STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

v. ) CASE NO. 88-4062

) ALAN KAYE AND K.N.A.C. OF ) MIAMI REALTY, INC., )

)

Respondents. )

)

RECOMMENDED ORDER

Pursuant to notice, an administrative hearing was held before Diane D. Tremor, Hearing Officer with the Division of Administrative Hearings, on January 10, 1989, in Miami, Florida. The issues for determination in this proceeding are whether respondents' real estate licenses are subject to disciplinary action for violations of Chapter 475, Florida Statutes.

APPEARANCES

For Petitioner: James H. Gillis, Esquire

DPR, Division of Real Estate

400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802

For Respondents: Manuel M. Arvesu, Esquire

100 North Biscayne Blvd. Miami, Florida 33132

INTRODUCTION

By an Administrative Complaint filed on July 28, 1988, respondents are charged with violations of Sections 475.25(1)(b), (d) and (k), Florida Statutes, in connection with a sales contract for the purchase and sale of certain real property. In summary, it is factually alleged that respondents returned to the purchasers a deposit in the amount of $6,200.00 without the prior knowledge and consent of the seller.

In support of the charges, petitioner presented the testimony of Maria Christina Trivino, the seller, and Kenneth G. Rehm, who was accepted as an expert witness in the area of mortgage financing. Petitioner's Exhibits 1 through 11 were received into evidence.

The respondent Alan Kaye testified on his own behalf and also presented the testimony of Robin K. Dybas. Respondents' Exhibit 1 was received into evidence.

Subsequent to the hearing, both parties submitted proposed findings of fact and proposed conclusions of law. To the extent that the parties' proposed factual findings are not included in this Recommended Order, they are rejected for the reasons stated in the Appendix hereto.

FINDINGS OF FACT

Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found:

1. At all times pertinent to this proceeding, respondent Alan Kaye was a licensed real estate broker in the State of Florida and respondent KNAC of Miami Realty, Inc. was a corporation registered as a real estate broker in the State of Florida. Respondent Alan Kaye was an officer of and qualifying broker for respondent KNAC of Miami Realty, Inc.

   
   

2. Respondents secured a 90-day listing from Christina Trivino for the sale of her residence located at 271 N.W. 148th Street in North Miami, Florida. When that listing expired, respondents obtained an extension. On or about November 28, 1987, respondents solicited and obtained a sales contract for the purchase and sale of the Trivino property. In connection therewith, the purchasers, Marie C. Eduoard and Henry S. Roy, entrusted to the respondents a total earnest money deposit of $6,200.00, and the respondents placed the deposit in the escrow account of respondent KNAC of Miami Realty, Inc.

   
   

3. In accordance with the provisions of the sales contract, the purchasers were to pay a total of $62,000 for the property, and assume the existing first mortgage in the principal amount of approximately $45,000. While the contract initially called for the closing to occur on or before February 15, 1988, Ms. Trivino was very anxious to close earlier due to some problems she was having with the Internal Revenue Service. Accordingly, the closing date was changed to occur on or before January 15, 1988.

   
   

4. Among the terms of the sales contract was a provision that conditioned the sale upon the purchasers' assumption of the first mortgage in the principal amount of approximately $45,000. Paragraph 8 of the contract provided that

   
   

   If, after diligent effort on the part of the purchaser, the purchaser is unable to obtain said first mortgage, all monies deposited hereunder shall be refunded to purchaser and parties herewith agree to enter into a Release on Deposit Receipt; and this contract shall be declared null and void.

   
   

5. At some point in time, it became known to the respondents and the seller Trivino that the bank which held the first mortgage on the subject property would not authorize an assumption of the mortgage by the purchasers without either a $3,000 paydown of the mortgage amount or the completion of qualifying papers by the purchasers. The testimony from Ms. Trivino and Mr. Kaye differ widely with regard to the dates upon which and the manner in which they became aware of this problem, as well as their communications with each other thereafter.

   
   

6. Ms. Trivino testified that in early January, 1988, she became concerned about the status of the transaction and began making repeated calls to the respondents which calls were never returned. She admits talking with Todd Kaye,

   respondent's son, in the respondents' offices on January 5, 1988, whereupon the mortgage problem was discussed. At that time, needing "desperately" to sell the house, Ms. Trivino offered to hold a second mortgage for the purchasers in the amount of approximately $3,000.00. She states that she also spoke with the officials at the bank regarding the mortgage. In spite of numerous unreturned telephone calls, Ms. Trivino did not hear anything further from Mr. Kaye until his letter dated January 29, 1988. That letter informed Ms. Trivino of the mortgage situation and indicated that "there is some doubt whether or not the Buyer has this extra money." Mr. Kaye further informed Ms. Trivino that "for all practical purposes, since the closing has not taken place, due to no one (sic) fault, the contract is void." Ms. Trivino then had her employer, a licensed real estate broker, write a letter dated February 3, 1988, to Mr. Kaye requesting Mr. Kaye to retain the $6,200 deposit pending a determination of the matter. She asserts that she made numerous further attempts to contact Mr. Kaye regarding this matter, but he would not return her calls.

   
   

7. According to Mr. Kaye, he delivered the sales contract to a title company in early December, 1987, with the requests that the title company do a title check, that the mortgage holder be contacted, and that a mortgage assumption package for the buyers be obtained. Mr. Kaye states that he was thereafter informed by the title company that the mortgage holder would not allow an assumption of the mortgage without a paydown of about $3,000. Mr. Kaye states that he communicated to the buyers the problem with the mortgage assumption and also communicated Ms. Trivino's offer to take a second mortgage for $3,000. According to Mr. Kaye, the buyers did not want a second mortgage and did not feel that they could qualify for an assumption of the first mortgage because they were unemployed at the time. Instead, they wanted a return of their $6,200 deposit. Mr. Kaye felt that the sales contract had become void because of the inability of the buyers to assume the first mortgage, as provided in Paragraph 8 of the sales contract. Accordingly, he returned the $6,200 deposit to the buyers on January 10, 1988. He did not request Ms. Trivino's consent nor did he notify Ms. Trivino that he had refunded the deposit to the buyers because he felt that Ms. Trivino was fully aware that "the deal was dead."

   
   

   CONCLUSIONS OF LAW

   
   

8. Based upon the respondents' return of the $6,200 deposit to the purchasers without the knowledge or consent of the seller, Ms. Trivino, respondents are charged with misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence and breach of trust in a business transaction, in violation of Section 475.25(1)(b), Florida Statutes; failure to account and deliver a deposit, in violation of Section 475.25(1)(d), Florida Statutes; and failure to maintain trust funds in the real estate brokerage escrow bank account or some other proper depository until disbursement thereof was properly authorized, in violation of Section 475.25(1)(k), Florida Statutes. The burden of proof in this proceeding is upon the petitioner to establish by clear and convincing evidence that the factual allegations of the Administrative Complaint are true and that said facts constitute violations of the laws applicable to the licensee.

   
   

9. Here, the evidence establishes that the respondents did refund the

   $6,200 deposit to the buyers without the prior consent of the seller. However, the evidence further establishes that the seller, Ms. Trivino, was aware prior to the time the deposit was returned that the buyers were not able to assume the first mortgage, as called for in the sales contract. The contract itself, in

   Paragraph 8 thereof, provided that should that situation occur, all monies deposited "shall" be refunded and the sales contract "shall" be declared null and void. Since the terms of the contract were incapable of performance, respondents had no choice but to refund the money deposited at the request of the purchasers. While respondents should have immediately notified Ms. Trivino that the purchasers had requested a refund of their deposit and obtained a Release on Deposit Receipt, as contemplated by Paragraph 8 of the sales contract, such action does not rise to the level of the charges filed in the Administrative Complaint.

   
   

10. It appears from the evidence that there may have been some misunderstanding and failure to communicate between the seller and the respondents. However, it simply cannot be concluded that respondents were guilty of misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence or breach of trust in violation of Section 475.25(1)(b), Florida Statutes. There was no proof or claim that the respondents were in any manner responsible for the mortgage holder's decision to disallow an assumption without further paydown or qualification on the part of the buyers. The testimony of Ms. Trivino shows that she was aware of the mortgage problem prior to the intended closing date on her property. Nor can it be concluded from the facts presented that respondents were guilty of having failed to account and deliver a deposit or having failed to maintain trust funds in an escrow bank account until disbursement was properly authorized, in violations of subsections (d) or (k) of Section 475.25(1), Florida Statutes. When it became clear that the buyers were unable to assume the first mortgage in the approximate amount of $45,000, the contract was null and void and the buyers were entitled to a return of their deposit.

The fact that the seller was deeply desirous of closing the transaction and made an offer to take a second mortgage did not negate the terms of the sales contract executed by the buyers. Respondent Kaye was correct in his assessment that, absent an agreement by the buyers to accept another financing arrangement, "the deal was dead." While respondent Kaye should have immediately informed Ms. Trivino that the buyers had requested a return of their deposit, his failure to do so does not constitute a violation of Chapter 475, as charged in the Administrative Complaint.

RECOMMENDATION

Based upon the findings of fact and conclusions of law recited herein, it is RECOMMENDED that the Administrative Complaint filed against the respondents be DISMISSED.

Respectfully submitted and entered this 15th day of March, 1989, in Tallahassee, Florida.

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 15th day of March, 1989.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 88-4062

The parties' proposed findings of fact have been fully considered and are accepted and/or incorporated in this Recommended Order, with the following exceptions:

Petitioner

8. The evidence demonstrates that the amount of the deposit was $6,200 in lieu of $6,000.

13. Partially rejected based upon the seller's testimony that she spoke to Todd Kaye in respondent's offices on or about January 5, 1988.

15. Accepted with the addition of the fact that the respondent communicated this offer to the buyers.

Respondent

4. The evidence demonstrates that the amount of the deposit was $6,200 in lieu of $6,000.

8. The date of "early December" is rejected as not established by competent, substantial evidence.

10. Rejected as not established by competent, substantial evidence.

COPIES FURNISHED:

James H. Gillis, Esquire DPR, Division of Real Estate

400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802

Manuel M. Arvesu, Esquire

100 North Biscayne Blvd. Miami, Florida 33132

Darlene Keller, Executive Director DPR, Division of Real Estate

400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802

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

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 NOS. 0159212,

0159977

ALAN KAYE and DOAH CASE NO. 88-4062

1. OF MIAMI REALTY, INC.,

   
   

   Respondent.

   /

   
   

   FINAL ORDER

   
   

   On April 18, 1989, the Florida Real Estate Commission heard this case to issue a Final Order. Hearing Officer Diane Tremor of the Division of Administrative Hearings presided over a formal hearing on January 10, 1989. On March 15, 1989, she issued a Recommended Order. A copy of this Recommended Order is attached hereto as Exhibit A and made part hereof.

   
   

   At the start of the hearing of this case, the parties represented to the Commission that they had reached a joint and voluntary agreement to petition the Commission to disregard and take no action upon the Hearing Officer's Recommended Order and the Exceptions filed by the Petitioner; that the parties had agreed each would pay their own attorneys fees and costs; and that they hereby submitted for the Commissions consideration an agreed Stipulation.

   
   

   After argument of counsel, consideration of the Stipulation submitted, a review of the complete record, and having been otherwise fully advised in the premises, the Commission ORDERS:

   
   

   1. That the petition jointly and voluntarily made by the parties be granted.

      
      

   2. That the Stipulation submitted be accepted and approved. A copy of this Stipulation is attached hereto as Exhibit B and made a part hereof.

DONE AND ORDERED this 18th day of April, 1989 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: Manuel N. Arvesu, Esquire, 100 North Biscayne Blvd., Miami, Fl 33132; to Hearing Officer Diane Tremor, Division of Administrative Hearings, 1230 Apalachee Parkway, Tallahassee, Fl 32395-1550; and to James Gillis, Esquire, DPR, Post Office Box 1900, Orlando, Fl 32802, this 28th day of April, 1989.

EXHBIIT B STATE OF FLORIDA

DEPARTMENT OF PROFESSIONAL REGULATION FLORIDA REAL ESTATE COMMISSION

DEPARTMENT OF PROFESSIONAL REGULATION, DIVISION OF REAL ESTATE,

Petitioner,

vs. CASE NOS. 0159212,

0159977

ALAN KAYE and DOAH CASE NO. 88-4062

1. OF MIAMI REALTY, INC.,

   
   

   Respondent.

   /

   
   

   STIPULATION

   
   

   Respondents, Alan Kaye and K.N.A.C. of Miami Realty, Inc., and the Florida Department of Professional Regulation hereby stipulate and agree to the issuance of a Final Order by the Florida Real Estate Commission, (FREC), adopting and incorporating the provisions of this stipulation on reference to the above styled case.

   
   

   STIPULATED FACTS AND CONCLUSIONS OF LAW

   
   

   1. Respondent Alan Kaye is now and was at all times pertinent herein a licensed real estate broker in the State of Florida having been issued license number 0380979. The last licensed issued was as a broker, c/o K.N.A.C. of Miami Realty, Inc., 1607A NE 123rd Street, Miami, Florida 33181.

      
      

   2. Respondent K.N.A.C. of Miami Realty, Inc., is now and was at all times pertinent herein a corporation licensed as a real estate broker in the State of

      Florida having been issued license number 0237488. The last license issued was at the address of 1607A NE 123rd Street, Miami, Florida 33181.

      
      

   3. Respondents, being a licensed real estate professionals admit that they are subject to the provisions of Chapter 455 and 475, Florida Statutes, and therefore, subject to the jurisdiction of the Department and of the FREC.

      
      

   4. Respondents admit that they have been served with the Administrative Complaint, copy attached, which charges the Respondents with having violated certain provisions of Chapter 475, Florida Statutes.

      
      

   5. Respondents neither admit nor deny the matters contained in the Administrative Complaint.

      
      

   6. Respondents admit that the stipulated facts contained in the Administrative Complaint support a finding of a violation of the Real Estate Practice Act.

      
      

      STIPULATED DISPOSITION

      
      

   7. In lieu of the Hearing Officer's Recommended Order dated March 15, 1989, Respondents shall not in the future violate Chapters 455 or 475, Florida Statutes, or the rules enacted pursuant thereto.

      
      

   8. Respondents shall be placed on probation for three (3) months with monthly reports to be submitted to Jack King, Chief Investigator, effective (30) thirty days from the filing of the final order; K.N.A.C. of Miami Realty, Inc., shall submit to an inspection by a DPR investigator during the ensuing months and Alan Kaye shall pay an administrative fine of $500 payable to the Department of Professional Regulation, Division of Real Estate, which fine shall be paid within thirty (30) days from the date of filing of the final order or the Respondents' licenses shall be revoked.

      
      

   9. The action taken as reflected in the Final Order shall only be published and will be published in the FREC News and Report as follows:

      
      

      Alan Kaye and K.N.A.C. of Miami Realty, Inc., brokers, Miami, fined

      $500 and probation; failed to maintain funds in the real estate brokerage trust account.

      
      

   10. It is expressly understood that this Stipulation subjects to the approval of the Department and of the FREC, and this Stipulation has no force and effect until a Final Order has been issued and filed.

       
       

   11. This Stipulation is executed by the Respondents for the purpose of avoiding further administrative action with respect to this cause. In this regard, the Respondents authorize the Commission to review and examine all investigative file material concerning the Respondents prior to or in conjunction with the consideration of this Stipulation. Furthermore, should this Stipulation not be approved by the Commission, it is agreed that presentation to and consideration of this Stipulation and other documents and matters by the Commission shall not unfairly or unlawfully prejudice the Respondents, the Department, the Commission or any of its members from further participation, consideration or resolution of these proceedings.

   12. Respondents and the Department fully understand that this Stipulation and resulting Final Order adopting and incorporating the provisions of this Stipulation shall in no way preclude any other disciplinary proceedings by the Department or the FREC against the Respondent for acts or omissions not specifically set forth in the attached Administrative Complaint.

       
       

   13. The Respondents expressly waive all notice requirements and right to seek judicial review of or to otherwise challenge or contest the validity and enforcement of this Stipulation and resulting Final Order of the Commission adopting and incoporating this Stipulation.

       
       

   14. All parties to this Stipulation shall bear their own attorneys' fees and costs.

SIGNED this 18th day of April, 1989.

SWORN AND SUBSCRIBED

before me this 18th MANUEL M. ARVESU, Esquire day of April, 1989. Attorney for Respondents

Alan Kaye and K.N.A.C. of Miami Realty, Inc.

100 North Biscayne Blvd.

Notary Public Suite 1209

Miami, Florida 33132

(305) 358-8685

JAMES H. GILLIS, Esquire

Attorney for Petitioner

DPR-Division of Real Estate

400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 (407) 423-6134

Approved this 19th day of April, 1989. LARRY GONZALEZ, Secretary

Department of Professional Regulation

Docket for Case No: 88-004062

Orders for Case No: 88-004062