GOLD COAST REAL ESTATE PRACTICE FINAL
385 PRACTICE QUESTIONS AND DETAILED
SOLUTIONS
◉ What should a broker do if unsure what action to take concerning
escrow funds?
Answer: Notify FREC in writing / institute the appropriate
settlement procedure. — Why: A broker cannot simply guess what
to do with disputed escrow money. Florida law provides specific
escrow-dispute settlement procedures.
◉ What appraisal principle says a buyer will not pay more for a
property than the cost of acquiring an equally desirable substitute?
Answer: Principle of substitution. — Why: Buyers compare
alternatives. If a similar property is available for less, a rational
buyer normally won't pay more for the subject property.
◉ What are the FHA qualifying ratios commonly taught for housing
expense and total debt?
Answer: 31% / 43%. — Why: The traditional benchmark is
approximately 31% for housing expense and 43% for total recurring
debt, although actual underwriting can allow variations.
◉ What deed provides the least protection to the grantee?
,Answer: Quitclaim deed. — Why: The grantor makes no warranties
of title. The grantor is basically saying, "Whatever interest I have, if
any, I'm giving to you."
◉ What right does a property owner have when the property
borders a river or stream?
Answer: Riparian rights. — Why: Riparian = river/stream. Rights
involving lakes and oceans are generally called littoral rights.
◉ What should a broker do upon discovering that title is not
merchantable?
Answer: Immediately notify the owner/client. — Why: A broker
must disclose material information affecting the transaction rather
than conceal a known title problem.
◉ If a city needs private land to build a public school, how may it
acquire the property?
Answer: Eminent domain. — Why: Eminent domain is the
government's power to take private property for a public purpose,
while paying just compensation.
◉ Who can a sales associate sue for an unpaid commission?
Answer: The employing broker. — Why: Sales associates are
compensated through their registered employer. They generally
cannot sue the buyer or seller directly for the commission.
, ◉ A broker represents both buyer and seller as a single agent. What
is this?
Answer: An illegal dual-agency relationship in Florida. — Why:
Florida does not permit a broker to act as a single agent for both
parties in the same transaction.
◉ What is the basic difference between FHA and VA loan programs?
Answer: FHA insures; VA guarantees. — Why: Easy memory trick:
FHA = insurance; VA = guarantee.
◉ What survey system is commonly used for platted subdivisions?
Answer: Lot-and-block system. — Why: Lot-and-block descriptions
identify property by lot, block, subdivision, and recorded plat
information.
◉ What generally happens to property taxes when a buyer
purchases property and the property is reassessed?
Answer: They may increase. — Why: A transfer can cause
reassessment and can remove limitations that benefited the
previous owner, particularly with homesteaded property.
◉ What disciplinary remedy can the DBPR NOT issue on its own?
385 PRACTICE QUESTIONS AND DETAILED
SOLUTIONS
◉ What should a broker do if unsure what action to take concerning
escrow funds?
Answer: Notify FREC in writing / institute the appropriate
settlement procedure. — Why: A broker cannot simply guess what
to do with disputed escrow money. Florida law provides specific
escrow-dispute settlement procedures.
◉ What appraisal principle says a buyer will not pay more for a
property than the cost of acquiring an equally desirable substitute?
Answer: Principle of substitution. — Why: Buyers compare
alternatives. If a similar property is available for less, a rational
buyer normally won't pay more for the subject property.
◉ What are the FHA qualifying ratios commonly taught for housing
expense and total debt?
Answer: 31% / 43%. — Why: The traditional benchmark is
approximately 31% for housing expense and 43% for total recurring
debt, although actual underwriting can allow variations.
◉ What deed provides the least protection to the grantee?
,Answer: Quitclaim deed. — Why: The grantor makes no warranties
of title. The grantor is basically saying, "Whatever interest I have, if
any, I'm giving to you."
◉ What right does a property owner have when the property
borders a river or stream?
Answer: Riparian rights. — Why: Riparian = river/stream. Rights
involving lakes and oceans are generally called littoral rights.
◉ What should a broker do upon discovering that title is not
merchantable?
Answer: Immediately notify the owner/client. — Why: A broker
must disclose material information affecting the transaction rather
than conceal a known title problem.
◉ If a city needs private land to build a public school, how may it
acquire the property?
Answer: Eminent domain. — Why: Eminent domain is the
government's power to take private property for a public purpose,
while paying just compensation.
◉ Who can a sales associate sue for an unpaid commission?
Answer: The employing broker. — Why: Sales associates are
compensated through their registered employer. They generally
cannot sue the buyer or seller directly for the commission.
, ◉ A broker represents both buyer and seller as a single agent. What
is this?
Answer: An illegal dual-agency relationship in Florida. — Why:
Florida does not permit a broker to act as a single agent for both
parties in the same transaction.
◉ What is the basic difference between FHA and VA loan programs?
Answer: FHA insures; VA guarantees. — Why: Easy memory trick:
FHA = insurance; VA = guarantee.
◉ What survey system is commonly used for platted subdivisions?
Answer: Lot-and-block system. — Why: Lot-and-block descriptions
identify property by lot, block, subdivision, and recorded plat
information.
◉ What generally happens to property taxes when a buyer
purchases property and the property is reassessed?
Answer: They may increase. — Why: A transfer can cause
reassessment and can remove limitations that benefited the
previous owner, particularly with homesteaded property.
◉ What disciplinary remedy can the DBPR NOT issue on its own?
