STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FLORIDA REAL ESTATE COMMISSION, ) RICARDO SANDA, REPRESENTATIVE, )

)

Petitioner, )

)

vs. ) CASE NO. 76-845

) GROVELAND RANCH ACRES, INC. ) AND OSCAR BURSTEIN, )

)

Respondents. )

)

RECOMMENDED ORDER

Pursuant to notice, an administrative hearing was held before Diane D. Tremor, Hearing Officer with the Division of Administrative Hearings, at 10:00

1. on August 18, 1976, in Suite 307, 717 Ponce de Leon Boulevard, Coral Gables, Florida.

   
   

   APPEARANCES

   
   

   For Petitioner: Mr. Randy J. Schwartz

   2699 Lee Road

   Winter Park, Florida 32789

   
   

   For Respondent: Mr. Stephen F. Kessler

   Moore, Kessler, Roth & Becherman 1895 South West 3rd Avenue Miami, Florida 33129

   
   

   FINDINGS OF FACT

   
   

   Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found:

   
   

   1. At all times pertinent to these proceedings, respondent Groveland Ranch Acres, Inc. and respondent Oscar Burstein were registered with petitioner as real estate brokers.

      
      

   2. Respondent Groveland Ranch Acres, Inc. and Zenith American Land and Development Corp. (hereinafter referred to as ZALD) are subsidiaries of Zenith American Corporation.

      
      

   3. On or about August 2, 1973, James H. and Ruth M. Kiser entered into an Agreement for Deed with ZALD for the purchase of an approximately one acre tract of land located in Zenith Acres, an unrecorded improved acreage subdivision of ZALD. The conditions of sale contained in the agreement provided the following refund privilege clause:

      
      

      "Buyer(s) may at any time within six months of

      the date of this Agreement for Deed, if said Agreement is not in default, complete a company guided tour, with an authorized company representative, of the area where the property is located and if not completely satisfied with this purchase, request in writing on a form provided by the company a refund of all monies paid under this Agreement for Deed. This money back inspection guarantee shall not apply to any Agreement for Deed executed at or after the Buyer(s) has visited the area. It is personal to the Buyer(s) and cannot be exercised by any agent on behalf of the Buyer(s).

      
      

   4. The ZALD - Kiser Agreement for Deed also contained the following language:

      
      

      "12. Should Seller fail to meet its obligations under this Contract within six (6) months after being notified of such failure, seller reserves the right to relocate Buyer's property, with the understanding that Buyer shall receive property of at least equal price, of at lease equal size, and in the same

      general areas as the original purchase. However, if Buyer does not desire to accept such exchange of property, after receiving written notice of such relocation, buyer shall be entitled to a full refund of all monies paid under the Contract. A full refund of all monies paid by reason of this condition shall unconditionally release both parties from any and all further obligations herein. In the event the Buyer desires to accept such exchange of property, the conditions of the original contract will remain in full force and effect as to such exchange."

      
      

   5. In February of 1974, the Kisers made a personal inspection of the property, were satisfied with what they saw and signed a Site Inspection Report acknowledging their desire to continue their Agreement for Deed according to its terms and conditions.

      
      

   6. In July of 1974, ZALD, under the signature of Oscar Burstein signing as Vice President, sent a letter to all property owners in Zenith Acres advising them that a law suit had been filed by Florida's Attorney General against land developers whose property was located in the area of Polk County that was considered to be an important water source for the central portion of the state. The letter stated that although an agreement had been reached between ZALD and the State, the attendant adverse publicity resulted in ZALD being unable to secure financing for Zenith Acres. Consequently, the original owner, Bunge Corporation, was foreclosing its mortgage on the Zenith Acres' property. The letter advised property owners that release provisions were available under the Bunge mortgage and that they could, if they wanted to try to keep their land at Zenith Acres, be required to pay $1,650.00 in one cash payment within a short time.

   7. The letter further advised that Zenith American Corporation, the parent company of ZALD, did not wish for the property-owners to suffer any losses due to the unfortunate chain of events and was therefore giving said property owners the opportunity to accept other property of equal or greater value in another development in exchange for the Zenith Acres property. The land offered was in a subdivision under development by respondent Groveland Ranch Acres, Inc. Finally, the letter stated that in the event the property owners elected to accept the exchange of properties, they would receive full credit for all monies paid, principal and interest, and the interest rate would be reduced.

      
      

   8. A copy of the agreement for deed for the Groveland Ranch acreage was attached to the July letter described in the preceding paragraph. While some of the Agreements attached did not contain the refund privilege, the form contract sent to Mr. Kiser contained the following:

      
      

      "Refund Privilege - Buyer(s) may at any time within 6 months hereafter, if this Agreement for Deed is not in default, complete a company guided tour at Groveland Estates and if not completely satisfied with his purchase, request in writing, on a form provided by the company, a refund of all monies paid under this Agreement for Deed. This form must be executed immediately upon completion of said tour. This money-back inspection guarantee shall not apply to any Agreement for Deed executed at or after the Buyer(s) has visited Groveland Estates, and is personal to the Buyer and cannot be exercised by any agent on behalf of the buyer."

      
      

   9. Upon receipt of the July, 1974, letter the Kisers wrote a letter to Mr. Burstein on July 13, 1974, returning the Agreement for Deed and asking that certain blanks be filled in with dollar amounts. Also, inquiry was made as to whether this sale included all the conditions of sale listed on the reverse side. The evidence did not establish whether or not a response was given to this latter inquiry.

      
      

   10. On or about August 7, 1974, the Kisers entered into the Agreement for Deed with respondent Groveland Ranch Acres, Inc. to buy one and one-quarter acres, more or less, of property in Groveland Estates. The Kisers were given a credit of $878.02, representing the amount previously paid into the Zenith Acres property.

       
       

   11. In the latter part of November, 1974, the Kisers personally inspected the Groveland Estates property. They were dissatisfied with what they saw and demanded a refund in accordance with the conditions of sale. A representative on the site refused to allow the Kisers a refund. The Kisers then went to the offices of the Florida Real Estate Commission in Winter park, Florida where a representative referred them to the Florida Land Sales Division in Tampa. The Kisers explained their refund problem to the Division's Chief of Compliance, Mr. Clarence R. Lynch, who then called respondent Burstein for his response. Lynch told the Kisers that Burstein had indicated that there was no problem with a refund of the monies paid under the Groveland contract, but no decision as to the Zenith Acres refund was made at that time. Mr. Lynch did not recommend to Burstein that the Kisers be refunded the monies paid into the Zenith Acres

       property for the reason that Zenith did not then have the money, and to refund the Kisers' money would have placed them in a priority or preferential position to the possible prejudice of other Zenith purchasers.

       
       

   12. On December 7, 1974, the Kisers filed a written complaint against Groveland Ranch Acres, Inc. with the Florida Real Estate Commission stating therein their feeling that they were entitled to all monies paid into both contracts, to wit: $1,097.74. The Commission was not advised in this complaint that the Kisers had previously met with Mr. Lynch of the Land Sales Division.

       
       

   13. By letter dated December 7, 1974, Mr. Kiser informed respondent Burstein that they did not approve of the Groveland property, wished to exercise the refund privilege, and demanded "the return of all money paid into this contract as shown on the face of said contract and monthly payments to date, totalling $1,097.74."

       
       

   14. Burstein responded to this demand by a letter dated December 17, 1974, reading as follows:

       
       

       "As per my conversation with Mr. Clarence Lynch for the Division of Florida Land Sales, enclosed is your refund check in the amount of

       $376.98, representing all monies paid into your Groveland account Number 10827.

       
       

       We are presently in the process of working out the problems which arose regarding Zenith Acres and will notify you as to when you can expect the balance of your refund."

       
       

       The enclosed check contained a release on the backside and was described as "refund in full payment of A/C 10827."

       
       

   15. On January 9, 1975, Mr. Kiser informed respondent Burstein by letter that the check was unacceptable since it was "neither in full payment nor can we release all claims." Kiser further stated "we will expect the balance of this account by return mail."

       
       

   16. By letter dated January 16, 1975, respondent Burstein informed the Kisers that:

       
       

       "As I stated in my previous letter to you, during my conversation with Mr. Clarence Lynch, for the Division of Florida Land Sales, it was understood and agreed that we were only able

       to refund that portion of your monies that was paid into your Groveland account. The check which was mailed to you in the amount of

       $376.98, represents this portion of your refund."

       
       

   17. Pursuant to an agreement with and authority from the Division of Florida Land Sales, ZALD sent a second letter, dated February 28, 1975 and signed by Stanley Rowen as president, to purchasers of property in Zenith Acres. This letter explained the foreclosure proceedings and the reasons for ZALD's default in mortgage payments and offered purchasers requesting refunds their choice of two modes of settlement. The first was the issuance of a note from ZALD, payable on March 1, 1980, for the full face amount of the refund due, plus

       interest accumulated at nine percent compound per annum. The second alternative offered was a credit of twice the amount of payments to date toward the purchase of a similar, substitute lot at a discounted sales price and lower monthly payments. These two alternative offers of settlement had been previously approved by the Florida Land Sales Division.

       
       

   18. By letter dated March 28, 1975, the Kisers advised ZALD, at the attention of respondent Burstein, that they were not interested in purchasing any more land in Florida. This letter further stated:

"It is our wish that you make a note payable to some financial institution in Florida, paying them the interest; and sending us a check for $878.02, the balance of our refund as requested."

19 . On April 4, 1975, respondent Burstein, signing as executive vice president of ZALD, sent the Kisers a settlement note in the amount of $878.02 at nine percent interest, compounded annually and payable March 1, 1980. The Kisers were advised that:

"We [ZALD] are not in a position to go to a financial institution, however you may try to discount the note at a financial institution in your area. When the note becomes due and payable we will be happy to pay the financial institution of your choice."

1. Finally, on April 15, 1975, respondent Burstein, as executive vice president of Groveland Ranch Acres, Inc., wrote Mr. Kiser the following:

   
   

   "It is my understanding from what the Florida Real Estate Commission has told me, that you have chosen not to cash this check for reasons of your own. Therefore, I have stopped payment on this check and am enclosing a replacement check in the amount of $219.72.

   This check represents actual payments received by the Company as payments on the above captioned account."

   
   

   CONCLUSIONS OF LAW

   
   

2. By an administrative complaint filed with the Florida Real Estate Commission on August 28, 1975, respondents Oscar Burstein and Groveland Ranch Acres, Inc. were charged with being guilty of misrepresentation; false promises, false pretenses, dishonest dealing, trick, scheme or device, or breach of trust in a business transaction, in violation of F.S. 475.25(1)(a). Respondents were further charged with failure to account or deliver to the Kisers monies, funds, deposits or things of value which had come into respondents' hands and which was not their property, or which they were not in law or equity entitled to retain, in violation of F.S. 475.25(1)(c). Both charges, if sustained by competent, substantial evidence, carry a penalty of suspension of registration for a period of two years or until compliance with a lawful order imposed in the final order of suspension.

3. Upon a careful review of the relevant facts adduced at the hearing, as set forth above, it is the conclusion of the undersigned Hearing Officer that the petitioner has failed to illustrate that respondents are guilty as charged in the administrative complaint.

   
   

4. The evidence shows that the Kisers had a contract with ZALD, with a six month refund privilege which they expressly declined to exercise. Whether or not the circumstances surrounding the Zenith Acres property was sufficient to bring paragraph 12 of that contract (as set forth in findings of fact 4 above) into operation is a matter between the Kisers and ZALD, and one for which the respondents herein have no responsibility. When the Zenith Acres agreement ran into difficulties, the Kisers were offered the opportunity to exchange their property for property owned by respondent Groveland. They elected to do so and there was nothing in either the Groveland Estates agreement or the ZALD letter offering the exchange opportunity that promised a full refund of all monies paid into the Zenith Acres property. The refund privilege clause contained in the Kiser's Groveland Estates Agreement for Deed provided for a "refund of all monies paid under this Agreement for Deed." As soon as respondent Burstein became aware of the Kisers' demand for a refund, first through Mr. Lynch with the Division of Land Sales and then through Mr. Kiser's letter dated December 7, 1974, Mr. Burstein sent the Kisers a check for all monies originally thought to have been paid pursuant to the Groveland Estates Agreement for Deed.

   Respondents are not responsible in this proceeding for the arrangements under which ZALD proceeded in its dealings with the Zenith Acres purchasers.

   Respondents fully complied with their agreement with the Kisers by delivering to them, upon demand, a full refund of all monies paid by the Kisers under the contract between them.

   
   

5. Under the circumstances of this case, there has been no showing of bad motives on the part of either respondent. Nor has there been any showing of misrepresentation, false promises or pretenses, dishonest dealing, trick, scheme or device or breach of trust in a business transaction. Finally, there is no evidence that respondents failed to account or deliver to the Kisers monies which had come into respondents' hands and which was not their property or which they were not in law or equity entitled to retain. Here, respondents immediately refunded that portion of the Kisers' monies paid directly into the Groveland Estates contract. Pursuant to authorization from the Division of Florida Land Sales, two modes of settlement were offered with respect to monies paid into the Zenith Acres contract. Whether or not the mode chosen by the Kisers -- the note payable in 1980 -- comport with their agreement with ZALD is a matter between ZALD and the Kisers. The responsibility of ZALD with respect to a refund of monies paid into the Zenith Acres property is not the liability of either respondent in this proceeding. Although the Kisers were offered a credit at the time they exchanged properties, respondents never offered a refund of the monies paid into the Zenith contract.

RECOMMENDATION

Based upon the findings of fact and conclusions of law recited above, it is recommended that the administrative complaint filed against Groveland Ranch Acres, Inc. and Oscar Burstein be dismissed.

Respectfully submitted and entered this 22nd day of September, 1976, in Tallahassee, Florida.

DIANE D. TREMOR, Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304

(904) 488-9675

COPIES FURNISHED:

Mr. Randy J. Schwartz 2699 Lee Road

Winter Park, Florida 32789

Mr. Stephen Kessler

Moore, Kessler, Roth & Becherman 1895 South West 3rd Avenue Miami, Florida 33129

Docket for Case No: 76-000845

Orders for Case No: 76-000845