for alleged failure to account for and deliver a deposit, and (3) for alleged failure to maintain a deposit in a real estate brokerage escrow bank account until properly authorized disbursement.
At all times pertinent to the charges, Respondent, J. Kent Staley, was a licensed real estate broker in the State of Florida, license number 0308397.
Before February 20, 1984, Staley was employed by Homex USA, Inc., (Homex USA), formerly doing business as Homefinders USA, Inc. Homex USA was a nationwide real estate referral and marketing service network owned and managed by Carl E. Mann until it ceased doing business on April 3, 1987.
When Staley obtained his real estate broker license, he became the qualifying broker for Homex USA on February 20, 1984, and remained its qualifying broker until March 31, 1986. Mann, who also was a licensed real estate salesman employed by Homex USA from December 22, 1982, to April 17, 1986, remained the owner and manager of Homex USA.
Before June 6, 1984, Mann and Staley discussed and planned the formation of a separate general real estate business. They decided that the business would operate exclusively for, and be paid by, buyers as a buyer brokerage and would not represent, or be paid commissions by, sellers. Staley formed Homex USA Real Estate Corp. (Homex Real Estate) and became its qualifying
broker on June 20, 1984. Staley remained its qualifying broker until March 31, 1986. Mann owned and managed Homex Real Estate but did not become employed by Homex Real Estate as a licensed real estate salesman.
Homex Real Estate was not very profitable, and Staley began to seek other means of earning income. By February, 1985, Staley was committing all of his time to employment in two other demanding jobs that made it physically impossible for him to be at the offices of either Homex USA or Homex Real Estate or to properly act as qualifying broker for either business. Staley went to Mann to make arrangements to resign. Mann asked Staley to continue as qualifying broker until Mann could replace him. Reluctantly, Staley agreed as a personal favor to Mann. Staley believed Mann would be able to operate the businesses without him and, effectively, to serve as their unofficial broker in Staley's absence. Staley delegated his entire duties as qualifying broker to Mann, effectively lending his license to Mann and abdicating his responsibilities. Staley had no further connection with, or knowledge of, the business of either corporation.
On or about May 30, 1985, Robert Geyer, on behalf of John Wagner and Associates, Inc., entered into a contract, as buyer, to purchase real property located in Hillsborough County, Florida.
Pursuant to the terms of the contract, Mann placed a $10,000 deposit in the escrow account of Homex Real Estate at NCNB, account number 3600099733. The deposit had actually been made and placed into the account on May 6, 1985, based on a May 2, 1985, contractual offer involving the same land and parties. The May 6, 1985, deposit carried over and was applied to the May 30, 1985, contract.
Because the property was not acceptable, on June 7, 1985, Geyer exercised his discretion under the contract to terminate the contract and request the return of the $10,000 deposit less incidental expenses of $1,566.75.
On August 29, 1985, Geyer received an escrow account check from Homex Real Estate in the amount of $5,933.25. The check represented the deposit less not only the incidental expenses but also a retainer fee claimed by Homex Real Estate. The check did not clear and was returned for insufficient funds.
Homex Real Estate usually charged its clients a $2500 non-refundable retainer fee and additional fees earned by locating suitable property for the client. In this case, Mann had done work for Geyer for approximately 30 days before they settled on a fee arrangement. By this time Mann had located a property on which Geyer wanted to place an offer for a purchase to close within the next 30 days. Mann and Geyer entered into a written agreement which did not provide for a retainer fee but provided for a 5 percent (of $500,000, or
$25,000) fee for finding "acceptable" property or, even if not exercised, a
$10,000 fee for obtaining an option to purchase "acceptable" property Since the property was not acceptable to Geyer, Homex Real Estate was not entitled to any fee under the written agreement.
Geyer contacted Carl Mann reference the check being returned and the retainer fee being deducted. Mr. Geyer requested a replacement check.
On or about October 23, 1985, Geyer received a second escrow account check from Homex Real Estate. This check, too, failed to clear upon deposit and was returned for insufficient funds.
Geyer again spoke with Mann about a replacement check for the
$5,933.25, a refund of the $2,500 retainer fee and costs of $30 to cover the two previous insufficient fund checks.
On or about November 25, 1985, Geyer received a certified check for
$5,500 and a Homex USA, Inc., check for $463.85 but did not receive any part of the $2,500.
Rather than pursuing the matter of the $2,500 any further with Mann, Geyer filed suit against Homex USA, Inc., and on November 10, 1986, obtained a judgment for $2,500 plus costs. To date, Geyer has not received the $2,500.
In August of 1985, Mann closed out the escrow account maintained by Homex Real Estate at NCNB and opened a new escrow account at Sun Bank, account number 657-1000223.
The Geyer $10,000 deposit check was placed in the escrow account of Homex Real Estate at the NCNB on May 6, 1985. As of May 8, 1985, the escrow account balance dropped to $7,513.20, and the balances at NCNB and Sun Bank never again achieved a minimum balance of $10,000. The balances ranged from a high balance of $7,513.20 on May 8, 1985, to a low balance of a negative $80.45 on June 28, 1985. At no time during this time period had Geyer authorized the removal of the $10,000 deposit from escrow.
Staley did not realize this transaction had taken place until a Department of Professional Regulation investigator contacted Mann and Mann related his version of the transaction to Staley. Based on the facts he now knows, Staley contends that Geyer should have been required to pay Homex Real Estate a $10,000 option fee.
Respondent's license has been on inactive status since March 31, 1986, but he plans to open his own real estate office in the near future.
CONCLUSIONS OF LAW
Section 475.25(1), (1985), provides that the Florida Real Estate Commission may: suspend a license for a period not exceeding 10 years; revoke a real estate license; impose an administrative fine not to exceed $1,000 for each count or separate offense; or issue a reprimand; or do any or all of the foregoing, if it finds a licensee:
(b) Has 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....
* * *
(d) Has failed to account or deliver to any person ... at the time
which has been agreed upon or is required by law or, in the absence of a fixed time, upon demand of the person entitled to such accounting and deliver, any personal property such as money, fund, deposit,
check ... which has come into his hands and which is not his property or which he is not in law or equity entitled to retain under the circumstances.
* * *
(k) Has failed, if a broker, to immediately 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 association located and doing business in this state, or to deposit such funds
in a trust or escrow account maintained by him with some bank or savings and loan association located and doing business in this state, wherein the funds shall be kept until disbursement thereof is properly authorized; ...
The evidence establishes that Robert Geyer, on or about May 6, 1985, entrusted to Carl Mann and Homex USA Real Estate Corp. a $10,000 deposit on a contract. On May 6, 1985, the deposit was placed in the escrow account of the corporation.
The evidence also establishes that the deposit, as of May 8, 1985, to at least October 30, 1985, was not maintained in the escrow account of the corporation since the balances of the account, as reflected in the monthly bank statements, are consistently below the $10,000 level.
Further, although the evidence shows the Respondent was unaware of the transaction, during all times that the deposit was to be maintained in an escrow account, the Respondent was the broker of record for the corporation.
The evidence finally establishes that, despite demands, $2,500 of the
$10,000 deposit has never been returned to Geyer.
Although Respondent was unaware of the transaction or the deposit, as qualifying broker he is still ultimately responsible for the escrow account and to all those who do business with the brokerage company and its agents. See Williams v. Hunt Bros. Construction, Inc., 475 So.2d 738 (Fla. 2nd DCA 1985); and Gatwood v. McGee, 475 So.2d 720 (Fla. 1st DCA 1985); Subsections 475.01(1)(c), 475.25(1)(k), 475.42(1)(d), Florida Statutes (1985); and Rules 21V-5.015, 21V-5.016, 21V-14.008 and 21V-14.011, Florida Administrative Code (1986).
Based on the facts, the Respondent is guilty of: culpable negligence and breach of trust in a business transaction in violation of Subsection 475.25(1)(b), Florida Statutes (1985); failure to account for and deliver a portion of a deposit in violation of Subsection 475.25(1)(d), Florida Statutes (1985); and failure to maintain a deposit in escrow in violation of Subsection
