STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL ) REGULATION, BOARD OF REAL ESTATE, )

)

Petitioner, )

)

vs. ) CASE NO. 81-2526

)

NORMAN D. RATHBUN and )

DIANNA STOLPMAN, )

)

Respondent. )

)

RECOMMENDED ORDER

This case was heard pursuant to notice on May 20, 1982, in Cocoa, Florida, by Stephen F. Dean, assigned Hearing Officer of the Division of Administrative Hearings. This case was presented on the Administrative Complaint filed by the Board of Real Estate against the Respondents alleging in two separate counts that the Respondents violated Section 475.25(1)(b), Florida Statutes.

APPEARANCES

For Petitioner: John G. DeLancett, Esquire

801 North Magnolia Avenue, Suite 402 Post Office Box 6171-C

Orlando, Florida 32803

For Respondents: Michael Krasny, Esquire

416 South Babcock Street Post Office Box 1376 Melbourne, Florida 32901

ISSUES

The Administrative Complaint alleges Respondents violated Section 475.25(1)(b), Florida Statutes, by committing certain acts which were fraudulent or were misrepresentations or concealed material facts. The issues are whether the Respondents committed the acts alleged and, if so, did their conduct constitute a violation of Section 475.25(1)(b), Florida Statutes.

Both parties submitted proposed findings which were read and considered.

To the extent that the findings herein differ from the findings proposed, it is because the proposed findings were not relevant or material to the issues, were not based upon the most credible evidence, or were not findings of fact.

FINDINGS OF FACT

1. The Respondents, Norman D. Rathbun and Dianna A. Stolpman, are real estate brokers having been issued license numbers 0072024 and 0085366 respectively. The last known address of Respondents is c/o Mark Realty, Inc.,

   130 Fifth Avenue, Indialantic, Florida.

   
   

2. Respondents are now and were at all times alleged herein licensed real estate brokers in the State of Florida.

   
   

3. In February of 1980, Rathbun discussed with Gene Myers at Myers' behest a financial arrangement by which Myers, who had been trying to sell a house which he and his wife owned and were leasing, could obtain immediate cash to go to California. On February 4, 1980, they entered into a written agreement which provided in general terms that the Respondents would give the Myers $5,000 in cash, would assume financial responsibility for the three mortgage payments on the house, would manage the rental of the property, and would attempt to sell the house for which Respondents would receive a $3,000 commission and split the proceeds of the sale of the house with the Myers less the moneys the Respondents had expended.

   
   

4. Upon discovering an outstanding judgment against the property of over

   $1,000, the Respondents prepared an amended agreement which provided that they would give the Myers $4,000 in cash and pay the outstanding judgment. This amendment was executed on February 8, 1980, at which time the Myers executed a warranty deed conveying the property to the Respondents.

   
   

5. All of the parties were aware of their mutual obligations and the benefits they were to obtain from the agreement, and the Myers executed the warranty deed with a full understanding that they were conveying their right in the property to the Respondents subject to the terms of this agreement.

   
   

6. Although conflicting testimony was received about whether the deed would be recorded by the Respondents, the documents and actions of the parties show the Myers were aware that the deed was in exchange for the cash and promises they received and that it would be recorded if necessary to secure the Respondents' interests (i.e., if the Myers were killed in an automobile accident) although the Respondents did not anticipate filing the deed.

   
   

7. In early May of 1980, the Myers, who were living in California, determined they wanted to return to Florida. Gene Myers called Rathbun and asked if they could get the house back. Rathbun consulted Stolpman and, as a result, a letter was sent to the Myers on or about May 2, 1980, setting forth the terms under which the Myers could have the house back. The Myers did not comply with the terms of this letter until September 5, 1980, when they tendered the money to the Respondents. Upon tendering the money in return for rescinding their previous agreement, the Respondents reconveyed the property.

   
   

8. Before the agreement was rescinded, Respondents continued to deal with the property as its owners limited only by the written agreement. The Myers had no legal right prior to September 5, 1980, to direct the Respondents to return the house to the Myers' possession or to cease their efforts to sell the property.

   
   

9. The Respondents did all the things which they were required to do under the agreement and at all times met their obligations under the agreement.

10. On or about May 10, 1980, when the Myers had returned to Florida, Gene Myers told Rathbun that he did not want the house sold, and that he could cut off the Respondents' rights by conveying the property to a relative. On May 12, 1980, in response to Myers' comment about cutting off their rights in the property, the Respondents filed the deed executed by the Myers conveying the property to the Respondents.

    
    

11. On June 30, 1980, the Myers filed a claim of financial interest in the property with the local circuit court clerk. No evidence exists that the Respondents were served with this claim.

    
    

12. Respondents continued their efforts to sell the property and on July 1, 1980, obtained a contract for sale on the property for a price that was within the limits established under their agreement with the Myers. Closing on the contract was to be on Friday August 1, 1980.

    
    

13. On July 21, 1980, through their attorney, the Myers filed suit against the Respondents, who were served with the suit and a lis pendens on July 24, 1980. On July 25, 1980, Respondents met with their attorney, who called the Myers' attorney. Arrangements were made to meet on August 4, 1980, to discuss resolution of the suit. Between July 25 and August 1, 1980, Respondents did not notify the buyers or the buyers' agent that a suit was pending regarding the property.

    
    

14. On or about July 31, 1980, the Myers reoccupied the house and on August 1, 1980, advised the buyers that they were the owners, not the Respondents. The buyers, their attorney and their real estate agent attended the scheduled closing. Rathbun arrived late, at which time the pending litigation and the Myers' claims were being discussed. Rathbun advised the group that he and his attorney were already scheduled to meet with the Myers and their attorney the following Monday, and that he felt the matter could be resolved.

    
    

15. On August 2, 1980, the buyers elected to withdraw their offer. On August 4, the Respondents and the Myers reached a tentative agreement for the Myers' continued possession of the property. This resulted in a written agreement dated September 5, 1980. The terms of this agreement were substantially the same as the terms stated in the letter to Myers of May 2, 1980.

    
    

    CONCLUSIONS OF LAW

    
    

16. The Division of Administrative Hearings has authority to hear this controversy and enter a recommended order under Section 120.57(1), Florida Statutes. The Florida Real Estate Commission (formerly Board of Real Estate) has authority to discipline the Respondents under the provisions of Chapter 475, Florida Statutes.

    
    

17. The Florida Real Estate Commission alleged in the Administrative Complaint that:

    
    

    1. The Respondents performed certain services for Gene R. Myers which resulted in the Myers being indebted to Respondents in the sum of $7,000;

    2. The Respondents insisted that the Myers secure the debt by executing a warranty deed;

    3. The Respondents understood and agreed with the Myers that the deed was a mortgage and that, when the Myers repaid the debt, the property would be reconveyed to the Myers by the Respondents;

    4. The Respondents recorded the warranty deed without the consent or knowledge of the Myers;

    5. Gene Myers told the Respondents not to sell the property;

    6. The Respondents continued to try to sell the property and obtained a contract for sale

       of it after they knew the Myers opposed the sale; and

    7. The Respondents failed to advise the buyers of the property prior to closing that a lawsuit affecting the property bad been served on the Respondents.

       
       

18. The facts show that the Respondents entered into a hybrid real estate/loan transaction by mutual agreement. Pursuant to that agreement Respondents loaned the Myers $4,000 cash, agreed to pay a judgment against the property in question, agreed to manage the property for six months, agreed to try to sell the property for six months, and agreed to make all mortgage payments for six months. In exchange for the Respondents' promises and $4,000 in cash, the Myers conveyed to the Respondents the property by warranty deed subject to their written agreement. This agreement further provided that the parties would share other proceeds of the sale, and that that the Myers would have a four-months' option to repurchase the property after six months. There is no evidence that "services were performed" for the Myers prior to the agreement, that Respondents insisted upon a warranty deed (although there is no prohibition against such insistence), that the deed was a mortgage, or that the property would be reconveyed when the "debt" was paid off.

    
    

19. The testimony regarding any representations concerning whether the deed would be recorded is conflicting; however, the nature of the deed, the transaction, and the statements of the witnesses show that the deed would be recorded if necessary to protect the Respondents' investment. It was recorded in response to Myers' statements about conveying the property and cutting off Respondents' interest. Even had the Respondents promised not to record the deed at the time the parties entered the agreement, the Respondents were warranted in recording the deed when the person to whom they allegedly made the promise threatened to cut off their interest by conveying the property without cause.

    
    

20. Looking at the facts as a whole, Respondents complied with the terms of the agreement and were willing to rescind the agreement upon payment of the money they had spent plus a profit. It was the Myers who did not keep their end of the agreement and failed to tender the payment necessary to rescind the agreement. The allegations of Count I, that Respondents violated Section 475.25(1)(b), Florida Statutes, are not proven.

    
    

21. Regarding Count II of the Administrative Complaint, although the factual allegations were proven, the Myers had no legal right to direct the Respondents not to sell the property based upon the findings in Count I regarding the deed. The Respondents' efforts to sell the property and their acceptance of a contract for sale are not violations of Section 475.25(1)(b), Florida Statutes.

22. Respondents did not advise the buyers of the claim of financial interest filed by the Myers or of the pending legal action. However, the legal issue is whether the Respondents had an obligation to advise the buyers about these matters. While the Respondents were acting as selling brokers for their own property, they were not representing the buyers. Florida law does not recognize a special relationship between a selling broker and a buyer. Both the claim of interest filed by the Myers and the suit and lis pendens were matters of public record. There being no special relationship between the Respondents and the buyers requiring disclosure of matters which were of public record, there was no duty of disclosure. Respondents did not violate Section 475.25(1)(b), Florida Statutes, by failing to advise the buyers of the claim, lawsuit or lis pendens.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Florida Real Estate Commission dismiss the allegations of the Administrative Complaint against the Respondents.

DONE and ORDERED this 21st day of September, 1982, in Tallahassee, Leon County, Florida.

STEPHEN F. DEAN, Hearing Officer Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 21st day of September, 1982.

COPIES FURNISHED:

John G. DeLancett, Esquire

801 North Magnolia Avenue, Suite 402 Post Office Box 6171-C

Orlando, Florida 32803

Michael Krasny, Esquire

416 South Babcock Street Post Office Box 1376 Melbourne, Florida 32901

C. B. Stafford, Executive Director Florida Real Estate Commission

400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802

Samuel R. ,Shorstein, Secretary Department of Professional

Regulation

130 North Monroe Streets Tallahassee, Florida 32301

Docket for Case No: 81-002526

Orders for Case No: 81-002526