Friday, May 4, 2012
At The Closing Table
From the May/June 2012 issue
Juana Watkins is director of the Florida Department of Business and Professional Regulation Division of Real Estate. Orlando REALTOR® asked her how the current real estate conditions are impacting the division.
Q. How is the proliferation of short‐sale and bank‐owned transactions affecting the division?
A. As a result of the current real estate market, the division has definitely seen an increase in short sale and bank owned-related complaints. The division has worked hard to address this growing area by disseminating information regarding the impact of these types of transactions. It is a frequent topic of discussion during outreach and educational events and was a topic at the continuing legal education seminar for real estate instructors during the last renewal cycle. The division hopes that by providing the necessary information to instructors that the licensee population as a whole will benefit.
Q. What is the status of the Florida Real Estate Recovery Fund, and what consequences of that status will be eventually felt by real estate licensees?
A. As of December 31, 2011, there was an account balance of just over $621,000 in the Real Estate Recovery Fund. According to Section 475.482, Florida Statutes, there is no financial impact to licensees unless the balance of the recovery fund drops below $500,000. At the direction of the Florida Real Estate Commission, the division is carefully monitoring the disbursement amounts from the funds to avoid any potential impact on licensees.
Q. What are the greatest challenges to be faced by the Florida Real Estate Commission in the upcoming years?
A. The future of the division is strong because the real estate industry in Florida remains strong, even during challenging economical times. In the past three months, the division has seen an increase in initial applications for real estate licenses, suggesting that there is strong interest in the industry. While there has been an increase in complaints over the last few years, the division is committed to aggressively addressing the quantity of complaints and investigations without sacrificing the quality of the investigations or service to current license holders.
Q. In 2011, Central Florida had more than twice the number of cases of unlicensed activity under investigation than both North Florida and South Florida. What is it about Central Florida’s real estate environment that is generating both more complaints and more investigations of unlicensed activity?
A. While we have seen an increase in the number of unlicensed activity cases in the central region over the northern and southern regions, there is no specific information that could identify the cause of this trend. Anecdotally, the division is aware of an upward trend in allegations of unlicensed practice related to timeshare and property management, which could be contributing to this increase in complaints and investigations.
Q. What are the most common violations committed by real estate licensees?
A. The most common violation charged against a real estate license is a violation of Section 475.25(1)(b), Florida Statutes, which makes it a violation of license law to commit fraud, misrepresentation, concealment, culpable negligence, dishonest dealing or other violations of law during a transaction.
The division has also recently observed an increase in cases involving escrow-related violations.
Q. What services that are not permitted under the scope of a real estate license are getting licensees in trouble? How can licensees avoid a situation that could lead to providing such a service, or recognize when they are about to cross the line?
A. From the first day of active licensure, a licensee is permitted to perform any of the services of a broker as defined in Section 475.011, Florida Statutes. A sales associate obviously must perform those services at the direction and control of the broker with whom that associate is registered. While the statute does not restrict the services that may be performed, from a best practices perspective, licensees should make an effort to ensure that they only provide services they are competent to perform. Failure to do so could result in violations of Sections 475.25(1)(b), 475.278, or Section 455.227(1)(o), Florida Statutes, among others.
Q. What property management functions are not considered "real estate services” and therefore do not require a real estate license to perform?
A. The division must make this assessment on a case-by-case basis when complaints are received in this area. The definition of broker services, per Section 475.01, Florida Statutes, covers leasing the real property of others and further includes taking part in procuring of lessors or lessees of real property. The broad definition also covers services, including but not limited to the procuring of prospects or in the negotiation or closing of any transaction which does or is calculated to result in leasing real property.
There are other sections of the statutes that deal with post-leasing activities as well. Any unlicensed person who wants to engage in property management should carefully consider the language of Chapter 475, Florida Statutes to ensure that the services he or she wishes to offer do not fall within the activities covered by licensure requirement.
Q. What protections during FREC’s investigation process are provided to licensees, that are not provided to non‐licensees?
A. The primary distinction between investigations of licensed persons under Chapter 475, Florida Statutes, versus unlicensed persons, is confidentiality. When a licensee is accused of a potential violation of statute, pursuant to a legally sufficient complaint, the investigation and all information contained within the complaint is confidential until 10 days after the finding of probable cause based on Section 455.227(10), Florida Statutes. Persons accused of the unlicensed practice of real estate are not afforded the benefit of confidentiality, pursuant to the same section of the statutes.
Q. What is the status of the Unlicensed Activity Fund, which is supported by a $5 assessment to each licensee’s annual renewal fee?
A. As of March 31, 2012 there was an account balance of $1,928,013 in the Florida Real Estate Commission Unlicensed Activity Account.
Q. What percentage of the fund was spent specifically on the prevention of unlicensed real estate activity in 2011, and have changes in Florida’s real estate environment in recent years led to changes in that percentage?
A. The budgetary allotment for spending for unlicensed activity for fiscal year 2011 – 2012 is $285,000. Under state budget procedures this is different from the account balance noted above. All of the money is dedicated to the prevention of unlicensed activity and the enforcement of violations of unlicensed activity.
The largest expense from the category is salary of investigators that handle only cases involving unlicensed activity. As of May 9, 2012 the division has spent $133,433 dollars for the salaries of those employees. The second largest expense is the unlicensed activity awareness campaign. Upon discussion with Florida REALTORS®, the division has paid or incurred expenses totaling $40,000.
The only noticeable difference in percentages over last year is that less money has been used in the effort to advertise how to file complaints for unlicensed activity this fiscal year to ensure there is sufficient money for salaries for investigators to handle the complaints.
Q. In addition to the media campaign, what real-estate specific unlicensed activity prevention activities are supported by the fund?
A diverse statewide media campaign remains our primary source to promote prevention. The division does attempt to educate the profession and public at outreach activities during the year throughout the state on the issue of unlicensed activity. These outreach programs are generally of little of no cost to the division.