Question 1
Under Florida law, a licensed mortgage broker negotiates a loan for a borrower and earns a fee from the lender. The borrower later discovers the broker also received a yield spread premium (YSP) from the lender that was not disclosed. Under Chapter 494, F.S., which statement best describes the broker's obligation regarding this compensation?
- A. The broker is required to disclose all compensation received from any source, including yield spread premiums, to the borrower in writing. ✓ Answer
- B. Yield spread premiums paid by lenders to brokers are exempt from Florida disclosure requirements because they are paid by the lender, not the borrower.
- C. Florida law only requires disclosure of fees paid directly by the borrower; lender-paid compensation to the broker need not be disclosed.
- D. A mortgage broker may accept undisclosed lender compensation provided it does not exceed two percent of the loan amount.
Explanation: Under Section 494.0038, F.S., a mortgage broker must disclose to the borrower all compensation the broker receives or expects to receive in connection with the loan, regardless of whether it comes from the borrower or the lender. Failure to make this written disclosure constitutes a violation of Chapter 494 and can result in license suspension, revocation, or civil penalties. There is no exemption for yield spread premiums or lender-paid fees from this disclosure requirement.
Question 2
A Florida seller of a residential property receives two competing written offers simultaneously. Seller accepts Buyer A's offer and executes the FAR/BAR contract. Seller then accepts Buyer B's offer as a backup contract using the FAR/BAR Residential Contract with Backup Addendum. Buyer A subsequently defaults and the seller declares Buyer A in default in writing. Under the Backup Contract Addendum, what event triggers Buyer B's contract becoming the primary contract?
- A. Buyer A's inspection period expires without cancellation
- B. The seller delivers written notice to Buyer B that the primary contract has been terminated ✓ Answer
- C. Buyer B delivers written notice to the seller electing to move to primary status
- D. The original closing date stated in Buyer A's contract passes without closing
Explanation: Under the FAR/BAR Residential Contract Backup Addendum, the backup contract automatically becomes the primary contract upon the seller delivering written notice to the backup buyer that the primary contract has been terminated. Buyer B's contract does not self-activate upon Buyer A's default alone; the seller must provide written notification of the primary contract's termination to trigger Buyer B's contract becoming the operative primary contract.
Question 3
Under the FAR/BAR Residential Contract for Sale and Purchase (standard version, not AS IS), the parties agree the seller will leave the riding lawnmower as personal property included in the sale. The contract is silent on whether the lawnmower's inclusion is subject to any lien. Before closing, it is discovered that the lawnmower is subject to a UCC financing statement filed by a lender. Under the contract, who bears responsibility for satisfying this lien?
- A. The buyer, because personal property is sold 'as is' unless the contract specifically warrants title to personal property
- B. The seller, because the FAR/BAR contract requires the seller to convey personal property included in the sale free and clear of all liens and encumbrances ✓ Answer
- C. Neither party; the lender must release the lien automatically at closing under Florida's UCC article 9 procedures
- D. The title company, because its title insurance policy extends to personal property included in a real estate contract
Explanation: The FAR/BAR Residential Contract requires the seller to convey included personal property free and clear of all liens, encumbrances, and interests. If a UCC financing statement encumbers personal property included in the sale, it is the seller's obligation to satisfy or release that lien prior to or at closing. Title insurance policies cover real property interests and generally do not extend to personal property liens.
Question 4
A Florida residential seller and buyer execute a FAR/BAR AS IS contract with a 10-day inspection period. On day 8, the buyer's inspector identifies a material defect. The buyer's agent sends a cancellation notice via email at 11:59 PM on day 10, but the seller's agent does not open or read the email until the morning of day 11. Under the FAR/BAR AS IS contract, was the cancellation timely?
- A. No, because the cancellation is only effective when actually received and read by the seller or seller's agent
- B. Yes, because the FAR/BAR contract provides that notice delivered electronically is effective upon transmission to the correct email address, regardless of when it is read ✓ Answer
- C. No, because cancellation during the inspection period must be delivered by certified mail or hand delivery only
- D. Yes, but only if the buyer's agent can prove the email was not intercepted by a spam filter before midnight
Explanation: The FAR/BAR AS IS Residential Contract includes notice provisions that allow delivery by electronic means, including email. Under the contract's notice paragraph, electronic delivery is effective upon transmission to the designated email address. Because the buyer's agent transmitted the cancellation notice before midnight on day 10, the cancellation was timely delivered regardless of when the seller's agent opened or read the email.
Question 5
A buyer and seller execute a FAR/BAR Residential Contract. The contract contains a clause stating: 'If the seller fails to convey marketable title, the buyer's sole remedy shall be a return of the deposit.' Under Florida law, is this limitation of remedies clause enforceable?
- A. Yes, Florida courts consistently enforce contractual limitations of remedy in real estate contracts, and the buyer is bound to accept deposit return as the sole remedy
- B. No, Florida Statute 475 prohibits licensees from including remedy limitation clauses in real estate contracts
- C. It may be enforceable, but Florida courts scrutinize such clauses and may find them unconscionable or against public policy if they effectively deprive the buyer of meaningful relief, particularly where the seller acted in bad faith ✓ Answer
- D. Yes, but only if the clause is conspicuously highlighted or initialed separately by both parties under Florida's Statute of Frauds
Explanation: Florida courts generally permit parties to contractually limit remedies in real estate contracts; however, such clauses are subject to judicial scrutiny. A limitation of remedies clause will not be enforced where enforcement would be unconscionable or would leave the non-breaching party without a meaningful remedy, especially if the breaching party acted in bad faith or intentionally. Florida courts apply general contract law principles to assess enforceability on a case-by-case basis.
Question 6
Under the FAR/BAR Residential Contract for Sale and Purchase, the parties agree that the seller will pay documentary stamp taxes on the deed and the buyer will pay documentary stamp taxes on the note. The transaction is located in Miami-Dade County. Which statement about this allocation is most accurate under Florida law?
- A. The allocation is invalid because Florida law requires the buyer to pay all documentary stamp taxes in Miami-Dade County
- B. The parties may contractually allocate closing costs differently from the statutory default, but the allocation only binds the parties inter se and does not affect the state's ability to collect the tax from either party ✓ Answer
- C. Miami-Dade County uses a surtax on deeds instead of documentary stamps, so the standard FAR/BAR allocation does not apply
- D. Documentary stamp taxes on deeds in Florida are always paid by the buyer regardless of any contract provision
Explanation: Florida Statute Chapter 201 imposes documentary stamp taxes, and the statutory obligation to pay runs to the state from both parties to the instrument. While the FAR/BAR contract allows the parties to allocate responsibility for payment between themselves contractually, this inter partes agreement does not bind the Florida Department of Revenue. The state may pursue either party for unpaid documentary stamps. Miami-Dade County does impose a surtax, but the standard FAR/BAR contract's allocation framework still applies to the parties' agreement.