STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL ) REGULATION, FLORIDA REAL ESTATE ) COMMISSION, )

)

Petitioner, )

)

vs. ) CASE NO. 82-810

)

MARJORIE V. FROST, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, William E. Williams, held a public hearing in this cause on October 28, 1982, in Orlando, Florida.

APPEARANCES

For Petitioner: John G. DeLancett, Esquire and

James R. Mitchell, Esquire Post Office Box 6171-C Orlando, Florida 32853

For Respondent: Seymour Benson, Esquire

609 East Pine Street Orlando, Florida 32801

ISSUES

1. Whether Respondent is guilty of failing to keep money entrusted to her by a person dealing with her as a broker in her escrow account until properly authorized to disburse those funds.

   
   

2. Whether Respondent is guilty of misrepresentation, false promises, culpable negligence, breach of trust in a business transaction and violation of a duty imposed by law and under the terms of a real estate contract by failing to advise, inquire, or otherwise obtain proper authorization from the Buyers prior to disbursing $10,000 from her escrow account, which funds had been entrusted to her by the Buyers under the terms of a real estate contract.

At the final hearing in this cause, Petitioner called John Maxwell, Judith

1. Maxwell, Janet Johnson, and Albert M. Johnson as its witnesses. Petitioner offered Petitioner's Exhibits 1 through 7, which were received into evidence. Respondent testified in her own behalf and called Charles R. Frost as a witness. Respondent offered Respondent's Exhibits 1 through 3, which were received into evidence.

   Both Petitioner and Respondent have offered proposed findings of fact for consideration by the Hearing Officer. To the extent that those proposed findings of fact are not included in this Recommended Order, they have been specifically rejected as being either irrelevant to the issues involved in this cause, or as having been unsupported by the evidence of record.

   
   

   FINDINGS OF FACT

   
   

   1. At all times material hereto, Respondent was a registered and licensed real estate broker, having been issued license No. 0029188.

      
      

   2. On August 21, 1981, John A. and Judith E. Maxwell ("Buyers") entered into a contract for the purchase of a home located at 2017 Howard Drive, in Orlando, Florida, owned by Albert M. and Janet T. Johnson ("Sellers"). The Contract for Sale and Purchase was accepted by the Sellers on August 22, 1981.

      
      

   3. Under the terms of the contract, the Buyers paid a $500 deposit to Respondent's escrow account, and paid an additional $9,500 into Respondent's escrow account upon acceptance of the contract by the Sellers. Paragraph 9 of the Contract for Sale and Purchase under the heading "Special Clauses," provided, in part, as follows:

      
      

      1. This offer is subject to Buyers selling their home in Austin, Texas, within twelve months from date of this executed contract. Buyer will close on this property upon closing of that property.

      2. Buyer will pay a monthly rent to the Seller at $500 per month until closing, and apy[sic] utility bills dur-

         ing that time. Buyer will occupy premises upon execution of this contract. . .

         
         

   4. In addition, under the heading STANDARDS FOR REAL ESTATE TRANSACTIONS, the contract provided as follows:

      
      

      1. DEFAULT BY BUYER: If the Buyer fails to perform any covenants of this con- tract within the time specified, the deposit this date paid by the Buyer aforesaid may

         be retained by or for the account of the Seller as consideration for the execution of this contract and in full settlement of any claims for damages and all parties shall be relieved of all obligations under this con- tract, and each party shall execute a separate release of the other party at this time; or the Seller, at his option, may proceed at

         law or in equity to enforce his legal rights under this contract, including, but not limited to, the right to bring a suit for specific performance.

      2. DEFAULT BY SELLER: If the Seller fails to perform any of the covenants of this contract other than the failure of the Seller to render his title marketable after diligent

      effort, the aforesaid deposit shall at the option of the Buyer be returned to the Buyer on demand and all parties shall execute a release of the other party of their rights

      and obligations under this contract; the Buyer, however, at his option may proceed in law or equity to enforce his legal rights under this contract, including, but not limited to, the right of specific performance.

      1. OTHER AGREEMENTS: No agreements or representations, unless incorporated in this contract shall be binding upon any of the parties.

      2. APPLICATION OF DEPOSIT ON DEFAULT: In the event Buyer fails to perform and the deposit aforesaid is retained, the amount of

      such deposit shall be divided equally between the Realtor and the Seller; provided, however, that the amount to be retained or received

      by the Realtor shall not exceed the full amount of the commission and any excess shall be paid to the Seller. If the trans- action shall not be closed because of the

      failure of the Seller to perform, then Seller shall pay said commission in full to the Realtor on demand.

      
      

   5. The Sellers were in immediate need of cash and, unknown to the Buyers, advised Respondent that they required that any down payment received pursuant to the contract be disbursed immediately to them. Before the Sellers accepted the contract submitted by the Buyers they received an assurance from Respondent that Respondent had fully informed the Buyers that the money was to be paid to the Sellers upon acceptance of the contract. The Sellers made it clear to Respondent that they could not wait for the closing of Buyers' home in Texas to receive the money. Respondent told Sellers that the Buyers were aware that the money was to go to them and that it was nonrefundable.

      
      

   6. Notwithstanding Respondent's representation to the Sellers, the Respondent, in fact, never informed the Buyers that the Sellers were expecting the money paid upon execution of the contract to be paid over to them immediately. Further, Respondent never advised the Buyers that either the $500 deposit or the $9,500 payments required by the contract would be nonrefundable absent a total default on the contract.

      
      

   7. The Buyers never had any direct conversations with the Sellers and, accordingly, were never advised by them that the Sellers expected to immediately receive the moneys paid by Buyers upon execution of the contract.

      
      

   8. The contract was prepared by Respondent's husband. The only parties present during the preparation of the contract were Respondent, her husband, and the Buyers. At no time during the preparation of the contract was the Sellers' financial condition discussed, nor the fact that the Sellers were immediately in need of the moneys deposited by the Buyers with Respondent.

      
      

   9. As required by the contract, the Buyers paid the $500 deposit to Respondent on August 21, 1981. On August 24, 1981, upon acceptance of the contract by the Sellers, an additional payment of $9,500 was made to Respondent.

      This latter sum was paid by check from the Buyers made payable to Respondent's escrow account at the request of Respondent.

      
      

   10. On August 25, 1981, Respondent disbursed $7,000 to the Sellers and

       $2,000 to herself as partial payment of her real estate commission. Respondent did not obtain the Buyers' authorization or permission to disburse either the

       $500 deposit or the $9,500 payment.

       
       

   11. It was not until the middle of September, 1981, that the Buyers learned that the $10,000 paid by them had been disbursed by Respondent. At that time the Buyers called Respondent to request that the total payment of $10,000 be placed in an interest-bearing account. When this request was made, Respondent at first advised the Buyers that she would not tell them where the money was, but the Buyers were later informed by Respondent's husband that the funds had been disbursed to the Sellers. The Buyers immediately requested that the funds be returned to Respondent's escrow account, but, as of the date of final hearing in this cause, none of the funds had been redeposited in that account.

       
       

       CONCLUSIONS OF LAW

       
       

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

       
       

   13. Section 475.25(1), Florida Statutes, provides that Petitioner may revoke or suspend a license, or may impose an administrative fine not to exceed

       $1,000 when a licensee has:

       
       

       (b) Been guilty of fraud, misrep- resentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme, or device, culpable negli- gence, 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 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 the intended victim of the misconduct has sustained no damage or loss; that the damage or loss has been settled and paid after dis- covery 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;

       (k) Failed, if a broker, to immedi- ately place, upon receipt, any money, fund, deposit, check, or draft entrusted to him by any person dealing with him as a broker in escrow with a title company, banking institution, or savings and loan associ- ation located and doing business in Florida, or to deposit such funds in a trust or escrow account maintained by him with some bank or savings and loan associ-

       ation located and doing business in Florida, wherein the funds shall be kept until disbursement thereof is properly autho- rized . . .

       
       

   14. Based upon the foregoing Findings of Fact and Conclusions of Law, it is concluded that Respondent has violated the above-cited provisions of Section 475.25(1)(b) and Florida Statutes, and, accordingly, it is

RECOMMENDED that a Final Order be entered by the Florida Real Estate Commission suspending Respondent's broker's license for a period of eighteen

(18) months.

DONE AND ENTERED this 1st day of March, 1983, at Tallahassee, Florida.

WILLIAM E. WILLIAMS

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 1st day of March, 1983.

COPIES FURNISHED:

John G. DeLancett, Esquire James R. Mitchell, Esquire Post Office Box 6171-C Orlando, Florida 32853

Seymour Benson, Esquire 609 East Pine Street Orlando, Florida 32801

William M. Furlow, Esquire Department of Professional

Regulation - Legal Post Office Box 1900 Orlando, Florida 32802

Fred M. Roche, Secretary Department of Professional

Regulation

130 North Monroe Street Tallahassee, Florida 32301

C. B. Stafford, Executive Director Florida Real Estate Commission Department of Professional

Regulation

Post Office Box 1900 Orlando, Florida 32802

Docket for Case No: 82-000810

Orders for Case No: 82-000810