Florida Broker Practice Exam

Licensees may not claim reimbursement from the Recovery Fund if the judgment was issued against which entity?

1. An individual

2. A spouse

3. A business entity

4. A buyer

The correct answer is: A business entity

The correct answer is that licensees may not claim reimbursement from the Recovery Fund if the judgment was issued against a business entity. This is because the Recovery Fund is specifically designed to protect consumers from wrongful acts committed by licensed real estate professionals. When a licensee is found liable for damages, the fund can be accessed only if the judgment is against an individual licensee or an unincorporated sole proprietor because these individuals are the ones directly accountable under the licensing laws for their actions. Business entities, such as corporations or limited liability companies (LLCs), are considered separate legal entities that limit personal liability. Because of this legal distinction, claims for reimbursement cannot be made against such entities under the Recovery Fund provisions. This distinction ensures that the fund is used to address claims related to individual licensee misconduct rather than the actions of corporate or business structures, which can have different legal ramifications and protections.