenforceable describes contracts with a technical defect, such as a missing writing; duress makes it voidable.

Incorrect: A contract signed under threat stays in force until the threatened party chooses to void it.

Correct: Duress makes a contract voidable by the party who was threatened, here the seller.

Incorrect: The buyer made the threat and cannot use his own wrong to escape the contract.

Incorrect: An express contract is stated in words, spoken or written; here the terms came from conduct.

Incorrect: Nothing about the arrangement is illegal or impossible, so it is not void.

Correct: When conduct shows both sides intend a deal, such as repeatedly accepting services known to be paid, an implied contract forms.

Incorrect: A quasi-contract is a remedy courts impose where no agreement exists; here the parties' conduct shows one.

Incorrect: $1,400 applies the $0.35 note rate to the full price.

Incorrect: $1,750 taxes only the $250,000 cash, but an assumed mortgage is part of the consideration.

Incorrect: $1,050 taxes only the assumed mortgage.

Correct: Deed stamps apply to the full consideration, including an assumed mortgage: $400,000 ÷ 100 × $0.70 = $2,800.

Incorrect: The amount is right, but unpaid taxes are a seller debit.

Incorrect: $1,500 is 100 days, which gives April 10 to the seller although it belongs to the buyer.

Correct: Seller owns January 1–April 9, 99 days: $5,475 ÷ 365 = $15 a day × 99 = $1,485, owed to the buyer who pays the November bill.

Incorrect: $3,990 is the buyer's 266 days, charged to the seller.

Incorrect: Section E holds recording fees and transfer taxes, not property tax prorations.

Correct: Unpaid taxes for the seller's months are an adjustment between the parties, shown on page 3 as a seller debit and a buyer credit.

Incorrect: Section F holds prepaids such as hazard insurance and the buyer's tax deposit, not the seller's unpaid share.

Incorrect: This direction fits taxes the seller already paid; unpaid taxes run the other way.

Incorrect: $827.47 multiplies the exact loan by 0.0035 and skips the round-up of the fractional $100.

Incorrect: $1,655.50 applies the $0.70 deed rate to the note.

Correct: Note stamps are $0.35 per $100 or fraction: $236,420 is 2,364.2 units, rounded up to 2,365, and 2,365 × $0.35 = $827.75.

Incorrect: $472.84 is the 0.2% intangible tax on the mortgage, a different tax.

Incorrect: C has the lowest rate of the four, 6.7%.

Incorrect: B's $38,000 is the largest NOI, but on a $500,000 price it is only 7.6%.

Incorrect: D's 8.0% is second, below A's 9.0%.

Correct: Cap rates: A $27,000 ÷ $300,000 = 9.0%, B 7.6%, C 6.7%, D 8.0%, so A has the highest yield.

Incorrect: $29,000 deducts both the mortgage and the income tax.

Incorrect: $44,000 deducts the owner's personal income tax, which is not a property expense.

Correct: Operating expenses are maintenance, management, advertising, and taxes, $14,000; the mortgage and the owner's income tax are not operating expenses: $60,000 − $14,000 = $46,000.

Incorrect: $31,000 deducts the mortgage payment, a financing cost that sits below NOI.

Incorrect: Borrowing raises the equity return only when the property earns more than the loan costs; here it earns less, so 'always' fails.

Incorrect: Debt service is paid out of NOI, so borrowing changes the cash left for the owner.

Incorrect: NOI is measured before debt service, so a loan cannot raise it.

Correct: With a 7% cap rate and an 8% constant, every borrowed dollar costs more than it earns, so the return on equity drops as debt rises.

Correct: Total investment is $200,000 + $300,000 = $500,000; the sale at $480,000 loses $20,000, and −$20,000 ÷ $500,000 = −4.0%.

Incorrect: −10.0% divides the loss by the land cost alone.

Incorrect: −6.7% divides the loss by the building cost alone.

Incorrect: The size is right, but the sale price is below the cost, so the return is negative.

Correct: GIM = price ÷ gross income: A is $250,000 ÷ $25,000 = 10.0 and B is $400,000 ÷ $36,000 = 11.1, so A is lower.

Incorrect: 0.09 is B's inverted ratio, and B's multiplier is the higher one.

Incorrect: 11.1 is B's correct multiplier, but it is the higher of the two.

Incorrect: 0.10 is income ÷ price, the inverse of the multiplier.

Correct: Interest is $300,000 × 6% = $18,000; cash flow is $32,000 − $18,000 = $14,000, and $14,000 ÷ $100,000 = 14.0%.

Incorrect: 8.0% is the cap rate, NOI ÷ price, which ignores the loan.

Incorrect: 32.0% divides NOI by the down payment without paying the interest.

Incorrect: 4.7% divides the cash flow by the loan instead of the cash invested.

Incorrect: 6.3% divides the gain by the $240,000 loan instead of the cash invested.

Incorrect: 20.0% is the down payment percentage, not a return.

Correct: A 5% rise on $300,000 is $15,000, earned on $60,000 of cash: $15,000 ÷ $60,000 = 25.0%.

Incorrect: 5.0% is the property's appreciation, not the return on the smaller cash investment.

Correct: Only the building depreciates: $330,000 − $55,000 = $275,000, over 27.5 years for residential rental property = $10,000 a year.

Incorrect: $12,000 depreciates the land along with the building.

Incorrect: $7,051 uses the 39-year life for nonresidential property.

Incorrect: $8,462 includes the land and uses the 39-year life.

Incorrect: Conformity is about a property matching its neighbors, not an outside facility changing values.

Incorrect: Contribution measures what one feature of the property adds to its own value.

Correct: Outside forces beyond the property line can raise or lower value; the station does both, depending on distance.

Incorrect: Demand does shift near a new station, but the principle that names value effects from off-site influences is externalities.

Incorrect: A mortgage banker funds loans with its own money and closes them in its own name.

Incorrect: A servicer collects payments after closing and handles escrow, not origination.

Correct: A mortgage broker takes the application and places it with a lender that funds the loan in its own name, earning a fee for the placement.

Incorrect: Secondary-market investors buy loans after closing; they do not take applications.

Correct: PITI = $1,520 + $4,200 ÷ 12 ($350) + $2,400 ÷ 12 ($200) = $2,070.

Incorrect: $1,870 adds only the taxes and leaves out the insurance.

Incorrect: $1,720 adds only the insurance and leaves out the taxes.

Incorrect: $8,120 adds the annual tax and insurance to one month's payment.

Correct: The Florida Constitution requires full compensation for property taken by eminent domain, and a 12-person jury sets the amount.

Incorrect: Assessed value is a tax figure; compensation is based on full value, set by the jury.

Incorrect: Police power regulates use without taking title; acquiring the strip is eminent domain and must be paid for.

Incorrect: A partial taking is still a taking and must be paid for, including damages to the remainder.

Incorrect: Expansion brings falling vacancy, rising rents, and new construction.

Correct: Rising vacancy and falling rents with new construction starts halted mark the recession phase.

Incorrect: Hypersupply has rising vacancy while construction is still active; here starts have stopped.

Incorrect: Recovery has vacancy falling from its peak, not rising.

Correct: Accrual accounting records revenue when it is earned, and the commission was earned at the December 28 closing.

Incorrect: Recording revenue when the cash arrives is the cash method.

Incorrect: Bank clearance is a cash event and does not decide accrual timing.

Incorrect: Revenue is not split between periods because payment crosses year-end.

Correct: In a bilateral contract the exchanged promises are the consideration, so the contract was formed on signing; not paying the deposit is the buyer's breach.

Incorrect: Both parties signed and promised, so both are bound.

Incorrect: A deposit is customary, not required; the promises already supply consideration.

Incorrect: Clearance of a deposit is not a condition of contract formation.

Correct: Buyer debits $350,000 + $9,500 = $359,500, minus credits $10,000 + $280,000 + $1,800 = $291,800, leaves $67,700 to bring.

Incorrect: $71,300 treats the tax proration as an extra charge instead of a credit.

Incorrect: $77,700 forgets the $10,000 deposit the buyer already paid.

Incorrect: $69,500 leaves out the $1,800 tax credit.

Correct: The September 1 payment covered August; September interest is $96,000 × 7.5% ÷ 12 = $600, and the seller owes September 1–10, 10 days: $600 × 10 ÷ 30 = $200 to the buyer, who will pay it on October 1.

Incorrect: $220 counts 11 days, giving September 11 to the seller although it belongs to the buyer.

Incorrect: The amount is right, but interest paid in arrears is owed by the seller for the days before closing, so it is a seller debit.

Incorrect: $400 is the buyer's 20 days, September 11–30, charged to the wrong party.

Incorrect: The test is the license status at the time of the service, not when the listing was signed.

Correct: Section 475.41 voids a commission contract unless the broker held a current license when the service was performed; on April 10 she did not.

Incorrect: Renewing on May 1 does not cure work done on April 10 while the license was inactive.

Incorrect: The listing did not end; the problem is that the commission cannot be enforced for work done while inactive.