STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL )

REGULATION, FLORIDA REAL )

ESTATE COMMISSION, )

)

Petitioner, )

)

vs. ) CASE NO. 82-781

)

MICHAEL T. NOVAK, JR., )

ALEXANDER G. RAPPAPORT and ) MIKE NOVAK REALTY CORPORATION, )

)

Respondent. )

)

RECOMMENDED ORDER

This matter came on for hearing in Tampa, Florida, on March 23, 1983, before the Division of Administrative Hearings and its duly appointed Hearing Officer, R. T. Carpenter. The Parties were represented by:

APPEARANCES

For Petitioner: Grover C. Freeman, Esquire

4600 West Cypress Avenue, Suite 410

Tampa, Florida 33607

For Respondent: Peter J. Kelly, Esquire

Post Office Box 3324 Tampa, Florida 33601

This case arose on Petitioner's Administrative Complaint charging Respondents with breaking their agreement to sell a wood-frame house to the tenants and, instead, selling it as part of a real estate package to an investment group. They are further charged with concealing an unfavorable termite inspection report on this wood-frame house and failing to pay subsequent termite extermination expenses as agreed, all in violation of Subsection 475.25(1)(b) , Florida Statutes (F.S.). The parties submitted proposed findings of fact which are incorporated herein to the extent they are relevant and consistent with the evidence.

FINDINGS OF FACT

1. At all times relevant to these proceedings, the Respondents were licensed as real estate brokers in Florida.

   
   

2. In March, 1979, a Ms. Stockton contacted Respondent Rappaport and proposed renting a small wood-frame house which he owned and was then using as a storage facility. Rappaport verbally agreed to rent the premises for nine months, giving Stockton an option to purchase at the end of that period.

3. Monthly rental payments of $100, plus $75 in tenant repairs, were to constitute partial down payment on the purchase price of $25,000. However, at the conclusion of the nine month period in December, 1979, Ms. Stockton made a counter offer that would have required Rappaport to make substantial improvements or accept a reduced price of $20,000. Since Rappaport did not accept the counter offer, there was no valid contract.

   
   

4. Around December, 1979, Respondent Rappaport became a 50 percent stock owner of Respondent Mike Novak Realty Corporation. Respondent Michael T. Novak retained 50 percent stock ownership in this corporation and, as part of the merger, acquired a 50 percent interest in certain properties previously owned solely by Rappaport. The residential parcel discussed above, along with an adjacent office building, were included in this transaction.

   
   

5. On January 30, 1980, the Respondents contracted to sell the above described residence and office building to a group of investors for $175,000. The contract required that termite inspections and any fumigation would be provided by the sellers.

   
   

6. The required termite inspections were provided, but the inspector furnished a certificate only on the office building since the wood-frame house was found to have termites. He reported this fact to Mike Novak Realty, but nothing was done to correct the problem prior to closing. The termite infestation was discovered by the purchasers after they had closed on the property.

   
   

7. Respondent Rappaport was aware of the termite problem prior to closing since it had been called to his attention by the Stocktons in mid-1979. After being confronted by the purchaser subsequent to the closing, Respondents agreed to pay the fumigation costs which amounted to $300. They did not, however, reimburse the buyers for these expenses on demand, but did so only after this Administrative Complaint was filed.

   
   

8. Although these omissions by Respondents leave much to be desired in terms of broker reliability, there was no evidence of intentional concealment of the termite infestation or willful withholding of the $300 fumigation payment. Rather, this negligence by Respondents resulted, at least partly, from the minimal interest shown by the contracting parties in the condition of the wood- frame house.

   
   

9. Respondents had reached their valuation of this property virtually without consideration for the wood-frame house. The buyers were primarily interested in the office building and the land occupied by the house. They expressed their intention to tear down or move this house so they could develop the underlying land. Even though two members of the purchasing group had real estate experience and all were represented by counsel, none of them noticed the missing termite inspection report. Furthermore, none of the buyers had even entered the wood-frame house to determine its condition prior to closing.

   
   

   CONCLUSIONS OF LAW

   
   

10. Subsection 475.25(1), F.S., provides in part:

    
    

    1. The board may deny an application for licensure or renewal, may suspend a license

       for a period not exceeding 10 years, may revoke a license, may impose an administrative fine not

       to exceed $1,000 for each count or separate of fense, or may issue a reprimand, if it finds that the licensee or applicant has:

       (b) Been guilty of fraud, misrepresentation, 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 or 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, express, or implied, in a real estate

       transaction; has aided, assisted, or conspired with any other person engaged in any such mis conduct 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 cus tomer or a person in confidential relation with the licensee, or was an identified member of the general public;

       
       

11. The above provision condemns dishonesty or other corrupt conduct by a real estate broker in a business transaction. Here, there was no persuasive evidence of such misconduct by any of the Respondents.

RECOMMENDATION

From the foregoing, it is

RECOMMENDED that Petitioner enter a Final Order dismissing the charges contained in the Administrative Complaint.

DONE and ENTERED this 23rd day of May, 1983, in Tallahassee, Florida.

R. T. CARPENTER 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 23rd day of May, 1983.

COPIES FURNISHED:

Grover C. Freeman, Esquire 4600 West Cypress Avenue Suite 410

Tampa, Florida 33607

Peter J. Kelly, Esquire Post Office Box 3324 Tampa, Florida 33601

William M. Furlow, Esquire Department of Professional

Regulation

Post Office Box 1900 Orlando, Florida 32802

Fred Roche, Secretary Department of Professional

Regulation

130 North Monroe Street Tallahassee, Florida 32301

Docket for Case No: 82-000781

Orders for Case No: 82-000781