Florida Real Estate License Exam Review Flashcards

Vocabulary flashcards covering key real estate definitions, Florida-specific laws, and real estate finance and appraisal concepts derived from lecture materials.

Fee Simple Absolute

The most complete form of ownership; the owner has unrestricted rights to use, sell, or will the property.

Life Estate

An interest in real property that lasts only for the duration of someone's life; passes to a remainderman or reverts to the grantor at death.

Fixture

An item of personal property that has become real property by being permanently attached to the land or structure.

Bundle of Rights

The legal concept describing real property ownership as a set of rights: possession, control, exclusion, enjoyment, and disposition.

Tenancy in Common

Co-ownership where two or more owners hold undivided interests with no right of survivorship; interests can be unequal.

Joint Tenancy

Co-ownership with right of survivorship, requiring the four unities of time, title, interest, and possession.

Tenancy by the Entirety

A form of co-ownership available only to married couples in Florida, with automatic right of survivorship.

Escheat

The reversion of property to the state when an owner dies without a will and without identifiable heirs.

Metes and Bounds

A legal description method that uses distances, directions, and a point of beginning to define property boundaries.

Government Survey System

A legal description method using townships, ranges, and sections; each section equals $640\text{ acres}$.

Transaction Broker

Florida's default brokerage relationship; provides limited representation without full fiduciary duties to either party.

Single Agent

A brokerage relationship with full fiduciary duties to one party: loyalty, obedience, disclosure, confidentiality, accounting, and skill/care/diligence.

No Brokerage Relationship (NBR)

A relationship where the licensee represents neither party as a client but still owes honesty and fair dealing.

Fiduciary Duty

A legal obligation of trust owed by an agent to a principal, including loyalty and full disclosure.

Dual Agency

Representing both buyer and seller as full fiduciaries in the same transaction; not permitted in its classic form in Florida.

Exclusive Right of Sale Listing

A listing agreement that guarantees the broker a commission regardless of who sells the property during the listing term.

Exclusive Agency Listing

A listing where the broker earns commission unless the owner personally sells the property without any broker's help.

Open Listing

A non-exclusive listing where multiple brokers can compete, and only the procuring cause broker earns the commission.

Net Listing

A listing where the broker's commission is the amount above a seller's minimum acceptable price; heavily discouraged/regulated in FL.

Statute of Frauds

The legal requirement that contracts for the sale of real property must be in writing to be enforceable.

Void Contract

A contract that has no legal effect from the beginning, as if it never existed.

Voidable Contract

A contract that is valid but may be canceled by one party due to some legal defect, such as fraud or incapacity.

Liquidated Damages

A predetermined amount (often the earnest money deposit) that a seller may keep if a buyer defaults on a contract.

Specific Performance

A legal remedy compelling a party to fulfill the exact terms of a contract, often used when the property is unique.

Promissory Note

The document representing a borrower's personal promise to repay a debt; establishes the borrower's personal liability.

Mortgage

The security instrument that creates a lien against real property to secure repayment of a debt.

Lien Theory State

A state (including Florida) where the borrower holds legal title and the lender holds only a lien until the loan is repaid.

Loan-to-Value Ratio (LTV)

The ratio of the loan amount to the appraised value or sale price of a property, expressed as a percentage.

Amortized Loan

A loan repaid through regular payments that cover both principal and interest over the loan term.

Adjustable-Rate Mortgage (ARM)

A mortgage loan with an interest rate that changes periodically based on a financial index.

Balloon Mortgage

A loan with smaller periodic payments and one large final payment to pay off the remaining balance.

Discount Points

Upfront fees paid to a lender at closing to reduce the interest rate; one point equals $1\%$ of the loan amount.

Truth in Lending Act (Regulation Z)

Federal law requiring lenders to disclose credit terms and the true cost of borrowing, including APR.

Annual Percentage Rate (APR)

The total yearly cost of a loan expressed as a percentage, including interest and certain fees.

Judicial Foreclosure

A court-supervised process used in Florida for a lender to reclaim property after a borrower defaults.

Equitable Right of Redemption

A borrower's right to reclaim property by paying off the debt before a foreclosure sale is finalized.

Sales Comparison Approach

An appraisal method that estimates value by comparing a property to recently sold similar properties.

Cost Approach

An appraisal method estimating value by adding land value to the depreciated cost of reproducing improvements.

Income Capitalization Approach

An appraisal method valuing property based on its ability to generate income; $\text{Value} = \frac{\text{Income}}{\text{Cap Rate}}$.

Highest and Best Use

The legally permissible, physically possible, and financially feasible use of land that produces the greatest value.

Functional Obsolescence

A loss in value due to outdated design, layout, or features within the property itself.

External (Economic) Obsolescence

A loss in value caused by factors outside the property, such as a declining neighborhood or nearby nuisance.

Fair Housing Act

Federal law prohibiting housing discrimination based on race, color, religion, sex, national origin, familial status, and disability.

Blockbusting

The illegal practice of inducing owners to sell by suggesting minority groups are moving into the neighborhood.

Steering

The illegal practice of guiding homebuyers toward or away from certain neighborhoods based on protected class.

Redlining

The illegal practice of denying loans or insurance to residents of certain areas based on race or ethnicity.

Mrs. Murphy Exemption

A limited Fair Housing Act exemption for owner-occupied buildings with four or fewer units.

Zoning

A government police power regulating land use through districts (residential, commercial, industrial, etc.) without compensation.

Eminent Domain

The government's power to take private property for public use upon payment of just compensation.

Variance

Permission to deviate from zoning requirements due to a unique hardship affecting the property.

Nonconforming Use

A legal use of property that existed before current zoning was enacted and is allowed to continue.

DBPR

Florida's Department of Business and Professional Regulation; oversees licensing and regulation of real estate professionals.

FREC

The Florida Real Estate Commission; sets rules, disciplines licensees, and approves education providers for the real estate industry.

Recovery Fund

A state fund that compensates consumers who have an uncollectible judgment against a Florida real estate licensee.

Pre-Licensing Education (Sales Associate)

The $63\text{ hours}$ of FREC-approved coursework required before taking the state sales associate exam.

Post-Licensing Education

$45\text{ hours}$ of coursework a new sales associate must complete before the first license renewal.

Continuing Education

$14\text{ hours}$ of coursework (including $3\text{ hours}$ of core law) required each renewal cycle after post-licensing.

License Activation

The process of attaching a sales associate's license to a sponsoring broker so they can legally practice.

Escrow Account

A trust account maintained by a broker to hold funds belonging to others, kept separate from personal or business funds.

Commingling

The illegal mixing of client escrow funds with a broker's personal or business funds.

Immediate Deposit Rule

Florida's requirement that a broker deposit escrow funds no later than the end of the third business day after receipt.

Culpable Negligence

Careless or reckless conduct by a licensee that can serve as grounds for disciplinary action.

Material Defect Disclosure

The requirement that sellers/agents disclose known facts materially affecting property value that are not readily observable.

Johnson v. Davis

Florida case establishing that sellers must disclose known material defects not readily observable to the buyer.

Radon Gas Disclosure

A required notice in Florida real estate contracts informing buyers that radon gas may be present at levels of concern.

Lead-Based Paint Disclosure

Federal disclosure required for homes built before $1978$ informing buyers of potential lead paint hazards.

Property Tax Disclosure

Florida-required notice that property taxes may change significantly after a sale due to reassessment.

Documentary Stamp Tax (Deed)

A Florida transfer tax on deeds, generally $\$0.70$ per $\$100$ of sale price (Miami-Dade single-family is $\$0.60$).

Documentary Stamp Tax (Note)

A Florida tax on promissory notes/mortgages, calculated at $\$0.35$ per $\$100$ of the loan amount.

Intangible Tax

A Florida tax on new mortgages calculated at $0.2\%$ ($0.002$) of the loan amount.

Millage Rate

The tax rate applied to assessed property value, expressed in dollars per $\$1,000$ of value, used to calculate property taxes.

Proration

Dividing ongoing expenses like taxes or HOA dues between buyer and seller based on the closing date.

Capitalization Rate (Cap Rate)

The rate of return on an income property, calculated as $\frac{\text{Net Operating Income}}{\text{Value}}$.

Gross Rent Multiplier (GRM)

A quick valuation tool calculated as $\frac{\text{Sale Price}}{\text{Monthly Gross Rent}}$.

Net Operating Income (NOI)

Income remaining after operating expenses are subtracted from gross income, before debt service and taxes.

Points

Upfront loan fees where one point equals $1\%$ of the loan amount, used to buy down the interest rate.

Assessed Value

The value assigned to a property by a tax assessor for the purpose of calculating property taxes.

Market Value

The most probable price a property should bring in a competitive, open market under normal conditions.

Market Price

The actual price a property sells for, which may differ from its market value.

Principle of Substitution

An appraisal principle stating a buyer won't pay more for a property than the cost of an equally desirable substitute.

Principle of Conformity

An appraisal principle stating property value is maximized when it is similar to surrounding properties.

Depreciation (Appraisal)

A loss in property value due to physical deterioration, functional obsolescence, or external obsolescence.

Condominium Ownership

Individual ownership of a unit combined with shared ownership of common elements with other unit owners.

Cooperative Ownership

Ownership of shares in a corporation that owns the building, granting the shareholder a right to occupy a unit.

Time-Share

An ownership or use arrangement where multiple parties hold rights to use a property during different, specified time periods.

Estate for Years

A leasehold with a definite beginning and ending date, agreed upon in advance by landlord and tenant.

Periodic Tenancy

A leasehold that automatically renews for successive periods (e.g., month-to-month) until terminated by proper notice.

Tenancy at Will

A leasehold with no fixed term that can be terminated at any time by either landlord or tenant.

Tenancy at Sufferance

A tenancy that occurs when a tenant remains in possession after the lease has expired without the landlord's consent.

Deed Restriction

A private limitation on land use created by agreement, recorded against the property, and enforced by other property owners.

Easement

A non-possessory right to use another person's land for a specific purpose, such as access or utilities.

Encroachment

A structure or improvement that illegally extends onto a neighboring property.

Lis Pendens

A recorded legal notice indicating that a lawsuit is pending which may affect title to a specific property.

Chain of Title

The historical sequence of ownership transfers for a specific piece of property.

Title Insurance

Insurance protecting a buyer or lender against losses from defects in title that existed before the policy date.

Abstract of Title

A summary of the recorded history of a property's ownership, encumbrances, and legal actions.

Marketable Title

Title that is reasonably free from defects and that a buyer can be required to accept.

Quitclaim Deed

A deed that transfers whatever interest the grantor has, if any, without warranties of title.

Warranty Deed

A deed in which the grantor guarantees clear title and promises to defend against future claims.

Special Warranty Deed

A deed in which the grantor only warrants against defects occurring during their own period of ownership.