STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FLORIDA REAL ESTATE COMMISSION, )

)

Petitioner, )

)

vs. ) CASE NO. 77-303

)

LEROY WILSON, )

)

Respondent. )

)

RECOMMENDED ORDER

This case was heard pursuant to notice on May 25, 1977, at 9:00 a.m. in the Conference Room, Department of Transportation Building, 780 S.W. 24th Street, Ft. Lauderdale, Florida, by Stephen F. Dean, assigned Hearing Officer of the Division of Administrative Hearings. Evidence was received on the allegations contained in the Administrative Complaint dated July 28, 1976. This was the second hearing in this cause, and this matter was referred back to the Division of Administrative Hearings on a determination by the Florida Real Estate Commission that the Respondent had not received sufficient notice of the initial hearing.

The Amended Administrative Complaint contains four counts. Count I alleges that the Respondent wrote a deposit receipt contract for the sale of real property belonging to him indicating receipt of $600 when only $300 was received; and the $600 amount was entered to misrepresent the facts of the transaction in order to obtain FHA financing which constitutes a violation of Section 475.25(1)(a), Florida Statutes. Count II alleges that Respondent failed to make good his oral promise to repay the $300 received on the deposit receipt contract to the purchasers of the Respondent's personal real property until he was aware of an investigation of the matter by the Florida Real Estate Commission also in violation of Section 475.25(1)(a), Florida Statutes. Count III alleges that the Respondent's escrow account was in arrears on September 15, 1975, when it contained $62 when it should have contained $300; and further, that it was in arrears in September 16, 1975, when it contained $292 when it should have contained $300, contrary to Section 475.25(1)(i), Florida Statutes. Count IV alleges that the Respondent failed to maintain a real estate office and failed to maintain a sign on said office contrary to the provisions of Rule 21V-

1. and 10.09, Florida Administrative Code, thereby violating Section 475.22, Florida Statutes.

   
   

   APPEARANCES

   
   

   For Petitioner: Manuel E. Oliver, Esquire

   Florida Real Estate Commission 2699 Lee Road

   Winter Park, Florida 32789

   For Respondent: Henry Latimer, Esquire

   5353 Southwest 40th Avenue

   Ft. Lauderdale, Florida 33314 FINDINGS OF FACT

   1. Leroy Wilson was a registered real estate broker holding license No. 0097177 at the time of the events alleged in the Amended Administrative Complaint.

      
      

   2. On April 2, 1975, Leroy Wilson received an offer to purchase a house owned by him from Robert and Mazie English. The Englishes executed a deposit receipt contract to purchase Wilson's house and agreed to pay an earnest money deposit of $600. They paid $300 at the time they executed the contract and it was understood by all the parties that the Englishes would have to pay an additional $300. This deposit receipt contract was introduced as Exhibit 12. The contract states on its face that it is a legally binding contract and that if it is not understood advice should be sought. The contract further states that no broker was involved, and the testimony of Mazie English indicates that she clearly understood that Wilson was selling his personal real property. The deposit receipt contract was contingent upon FHA approval of the Englishes application for FHA financing. The contract further provided that the seller was entitled to retain the deposit if the buyers defaulted.

      
      

   3. The Englishes subsequently decided that they could not afford to purchase the house and notified Wilson that they did not desire to complete the transaction. This occurred prior to the consideration of their application for a loan from FHA. Mazie English asked Wilson if they could receive their money back. At that time, Wilson gratuitously promised to return their deposit, however, Wilson advised her that it would be sometime before they could pay them.

      
      

   4. There is no minimum deposit required by FHA which is concerned primarily with the financial ability of the potential purchasers to make payments on the loan sought. The amount of the deposit received by the seller is only relevant insofar as it would reduce the principle amount of the loan. FHA is not concerned with the details of the transaction between the parties.

      
      

   5. Wilson's business was failing at the time he entered into the English transaction. Eventually, Wilson's real estate office was closed by his landlord who locked Wilson out and took all of his office papers and records. Wilson was contacted at his home at 2951 Northwest 24th Avenue, Ft. Lauderdale, Florida, by the Commission's investigator. The investigator advised Wilson that as a broker Wilson would have to maintain an office, but that Wilson could work out of his home. On September 21, 1975, Wilson executed a change of business address to the Florida Real Estate Commission to indicate his residence located at 2951 Northwest 24th Avenue, Ft. Lauderdale, Florida. The investigator's report, Exhibit 11, under date of 9-16-75 indicates that a non-active registrant letter had been prepared by the broker. The specific entry, No. 8 on the reverse side of the report, bears a date October 1, 1975. On November 22, 1975, Wilson changed his status from broker to broker-salesman with Frank Barrow. His application was annotated by the Florida Real Estate Commission staff to indicate that his application for change of status from active to inactive was already on file. According to the investigator's report Wilson's broker's license was to expire on 9-30-75. While the testimony is clear that Wilson did not establish an office at his residence, Wilson conducted no real estate transactions from that location and the formal application for a change of

      business address to his residence was made. At no time was a business sign and other indications of an active broker's office established on the premises.

      
      

   6. The records of the Plantation First National Bank of Account No. 149- 294-6, Leroy Wilson overpass real-state trust account were introduced. The signature card for the account (Exhibit 2) indicates the initial deposit to the account was made on August 21, 1975, by Leroy Wilson for the deposit of $300. A bank statement (Exhibit 3) was introduced indicating that it was an initial statement for Account No. 149-294-6, which contained only one entry indicating an initial deposit of $300 on August 21, 1975. This substantiates the signature card entry referenced above. The statement for this account for the following month was introduced as Exhibit 1. This statement commences with two checks drawn on the account for a total of $238. This left a balance of $62 on September 15, 1975. On September 16, 1975, a deposit of $230 was made, whereupon the balance was $292. It is the contention of the Petitioner that this account was not in order. Its contention is based upon the investigator's statement that Wilson had told him that he had one transaction pending in which he had received a $300 deposit. This became the basis of the investigator's audit of Trust Account No. 149-294-6 and the Petitioner's allegations. No evidence of the transaction was introduced other than the investigator's statement. Wilson explained that he did in fact have one transaction pending but that it was on his personal property which had been the subject of the English transaction. A review of the checks on the account indicates that all of the checks drawn on the account were for business items but not escrow type transactions. The officer of the bank who identified the records and the investigator could not testify that Account No. 149-294-6 was the only account maintained by Wilson at Plantation National Bank.

      
      

      CONCLUSIONS OF LAW

      
      

   7. The Florida Real Estate Commission has jurisdiction of this matter.

      
      

   8. Because it was a personal transaction there was no requirement for Wilson's deposit, the Englishes' earnest money deposit in an escrow account. This point is conceded by the Florida Real Estate Commission. The deposit receipt contract clearly provides that the seller is to retain the deposit receipt in case of default by the purchaser. The credit application of the Englishes was never acted on by FHA, having been withdrawn when the Englishes determined that they did not want to go through with the transaction.

      Therefore, the Englishes defaulted on the contract and Wilson was entitled under the contract to retain their deposit. His subsequent promise to pay the money was gratuitous and was from the start conditioned upon his having the money to pay the Englishes. In failing to repay the money until the investigation of the Englishes' complaint he violated no provision of law.

      
      

   9. The evidence was clear that FHA has no minimum deposit, required on a transaction and, further, that the Englishes were expected to pay the full $600 recited in the deposit receipt contract. There could therefore have been no representation to FHA.

      
      

   10. There was no evidence beyond Wilson's statement to the investigator regarding a pending transaction in which Wilson had received $300 to substantiate the allegation that Wilson's escrow account was in arrears. Wilson clarified at the hearing that the transaction to which he referred was an offer to purchase his own house. Under the same theory applicable to the English transaction. Wilson had no legal duty to deposit the money in his escrow account. If a violation occurred, it was Wilson's deposit of personal funds to

       his trust account. However, neither the investigator nor the bank official could state that Account No. 149-294-6 was the only account maintained by Leroy Wilson. Review of the checks written on this account indicates the checks were for business related expenses. A substantial question therefore exists whether Account No. 149-294-6 was in fact a business account. However, if one assumes that this was in fact Wilson's trust account, because there were no other transactions pending and no other monies escrowed, Wilson's deposit of personal funds to the account resulted in no co-mingling. Wilson's records were held by his landlord when his office was closed. His inability to produce these records was beyond his control.

       
       

   11. Wilson did fail to maintain an office; however, this was a technical violation and must be considered in light of the fact that he shortly thereafter applied for inactive status and subsequently became a broker salesman.

       
       

   12. Clearly, while only Count IV was proven at the hearing, the fact remains that Wilson spent $300 received in a personal transaction and encountered substantial difficulty in repaying the amount. Although the Englishes did default on the contract, under a different set of facts Wilson would have been in clear violation of section 475.25(1)(a), Florida Statutes. Under the set of facts presented, however, there was no violation of this provision.

RECOMMENDATION

Based upon the Findings of Fact and Conclusions of Law stated above the Hearing Officer would recommend that the Florida Real Estate Commission issue a letter of admonition to Leroy Wilson clarifying his responsibilities and the maintenance of his financial affairs and proper business office when operating as a broker.

DONE and ORDERED this 22nd day of June, 1977, in Tallahassee, Florida.

STEPHEN F. DEAN

Hearing Officer

Division of Administrative Hearings Room 530 Carlton Building Tallahassee, Florida 32304

(904) 488-9675

COPIES FURNISHED:

Manuel E. Oliver, Esquire Florida Real Estate Commission 2699 Lee Road

Winter Park, Florida 32789

Henry Latimer, Esquire Mavrides and Latimer

5353 Southwest 40th Avenue Fort Lauderdale, Florida 33314

Docket for Case No: 77-000303

Orders for Case No: 77-000303