STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL ) REGULATION, BOARD OF REAL ESTATE ) (now FLORIDA REAL ESTATE )

COMMISSION), )

)

Petitioner, )

)

vs. ) CASE NO. 81-2558

)

RICHARD ELMER BACKUS, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, William E. Williams, held a formal hearing in this cause on March 16, 1982, in Lakeland, Florida.

APPEARANCES

For Petitioner: Grover C. Freeman, Esquire

4600 West Cypress, Suite 410

Tampa, Florida 33601

For Respondent: Charles A. Williams, Jr., Esquire

2815 Northwest 13th Street Gainesville, Florida 32602

On or about September 28, 1981, Petitioner, Department of Professional Regulation, Board of Real Estate ("Petitioner") issued an Administrative Complaint seeking to suspend or revoke, or take other disciplinary action against Respondent's license as a real estate broker. Respondent, Richard Elmer Backus ("Respondent"), requested a formal hearing and the matter was forwarded to the Division of Administrative Hearings for assignment of a Hearing Officer and the scheduling of a hearing.

At final hearing in this cause, Petitioner called Margaret Rhoden, Myrtle Williams, and Respondent as its witnesses. Petitioner offered Petitioners Exhibits 1 through 4, each of which was received into evidence. Respondent testified in his own behalf and called David B. Higginbottom as a witness.

Respondent offered no exhibits for inclusion in the record.

The issues in this proceeding are whether Respondent violated Section 475.25(1)(b), Florida Statutes. The single-count Administrative Complaint alleges that Respondent received a warranty deed conveying real property to Margaret Rhoden for the purpose of recording that deed, but that he, without authority to do so, and under false pretenses, did not record the warranty deed, but instead delivered it to an agent for the seller so that the deed was used for security for the payment of a promissory note between the buyer and seller.

FINDINGS OF FACT

1. Respondent is licensed by the State of Florida as a real estate brokers and holds license No. 0002997.

   
   

2. On May 7, 1979, Respondent acted in the capacity of a real estate broker in the transaction of the sale of a parcel of real property located in Polk County, Florida. The purchaser in that transaction was Margaret Rhoden, and the seller was June Davis, who was represented in the transaction by a relative, Henry Goodwin.

   
   

3. On May 7, 1979, Margaret Rhoden entered into a Contract for Sale of Rea1 Estate for the purchase of a piece of property Frostproof, Florida, from June Davis. The full purchase price of the property was $3,500, which Ms. Rhoden paid to Respondent in cash on May 7, 1979, and obtained a receipt from Respondent for that amount. At the time the contract was entered into, Ms. Rhoden was advised that a deed should be forthcoming from the seller within two to four weeks. A date of June 20, 1979, was established to close the transaction, subject to a 120-day curative period should any cloud on the title be discovered. The contract between the parties provided that should any such cloud appear of record, the seller would have a period of 120 days after receipt of written notice prior to the date set for closing in which to attempt to cure the defect. The contract further provided that if title defects were not cleared within the l20-day period, the deposit would be returned to the buyer, or, at the buyer's option, the transaction should be closed in the same manner as if no defect had been found.

   
   

4. A warranty deed purporting to transfer the property from the seller to the buyer was executed on June 7, 1979, and a title binder was issued on that same date. The title binder indicated an outstanding mortgage on a larger piece of property of which the parcel purchased by Ms. Rhoden was only a part. When efforts to clear this cloud on the title took longer than expected, Ms. Rhoden asked, and was granted, permission by the seller's agent to commence construction on the improvements on the property notwithstanding the fact that she knew that a cloud remained on the title to the lot, and the transaction had not been closed. Construction was not completed on the improvements because Ms. Rhoden ran out of cash during the course of construction. She moved into the dwelling while it was still in a partially completed condition and, on September 8, 1979, with the permission of the seller's agent, received a loan of $3,000 from the $3,500 deposit she had placed with Respondent, Ms. Rhoden executed a promissory note dated September 8, 1979, in which she agreed to repay the $3,000 loan when clear title to the property was issued. Ms. Rhoden used the proceeds of this loan to make additional improvements on the property.

   
   

5. On October 26, 1979, Respondent received both the warranty deed dated June 7, 1979, and the title binder issued on that date from the attorney for the seller. When approached by Ms. Rhoden, Respondent agreed to lend her the deed and title binder to attempt to obtain additional financing to complete construction on her home. The clear inference from the record in this proceeding is that there was never any understanding between Respondent and Ms. Rhoden that this deed could be recorded at this or any other juncture in this transaction. In fact, the contract entered into between the buyer and seller clearly called for the payment of the full purchase price of the property at closing, and the note subsequently executed by Ms. Rhoden conditioned the issuance of a warranty deed to her on the payment of the $3,000 face value of the note.

6. Ms. Rhoden was unsuccessful in obtaining additional financing to complete construction on her home, probably due to the fact that when she sought that financing the outstanding mortgage on the property had still not been satisfied. When Respondent advised the seller's attorney that he had loaned the warranty deed to Ms. Rhoden for the purposes outlined above, he was advised that there was nothing to keep Ms. Rhoden from recording the deed, at which point Respondent apparently determined that it would be prudent for him to retrieve the deed from Ms. Rhoden's possession. Ms. Rhoden had her mother return the deed to Respondent in February of 1980. According to the testimony of both Ms. Rhoden and her mother, they felt the purpose for the returning of the deed was to have it recorded. Respondent denies any such understanding. In resolving this conflict in testimony, the clear inference from the circumstances involved in this transaction, including the wording of the contract of sale and the note executed by Ms. Rhoden, supports a finding that all of the parties to this transaction either knew, or should have known, that the recording of the deed at this juncture in the transaction would have been improper. Although the outstanding mortgage had been satisfied in January of 1980, Ms. Rhoden had not Performed her obligation under the contract of sale by paying the full purchase price.

   
   

7. When Respondent had recovered the deed from Ms. Rhoden, he was advised by the attorney for the seller not to record the deed until he had received payment from Ms. Rhoden in accordance with the contract and the promissory note. As indicated above, the outstanding mortgage on the property was satisfied in January of 1980.

   
   

8. On February 6, 1980, Respondent Prepared a closing statement reflecting the purchase price of the property as $3,500. From this amount he deducted a total of $478 for state documentary stamps, title insurance, Preparing the deed, and amount of real estate commission leaving a the apparently forwarded the note from Ms. Rhoden for $3,000, together with the $22.00 cash balance remaining from her initial $3,500 deposit to the seller along with the deed which the seller had earlier executed.

   
   

9. Ms. Rhoden apparently never made or tendered payment of the $3,000 note, the transaction never closed, and at the time of final hearing in this cause an eviction action was apparently pending between the seller and Ms. Rhoden.

   
   

10. Paragraph seven of the contract of sale executed between the seller and Ms. Rhoden Provides as follows:

    
    

    If Buyer fails to perform this contract, the deposit this day paid by Buyer as aforesaid shall be retained by or for the account of Seller as consideration for the execution of this agreement and in full settlement of any claims for damages.

    
    

    CONCLUSIONS OF LAW

    
    

11. The Division of Administrative Hearings has jurisdiction over the subject matter of and the parties to this proceeding. Section 120.57(1), Florida Statutes.

12. Section 475.25(1)(b), Florida Statutes (1979) which Respondent is alleged to have violated, authorizes imposition of an administrative fine, revocation or suspension of a license if the licensee is found to have:

    
    

    Been guilty of fraud, misrepresen- tation, concealment, false promises, false pretenses, dishonest dealing

    by trick, scheme, or device, culpable negligence or breach of trust in any business transaction in this state

    any other state, nation, or territory; has violated a duty imposed upon him by law or by the terms of a listing contract, written, oral, expressed, or implied, in a real estate transaction; has aided, assisted, or conspired with any other person engaged in any such misconduct and in furtherance thereof; or has formed an intent, design, or

    scheme to engage in any such misconduct and has committed an overt act in furtherance of such intent, design,

    or scheme. It shall be immaterial to the guilt of the licensee that the victim or intended victim of the

    misconduct has sustained no damage or loss; that the damage or loss has been settled and paid after discovery of the misconduct; or that such victim or intended victim was a customer or a person in confidential relation with the licensee, or was an identified member of the general public. . .

    
    

13. The Administrative Complaint alleges that Ms. Rhoden"... gave the respondent the warranty deed for the property for the purpose of recording it" .

. . and that "respondent, without authority to do so and under false pretenses, did not record the warranty deed, but instead delivered it to [the seller's] agent . . . as security for the promissory note." This record does not support a finding that Respondent received a warranty deed from Ms. Rhoden for the purpose of recording it, and, indeed, the clear inference from the record in this Proceeding is that the recordation of that deed when Respondent received it from Ms. Rhoden would have been improper. Neither does the record in this case support the finding that Respondent acted "under false pretenses" in failing to record the deed or by returning it to the seller's agent. The entire import of this admittedly inartful real estate transaction was that the sale was not to be concluded and the deed recorded until Ms. Rhoden had made the entire cash payment for the property of $3,500. The record in this case clearly establishes that she never tendered such performance. Respondent's conduct as reflected in the Findings of Fact section of this Recommended Order neither unfairly placed the seller or buyer in an unfavorable Position, nor did it violate any of the requirements of Section 475.25(1)(b), Florida Statutes (1979).

Accordingly, it is

RECOMMENDED that a Final Order be entered by Florida Real Estate Commission dismissing the Administrative Complaint against Respondent.

DONE AND ENTERED this 15th day of October, 1982, at Tallahassee, Florida.

WILLIAM E. WILLIAMS

Hearing Officer

Division of Administrative Hearings Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 15th day of October, 1982.

COPIES FURNISHED:

Grover C. Freeman, Esquire

Suite 410, Metropolitan Bank Building 4600 West Cypress

Tampa, Florida 33601

Charles A. Williams, Jr., Esquire WILLIAMS, CASTELLO & NICKERSON

2815 Northwest 13th Street Gainesville, Florida 33602

William M. Furlow, Esquire Department of Professional

Regulation

Post Office Box 1900 Orlando, Florida 32802

C. B. Stafford, Executive Director Florida Real Estate Commission Post Office Box 1900

Orlando, Florida 32802

Samuel R. Shorstein, Secretary Department of Professional Regulation

130 North Monroe Street Tallahassee, Florida 32301

Docket for Case No: 81-002558

Orders for Case No: 81-002558