Topic 1.1: History and Objectives of Real Estate License Laws

Learning Objectives

After successfully completing this topic, you will be able to
• describe the major purpose of the Florida Real Estate Commission, and
• list the four principal statutes and rules that affect real estate regulation in Florida.

History of Florida’s Real Estate License Law

In 1923, Florida passed the real estate license law, but the law did not have an enforcement body. It was up to county courts to set penalties for violations of the law. In 1925, Florida created the Florida Real Estate Commission to establish rules for professional practice and to discipline licensees who violate the law.

Need for Regulation

A look at Florida’s history shows that real estate regulation is very important. “Let the buyer beware” (caveat emptor) was the public’s image of real estate brokers in the early 1900’s. Caveat emptor means that the buyer alone is responsible for checking the quality and suitability of goods before a purchase is made.

Honest brokers had difficulty practicing real estate because the lack of public trust. Many brokers formed associations to help regulate the practice of real estate in their states. In 1908, brokers formed the National Association of Real Estate Boards, later renamed The National Association of Realtors (NAR), to push for the regulation of real estate practitioners.

Purpose of Regulation

The Florida Legislature established the Florida Real Estate Commission as a consumer protection agency, to protect the health, welfare and safety of the public. The Division of Real Estate (DRE) of the Department of Business and Professional Regulation (DBPR) administers the law.

Important Real Estate Statutes and Rules

Florida Statute (FS) 20 – Organizational Structure

There are three branches of Florida state government: executive, legislative, and judicial. The executive branch executes the programs and policies adopted by the Legislature and makes policy recommendations to the Legislature. This law establishes the structure of the executive branch.

Florida Statute 120 – Administrative Procedures Act 

This act establishes the procedures for setting agency rules and procedures. The statute sets requirements for applications for licensing as well as setting the procedures for hearings and discipline of licensees.

Florida Statute 455 – Regulation of Professions and Occupations

This statute makes the Department of Business and Professional Regulation (DBPR) the agency that regulates businesses and professions. The Department vigorously enforces the law against persons who practice a profession without having a license. The Florida Real Estate Commission disciplines real estate licensees for violations of Chapter 455. The FREC can fine licensees up to $5,000 for each offense.

Florida Statute 475 – The real estate license law

There are four parts to Chapter 475:
• Part I establishes the Florida Real Estate Commission, which regulates real estate brokers and sales associates.
• Part II establishes the Florida Real Estate Appraisal Board, which regulates appraisers.
• Part III is the Commercial Real Estate Sales Commission Lien Act. This applies only to commercial property and gives a broker a lien against the owner’s proceeds from a sale up to the amount of the broker’s commission. It is not a lien against the property itself.
• Part IV is the Commercial Real Estate Leasing Commission Act. It gives a broker lien rights for commissions earned from leasing real property.

Chapter 61J2, Florida Administrative Code (FAC) – Rules of the Florida Real Estate Commission

The Commission is authorized to enact rules that clarify and expand Chapter 475, FS. The Commission may not, however, exceed the authority granted under the license law.