Florida Real Estate Sales Associate Examination Content Outline flashcards

The most complete form of ownership in real estate, granting the owner maximum rights without any conditions or limitations.

• Indefinite duration.
• Freely transferable and inheritable.
• Subject only to government powers (police power, eminent domain, taxation, escheat).

Memory trick: Fee Simple reigns supreme!

Fees paid to the lender at closing to reduce the interest rate on a loan. One point equals 1% of the loan amount.

• Paid upfront at closing.
• Reduces the interest rate over the loan term.
• Each point is 1% of the loan principal.

Memory trick: Closing Costs Clearly Cover Crucial Charges.

A form of concurrent ownership available only to married couples, offering the right of survivorship and protection from individual creditors.

• Only for married couples.
• Includes right of survivorship (automatic inheritance by surviving spouse).
• Protects property from individual debts of one spouse.

Memory trick: Entireties ensures the ENTIRE property goes to the surviving spouse.

Real estate commission is a percentage of the sale price, often split between the listing and buyer's brokers.

• Calculated on the sale price.
• Expressed as a percentage.
• Can be split between multiple brokers.

Memory trick: Commission Cash Comes from Closing.

A type of easement that grants a right to use land to a specific individual or entity (e.g., a utility company) and is not tied to the ownership of an adjacent parcel.

• Benefits a person or entity, not a specific parcel of land.
• Often transferable (especially for commercial easements like utilities).
• No dominant estate, only a servient estate.

Memory trick: IN GROSS, it's a right for a PERSON, not the land.

In the sales comparison approach, adjustments are made to the comparable properties (never the subject) to account for differences in features. If the comparable is superior, subtract; if inferior, add.

• Always adjust the comparable property, not the subject.
• C-S-A: If Comparable is Superior, Subtract.
• C-I-A: If Comparable is Inferior, Add.

Memory trick: COMPARE and ADJUST: Superior Subtract, Inferior Add.

An interest in real property that is held for the duration of the life of a designated person (the life tenant). Upon the death of the life tenant, the property reverts to the original grantor or passes to a designated third party (remainderman).

• Limited by a person's life.
• Life tenant has possession and use.
• Future interest held by grantor (reversion) or third party (remainder).

Memory trick: Life Estates are like 'Living' on borrowed time, then it's gone.

The division of property taxes between the buyer and seller at closing, based on the portion of the year each party owns the property.

• Calculated daily or monthly.
• Determines who owes whom at closing.
• Seller usually credited for prepaid period, buyer for unpaid.

Memory trick: Prorations Precisely Partition Payments.

A real estate valuation method that estimates a property's value based on the income it is expected to generate, using a capitalization rate.

• Value = NOI / Cap Rate.
• Primarily used for income-producing properties.
• Cap rate reflects investor's required return.

Memory trick: Value Varies, Verify Valuation.

The amount of two-dimensional space occupied by a trapezoidal shape, calculated using the lengths of its parallel sides and its perpendicular height.

• Formula: A = 0.5 × (base1 + base2) × height.
• Units are always square units (e.g., sq ft, sq meters).
• Used for irregularly shaped land parcels.

Memory trick: Area Always Adds All Angles.

The process of determining the number of usable lots that can be created from a larger parcel of land, accounting for reserved areas and individual lot size requirements.

• 1 acre = 43,560 square feet.
• Must account for non-buildable areas (e.g., roads, common spaces).
• Final lot count always rounds down.

Memory trick: Lots Leave Little Leftover.

An involuntary, specific lien placed on real property by local government for unpaid property taxes.

• Superior lien: takes priority over almost all other liens.
• Specific lien: attaches only to the property taxed.
• Involuntary lien: created by law, not owner's consent.

Memory trick: Tax liens are TOP PRIORITY!

A legal description that defines property boundaries by describing distances (metes) and directions (bounds) from a point of beginning.

• Uses monuments (physical markers) as reference points.
• Must close, meaning it returns to the point of beginning.
• Commonly used for irregular parcels and in older states.

Memory trick: Metes and Bounds: start and circle back!

A method of legal description that identifies a parcel of land by reference to a lot and block number on a recorded subdivision plat (map).

• Used for properties within subdivisions.
• References a plat map filed in public records.
• Often includes the county and state where the plat is recorded.

Memory trick: LOTS of BLOCKS in the subdivision map.

One of the key tests to determine if an item is a fixture (real property) or personal property, focusing on the annexor's original intention.

• Primary test in disputes.
• Determined by actions and circumstances, not just stated desire.
• Can be overridden by written agreements.

Memory trick: MIA is the key to fixtures!

An estate in land created by a grantor (owner) for the lifetime of a specific individual (the life tenant/grantee).

• Terminates upon the death of the designated life tenant.
• Often includes a remainder or reversionary interest.
• Life tenant has rights of possession and use, but cannot waste the property.

Memory trick: A CONVENTIONAL life estate is for the CONVENTIONAL life span of the tenant.

Annually cultivated crops that are considered personal property of the tenant farmer, with the right to harvest them even after the lease expires.

• Result of human labor and industry (fructus industriales).
• Considered personal property.
• Tenant has the right to re-enter and harvest after lease termination.

Memory trick: EMBLEMENTS are the fruits of the farmer's LABOR.

A form of concurrent ownership available only to married couples, offering rights of survivorship and protection from individual creditors.

• Requires the four unities plus the unity of marriage.
• Property automatically passes to the surviving spouse.
• Cannot be partitioned by one spouse alone.

Memory trick: Entirety = ENTIRELY for spouses!

An unauthorized intrusion of a building or other improvement onto another's land.

• Physical intrusion across a property line.
• Can be discovered by a survey.
• May lead to legal disputes or require removal.

Memory trick: ENCROACHMENTS CROWD your boundaries.

A financial metric that compares the amount of a mortgage loan to the appraised value or purchase price of the property, whichever is lower.

• Loan Amount / Property Value = LTV.
• Expressed as a percentage.
• Higher LTV typically means higher risk for lender.

Memory trick: Lenders Lend Less than Value.

The amount of money a seller receives from a property sale after all expenses, including commissions and closing costs, have been deducted.

• Calculated from the sale price.
• Seller's expenses are subtracted.
• Buyer's expenses do not affect seller's net proceeds.

Memory trick: Net Nurtures New Necessities.

The total loss in value of a property from all causes (physical deterioration, functional obsolescence, economic obsolescence) as of the appraisal date.

• Calculated by various methods, often straight-line for physical deterioration.
• Economic life is the period over which an improvement contributes value.
• Effective age is the age indicated by the property's condition and utility.

Memory trick: COST to BUILD, MINUS the AGE, EQUALS the VALUE page.

In a condominium, individual unit owners typically hold title to their specific unit in fee simple, granting them full ownership rights within the unit's boundaries, along with an undivided interest in the common elements.

• Fee simple ownership for individual unit.
• Undivided interest in common elements.
• Subject to condominium declaration and bylaws.

Memory trick: Think of estates as levels of property control, from temporary to total.

A rate of return that measures the annual before-tax cash flow generated by a property in relation to the amount of cash invested.

• Formula: (Annual Before-Tax Cash Flow / Total Cash Invested) * 100%.
• Focuses on actual cash invested, not total property value.
• Useful for evaluating leveraged real estate investments.

Memory trick: Analyze Assets Accurately.

An appraisal method that estimates the value of a property by summing the estimated land value and the depreciated cost of replacing or reproducing the improvements. It is best suited for new construction, unique properties, and properties where comparable sales are limited.

• Estimates replacement/reproduction cost.
• Subtracts depreciation.
• Adds land value.
• Best for new or unique properties.

Memory trick: Don't 'S.I.C.' when valuing property – Sales, Income, Cost are your tools.

A legal description system that uses physical markers, both natural and artificial, as reference points (monuments) to define property boundaries.

• Monuments are crucial for defining property corners and lines.
• Natural monuments (trees, rocks, rivers) are often used in older descriptions.
• Artificial monuments (iron pins, concrete markers) are also common.

Memory trick: Metes and Bounds: use the land's landmarks!

The total distance around the boundary of a two-dimensional shape, often used for fencing or landscaping costs.

• For a rectangle: 2 × (length + width).
• Measured in linear units (feet, meters).
• Used to calculate costs per linear unit.

Memory trick: Measure the Margin to Make a Mark.

Items of personal property installed by a tenant in a leased commercial space for the purpose of conducting their business.

• Considered personal property.
• Removable by the tenant by lease end.
• Tenant must repair any damage caused by removal.

Memory trick: Business needs get to leave!

Annual property tax liability is calculated by multiplying the taxable value of a property by the applicable millage rate.

• Taxable Value = Assessed Value - Exemptions.
• Millage rate is expressed as dollars per $1,000 of value, or mills (1 mill = $0.001).
• Homestead exemption typically applies only to residential owner-occupied properties, not commercial.

Memory trick: ASSESS, EXEMPT, then MILL to pay the BILL.

To find the acreage of a parcel described by fractional parts of a section, divide 640 acres by the denominator of each fraction.

• One section = 640 acres.
• Multiply denominators of fractions together and divide 640 by the product.
• Alternatively, divide 640 sequentially by each denominator.

Memory trick: SIXTY-FOURTY is the base, divide by each fraction's PACE.

Private agreements, usually written into deeds or subdivision declarations, that limit the use of real property, often to maintain property values and aesthetics.

• Private, not governmental, restrictions.
• Often called deed restrictions or CC&Rs (Covenants, Conditions, and Restrictions).
• Enforceable by homeowners' associations or other property owners.

Memory trick: COVENANTS CONTROL what you can do on your property.

A lien created by an agreement between the property owner and a creditor, attaching only to a particular piece of property.

• Voluntary: created by the property owner's choice (e.g., mortgage, deed of trust).
• Specific: attaches only to a single, identified property.
• Contrasts with involuntary (e.g., tax) or general (e.g., judgment) liens.

Memory trick: Voluntary Specific: YOU CHOOSE which property to LINK.

A permanent marker of known elevation and location used as a reference point in surveying.

• Establishes a fixed, reliable reference for measurements.
• Often a brass or bronze plate embedded in concrete or rock.
• Used to ensure accuracy and consistency in surveys.

Memory trick: BenchMARKS the START of accurate measurements.

A hybrid business entity that combines the limited liability of a corporation with the tax efficiencies and operational flexibility of a partnership or sole proprietorship.

• Owners (members) have personal liability protection from business debts and lawsuits.
• Profits and losses can be passed through to personal income without corporate taxation.
• Offers flexibility in management structure and ownership.

Memory trick: Choose your entity carefully; it defines your risk and taxes.

The risk associated with the particular operations of a specific property or business, including factors like tenant turnover, vacancy rates, operating expenses, and the quality of management.

• Directly impacts the property's Net Operating Income (NOI).
• Can be mitigated through effective property management, market analysis, and diversification.
• Different from financial risk (related to debt) or market risk (related to overall market conditions).

Memory trick: Many risks lurk, know them to invest smart.

A business valuation technique that estimates a business's value by multiplying its earnings (e.g., net income, gross revenue) by an industry-specific factor or multiple.

• Often used for smaller businesses or those with consistent earnings.
• Multipliers are derived from comparable sales data.
• Simpler than discounted cash flow but less precise for unique businesses.

Memory trick: Value a business: income, assets, or comps.

A lease agreement in which the tenant pays a base rent plus a percentage of their gross sales or profits.

• Common in retail
• Rent tied to business performance
• Includes a fixed base rent

Memory trick: Gross is all-inclusive, Net adds expenses, Percentage depends on profit, Ground is just the dirt.

A unilateral contract where the seller (optionor) grants the buyer (optionee) the exclusive right to purchase a property within a specified period at a predetermined price, for which the buyer pays consideration.

• Buyer has right, not obligation, to buy
• Seller is obligated to sell if option is exercised
• Requires consideration from buyer

Memory trick: Purchase is a promise, Option is a choice, First Refusal is a match.

A measure used to calculate the profitability of income-generating real estate. It equals all revenue from the property minus all reasonably necessary operating expenses.

• Calculated before debt service, depreciation, capital expenditures, and income taxes.
• Crucial for property valuation using the income capitalization approach.
• Reflects the property's ability to generate income from its core operations.

Memory trick: Gross to Net, carefully subtract.

A rate of return on a real estate investment property based on the income that the property is expected to generate, used to estimate the property's potential return.

• Calculated as Net Operating Income (NOI) / Property Value
• Used to compare potential returns of similar properties
• Lower cap rate generally indicates higher value for a given NOI

Memory trick: Income drives value, cap rate connects them.

A law adopted in some states that specifies who bears the risk of loss for damage to real property between the time a contract is signed and the closing, if the contract does not explicitly state otherwise.

• Seller bears risk until legal title or possession transfers
• Buyer can rescind contract if substantial damage occurs
• Applies when no fault of buyer or seller

Memory trick: Before Title, Seller's Trouble; After Title or Possession, Buyer's Burden.

A type of mortgage in which the interest rate applied on the outstanding balance varies throughout the life of the loan. The initial interest rate is fixed for a period, after which it resets periodically.

• Interest rate fluctuates
• Linked to an economic index
• Payments can increase or decrease

Memory trick: Fixed is stable, Adjustable is active, Balloon has a big bump, Reverse gives cash back.

A deed that conveys title to a grantee, but specifies a condition that if violated, allows the grantor (or their heirs) the right to re-enter and reclaim the property.

• Grantor retains a 'right of re-entry'
• Condition must be clearly stated
• Violation of condition does not automatically revert title; grantor must act

Memory trick: Warranty is full, Special is partial, Quitclaim just quits, Condition Creates Control.

A real estate agent's obligation to reveal all known material facts concerning the property that are not readily observable to the buyer.

• Applies to all known material facts
• Must disclose even if seller requests not to
• Duty to deal honestly and fairly

Memory trick: Reveal what you Know, it's the Right thing to Show.

The legal procedure a landlord must follow in Florida to remove a tenant from a property due to lease violations or unpaid rent.

• Self-help evictions are illegal (e.g., changing locks, removing doors).
• Requires proper written notice to the tenant (e.g., 3-day for rent, 7-day for non-compliance).
• If the tenant doesn't comply, the landlord must file an unlawful detainer action in court.

Memory trick: Notice first, then court, never self-help.

An amount equal to 1% of the loan amount, charged by the lender at closing to increase the lender's yield or to reduce the borrower's interest rate.

• 1 point = 1% of loan amount
• Paid at closing
• Used to 'buy down' the interest rate or increase lender's yield

Memory trick: Origination starts it, Discount lowers rate, Appraisal checks value.

A new offer made in response to an initial offer, which has the effect of rejecting the original offer.

• Rejects the original offer
• Creates a new offer
• Changes one or more terms of the original offer

Memory trick: Offer is a proposal, Acceptance is agreement, Counter is a cancel and create.

A provision in the U.S. Internal Revenue Code that allows investors to defer capital gains taxes on the sale of investment property by reinvesting the proceeds into another 'like-kind' property.

• Must be investment or business property, not primary residence.
• Both relinquished and replacement properties must be 'like-kind'.
• Strict timelines for identifying (45 days) and acquiring (180 days) replacement property.

Memory trick: Tax rules can save you, if you know the game.

The unmaking of a contract between parties. Rescission is the unwinding of a transaction. This is done to bring the parties, as far as possible, back to the position in which they were before they entered into a contract.

• Cancels the contract
• Restores parties to original positions
• Often used for fraud, misrepresentation, or mutual mistake

Memory trick: Rescission Reverses Relationships; Specific performance Secures Sale; Damages Demand Dollars.

The Fair Housing Act requires housing providers to make reasonable accommodations for individuals with disabilities, which includes allowing service animals (and often emotional support animals with proper documentation), even if there is a 'no pets' policy.

• Service animals are not considered 'pets' under the FHA.
• No pet deposits or fees can be charged for service animals.
• Housing providers can request documentation if the disability and need for the animal are not readily apparent.

Memory trick: Disability rights trump pet rules, accommodate reasonably.

A fiduciary duty requiring an agent to protect their principal's confidential information, including personal financial details, motivations, or negotiating positions, from disclosure to third parties.

• Information remains confidential even after the agency relationship ends
• Essential for client trust
• Only waived by client's express permission or legal requirement

Memory trick: OLD CAR: Obedience, Loyalty, Disclosure, Confidentiality, Accounting, Reasonable Care.

A real estate broker acting as a single agent owes the principal (client) undivided loyalty, confidentiality, obedience, full disclosure, accounting, and reasonable care and skill.

• Highest level of agency relationship
• Undivided loyalty to one party
• Full disclosure of all known material facts to the principal

Memory trick: OLD CAR: Obedience, Loyalty, Disclosure, Confidentiality, Accounting, Reasonable Care.

A financial metric used to assess a property's ability to cover its debt payments from its net operating income. It's calculated as Net Operating Income (NOI) divided by Annual Debt Service.

• Lenders typically require a DSCR of 1.20 or higher for commercial loans.
• A higher DSCR indicates less risk for the lender.
• Below 1.00 means the property's income isn't enough to cover debt payments.

Memory trick: Ratios reveal property health and risk.

A type of adjustable-rate mortgage (ARM) that offers a fixed interest rate for an initial period (e.g., 3, 5, 7, or 10 years) before adjusting periodically for the remainder of the loan term.

• Combines fixed-rate stability with adjustable-rate flexibility
• Designated by fixed period then adjustment frequency (e.g., 5/1 ARM)
• Initial fixed rate is often lower than a traditional fixed-rate mortgage
• Borrower faces interest rate risk after the fixed period

Memory trick: Hybrid ARM: 'Half Fixed, Half Floats' on the market.

The legal process by which a lender attempts to recover the balance of a loan from a borrower who has defaulted on payments by forcing the sale of the asset used as collateral.

• Initiated by the lender after default
• Involves legal proceedings
• Results in the sale of the property
• Can significantly damage the borrower's credit

Memory trick: Foreclosure is the 'Final Call' from the bank.

A fee charged by a lender for processing a loan application, typically expressed as a percentage of the loan amount.

• Covers administrative costs
• Paid at closing
• Usually 0.5% to 1.5% of the loan amount

Memory trick: Fees: 'F' for 'Final' costs.

A mortgage loan insured by the Federal Housing Administration (FHA), a government agency that provides mortgage insurance on loans made by FHA-approved lenders throughout the United States.

• Low down payment requirements (as low as 3.5%)
• More flexible credit score requirements
• Mortgage insurance premium (MIP) is required
• Designed for moderate-to-low-income borrowers and first-time homebuyers

Memory trick: FHA helps 'First Home Aspirants' with Federal Help.

TRID (TILA-RESPA Integrated Disclosure) rules mandate a minimum 7-business-day waiting period between a consumer's receipt of the Loan Estimate and the loan closing.

• Ensures time for consumer review.
• Applies to most closed-end consumer mortgages.
• New Loan Estimate triggers a new 7-day wait if interest rate changes significantly.

Memory trick: TRID's time for disclosure: LE is seven, CD is three, so you can clearly see.

Comparison of two common mortgage terms, where a 15-year mortgage pays off the loan in half the time of a 30-year mortgage, impacting monthly payments, total interest paid, and equity accumulation.

• 15-year: Higher monthly payments, lower total interest, faster equity
• 30-year: Lower monthly payments, higher total interest, slower equity
• Interest rates for 15-year are often slightly lower
• Choice depends on borrower's financial goals and comfort with monthly payments

Memory trick: Short Term Loans: 'Swift Equity' and less interest.

In Florida, the documentary stamp tax on deeds is a transfer tax levied on the value of real property being conveyed, typically $0.70 per $100 (or fraction thereof) of the consideration.

• Paid by the seller.
• Calculated on the full purchase price.
• Rate is $0.70 per $100 (except Miami-Dade County).

Memory trick: Doc stamps for deeds: Dollars per hundred, seller's burden.