Copyright Gold Coast Schools
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Learning Objectives
Describe the characteristics of the 3
major types of listings
Describe at least 3 statutory
requirements for listing agreements
Distinguish between a listing broker's
employment to find a purchaser and
to effect a sale
List the 4 types of legal contracts the
licensee may prepare
Copyright Gold Coast Schools
3
Learning Objectives
List 4 documents that the licensee
can use to gather information for
preparing a contract
Describe the differences between a
tenancy by the entireties, a joint
tenancy and a tenancy in common
Specify what steps are desirable to
protect the parties if the buyer takes
occupancy before or after the closing
date
Copyright Gold Coast Schools
4
Learning Objectives
Describe the differences between an
option contract and a right of first
refusal
Describe the effects of Johnson v.
Davis Supreme Court ruling on real
estate practice in Florida
Define the differences between a
lease option agreement and a lease
purchase agreement
Copyright Gold Coast Schools
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Brokerage Compensation
A condition of employment must exist for a
broker to be entitled to a commission
Listing agreement in writing
Contract between the owner and real estate
broker (not the licensee)
Both owner and broker (licensee) must sign
Copy to owner within 24 hours
Oral (parol) listing agreement
Enforceable if evidence of existence
Easier to prove if written
Must be in writing if for more than 1 year
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Types of Listing Agreement
Open listing
Given to many brokers
Only broker who brings a ready, willing and
able buyer is entitled to a commission
Unilateral contract, seller is obligated
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Types of Listings
Exclusive agency listing
Allows the seller to sell without owing the
listing broker a commission
The listing broker is entitled to a commission
if any brokerage firm sells the property
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Types of Listings
Exclusive right-of-sale listing
The broker is entitled to a commission no
matter who sells the property
The most widely used listing
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Types of Listings
Net listings
Seller agrees to accept a minimum amount
Any excess is the broker’s commission
Unjust enrichment
Customary commission
Legal in Florida
Should avoid
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Written Listing Agreements
Rules Definite expiration date
May not be automatically renewed
Signed copy to owner within 24 hours
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Entitlement to Commission
Procuring cause
Find a purchaser — ready, willing and able
buyer (Florida)
Effect a sale — transaction must close
Referral fee
May share commission if licensed in
another state
May not share commission if unlicensed
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Commercial Real Estate
Commercial Real Estate Sales Commission
Lien Act
Broker can lien for earned commission
Applies to the sale of commercial property
Lien is against owner’s net proceeds not property
Broker must disclose lien to seller at:
Listing
Sale
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Commercial Real Estate
Commercial Real Estate Leasing Commission Lien
Act
Broker can lien for earned commission
Applies to the lease of commercial property
Lien is against owner’s property
Tenant to pay commission
Lien is against tenants leasehold estate
May enforce rights under a renewal commission
Must file lien notice 90 days after tenant takes
possession
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Purchase and Sale Contracts
Unauthorized practice of law
Brokers may prepare
Listing agreements
Sales contracts
Option contracts
Lease agreements
– On the Florida Supreme Court approved
form (fill in the blanks only)
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Statute of Frauds
The sale of any interest in real property must
be in writing to be enforceable
Two exceptions
Contract has been performed (executed)
Partial performance
– 1) partial or full payment
– 2) buyer has taken physical possession
– or
– made improvements to property
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E-Sign Act
Electronic signatures are legally enforceable
Encryption is a problem
Not commonplace yet
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Documents Necessary
Seller documents Deed
Title policy
Survey - shows encroachments, easements
and setback violations
Mortgage
Zoning
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Provisions of Real Estate Contracts
Contract for sale and purchase FAR/BAR and CRSP widely used for routine
residential transactions
Contract date
– “Time is of the essence”
– Use realistic times
Effective date
– Date last party signed contract
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Parties to the Contract
Seller
Both husband and wife should sign
– Even if only one owns homestead
property
Buyer
Each buyer should be named
Each buyers should sign
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Types of Ownership
Sole owner
Called owner in severalty
Sole and separate owner
– Married
– If homestead owner is survived by a
spouse and lineal descendants
(remaindermen)
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Types of Ownership
Joint tenancy versus tenancy in common
Joint tenancy has the characteristic of survivorship
Tenancy in common has the characteristic of inheritability
Tenancy by the entireties
Husband and wife
Characteristic of survivorship
Simultaneous conveyance
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Co-ownership
Tenancy in
Common
Joint
Tenancy
Tenancy by
the
Entireties
Unities of
title
Same or
differentSame Same
PartiesTwo or
more
Two or
more
Husband
and wife
Survivorship NoMust
stateYes
Second
most
common
Most
common
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Earnest Money Deposit
Not required with a real estate contract
Entered on the real estate contract
More than $10,000 cash – report to IRS
A broker is not required to have an escrow account
A broker is not responsible for a returned escrow
check if timely deposited
Post dated checks require the seller’s approval and
must be noted on the contract
Licensees as buyers
Must make deposit if on contract
Cannot use commission due as deposit
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Earnest Money Deposit
Subsequent additional earnest money
Notes as earnest money
Old earnest money for new contract
Licensees as buyers
Must make deposit if on contract
Cannot use commission due as deposit
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Provisions of Real Estate Contracts
Legal description is an essential element of the
contract
Purchase Price
Method of payment
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Financing Terms
Time limit for loan application and approval
Owner occupied as principal residence
Conditional on buyer obtaining loan
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Financing Terms
Cash Sale
Seller to carry first mortgage
Due on sale clause
Balloon payment
Reserves
New conventional first mortgage
VA
Sellers concessions and nonallowables
FHA/VA amendatory clause
Adjustable
Loan Assumption
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Chattel and Fixture Inclusions
Inaccurate or incomplete descriptions of
personal property can render the contract
unenforceable
Personal property itemized in the contract with
stated amounts is subject to sales tax
A closing date is not a legal requirement of a
sales contract
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Provisions of a Contract
Evidence of Title
Time to examine title
Date of closing
Proration of expenses
Possession of Property
Time allowed for acceptance
Type of deed
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Specific Performance vs.
Liquidated Damages
Liquidated damages - available to a seller
when a buyer defaults
Rescission on breach
Compensatory damages
Specific performance
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Miscellaneous Provisions
Special assessment
Government lien
Seller usually pays lien if improvement
completed
Buyer assumes pending liens unless work
is substantially completed
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Miscellaneous Provisions
Licensee acting as buyer or seller Disclose
– Information
– That licensee no longer represents the seller
– License status in contract
Provide a no brokerage relationship
disclosure
Licensee may accept a commission
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Miscellaneous Issues
Contingent on sale of buyers’
properties
Right of first refusal
Contingent on property inspection
Conditional on spouse’s approval
Signing and acknowledgement
Number of copies needed
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Disclosure
Psychologically impacted or stigmatized
properties
Scenes of murder, suicides or are alleged
to be haunted
Disclosure is not required
Occupant infected with HIV or AIDS
Not a material fact
Disclosure violates Florida law
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Disclosure
Homeowners’ association
Ad Valorem Tax Disclosure
Energy-efficiency brochure
Radon
Property disclosure (not required)
Lead based paint
– Residential building built prior to 1978
– Information pamphlet
– Seller must disclose presence of lead based paint if seller knows
– Buyer can inspect
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Other Contracts Lease purchase agreement
Option contract
Unilateral contract,
optionor bound
Optionee is not obligated to purchase
Must contain essential elements of contract
Requires substantial or adequate consideration
Agreement for Deed
Contract for deed, land contract, installment
contract