STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

vs. ) CASE NO. 89-2681

)

ROBERT P. TUNO, )

T/A SUNSPOT REALTY, )

)

Respondent. )

)

RECOMMENDED ORDER

A formal hearing was conducted pursuant to notice on October 25, 1989, in Panama City, Florida, by Stephen F. Dean, assigned Hearing Officer of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Steven W. Johnson, Esquire

Department of Professional Regulation Division of Real Estate

400 West Robinson Street

P. O. Box 1900 Orlando, Florida 32802

For Respondent: Robert P. Tuno, pro se

16428 West Highway 98A Panama City, Florida 32407

STATEMENT OF THE ISSUES

Whether the Respondent violated Subsection 475.25(1)(b), Florida Statutes, by failing to reconcile his accounts, having monies stolen from him by an employee, and withdrawing money from his escrow account as commissions.

Whether the Respondent violated Subsection 475.25(1)(k), Florida Statutes, by failing to maintain funds paid to him as deposits for rentals, sales taxes, and security deposits in his escrow account until after the date of the rental.

PRELIMINARY STATEMENT

The final hearing was held on October 25, 1989. A letter in place of proposed findings was received from the Respondent on November 3, 1989 and the Petitioner filed its proposed findings on November 8, 1989. No transcript was filed in this case. The proposed findings of the Petitioner were read and considered. Adoption and rejection of the proposed findings are discussed in detail in Appendix A.

FINDINGS OF FACT

1. The Respondent is a licensed real estate broker and was so licensed at all times relevant to the events which are a part of the Administrative Complaint. The Respondent holds license number 0177110 issued as a broker, t/a Sunspot Realty, 16428 West Highway 98A, Panama City, Florida 32407.

   
   

2. On February 10, 1989, Elaine Brantley, an investigator for the Department of Professional Regulation, visited the Respondent's office for the purpose of conducting a financial audit of the records of the business. The Respondent was not present; and Teresa Tuno, the Respondent's secretary and wife, stated she would prefer that Brantley not review the records in her husband's absence.

   
   

3. On February 14, 1989, Brantley telephoned the Respondent and made arrangements to audit Respondent's books on February 15, 1989. A review of the records by Brantley on February 15, 1989 revealed that the records were in a state of disarray and the ledgers were not posted. At that time, Brantley advised the Respondent that the records had to be put in order, the ledgers posted, and accounts reconciled by February 17, 1989, when she would reinspect the records.

   
   

4. Brantley reinspected the records on February 17, 1989, and all the ledgers had been posted and the accounts had been reconciled through January. The audit revealed that Tuno had received $47,961.45 in security deposits, sales taxes, and rental deposits which were not refundable under the lease agreement. The audit revealed that the balance of the Respondent's escrow account was

   $33,321.45.

   
   

5. The difference between the balance of the escrow account and the money received by the Respondent includes $8,000 which the Respondent paid to himself with checks drawn on the account for "commissions", and $6,540 which had been stolen by an employee of the Respondent. The monies stolen included cash deposits paid by rental customers to the employee and one check on the escrow account endorsed in blank and given to the employee to pay for items purchased for one of the rental units which the employee cashed and converted to his own use. The theft was reported to the local police and their investigation revealed that the employee had disappeared under suspicious circumstances, indicating foul play.

   
   

6. The lease agreement states that a deposit of 50% of the rental rate was required to reserve a property and the deposit was refundable only if another tenant could be found for the same period. The Respondent's agreement with the owner of the property called for a commission of 30% of the rental receipts. However, there was no mention of when the commission was earned and under what circumstances it would be paid in the original rental agreement.

   
   

7. Upon being criticized for this practice by Brantley, the Respondent repaid the total amount of the draws. Subsequently, he had a new agreement drawn purporting to authorize early payment of management fees. The new agreement states in pertinent part:

   
   

   Owner agrees to compensate Agent a commission of 30% of rental receipts with the exception of long term winter rentals

   which will be at a rate of 20%. Agent is authorized to draw management fees upon receipt of tenant's non-refundable reservation deposit.

   
   

8. The balance of the escrow account was sufficient to meet any potential demands against it. Had the property been leased to another renter for the same period of time, the second renter's deposit would have been deposited to the account making up the funds refunded to the first renter.

   
   

9. The audit also revealed that the Respondent had paid monies from the escrow account to a maintenance company operated by the Respondent for work performed on various of the properties. However, the Respondent had not debited the individual property accounts at the time the check was drawn. Each of the properties had a sufficient individual balance to pay for work charged against the property. The appropriate entries were made eventually in the ledgers for the property by the Respondent.

   
   

10. The Respondent has amended his agreement with property owners to permit him to bill for repairs on their property on a cost-plus-10% basis to eliminate this problem.

    
    

11. None of the actions by the Respondent resulted in financial loss to any of his clients, and the Respondent was cooperative and candid with the auditor.

    
    

    CONCLUSIONS OF LAW

    
    

12. The Division of Administrative Hearings has jurisdiction over the subject matter and parties, pursuant to Chapter 120, Florida Statutes, under authority of which this Order is entered.

    
    

13. The Respondent is charged with the violation of Section 475.25(1)(b) and (k), Florida Statutes. Section 475.25(1)(b), supra, proscribes breach of trust in a business transaction. The evidence presented in this case does not support a conclusion that the Respondent violated this provision. Section 475.25(1)(k), supra, proscribes the failure to deposit and maintain monies received in a fiduciary capacity in an escrow account until authorized to distribute them.

    
    

14. The Respondent technically failed to maintain monies in the escrow account properly. He distributed monies to himself for commissions when, under the agreement with the owners, it was less than clear that he had earned the money. He also paid monies to a company which he owned for maintenance on properties for which he was the rental broker without debiting individual accounts for the work done on individual properties. While violating Section 425.25(1)(k), supra, Respondent's acts were unintentional and not for the purpose of defrauding any of his clients. None of Respondent's clients suffered financial loss as a result of his acts even though he suffered a financial loss of $6,450 due to the criminal acts of an employee. Respondent's revision of his contracts indicates his desire to operate within the letter and spirit of the law.

    
    

15. Because the broker's acts were not intentional, were not negligent, and did not result in any financial loss to his clients, the recommendation that the Respondent receive a reprimand is rejected. The broker's actions indicate

that he would benefit from additional training specifically as it relates to maintenance of escrow accounts and funds and that he should bear the costs of these proceedings, which exceed $1,000.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Respondent:

1. Be required to pay an administrative fine of $1,000 for violation of Section 475.25(1)(k), Florida Statutes, by distributing commissions to himself;

   
   

2. Be required to pay an administrative fine of $1,000 for violation of Section 475.25(1)(k), Florida Statutes, by distributing payments to a maintenance company which he owned without debiting individual property accounts; and

   
   

3. Be required to enroll and satisfactorily complete a course on maintenance of escrow funds and accounts.

DONE AND ORDERED this 6th day of December, 1989, in Tallahassee, Leon County, Florida.

STEPHEN F. DEAN

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 6th day of December, 1989.

APPENDIX A TO RECOMMENDED ORDER, CASE NO. 89-2681

The Respondent filed a letter in place of proposed findings which contained legal argument which was read and considered. It did not contain any findings.

The Petitioner filed proposed findings which were read and considered as follows:

Paragraphs 1-3 Adopted Paragraph 4, 1st sentence Adopted

Paragraph 4, 2nd sentence Rejected as irrelevant Paragraphs 5-7 Adopted

Paragraphs 8-10 Rejected. The terms of the contracts do not address when Tuno was entitled to his commission. Under the terms of the contracts the renters were not entitled to a refund of their advance deposit after

a reservation was made unless a new renter could be found for the same time, in which case that renter would have to make a deposit. When Tuno was entitled to his commission was not addressed in the contracts. While findings that Tuno violated the provisions of statute relating to maintenance of funds in his escrow account; this failure was based upon the lack of clarity in the contracts and the high standard of conduct in maintaining escrow accounts which is required of licensees.

COPIES FURNISHED:

Ms. Darlene F. Keller Division Director Division of Real Estate

400 West Robinson Street

P. O. Box 1900 Orlando, Florida 32801

Kenneth E. Easley, Esquire General Counsel

Department of Professional Regulation

1940 North Monroe Street Tallahassee, Florida 32399-0792

Steven W. Johnson, Esquire Department of Professional

Regulation

Division of Real Estate

400 West Robinson Street P. 0. Box 1900

Orlando, Florida 32802

Mr. Robert P. Tuno 16428 West Highway 98A

Panama City, Florida 32407

Docket for Case No: 89-002681

Orders for Case No: 89-002681