STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

vs. ) CASE NO. 87-3667

)

HARRY LICHT, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, this cause was heard by Linda M. Rigot, the assigned Hearing Officer of the Division of Administrative Hearings, on November 18, 1987, in Miami, Florida.

Petitioner Department of Professional Regulation, Florida Real Estate Commission, was represented by James H. Gillis, Esquire, Orlando, Florida; and Respondent Harry Licht was represented by Paul B. Steinberg, Esquire, Miami Beach, Florida.

Petitioner filed an Administrative Complaint against Respondent alleging various violations of the real estate brokerage laws, and Respondent timely requested a formal hearing. Accordingly, the issues for determination herein are whether Respondent is guilty of the allegations contained within the Administrative Complaint, and, if so, what disciplinary action should be taken, if any.

Petitioner presented the testimony of the Respondent and of Mae F. Summers, Michael Robert Blynn, and Barbara Summers. The Respondent also testified on his own behalf. Additionally, Petitioner's Exhibits numbered 1-4 and 6-9 and Respondent's Exhibits numbered 1, 3, 4, 6, and 7 were admitted in evidence.

Although both parties requested leave to file proposed findings of fact in the form of proposed recommended orders, only Petitioner did so. Rulings on each proposed finding of fact can be found in the Appendix to this Recommended Order.

FINDINGS OF FACT

1. At all times material hereto, Respondent has been a licensed real estate broker in the state of Florida having been issued license no. 0052320. The last license issued was as a broker for First Federal Realty, Inc.

   
   

2. First Federal Realty, Inc. (hereinafter "Federal Realty"), is the owner and developer of mobile home parks. Respondent is and has been the president of Federal Realty.

3. On June 13, 1971, Federal Realty and Mae F. Summers entered into two agreements for deed whereby Summers would become the owner of lot A-19 in Christmas Park and the west one-half of lot 229 in Lake Louise Estates. Both developments are located on Route 50 between Orlando and Titusville, just a few miles apart.

   
   

4. Respondent was not the salesman for either of those lots, and the Articles of Agreement were signed by the vice-president of Federal Realty. The Articles of Agreement provided for a modest down payment ($300 on one lot and

   $20 on the other), monthly payments with an interest rate of 7 percent, and the buyer to pay all taxes on the land. The Articles of Agreement further provided that the buyer would be considered in default for failure to make a payment within 30 days from the due date or failure to perform any other covenant and that thereafter the seller would have the option of terminating the contract with the buyer forfeiting all payments made. The seller was specifically granted the right to reenter and take possession without the requirement of filing any legal action therefor.

   
   

5. Summers began making payments to Federal Realty, which payments were generally late. Her history of late payments commenced almost immediately. Further, she failed to pay the taxes on either of the two lots necessitating Federal Realty paying the taxes on the lots and seeking reimbursement from Summers. Over the years, demand letters were sent to Summers by the employee of Federal Realty responsible for collecting payments and maintaining all records regarding Christmas Park and Lake Louise Estates asking Summers to please make payments on the lots and to please bring her accounts current so that it would not be necessary for Federal Realty to cancel the agreement for deed.

   
   

6. The September 1985 payments on both lots were received by Federal Realty on September 9, 1985. Thereafter, no further payments were made by Summers. In February 1986, Summers' daughter called the Respondent and asked him if they could reinstate the Agreements for Deed. Respondent advised her that would be acceptable to him and that he would send her copies of the contracts.

   
   

7. Respondent went to the files, pulled out copies of the contracts, and mailed those to Summers on February 19, 1986. The contracts Respondent found in the files were identical to those signed in June of 1971 except that the interest rate was 10 percent rather than 7 percent. Respondent's transmittal letter on February 19, 1986, advised Summers as to the balance due on both lots at 10 percent interest. He further advised Summers that the payment she had sent on February 12, 1986, had been applied to the late payments due for the months of October and November of 1985 and that, therefore, Summers was still late and past due for the payments due in December 1985 as well as January and February of 1986.

   
   

8. Summers did not respond to the February 19, 1986 letter. She also failed to make any additional payments. At the time of the final hearing in this cause, the last payments on each lot remained the November 1985 payments which had been made in February of 1986.

   
   

9. On March 31, 1986, Respondent sent to Summers by certified mail a letter advising her that she had seven days in which to bring her account up to date on both lots or Federal Realty would take back the property in accordance with the Articles of Agreement. That letter, marked "Final Notice," although mailed to Summers at her correct address was eventually returned to Federal

   Realty with a notation that the letter had been unclaimed despite several notices from the post office to Summers.

   
   

10. In May 1986, Summers' daughter became employed at a title company. She had an amortization schedule prepared on each of the two lots using a 7 percent interest rate. The amortization schedule assumed timely payments made at 7 percent interest. It failed to factor in the many late payments with the extra interest which would have accrued and failed to take into account the responsibility for paying taxes on the two lots. Based upon that inaccurate amortization schedule, Summers' daughter "felt" that the lots must be paid for although there might be a balance due on one of them.

    
    

11. In May of 1987, Summers' attorney wrote to Respondent demanding a deed for the lot in Christmas Park and a payoff figure for the lot at Lake Louise Estates. That correspondence also questioned the interest rate which had been set forth by Respondent in his letter of February 19, 1986.

    
    

12. By the time that Summers' attorney responded in May of 1987 to Respondent's letter of February of 1986, both lots had been sold to third parties.

    
    

13. Respondent was able to obtain title to one of the two lots in question. He has offered to convey that lot to Summers free and clear. Summers has refused to accept title to that lot because she wants title to both lots.

    
    

14. Respondent did not change the interest rate on the Articles of Agreement from 7 percent to 10 percent and does not know who did. It was not unusual, however, for the employees of Federal Realty to renegotiate contracts on these mobile home lots when the purchasers had difficulty making payments but did not wish to default under their contracts. The only copies of the Articles of Agreement in Federal Realty's files were the copies bearing a 10 percent interest rate.

    
    

15. Using a 10 percent interest rate, Summers has not paid the full purchase price for either lot. Using the 7 percent interest rate and taking into account the many late payments and the nonpayment of taxes when due, Summers has not paid in full the purchase price for either lot.

    
    

16. Computing a payoff figure on the lots in Christmas Park and Lake Louise Estates is difficult when there has been a small down payment and many late monthly payments since amortization schedules cannot be prepared where there is a negative cash flow. It has been Respondent's policy to compute balances due in such a situation as precisely as possible, provide that figure to the purchaser, and then negotiate with the purchaser if the purchaser suggests that the appropriate figure is less than that given by the Respondent. Petitioner offered no evidence to controvert the balance due figures for the two lots which Respondent set forth in his February 19, 1986 letter to Summers.

    
    

17. None of the Articles of Agreement was ever recorded.

    
    

18. Summers was never in possession of either of the mobile home lots, and those lots were simply vacant land at all times material hereto.

    
    

    CONCLUSIONS OF LAW

19. The Division of Administrative Hearings has jurisdiction over the subject matter hereof and the parties hereto. Section 120.57(1), Florida Statutes.

    
    

20. The single-count Administrative Complaint filed herein charges Respondent with violating section 475.25(1)(b), Florida Statutes, by being 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. Petitioner has failed to meet its burden of proving such a violation.

    
    

21. The evidence is uncontroverted that Respondent did not execute the Articles of Agreement in question, that Summers' payments were generally late, that the last payment made on either lot was as of November of 1985, and that there was still a balance due on each lot at the time that Summers ceased making payments due to Summers' late payments on the property together with her failure to timely and directly pay the real property taxes, even computing the amount due based upon a 7 percent interest rate. Petitioner offered no evidence to show that Respondent changed the interest rate on the contracts in question. No evidence was offered to show that either of the lots was paid in full so as to entitle Summers to receive the warranty deeds she requested.

    
    

22. Petitioner condemns Respondent's business practices by virtue of his inability to compute an exact balance due where a negative amortization has occurred, yet Petitioner offered no evidence to show what the proper figure would be or to even controvert Respondent's computations. While it is agreed that Respondent's practice may not be the best business practice, there is no showing that it is illegal, and there is no showing that Respondent was engaging in fraud, misrepresentation, false pretenses, dishonest dealing, or breach of trust by settling on a payoff figure with a purchaser who has caused the negative amortization situation to occur by continued late payments. There is no showing that any purchaser paid more than what that purchaser owed.

    
    

23. Petitioner further argues that Respondent could not legally consider Summers to be in default under the Articles of Agreement since Respondent's only recourse would have been to file a foreclosure action. Petitioner ignores the fact that these lots were vacant property, that no one was in possession of those lots, and that the Articles of Agreement were not recorded documents. The law is clear that a deed can be given in lieu of foreclosure. In this situation, when Summers failed to respond to the demands for payment and failed to make any payments (for a period of two years by the time of the final hearing in this cause), she gave to Federal Realty the equivalent of a deed in lieu of foreclosure. Her inaction failed to put others on actual notice by possession, or on constructive notice by recording, of any equity of redemption rights she might have claimed. In short, there is no proof that Summers was entitled to claim an ownership interest in the lots in question and, therefore, Respondent violated no statutory prohibition by failing to deed the properties to her.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is,

RECOMMENDED that a Final Order be entered finding Respondent not guilty and dismissing the Administrative Complaint filed against him in this cause.

DONE and RECOMMENDED this 16th day of February, 1988, at Tallahassee, Florida.

LINDA M. RIGOT, 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 16th day of February, 1988.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 87-3667

1. Petitioner's proposed findings of fact numbered 2, 3, 7, 9, 12, and 13, have been adopted either verbatim or in substance in this Recommended Order.

2. Petitioner's proposed findings of fact numbered 1 and 14-16 have been rejected as not constituting findings of fact but rather as constituting conclusions of law, argument of counsel or recitations of the testimony herein.

3. Petitioner's proposed findings of fact numbered 4, 5, 8, and 17, have been rejected as being contrary to the weight of the credible evidence in this cause.

4. Petitioner's proposed finding of fact numbered 6 has been rejected as not being supported by the evidence in this cause.

5. Petitioner's proposed findings of fact numbered 10 and 11 have been rejected as being unnecessary for determination herein.

6. Petitioner's proposed finding of fact numbered 18 has been rejected as being irrelevant.

COPIES FURNISHED:

Darlene F. Keller, Executive Director Department of Professional Regulation Division of Real Estate

Post Office Box 1900 Orlando, Florida 32802

Paul B. Steinberg, Esquire 767 Arthur Godfrey Road Miami Beach, Florida 33140

James H. Gillis, Esquire

Department of Professional Regulation Division of Real Estate

Post Office Box 1900 Orlando, Florida 32802

William O'Neil, Esquire

Department of Professional Regulation

130 North Monroe Street Tallahassee, Florida 32399-0750

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AGENCY FINAL ORDER

=================================================================

STATE OF FLORIDA DEPARTMENT OF PROFESSIONAL REGULATION

FLORIDA REAL ESTATE COMMISSION

DEPARTMENT OF PROFESSIONAL REGULATION, DIVISION OF REAL ESTATE,

Petitioner,

vs. CASE NO. 0155675

DOAH NO. 87-3667

HARRY LIGHT,

Respondent.

/

FINAL ORDER

The Florida Real Estate Commission heard this case on March 15, 1988 to issue a Final Order. Hearing Officer Linda M. Rigot of the Division of Administrative Hearings presided over a formal hearing on November 18, 1987. On February 16, 1988, she issued a Recommended Order. A copy of this Recommended Order is attached here to as Exhibit A and made a part hereof. Petitioner's Exceptions to the Recommended Order were timely filed, and a copy of these Exceptions is attached here to as Exhibit B and made a part hereof.

After a review of the complete record, and the Commission being otherwise fully advised in the premises, it is ORDERED:

1. That the Hearing Officer's Findings of Fact #1, 4, 5, 6, 8, 10, 11, 14, 15, 16 and 17 in her Recommended Order be, and they are hereby, rejected, as they are not based upon competent and substantial evidence.

   
   

2. That the Petitioner's Exceptions to the Recommended Order be, and the same are hereby, accepted in their entirety.

   
   

3. That the Petitioner's Findings of Fact and Conclusions of Law as set forth in its Proposed Recommended Order be, and the same are hereby, accepted in their entirety and are hereby adopted as the Commission's Findings of Fact and Conclusions of Law.

   
   

4. That the Hearing Officer's Recommendation that the Respondent be found not guilty and that the Administrative Complaint against the Respondent be dismissed be, and the same is hereby, rejected as not justified in view of the Findings of Fact and Conclusions of Law of the Commission and the evidence in the record as, with particularity, described in Petitioner's Proposed Recommended Order which has been adopted as their own by the Commission, as set forth herein, as to its Findings of Fact and Conclusions of Law.

5. That the real estate broker's license of Respondent Harry Light be, and the same is hereby, suspended for a period of five (5) years.

This Order shall be effective 30 days from date of filing with the Clerk of the Department of Professional Regulation. This Order shall be appealable to the District Court of Appeal within 30 days from filing date.

DONE AND ORDERED this 15th day of March 1988 in Orlando, Florida.

Darlene F. Keller, Director Division of Real Estate

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true copy of the foregoing was sent by U.S. Mail to: Paul B. Steinberg, Esquire, 767 Arthur Godfrey Road, Miami Beach, Fl 33140; to Hearing Officer Linda Rigot, Division of Administrative Hearings, 2009 Apalachee Parkway, Tallahassee, Fl 32399- 1550; and to James Gillis, Esquire, DPR, P.O. Box 1900, Orlando, Fl 32802, this 29th day of March 1988.

MO :pep

Director

Docket for Case No: 87-003667

Orders for Case No: 87-003667