STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

vs. ) CASE NO. 90-709

)

DONALD J. MUNCH, )

)

Respondent. )

)

RECOMMENDED ORDER

The final hearing in the above-styled matter was heard pursuant to notice by Stephen F. Dean, assigned Hearing Officer of the Division of Administrative Hearings, on June 27, 1990, in St. Augustine, Florida.

APPEARANCES

For Petitioner: Janine A. Bamping, Esq.

Senior Attorney

Department of Professional Regulation

Division of Real Estate

400 West Robinson Street

P.O. Box 1900 Orlando, FL 32802

For Respondent: Howard Hadley, Esq.

2352 Carolton Road

Maitland, FL 32751 STATEMENT OF THE ISSUES

1. Whether the Respondent's real estate license in Florida should be disciplined based upon the charge that the Respondent committed fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence or breach of trust in a business transaction in violation of Subsection 475.25(1)(b), Florida Statutes.

   
   

2. Whether the Respondent's real estate license should be disciplined because the Respondent operated as a broker without being the holder of a valid and current broker's license or operated as a salesman for a person not registered as his employer in violation of Subsection 475.25(1)(b), Florida Statutes, and therefore, in violation of Subsection 475.25(1)(e), Florida Statutes.

PRELIMINARY STATEMENT

By an Administrative Complaint filed on December 11, 1989, the Petitioner alleges that the Respondent has violated Subsections 475.25(1)(b) and (e), Florida Statutes. Based upon these charges, the Petitioner seeks to discipline the Respondent's real estate license.

The Respondent disputed the charges and requested a Section 120.57(1), Florida Statutes, hearing; and thereafter, a formal hearing was held accordingly on June 27, 1990 in St. Augustine, Florida.

At hearing, the testimony of William Joos, J. William Henderson, Robert Miller, John Cobb, and Jonathan Bamburg was presented and Petitioner's exhibits 1-4 and Respondent's exhibits 1-5 were received into evidence.

FINDINGS OF FACT

1. Petitioner is authorized statutorily to license and regulate real estate salesmen and brokers.

   
   

2. At all times material to these charges, Donald J. Munch was a licensed real estate salesman holding license number 045938. From December, 1987 through May 30, 1989, Munch was licensed as a salesman with Active One Realty, Inc., Winter Park, Florida. He now holds a broker's license.

   
   

3. Sand Dollar Condominium Association was an association of condominium owners who owned apartments in Sand Dollar Condominiums. Owners of apartments in the condominium had entered into agreements with the association to rent out their apartments. This agreement provided that the association would receive 20% of the rents received.

   
   

4. Munch was the owner of Four Seasons Properties (Four Seasons), a property management company, which contracted with Sand Dollar Condominium Association (Sand Dollar) from December 13, 1987 until May 30, 1989 to provide various management services, including but not limited to, recruiting, hiring and supervising all personnel; installing and maintaining an electronic bookkeeping system; collecting monthly assessments; maintaining a bank account; preparing and mailing delinquent notices; auditing accounts and records; and collecting delinquencies; negotiating outside contracts for Sand Dollar; and supervising a rental program organization with advertising, printing, electronic bookkeeping, rotation scheduling and mailings. Although not specifically stated, Four Seasons was to collect for the rental of apartments.

   
   

5. Four Seasons was to be paid for its management services $2,000.00 per month payable on the first of every month during the duration of the contract. It is uncontroverted that, in addition to this compensation, Four Seasons also received 15% of the 20% of receipts from the rental of apartments which were payable to Sand Dollar by the owners of apartments who participated in the rental program provided by the association and managed by Four Seasons.

   
   

6. It is uncontroverted that, when Four Seasons began management of the condominium, the condominium was over $10,000.00 in arrears with regard to money used by the association for upkeep of the condominium which had been taken from the rental escrow accounts.

7. Four Seasons, through its owner Munch, rented apartments for the association, collected fees from owners, rents from lessees, deposited the proceeds into the bank account of Four Seasons maintained in accordance with its contract with the association, and accounted periodically to the association and owners during the period of its management.

   
   

8. The Respondent's broker knew of the Respondent's activities and did not expect commissions or deposits to his account from the Respondent.

   
   

9. Four Seasons and Munch assert that Sand Dollar owed Four Seasons

   $7,100.00 when their contract was terminated. Four Seasons provided Sand Dollar a complete financial statement and a check for $10,079.92 to Sand Dollar. Four Seasons retained $7,100.00, the amount which it claimed it was owed by Sand Dollar. Subsequently, Sand Dollar sued Four Seasons over the $7,100.00 claim and Munch paid the money into Sand Dollar's attorney's trust account.

   
   

   CONCLUSIONS OF LAW

   
   

10. The Division of Administrative Hearings has jurisdiction over the subject matter and parties, and this Recommended Order is entered pursuant to the provisions of Section 120.57(1), Florida Statutes.

    
    

11. The Florida Real Estate Commission charges the Respondent with violation of 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 a business transaction and Section 475.25(1)(e), supra, by acting as a broker while licensed as a salesman or operating as a salesman for a person not registered as his broker. The factual allegations upon which the charges were based were that (1) the Respondent improperly removed $7,100.00 from an account which he should have placed with his broker, and (2) the Respondent acted as a broker without a license.

    
    

12. The allegations that the Respondent acted as a broker related to the activities of Four Seasons as a property manager. It was shown that Four Seasons and the Respondent advertised apartments for rent, rented apartments, and collected rents. Section 475.01(1)(c) and (d), Florida Statutes, include within the acts of being a broker or salesman both advertising and renting real property. However, Section 475.011, supra, provides certain exemptions.

    
    

13. The parties concerned themselves primarily with the exemption for condominium managers contained in Paragraph (5) of Section 475.011, supra, which provides:

    
    

    1. Any person employed as, or acting in the capacity of, a manager of a condominium or cooperative apartment building as a result of any activities or duties which he may have in relation to the renting of individual units within such condominium or cooperative apartment if such manager is acting on behalf of a tenant owning or having an interest in no more than one unit within the condominium or cooperative apartment and if rentals arranged by him are for periods no greater than 1 year;

14. After October of 1988, Section 475.011(5) was amended as follows:

    
    

    1. Any person employed for a salary as a manager of a condominium or cooperative apartment complex as a result of any activities or duties which he may have in relation to the renting of individual units within such condominium or cooperative apartment complex if rentals arranged by him are for periods no greater than 1 year;

       
       

15. Clearly, neither salary or commission is mentioned in the 1987 exemption quoted above. The manner of compensation does not determine one's status as an employee. The amendment clarifies that employment must be salaried and deletes qualification based on the number of units which an owner may own. The Commission limits its post-hearing argument to the period after October, 1988 when the statute was clarified to specify salaried employees.

    
    

16. The Commission argues that the 1988 exemption is limited to "an exemption from the broker license requirement for salaried managers engaged in renting individual units in a cooperative apartment or condominium complex for terms of less than one year. This exemption does not apply to persons receiving a commission for renting individual units." However, the change to the exemptions provisions of Chapter 475, supra, was enacted simultaneously with a new provision for licensure of community association managers in Chapter 468, Part VIII.

    
    

17. Section 468.431(2), Florida Statutes, defines association management as: "specialized knowledge, judgment, and managerial skill when done for remuneration and for the public and when the association or associations served contain more than 50 units or have an annual budget or budgets in excess of

    $100,000.00: controlling or disbursing funds of a community association, preparing budgets or other financial documents, assisting in the noticing or conduct of meetings, and coordination of maintenance for the residential development or other day-to-day services involved with the operation of a community association." (Emphasis supplied.)

    
    

18. On September 26, 1988, the Respondent was licensed as a community association manager. The Respondent argues that maintaining the rental program was a day-to-day service. Although the Commission argues the rental of units was not intended to be within the scope of the Section 468.431, supra, this service was available to owners from the association and performed day-to-day by Four Seasons. The vagueness of the term "day-to-day" creates problems in attempting to harmonize the provision of Chapter 475 and Part VIII of Chapter 468, supra. Further, this provision is not an interpretation of Chapter 475, supra, by the Commission. Fortunately, in this instance, a definition of the term "day-to-day service" is not required because Section 475.011(2), supra, provides an additional applicable exemption.

    
    

19. Section 475.011(2), Florida Statutes, predates the agreement between the Respondent and Sand Dollar and remains unchanged to date. Since the Respondent and Sand Dollar entered into their management agreement in 1987, Section 475.011(2), supra, has provided the following exemption:

    (2) Any individual, corporation, partnership, trust, joint venture, or other entity which sells, exchanges, or leases its own real property; however, this exemption shall not be available if and to the extent that an agency, employee, or independent contractor paid a commission or other compensation strictly on a transactional basis is employed to make sales, exchanges, or leases to or with customers in the ordinary course of an owner's business of

    selling, exchanging, or leasing real property to the public;

    
    

20. This exemption covers the Respondent as an independent contractor if he does not receive compensation or a commission on a strictly transactional basis. Pursuant to the contract and that contract's verbal amendment by the Respondent and the condominium association, Four Seasons was paid $2,000.00 as a salary for providing overall managerial services and, according to the uncontroverted testimony of the Respondent, a 15% "commission" in lieu of the association providing him with free housing. He was paid a monthly salary and the percentage of gross rents on a monthly basis without regard to the number of rentals.

    
    

21. "Transactional" is the adjective form of "transaction," which is defined by Webster's New Collegiate Dictionary, 1975 Edition, as: "An act, process, or instance of transacting." The statute modifies "transactional basis" with the term, "strictly." It is concluded that commission exclusion is limited to those whose total compensation is payable on a rental-by-rental basis, both in terms of accrual and time.

    
    

22. It is concluded that Respondent's compensation of a fixed amount each month plus a percentage of the receipts from rentals collected was not payable on a strictly transactional basis and that the exemption of Section 475.011(2), Florida Statutes, is applicable. Consequently, the Respondent is not guilty of violating Section 475.25(1)(e), supra, because his activities in managing the condominium were exempt from Chapter 475, supra.

    
    

23. The allegations of fraud, etc. are based upon the alleged "taking" of the $7,100.00 from the account maintained by Four Seasons for Sand Dollar and upon the alleged representations by the Respondent that he was a broker. No credible evidence was received that the Respondent represented himself as a broker. He was a real estate salesman. This leaves the claims concerning the

    $7,100.00.

    
    

24. This money was part of the monies from various sources received by Four Seasons and maintained for Sand Dollar. Four Seasons was authorized to pay the expenses of operating the rental program. See Sand Dollar Condominium Association Rental Agreement. Four Seasons' claim for $7,100.00 was an expense of operation, and Four Seasons was authorized to pay itself this money.

    
    

25. Four Seasons asserted the $7,100.00 claim in its final accounting to the Association when it tendered a check for over $10,000.00 to the Association and did not remove the money from the single account in which it had maintained the money in accordance with its contract with Sand Dollar. See Paragraph I, B,

3. of Property Management Agreement, Respondent's Exhibit 1. When it became clear there was a controversy over the claim and Sand Dollar sued, Four Seasons

paid the money into the trust account of the Association's attorney. There is no fraud, no misrepresentation, and no taking. The funds were dealt with appropriately, and this conduct did not constitute a violation of Section 475.25(1)(b), supra.

26. Given the ambiguities of Section 475.011, supra, and Part VIII of Chapter 468, supra, discussed above, plus the penal nature of this statute, should the Commission reject the interpretation of these statutes, the violations of Section 475.25(1)(e), supra, under these facts are minimal technical violations arising from changes in statutes. From the evidence presented, the Respondent conducted himself properly and protected the assets which were placed in his keeping. He did not violate Section 475.25(1)(b), supra.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Administrative Complaint be dismissed.

DONE AND ENTERED this 15th day of August, 1990, in Tallahassee, Leon County, Florida.

STEPHEN F. DEAN

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, FL 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 15th day of August, 1990.

COPIES FURNISHED:

Janine A. Bamping, Esq. Senior Attorney

Department of Professional Regulation

Division of Real Estate

400 West Robinson Street

P.O. Box 1900 Orlando, FL 32802

Howard Hadley, Esq.

2352 Carolton Road

Maitland, FL 32751

Kenneth E. Easley, Esq. General Counsel

Department of Professional Regulation

1940 North Monroe Street Tallahassee, FL 32399-0792

Darlene F. Keller Division Director Division of Real Estate

Department of Professional Regulation

400 West Robinson Street

P.O. Box 1900 Orlando, FL 32801

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

AGENCY FINAL ORDERS

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

STATE OF FLORIDA

DEPARTMENT OF PROFESSIONAL REGULATION FLORIDA REAL ESTATE COMMISSION

DEPARTMENT OF PROFESSIONAL REGULATION, DIVISION OF REAL ESTATE,

Petitioner,

vs. CASE NO. 0164284

DOAH NO. 90-0709

DONALD J. MUNCH

Respondent.

/

FINAL ORDER

On September 18, 1990, the Florida Real Estate Commission heard this case to issue a Final Order. Hearing Officer Stephen F. Dean of the Division of Administrative Hearings presided over a formal, hearing on June 27, 1990. On August 15, 1990, he issued a Recommended Order, a copy of which is attached hereto as Exhibit A and made a part hereof.

Petitioner filed Exceptions to the Recommended Order. A copy of said Exceptions is attached hereto as Exhibit B and made a part hereof. The Petitioner took exception to the Hearing Officer's Findings of Fact, Paragraphs 5 and 7, and to the Hearing Officer's Conclusions of Law pertaining to the amendment of s.475.011(5), Florida Statutes, and the

exemption provided in s.475.011(2), Florida Statutes, from which the Hearing Officer concluded that the Respondent did not violate s.475.25(1)(b), Florida Statutes.

After hearing argument of counsel and upon a complete review of the record, the Commission adopts those Findings of Fact and Conclusions of Law outlined in the Petitioner's Exceptions and the remaining Findings of Fact and Conclusions of Law of the Hearing Officer. Further, after a complete review of the record, the Commission rejects the Hearing Officer's Recommendation and cites the Petitioner's Exceptions as justification to find the Respondent guilty of Counts I and II, as set forth in the Administrative Complaint.

Accordingly, the Florida Real Estate Commission ORDERS that the Respondent pay an administrative fine of $1000 and that the Respondent's license be suspended for a period of one (1) year.

This Order shall be effective 30 days from date of filing with the Clerk of the Department of Professional Regulation. However, any party affected by this Order has the right to seek judicial review, pursuant to s.120.68, Florida Statutes, and to Rule 9.110, Florida Rules of Appellate Procedure.

Within 30 days of the filing date of this Order, review proceedings may be instituted by filing a Notice of Appeal with the Clerk of the Department of Professional Regulation at 400 West Robinson Street, Suite 309, Orlando, Florida 32801. At the same time, a copy of the Notice of Appeal, with applicable filing fees, must be filed with the appropriate District Court of Appeal.

DONE AND ORDERED this 18th day of September 1990 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: Howard Hadley, Esq., 2352 Carolton Road, Maitland, FL 32751; to Hearing Officer Stephen F. Dean, Division of Administrative Hearings, 1230 Apalachee Parkway, Tallahassee, FL 32399-1550; and to Janine Myrick, Esq., DPR, P O Box 1900, Orlando, FL 32802, this 18 day of September , 1990.

STATE OF FLORIDA

DEPARTMENT OF PROFESSIONAL REGULATION FLORIDA REAL ESTATE COMMISSION

DEPARTMENT OF PROFESSIONAL REGULATION, DIVISION OF REAL ESTATE

Petitioner,

vs. CASE NO. 0164284

DOAH NO. 90-0709

DONALD J. MUNCH 1ST DCA NO. 90-3238

Respondent,

/

FINAL ORDER

On February 20, 1992, the Florida Real Estate Commission heard this case to issue a Final Order as a result of a Mandate from the District Court of Appeal of Florida, First District. The District Court concluded that the Commission failed to conform with the requirements of s.120.57(1)(b) 10, Florida Statutes, and erroneously rejected the Hearing Officer's findings and conclusions regarding Count I of the Administrative Complaint. The District Court did agree with the Commission that s.475.011(2) , Florida Statutes, "did not afford an exemption to the appellant" and therefore agreed with the Commission's rejection of the Hearing Officer's conclusion about Count II of the complaint. The District Court issued an opinion therefore that partially reversed the Final Order issued by the Commission on October 5, 1990 and remanded to the Commission to reconsider and impose a penalty for the "minimal" and "technical" violation of s.475.25(1)(e), Florida Statutes.

After completely reviewing the record and being otherwise fully advised, the Commission accepts the Mandate of the District Court of Appeal and finds Donald J. Munch guilty of the technical violation of s.475.25(1)(e), Florida Statutes.

Therefore, the Commission ORDERS that Donald J. Munch be reprimanded and pay an administrative fine of $300.

This Order shall be effective 30 days from date of filing with the Clerk of the Department of Professional Regulation. However, any party affected by this Order has the right to seek judicial review, pursuant to s.120.68, Florida Statutes, and to Rule 9.110, Florida Rules of Appellate Procedure.

Within 30 days of the filing date of this Order, review proceedings may be instituted by filing a Notice of Appeal with the Clerk of the Department of Professional Regulation at 400 West Robinson Street, Suite 309, Orlando, Florida 32801. At the same time, a copy of the Notice of Appeal, with applicable filing fees, must be filed with the appropriate District Court of Appeal.

DONE AND ORDERED this 20th day of February 1992 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: Geoffery B. Dobson, Esq. , 66 Cuno Street, Suite B, St. Augustine, FL 32084; to Howard Hadley, Esq. 2352 Carolton Road, Maitland, FL 32751; to the Division of Administrative Hearings, 1230 Apalachee Parkway, Tallahassee, FL 32399-1550; and to Janine B. Myrick, Esq., DPR, Post Office Box 1900, Orlando, FL 32802, this 20 day of February 1992.

DARLENE F. KELLER, DIRECTOR

Division of Real Estate

Docket for Case No: 90-000709

Orders for Case No: 90-000709