Proposed Pre License Education Regulations For the 2016 Legislative Session Dear Real Estate Commissioners: The Florida Real Estate Commission has developed an extensive set of FREC rules pertaining to real estate brokers and sales associates. These rules and their enabling statutes are enforced diligently. Each month real estate licensees who violated license law and FREC rules are disciplined accordingly. However, there are few rules in place that establish uniform guidelines for real estate schools and instructors. I believe there should be a clear set of rules and guidelines so that all real estate schools and course providers meet an established threshold of practice. Today, partly because of out‐of‐state schools and solely online course providers, it has become difficult for license applicants to make informed decisions regarding pre license education. License applicants rely on the DBPR through its regulation of real estate schools and educational offerings to assure license applicants that they are receiving up‐to‐date courses and instructional offerings that will prepare them for the license exam and ultimately the practice of real estate. This sounds like a foreboding task to expect of pre license education. But that is exactly what I believe the Florida legislature intended when it gave the Commission the authority to regulate schools and instructors and to review and approve pre license course offerings. I have prepared what I believe are important steps in assuring that all license applicants (and future real estate licensees) receive quality pre license education. And, just as importantly, a list of proposals that would require statutory authority to implement. It is my hope that the Commission will consider these proposals and begin a process of developing a set of regulations and rules that will better serve the public in years to come. (1) After three failed attempts on the license exam, license applicants must repeat the 63‐hour pre license course. After a third failed real estate license exam, students must successfully complete the pre license course and again pass the end‐of‐course exam before being eligible to retake the license exam a fourth time. Explanation. The pass rate on the sales associate license exam is consistently low. Of greater concern is the even lower pass rate for repeat attempts on the sales associate exam. The average pass rate for first time test takers for calendar year 2014 was 51% compared with just 34% for repeat test takers (2014 Exam Performance Summary prepared by Pearson Vue for the DBPR). Students pay for each retake exam. Pass rate statistics indicate that retaking the exam does not statistically improve students’ performance on the license exam. The public is best protected by requiring license applicants who have failed the state license exam on three attempts to successfully repeat the pre license before allowing the applicant to retest a fourth time. Exam applicants are better off retaking the pre license course when they have repeatedly failed the exam rather than to pay multiple times to retake the state exam. Furthermore, the license exam question bank is more secure if applicants do not take the license exam over and over again in short succession. There is precedence for implementing conditions for repeated exam failures. The Nationwide Mortgage Licensing System (NMLS), for example, requires a waiting period to retake the mortgage loan originator exam. Candidates taking the nationwide mortgage licensing exam must wait 30 days before retaking a failed exam and after the 3rd failure, mortgage loan originator license candidates must wait 180 days before attempting the exam a 4th time. These exam restrictions are very stringent indeed. They emphasize the importance that the NMLS places on both license exam security and exam preparation. Requiring real estate license exam candidates to repeat the pre license course after three failed license exams is a reasonable alternative to implement high exam stakes and insure that new real estate licensees have sufficient knowledge to begin their real estate careers in compliance with license law. (NMLS information regarding retaking a failed test is attached.) (2) Schools and their instructors may not give students a copy of the end‐of‐course exam prior to testing. End‐of‐course exam questions are confidential and may not be distributed to students either verbally or in writing. Explanation. Currently there are no guidelines in place for preparing students for the end‐of‐course exam. Students who are prepped on specific end‐of‐course exam questions may erroneously assume that they are prepared to sit for the state license exam. Distributing or selling end‐of‐course questions for the purpose of financial gain or for the purpose of erroneously skewing the course pass rate should be a violation of license law. (3) Schools may prepare and provide students with a study guide for the purpose of preparing for the end‐of‐course exam. The study guide must be organized into learning objectives or topic areas that students must master to be prepared for the end‐of‐course exam. The study guide must cover the topics for preparing for both forms A and B of the end‐of‐course exam. The study guide may be distributed to students no sooner than the halfway point of the pre license course. If a study guide to be used by schools, the study guide must be submitted to the DBPR as part of the course submission for course approval. Explanation. Currently there are no rules in place regarding whether schools may prepare and distribute a study guide. Some schools provide study guides and others do not offer a study guide because they are concerned that they may be in violation for using a study guide. Rules should be in place that both allow for a study guide and specify appropriate content. For students to pass the state exam the course needs to cover all of the course syllabus content and not focus time disproportionately on what is tested on the end‐of‐course exam. By developing an appropriate study guide, instructors can focus on the entire course rather than reviewing for the end‐of‐course exam. There is a large amount of content to cover in a 63‐hour pre‐license course. Distributing a study guide allows the instructor to spend more time teaching the course content. (A sample study guide is attached.) (4) After two 2‐year course renewals, pre license course content and end‐of‐course exams must be re‐submitted for course evaluation so that on approximately year 5, pre licenses courses are reevaluated by the DBPR to confirm that the course conforms to the Commission approved course syllabus, and that the course is current with regards to content, statutes, and rules. Explanation. Today once a course is approved initially, the course developer/provider simply submits the prior DBPR course approval letter and the course evaluation request form. The course content and the end‐of‐course exams are never reviewed by the Bureau of Education and Testing (BET) again. Consequently some providers do not keep their course material current. Students pay the course tuition in good faith expecting the course material to be current and accurate. This likely contributes to lowering the state exam pass rate because in some situations students study out‐of‐date course material. Students assume that because a course has been issued an official DBPR course approval number that the course meets acceptable standards. The student relies on the DBPR course evaluation to assure the course is appropriate for preparing for a Florida real estate license.
(5) Schools may not advertise their end‐of‐course exam pass rate. Explanation. Currently there are no rules in place regarding whether schools may advertise their pass rate on the school’s end‐of‐course exam. To advertise such information is misleading. Is a particular school’s end‐of‐course exam pass rate high because students were coached regarding what questions were on the end‐of‐course exam? Is a school’s end‐of‐course exam pass rate inflated because the school emphasizes the questions on the end‐of‐course exam rather than teach the entire pre license course syllabus content? Because there are no current guidelines regarding end‐of‐course exam preparation, the information is meaningless and misleading. (6) Schools may not advertise their school’s pass rate on the license exam. Explanation: Pass rates for individual schools are currently not available from the DBPR’s Bureau of Education and Testing. Unless there is a uniform impartial third party source for a school’s state exam pass rate this information is meaningless and misleading. For example, does a passing statistic on the state exam mean on first attempt or after multiple failures? Does the passing statistic include students who gave up after one or more exam failures and therefore never passed the state license exam? It’s not likely that a school’s pass rate can be appropriately interpreted by the public (potential students) in a meaningful way. It would be difficult for the DBPR to regulate the advertising of school pass rates to insure that they are not misleading. Respectfully submitted, Linda L. Crawford, Licensed School Permit Holder and Instructor Author, Real Estate Education Company Study Guide to Sales Associate End‐of‐Course Exam Based on Florida Real Estate Principles, Practices & Law, 39th edition Note to students. This study guide is designed to help you focus on the sales associate course content that you must master to pass the end‐of‐course exam. This study guide is extensive and requires a lot of studying on your part. Keep in mind that this guide focuses on the end‐of‐course exam. You will need to master all of the topics in your course (not just this study guide) to prepare for the license exam. Unit 1 The Real Estate Business e
Identify the areas of expert information that real estate professional provide. Identify under what circumstances property managers must be licensed real estate brokers. Review the text regarding comparative market analyses (CMAs). pl
Identify which valuation products must be prepared by a licensed or certified appraiser. Unit 2 License Law and Qualifications for Licensure Distinguish among the statutes and rules important to real estate. Identify the three real estate license categories. Review military veteran and spouse fee waiver provisions. Sa
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Apply the rules regarding nonresident licensees. Identify the definition of Florida resident under 61J2, F.A.C. Identify sales associate qualifications for licensure. Distinguish among the education exemptions for Florida‐licensed attorneys and individuals who have earned a four‐year degree in real estate. Review the text regarding experience requirements for broker applicants. Recognize individuals who are exempt from real estate licensure. Unit 3: Real Estate License Law and Commission Rules Identify who appoints and confirms the DBPR secretary. Review the services provided by the Division of Florida Condominiums, Timeshares, and Mobile Homes. Review the Commission’s general powers and duties and recognize which penalties the FREC may or may not impose. Identify the provisions of a temporary real estate license. Identify the license status of a sales associate’s license or a broker associate’s license when the registered broker’s license is suspended or revoked. Understand the purpose and details of voluntarily relinquishment of a real estate license. Copyright 2015 Kaplan, Inc. Distinguish between a multiple licenses and a group license. Unit 4: Authorized Relationships, Duties, and Disclosure Distinguish between a general agent and a special agent and know which type of agent a sales associate is with the employing broker. Review the three basic options in all real estate transactions concerning the role of the real estate brokerage firm and know who determines the appropriate type of agency relationship. Identify examples of residential transactions under Chapter 475, F.S. e
Recognize examples of information that may or may not be disclosed to a customer in a transaction broker relationship. Review brokerage relationship limitations and understand in which capacity a brokerage can work with a buyer when the brokerage represents the seller in a single agent relationship. pl
Recognize the requirements for record keeping and retention of disclosure documents. Identify the requirements for transitioning from a single agent relationship to a transaction broker relationship. Unit 5: Real Estate Brokerage Activities and Procedures Sa
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Review the requirements for real estate office signs. Recognize who may use an association’s name or an organization’s designation. Distinguish between the Federal telephone solicitation law and Florida’s telephone solicitation law. Review the details of both laws. List the types of depositories in which a broker may establish an escrow account. Identify the time period for sales associates to deliver escrow to the employing broker and broker requirements for timely deposit of escrow funds. Review the notice and settlement procedures regarding conflicting demands and recognize exceptions to the notice requirements. Given a scenario, calculate the number of days the broker has remaining to implement one of the settlement procedures. Review the antitrust laws and recognize examples of price‐fixing and market allocation. Recognize the regulations regarding kickbacks. Recognize which types of business entities may or may not register as brokerage entities. Identify the requirements for a real estate brokerage limited partnership. Recognize activities that may be performed by an unlicensed personal assistant. Unit 6 Violations of License Law, Penalties, and Procedures Define settlement stipulation. Copyright 2015 Kaplan, Inc. Distinguish between informal hearing and formal hearing. Review the different types of administrative penalties that the FREC may impose and which types of penalties the FREC may not impose. Distinguish between notice of noncompliance and citation and recognize the proper way to handle a citation that is issued in error. Recognize which violation of real estate law is a misdemeanor of the first degree and identify the penalty for unlicensed practice of real estate. e
Understand the provisions of the real estate recovery fund, how it is funded, which expenses may not be reimbursed from the fund, and the action taken against a broker’s license when a payment is made from the fund. Chapter 7 Federal and State Laws Pertaining to Real Estate pl
Review the provisions of the Fair Housing Act, special exemptions under the Act, and recognize activities that are prohibited under the Act. Review the provisions of the Interstate Land Sales Full Disclosure Act (ILSA), identify when developers are required to provide a property report, and registration requirements. Sa
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Review the provisions of the Florida Residential Landlord and Tenant Act, identify the ways landlords must account for rental deposits and advance rents, and how brokers who provide property management services must account for deposits and advance rents. Identify the time restrictions imposed on landlords when a tenant vacates a rental unit. Unit 8 Property Rights: Estates and Tenancies, Condominiums, Cooperatives, and Time‐Sharing Distinguish between the physical components of land and the definitions associated with water rights. Review the section concerning fixtures and recognize examples of items that are classified as fixtures. Review the section concerning estates and tenancies, recognize which types of tenancies feature the right of survivorship, and distinguish between tenancy in common and joint tenancy. Review the provisions of life estates and remainder estates. Review the provisions of Florida’s Homestead law, including size of homestead property, and types of delinquent debt protected from forced sale. Review the section concerning leasehold estates and distinguish between a leasehold estate and a reversion estate. Review which disclosure documents must be provided to prospective buyers of condominium units for new construction and resale units. Review the section concerning time‐share ownership and distinguish between interval ownership and right to use. Unit 9 Title, Deeds, and Ownership Restrictions Copyright 2015 Kaplan, Inc. List the types of voluntary alienation. Review the terms associated with last will and testament and be able to identify the parties to a will. Distinguish between actual notice and constructive notice to legal title. Distinguish between the two types of title insurance. Review the parts of a deed and identify in which section of the deed the names of the grantor and grantee and date of execution are entered. Review the characteristics of quitclaim deeds. e
Identify which special warranties are included in general warranty deeds. Distinguish among the different types of lease agreements. Calculate the rent owed for a percentage lease and a variable lease. pl
Distinguish between general and specific liens, and recognize examples of specific liens. Distinguish between superior liens and junior liens and recognize examples of junior liens. Unit 10 Legal Descriptions Sa
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Review the section regarding description by metes‐and‐bounds and identify the compass direction opposite of one given in a metes‐and‐bounds description. Review the section regarding description by government survey, identify the features of a township, and be able to identify the township and range number east or west of a specific township and range number. Review sections of a township, identify the features of a section, number the sections of a township, and identify the section north or south of a given township. Define government lot. Calculate the number of acres in a legal description. Unit 11 Real Estate Contracts Identify the types of contracts that may be prepared by real estate licensees may prepare. Recognize the essential elements of a valid contract. Review the requirements of the statute of frauds, list the contracts covered by the statute of frauds, and define enforceable contract. Review the statute of limitations and the time periods that contracts may be enforced. Identify examples of unilateral and bilateral contracts and distinguish between executory and executed contracts. Review contract negotiation and counteroffers. Copyright 2015 Kaplan, Inc. Distinguish among the remedies for breach of contract. Distinguish among the types of listing agreements. Identify the purpose of a power of attorney. Review the requirements concerning the homeowner’s association disclosure, identify the statute that governs the disclosure, and the consequences of not giving the buyer the disclosure at time of signing the sale contract. Unit 12 Residential Mortgages Distinguish between lien theory and title theory. e
Identify the requirements concerning the lead‐based paint law. Distinguish between a mortgage and a promissory note. pl
Define satisfaction of mortgage (or release of mortgage). Identify the purpose of a subordination agreement. Identify the purpose of a due‐on‐sale clause. Define loan servicing. Sa
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Calculate discount points. Calculate the loan‐to‐value ratio. Identify the purpose of an assignment of mortgage. Identify the purpose of a contract for deed and who retains legal title. Unit 13 Types of Mortgages and Sources of Financing Amortize a level‐payment plan mortgage. Identify the components of an adjustable‐rate mortgage. Recognize the applicability of a reverse mortgage. Identify the qualifying ratios for FHA mortgage loans. Identify the features of VA mortgage loans. Identify the features of Ginnie Mae. Recognize which law protects borrowers from age discrimination. Identify which loan costs must be disclosed under the Consumer Protection Act. Identify examples of triggering terms and bait and switch advertising. Identify the RESPA requirements concerning purchase of title insurance. Copyright 2015 Kaplan, Inc. Define discount rate and identify the effect on interest rates of raising the discount rate. Unit 14 Real Estate Related Computations and Closing of Transactions Calculate a sale commission. Calculate percentage of profit. Prorate an assumed mortgage loan and prepaid rent, and indicate how the prorations are entered on the closing document. Calculate intangible tax on a new mortgage. Unit 15 Real Estate Markets and Analysis pl
Define situs. e
Identify how the earnest money deposit, documentary stamp taxes, and unpaid property taxes are entered on the closing document. Identify the variables that influence demand. Identify the conditions that create a buyer’s market. Unit 16 Real Estate Appraisal Sa
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Identify the function of the Appraiser Qualifications Board. Recognize examples of federally related transactions. Distinguish among the terms value, price, and cost. Identify the type of value associated with a rapid sale. Calculate the adjusted sale price of a comparable property. Calculate a weighted average reconciliation. Calculate reproduction cost new of a structure. Identify examples of functional obsolescence. Identify which expenses are deducted to calculate effective gross income and net operating income. Identify the components of the overall capitalization rate. Unit 17 Real Estate Investments and Business Opportunity Brokerage Define cash flow and identify an example of negative cash flow. Define equity and identify the formula for calculating equity. Define real estate investment trust. Identify similarities and differences between business brokerage and real estate brokerage. Copyright 2015 Kaplan, Inc. Unit 18 Taxes Affecting Real Estate Identify the steps in the property tax protest procedure. Identify property that is immune from property taxes. Calculate the homestead tax exemption given the assessed value and characteristics of the property owner. Identify provisions of the Save Our Homes amendment. Calculate a special assessment. Identify the tax advantages of home ownership. e
Calculate property taxes given millage rates, assessed value, and characteristics of the property owner. pl
Identify which expenses may be deducted when calculating taxable income for an individual homeowner. Calculate the adjusted basis of a homeowner’s principal residence. Identify the IRS useful asset life for residential rental property and nonresidential income‐producing property. Calculate the depreciable basis of residential investment property given the sale price and land value. Sa
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Identify IRS regulations regarding the purchase of real property from foreign sellers. Unit 19 Planning, Zoning, and Environmental Hazards Identify the three areas of responsibility of planning commissions. Calculate lots per acre. Define buffer zone. Review the section, building codes, and identify how the Florida Building Code is enforced. Distinguish between a variance and a nonconforming use. Copyright 2015 Kaplan, Inc. The MLO Testing Handbook
10.1 Retaking a Failed Test / Waiting Period
As prescribed by the S.A.F.E. Mortgage Licensing Act, a waiting period is required prior to the
candidate being allowed to retake a failed test component (either National or State). On June
30, 2011 the US Department of Housing and Urban Development (HUD) published its final rule
(the Rule) about the implementation of the SAFE Act. The Rule states that a candidate may
take a SAFE MLO Test Component three times before being required to sit out the 180-day
wait period. A candidate must request and pay for a separate test enrollment for each attempt
to pass a test component of the SAFE MLO Test.
The candidate is subject to a waiting period of thirty (30) calendar days from the previous test
date prior to retaking the test. After every third failed test, the candidate is subject to a waiting
period of one hundred eighty (180) calendar days before he or she is able to retake the test.
NMLS will allow the candidate to request and pay for a new test enrollment window
immediately following the failure of a test. However, the window will not allow the candidate to
reschedule the test for a date prior to the waiting period being satisfied. The table below
defines the waiting period cycle:
Test Retake Cycle Table
Test Result
Retake Waiting
Period
Initial
Fail
30 days
2nd
Fail
30 days
3rd
Initial
(New retake cycle starts)
Fail
180 days
Fail
30 days
2nd
Fail
30 days
3rd
Fail
180 days
Test Attempt
Initial (New retake cycle repeats the previous cycles)
The waiting period applies to each specific test. Failing one test, such as the National
Component, does not impose a waiting period on a different test, such as a Unique State
Component.
CANDIDATES WHO PASS A TEST COMPONENT ARE NOT PERMITTED TO RETAKE
THE SAME TEST COMPONENT AGAIN.
The MLO Testing Handbook
Version 15.1.1
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