STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

vs. ) CASE NO. 84-1113

)

KENNETH W. SCHNEEGOLD, )

)

Respondent. )

)

RECOMMENDED ORDER

The formal hearing of the above styled case was heard on October 10, 1984, in St. Petersburg, Florida, by Stephen F. Dean, assigned Hearing Officer of the Division of Administrative Hearings. This case arose upon an administrative complaint filed by the Division of Real Estate against Kenneth W. Schneegold alleging that Schneegold had failed to account for or deliver a $1,000.00 deposit which he received from a client and had failed to maintain the $1,000.00 deposit in his escrow account as required by law contrary to Section 475.25 (1)(b), (d), (k), Florida Statutes. The Respondent admitted that an analysis of his bank statement revealed that his balance in his escrow account had dropped below $1,000.00 while he was under an obligation to maintain the $1,000.00 of his client in the Respondent's bank account; however, the Respondent denied that he had failed to deliver and account for the $1,000.00 deposit to his client asserting that the client was one of two partners from whom he had received the deposit and that the other partner had not joined in the request for the return of the deposit. The factual issues to be determined are as follows:

1. whether or not the deposit was received in behalf of the partnership

   and,

   
   

2. whether the Respondent's bank account dropped below $1,000.00 during

the period of time he was responsible for his client's $1,000.00 held in escrow in said account.

FINDINGS OF FACT

1. Kenneth W. Schneegold is a licensed real estate broker holding license no. 0078270 issued by the Department of Professional Regulations in the Division of Real Estate.

   
   

2. The Respondent was president of Atlantis Properties, Inc., Florida Corporation. Atlantis Properties, Inc., and the Respondent were developers of a condominium to be built and known as Presidential Estates located in St. Petersburg, Florida.

   
   

3. On or about January 10, 1981, Daniel K. Cullinan and J. Kent Staley entered into a written Reservation Agreement with Atlantis Properties, Inc., and the Respondent, as president, to reserve a unit within Presidential Estates.

   Pursuant to the Reservation Agreement a deposit of $1,000.00 was paid to ERA Kent Warren Realty in the form of a check received by the Respondent. The Reservation Agreement specified that the $1,000.00 deposit was to be held in the ERA Kent Warren Realty escrow account.

   
   

4. The $1,000.00 deposit was paid in the form of a check signed by Daniel

   K. Cullinan on January 10, 1981. The deposit was placed into the escrow account of ERA Kent Warren Realty in the Pinellas Bank in St. Petersburg, Florida, on or about January 12, 1981. ERA Kent Warren Realty is the name under which the Respondent trades and the ERA Kent Warren Realty escrow account is the escrow account of the Respondent. This escrow account was maintained by the Respondent in his capacity as real estate broker.

   
   

5. Pursuant to the terms of the Reservation Agreement, the $1,000.00 deposit was to be returned to the prospective buyer if one of the following occurred:

   
   

   1. In the event that the Agreement was terminated, the buyer would be entitled to an immediate and unqualified refund of reservation deposit. Said agreement could be terminated by the buyer upon written request at any time prior to the execution by the parties of a Purchase Agreement. The written notice was to be delivered by certified mail.

      
      

   2. The Agreement was also to terminate and the deposit would be returned if, by the first anniversary date of the Reservation Agreement, the purchase agreement had not been entered into by the parties.

      
      

6. More than one year after the signing of the Reservation Agreement a purchase agreement had not been entered into by the parties. Cullinan made verbal demands upon the Respondent for return of his $1,000.00 deposit on several occasions. The Respondent did not account or deliver the $1,000.00 deposit to Cullinan. Cullinan sent a certified letter to the Respondent terminating the Reservation Agreement and requesting return of the $1,000.00 deposit. This written request was made on or about January 22, 1983. The certified letter was returned to Cullinan as unclaimed by the Respondent.

   
   

7. The Respondent acknowledged that he was aware of Cullinan's request for the return of the $1,000.00 and also aware of his written request for the return of the $1,000.00 deposit. The Respondent communicated with Staley who did not demand termination of the agreement and return of the money from the Respondent.

   
   

8. During the time from January 25, 1982, through February 28, 1983, prior to the return of the $1,000.00 deposit to Cullinan, the ERA Kent Warren Realty escrow account fell to a balance below $1,000.00 on no less that 16 occasions. The Respondent admits that his escrow account did fall below $1,000.00 on several occasions during the above mentioned time period.

   
   

9. Cullinan nor Staley never gave their consent to the removal or use of the $1,000.00 deposit for any purpose other than those specified in the agreement.

   
   

10. After complaint was lodged with the Division of Real Estate, the Respondent under compulsion from the Real Estate Commission paid the $1,000.00 deposit to Cullinan.

    CONCLUSIONS OF LAW

    
    

11. The Division of Real Estate regulates real estate brokers in the State of Florida pursuant to Chapter 475, Florida Statutes. The Division of Administrative Hearings has jurisdiction and authority to enter this order pursuant to the provisions of Section 120.57 (1), Florida Statutes.

    
    

12. The Administrative Complaint alleges that the Respondent violated Chapter 475 by failing to return the $1,000.00 deposit to Cullinan upon being notified by Cullinan that Cullinan desired to terminate the agreement, and also failed to maintain the $1,000.00 in escrow as required by law. The facts revealed that the agreement between the Respondent and Atlantis Properties, Inc., was entered into with Daniel K. Cullinan and J. Kent Staley. Although Cullinan was the source of the check, this money was paid to Atlantis Properties, Inc., in behalf of Cullinan and Staley. It required action by both Cullinan and Staley to terminate the Reservation Agreement and seek return of the $1,000.00 deposit. Mr. Cullinan was less than definite in his testimony concerning Staley's authorization to terminate the agreement and seek return of the $1,000.00. It appears that Cullinan mentioned this matter to Staley and Staley did not object; however, this is less than a demand by Staley to the Respondent to terminate the agreement and return the money. Under the terms of the agreement this is the action required to terminate the agreement and seek return of the money. Based upon the evidence presented, it cannot be concluded that the Respondent violated Section 475.25 (1)(d) and thereby (b), Florida Statutes, by failing to account for deliver the $1,000.00 deposit.

    
    

13. The Administrative Complaint also alleges that the Respondent failed to maintain the escrow account properly contrary to Section 475.25 (1)(k), Florida Statutes. The evidence clearly reflects that the balance of the Respondent's escrow account fell below $1,000.00 on many occasions during the period he was required to maintain the monies paid to him by Cullinan and Staley in his escrow account. This constitutes violation of Section 475.25 (1)(k), Florida Statutes. Although the evidence fails to demonstrate that the broker failed to maintain these monies because of some evil intent or fraud, is very clear that the broker was negligent in the maintenance of this escrow account and his dealings with escrow funds.

RECOMMENDATIONS

Having found the Respondent guilty of violation Section 475.25 (1)(k), Florida Statutes, by failing to maintain monies in his escrow account properly it is recommended that the Respondent's license as real estate broker be suspended for a period of three months and that he be fined a sum of $1,000.00.

DONE AND ORDERED this 27th day of November, 1984, at Tallahassee, 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 27th day of November, 1984.

COPIES FURNISHED:

James R. Mitchell, Attorney for Petitioner

DPR-Division of Real Estate

400 W. Robinson St.

P.O. Box 1900

Orlando, Florida 32802

Mr. Kenneth W. Schneegold 11360 Fourth Street, East Treasure Island, Florida 33706

Mr. Harold Huff

Director, Division of Real Estate Department of Professional

Regulation

400 West Robinson Street Orlando, Florida 32801

Docket for Case No: 84-001113

Orders for Case No: 84-001113