An agent is someone who transacts business or manages the tasks of another person (e.g., principal), pursuant to the principal’s authority. A principal is the party that the agent represents and acts on behalf of, such as Alex. Lori is not necessarily a licensed salesperson. She can be an agent and hold another position, such as a broker, that requires an agency relationship.

A freehold estate is ownership of real property for an undetermined length of time. A nonfreehold or leasehold estate has a determinable end. An estate is simply an interest in property that provides the right to possess the land.

An easement, which is a nonpossessory interest in someone else’s land, is also known as a right of way. The property receiving the benefit of the easement is the dominant estate, while the property that is providing the benefit or suffering is the servient estate. An easement in gross is also known as a commercial easement in gross and is typically possessed by governments and utilities for providing services to the public such as electrical lines across another’s property. No easement provides an ownership or possessory interest in the property. It is just a right to use or to restrict use.

To compute the loan to value ratio, which is the ratio of the loan balance to the property value, you divide the loan balance by the market value. $135,000 / $540,000 = .25, so the loan to value ratio is 25%.

An executory contract is a contract that has terms to be completed at a later date. It is not fully performed until all acts required are completed, such as a mortgage. An executed contract is a fully performed contract. A unilateral contract involves a promise to induce the other party to do some act, such as an open listing contract, where the property owner can cancel the listing at any time prior to an agreed upon deal. An implied contract is formed based upon the actions of the parties that evidence an intent to enter into a contract, such as where a seller permits a broker to show a property before any formal agreement is entered into.

A blanket mortgage is a commercial mortgage often used by real estate developers to finance a project. At least two parcels of property are pledged as collateral. The release clause allows the lien to be lifted on particular parcels when a certain amount of the loan balance is paid, such as when a new home is sold and the developer uses the proceeds from the sale to pay off a portion of the Blanket mortgage. PMI is private mortgage insurance, which is not a type of mortgage. It is used when the down payment is less than 20% to insure the top portion of the loan in case of default. An insurance premium is typically added to the monthly mortgage payment. A Pledged Account involves the purchaser placing money in a savings account and using the earned interest to supplement the mortgage payment. With an Open-End mortgage, the mortgagor (purchaser/borrower) is entitled to demand additional loan funds without the need to undergo a new underwriting process.

Eminent domain is the government power permitting it to obtain private property for public use. Condemnation is the actual taking of the property pursuant to the eminent domain power. Municipal forfeiture and public seizure are not formal terms.

Wetlands are protected areas that include swamps, marshes, wet meadows and bogs. They may serve as protection for storm and flood water and help control erosion and pollution. They also serve as sanctuaries for wildlife and the natural landscape.

A claim to the Florida Real Estate Recovery Fund must be filed within 2 years of the alleged violation or after its discovery. The Real Estate Recovery Fund is an account created by the Florida Real Estate Commission (FREC) to reimburse any person, partnership, or corporation adjudged by a court of competent civil jurisdiction in this state to have suffered monetary damages by reason of any act committed, as a part of any real estate brokerage transaction involving real property in Florida, by any broker or sales associate. The spouse of a licensee violator is not eligible for a recovery. A final judgment and attempt to collect on the judgment is required to obtain a recovery. Punitive damages are not recoverable from the fund.

A property manager oversees the property on behalf of the owner and is typically required to oversee employees and maintenance and protect the interests of and obtain the optimum financial return for the property owner who employs the manager. A lessee is the tenant of a property pursuant to a lease. A leasing agent is retained by a property owner to locate tenants for the owner’s building. A managing agent has more power than a property manager, including the ability to use their judgment and discretion in matters affecting the property.

Capital gains represent the profits on a capital investment, such as real estate. The profit realized from the sale of real estate held for 3 years is long term capital gains. Long term capital gains are profits on assets that are owned for more than 12 months. Short term capital gains are profits on assets that are owned for 12 months or less. Profit on long term capital gains is subject to a reduced tax rate and is not taxed as ordinary gross income, but profit on short term capital gains is taxed as ordinary gross income.

An agency by estoppel, which is an implied agency, was created since Lev, the principal, did not stop Francois, the agent, from representing Lev’s interests. An implied agency is formed based on the words or actions of the agent and principal that evidences an intent to form the agency. An express agency is formed through an oral or written agreement. An agency does not necessarily need to be created through a written agreement. A listing agreement is an example of an express agency.

The 1988 Amendment to the Fair Housing act added protected classes to the law. It added families and persons with mental and physical disabilities to the law. Elderly persons were not added to law. However, senior citizen housing is exempt from the Fair Housing Act if it complies with the exemption requirements. By restricting tenants to people 55 and over, an exemption to the Fair Housing Act could apply.

Depreciation is the loss of value due to a building or property due to any cause, such as deterioration, damage and normal wear and tear. Functional obsolescence means that the property has become inferior to surrounding properties due to technological changes, such as obsolete equipment (e.g., heating system), outdated electrical system or outdated design. External obsolescence refers to changes occurring to land-use in the surrounding area, such as increased traffic, pollution, and zoning changes that affect the permitted use of the property.

Accountability means financial accountability and is the fiduciary duty that requires the agent to act with care and properly handle funds received on behalf of the principal. Reasonable care, skill and diligence, along with full disclosure of pertinent information, obedience and loyalty are also all a part of a licensee’s fiduciary duty to the principal.

The Florida Department of Business and Professional Regulation (DBPR) is the licensing authority for Florida real estate professionals. License applications are submitted through http://www.myfloridalicense.com/dbpr/.

Florida does not have reciprocity agreements with any other states. A reciprocity agreement allows a broker that is licensed in one state to be able to operate in another state without the need to take pre-licensing course work and/or an examination. A Florida broker must meet the licensing requirement of any state in which the broker seeks to be licensed. However, Florida does have mutual recognition agreements with other states, so a non-Florida resident who is a broker in one of the states with comparable licensing requirements can become licensed in Florida without meeting all of Florida’s licensing requirements, though the licensee must still pass a 40 question exam covering Florida real estate law. This option is not available to Florida residents licensed in other states to obtain a Florida license. Florida has mutual recognition agreements with the following seven states: Alabama, Arkansas, Connecticut, Georgia, Illinois, Mississippi, and Nebraska.

While Florida attorneys may be exempt from some of the requirements of licensure, attorneys still need to have a license to sell real estate. Court appointed persons who follow the court directive, banks that are federally regulated and SEC registered dealers selling businesses to accredited investors are a few of the situations where a license is not required.

No experience is necessary to become a registered trainee appraiser, which is essentially an apprentice to a licensed or certified appraiser. The registered trainee appraiser has to work under the direct supervision of a licensed or certified appraiser, such as a certified general appraiser or certified residential appraiser. Certified general real estate appraisers require two and a half years of experience, while licensed real estate appraisers and certified residential real estate appraisers require two years of experience.

The sales price is placed on page three on the Closing Disclosure as credit to the seller and debit to buyer.