STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL )

REGULATION, DIVISION OF )

REAL ESTATE, )

)

Petitioner, )

)

vs. ) CASE NO. 87-3027

) RAYMOND J. SCENT and BUCKINGHAM ) WHEELER REALTY, INC., )

)

Respondent. )

)

RECOMMENDED ORDER

Consistent with the Notice of Hearing furnished the parties by the undersigned a hearing was held in this case before Arnold H. Pollock, a Hearing Officer with the Division of Administrative Hearings, in Vero Beach, Florida on August 19, 1987. The issue for consideration was whether the Respondents' licenses as brokers should be disciplined because of the alleged misconduct outlined in the Administrative Complaint.

APPEARANCES

Petitioner: James H. Gillis, Esquire

Division of Real Estate

400 West Robinson Street Orlando, Florida 32801

Respondent: Raymond J. Scent, pro se

Post Office Box 6089

Vero Beach, Florida 32961-6089 BACKGROUND INFORMATION

On June 22, 1987, Van D. Poole, Secretary of the Department of Professional Regulation, on behalf of the Division of Real Estate, filed an Administrative Complaint in this case which, in six Counts, charged the Respondents with various violations of Section 475.25 and Section 475.42, Florida Statutes. On July 6, 1987, the Respondent, Raymond J. Scent, for himself and on behalf of his co-Respondent, Buckingham Wheeler Realty, Inc., executed Election of Rights forms in which he disputed the allegations of fact and requested formal hearing. The file was subsequently transmitted to the Division of Administrative Hearings and assigned to the undersigned who set the case for hearing.

At the hearing, Petitioner presented the testimony of the Respondent, Raymond J. Scent, and Charles E. Kimmig, Sr., an investigator with the Division of Real Estate, and introduced Petitioner's Exhibits 1 through 5. Respondent testified in his own behalf. Respondent requested that the undersigned listen

to several audio tapes and observe several video tapes recorded by him which was done. However, they were not admitted into evidence since they were not relevant to the issues involved in this case.

No transcript of the proceeding was furnished, however, the parties submitted proposed Findings of Fact which have been ruled upon in the Appendix hereto.

FINDINGS OF FACT

1. At all times relevant to the issues herein, the Respondent, Raymond J. Scent was a licensed real estate broker in Florida, holding license number 0117710. He is the qualifying broker for Respondent, Buckingham Wheeler Realty, Inc., which at all material times was licensed as a brokerage corporation in Florida holding license number 0011055.

   
   

2. On or about February 8, 1987, Raymond and Kathleen Lenau, timeshare owners of interval week 50, for unit number 120 at Hideaway Sands in St. Petersburg, Florida, received a post card solicitation from Respondent to sell their unit at auction. The notice indicated that Aardvark, Inc., with "Colonel" Ray Scent as auctioneer, would sell, for a flat fee, timeshare condominium ownerships at auction. The solicitation indicated that the seller would pay no commission. Respondent was listed on the return address as a Florida licensed real estate broker.

   
   

3. Subsequent to receiving this Solicitation, the Lenaus, on February 23, 1987, entered into a "firm, fixed cost (no commission) interval ownership (timeshare) auction agreement" for their property which indicated that the property would be offered at a public sale in Orlando, Florida on or about March 6, 1987. The agreement further provided that the auctioneer, (Respondent), would receive as "compensation" for "promoting, advertising, and conducting said auction sale" the total sum of $279.00. If the unit was sold or withdrawn by the owner prior to the auction, Respondent was to retain the full amount paid as liquidated damages. If the Respondent failed to present the unit for sale, he would return the fixed cost fee. There were other costs incident to a consummated sale, but these are not relevant to the issues herein.

   
   

4. The Lenaus paid Respondent the $279.00 called for in the agreement. Respondent did not place this money in an advance fee escrow or trust account but instead placed it in a business checking account maintained by him, co- mingled with other funds of his auction business.

   
   

5. The Lenau's property was offered for sale at the March 6-7, 1987 auction along with numerous other units owned by other individuals but there were no bidders for this unit and it was not sold. When the Lenaus contacted Respondent after the auction, they were advised that the unit had not sold but if they wanted it to be re-offered at the next sale, they could pay an additional $79.00 and it would be offered. The Lenaus declined to do this.

   
   

6. At no time has Respondent accounted to the Lenaus for the expenditure of the $279.00 received from them, nor has he returned the fee.

   
   

7. On or about May 1, 1987, subsequent to a complaint filed by the Lenaus, Charles E. Kimmig, Sr., an investigator with the Division of Real Estate, met with Respondent to discuss the escrow books required to be maintained by Respondent as a real estate broker. Mr. Kimmig contends he requested to see the records pertaining to the fee paid by the Lenaus. In response, according to Mr.

   Kimmig, Respondent indicated that the money was placed in his personal account, which was private, and that he would not make the records available except by court order.

   
   

8. Petitioner contends that the $279.00 fee paid to him was his compensation for offering the property for sale at auction and was designed to recover the cost of advertising, printing, and other expenses incident to the auction as well as a portion of profit. In addition to the fee received from the seller, he also receives a $40.00 fee from each bidder and a premium from the buyer of 15 percent of the purchase price.

   
   

9. The actual auction company is Aardvark, Inc., which is owned by Respondent, Scent. Raymond Scent, as a registered real estate broker, is employed by Aardvark Inc., to conduct the auctions of time share units as is required by statute. In all his advertising, Respondent identified himself as a licensed broker, along with Aardvark Inc., as the auction company.

   
   

   CONCLUSIONS OF LAW

   
   

10. The Division of Administrative Hearings has jurisdiction over the parties and subject matter in this case. Section 120.57(1), Florida Statutes.

    
    

11. In each of the Counts in the Administrative Complaint, Respondents are alleged to have violated Section 475.25, Florida Statutes, in one particular or another. In Count I, Mr. Scent is alleged to have failed to place advance fees in a trust account; to have failed to furnish prior to withdrawal thereof, a statement itemizing how the advance fees are to be expended; and to have failed to furnish verified accounts to the principals who paid the fee in violation of Section 475.452 (1) & (3), and Rule 21V-10.29, F.A.C., both constituting violations of Section 475.25(1)(e).

    
    

12. Section 475.452(1) provides:

It is unlawful for any broker to contract for or collect any advance fee for the listing of real property from any

principal without depositing 75 percent of such amount, when collected, in a trust

account with a bank or other recognized depository. Such funds shall be held as trust funds and may not be co-mingled with the funds of the broker who has collected the fee. Prior to the withdrawal of any fees from the trust account, the broker shall furnish a statement to the principal itemizing how the advance fees are to be expended and the amounts thereof....

and Subparagraph (3) provides:

Each broker shall furnish each principal a verified copy of such accounting at the end of each calendar quarter, when the contract has been completely performed by the broker, and at any other time deemed appropriate by the Commission. The

Commission shall be furnished a verified copy of any account or all accounts upon its demand therefor.

13. Rule 21V-10.29(1), F.A.C., provides:

Any broker who claims, demands, charges, receives, collects or contracts for in a listing, advertisement, or offer to sell or lease real property or any interest therein for the purpose of promoting the sale or lease of real estate or for the referral of real estate brokers or salesmen, or both, in advance of the transaction actually closing, shall

deposit not less than 75 percent of the advance fee so collected into a special trust or

escrow account ... maintained by said broker with some bank located and doing business in Florida or in a recognized depository. The advance fee trust or escrow account shall not be co-mingled with any other funds, trust, escrow or otherwise, or the broker.

1. In Subparagraph (2), the rule requires that the broker maintain separate accounting records for the advance fee operations and permits him to withdraw amounts from the advance fee trust account when expended for the benefit of the principal which shall be:

   
   

   ...for direct or special advertising the principal's interest only or as provided by statute. Expenses such as telephone calls, office supplies, rental, automobile, commissions, controlled publications, etc., are considered overhead of the broker and shall not be paid from the broker's advance fee trust or escrow account or other recognized depository....

   
   

2. If it is concluded that Respondent is guilty of a violation of the above statutory and rule provisions, then he may be disciplined under the provisions of Section 475.25 which allows the Commission to discipline a licensee if it finds that he has:

   
   

   (e)...violated any of the provisions of this chapter or any lawful order or rule made or issued under the provisions of this chapter or Chapter 455.

   
   

3. In Count II, based on the same factual allegations, Petitioner alleges that Buckingham Wheeler Realty, Inc., is guilty of the same violations alleged in Count I as pertained therein to Mr. Scent.

   
   

4. In Counts III and IV, Petitioner alleges as to each Respondent respectively, that he or it is guilty of fraud, misrepresentation, concealment,

   false promises, false pretenses, dishonest dealing by trick, scheme or devise, culpable negligence and breach of trust in a business transaction, all in violation of Subsection 475.25(1)(b) which allows the Commission to discipline a license holder when it finds the licensee 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....

   
   

5. In Counts V and VI, Petitioner alleges as to both Respondent respectively, that he or it is guilty of having operated as a real estate broker without being the holder of a valid and current license in violation of Section 475.42(1)(k) and, therefore, 475.25(1)(a).

   
   

6. Section 475.42(1)(k) provides:

   
   

   No person shall operate as a broker, under a trade name, without causing the same to be noted in the records of the commission and placed on his license or so operate as a member of a partnership or corporation or as an officer or manager thereof, unless such partnership or corporation is the holder of a valid, current registration.

   
   

7. If found guilty of this violation, Respondent would also be guilty of a violation of Section 475.25 (1)(a), which permits the Commission to discipline a licensee if it finds that he:

   
   

   1. Has violated any provision of s. 475.42....

      
      

8. Taking the allegations in reverse order, the evidence clearly shows that both Respondents are registered real estate brokers and Petitioner has stipulated to this. In the instant case, it is clear that Aardvark, Inc., a commercial auctioneering company owned by Mr. Scent, consistent with the laws of Florida which require an auction of real property to be conducted by a registered real estate broker, hired Respondent Scent to do this. That he owns the stock in the company which hired him is not relevant nor is it improper.

   The relationship of Buckingham Wheeler Realty, Inc., is coincidental and neither is guilty of the offenses alleged in these last two Counts.

   
   

9. With respect to whether either Respondent is guilty of fraud, misrepresentation, etc., as alleged in Counts II and IV, there is no doubt that Respondent Scent is a clever businessman, but there is no evidence that any of his dealings in issue here constitute fraud, misrepresentation, or any of the other forms of misconduct alleged. Respondent made no promises or representations to the Lenaus that he did not keep.

   
   

10. As to Counts I and II, the resolution of the issues here is not so easily accomplished. Petitioner contends that the $279.00 received from the Lenaus under the terms of the agreement with Aardvark, Inc., constitutes an "advance fee" subject to the requirements of Section 475.452 and Rule 21V-10.29

    F.A.C. Respondent, on the other hand, contends that the money paid by the

    Lenaus was not a brokerage commission for the sale of the property but, instead, administrative costs inherent in the operation of the auction at which the property was offered for sale. He contends that since the $279.00 is to be retained whether the property is sold or not, so long as it is offered for sale at auction, it is not a commission for the sale, and he relies on the provision of the contract which states that the auctioneer shall receive "as compensation for promoting, advertising, and conducting said sale..." to show that the money is a reimbursement for out of pocket expenses related to the offering rather than as a commission for the transfer of ownership or interest in property which may not take place.

    
    

11. Generally, real estate commissions subject to the provisions of the relevant statute and rule become payable only when the broker presents a buyer to the seller ready, willing and able to consummate the sale. Here, the consideration paid by the Lenaus was more for the services of an auctioneer rather than for the brokerage services of a registered real estate broker even though the statute governing the auctioning of real property requires the sale be conducted by a registered real estate broker.

    
    

12. It would have been better if the contract more clearly stated the position of the parties in the event the property was not sold after being offered for sale. Had this been done and had it been clearly indicated that if the property were offered but not bid upon, there would be no refund of the auction fee, the Lenaus would have known what their position was. However, Respondent is not charged with having drawn an inartfully worded contract and under the terms of the statute, it cannot be said that he or Buckingham Wheeler Realty, Inc., was required to place the fee in a trust account, furnish a statement to the Lenaus as to where it was going, or furnish a verified account of sums expended subsequent to the auction.

    
    

13. The burden to establish that the Respondents are guilty of the violations alleged in the Administrative Complaint, by clear and convincing evidence, has not been met. Ferris v. Turlington, So.2d (Fla., 1987) opinion filed July 16, 1987.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore:

RECOMMENDED that the Administrative Complaint filed herein against the Respondents Raymond J. Scent and Buckingham Wheeler Realty, Inc., be dismissed.

RECOMMENDED this 4th day of September, 1987 at Tallahassee, Florida.

ARNOLD H. POLLOCK, Hearing Officer Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 4th day of September, 1987.

COPIES FURNISHED:

James H. Gillis, Esquire

DPR - Division of Real Estate

400 West Robinson Street Orlando, Florida 32801

Mr. Raymond J. Scent Post Office Box 6089

Vero Beach, Florida 32961-6089

Docket for Case No: 87-003027

Orders for Case No: 87-003027