vs. ) CASE NO. 90-2468
Respondents. )
Pursuant to Notice, this cause was heard by Linda M. Rigot, the assigned Hearing Officer from the Division of Administrative Hearings, on February 7, 1991, in Hollywood, Florida.
For Petitioner: James H. Gillis, Esquire
Department of Professional Regulation Division of Real Estate-Legal Section Hurston Building - North Tower
For Respondents: Monte K. Rassner, Esquire
The issue presented is whether Respondents are guilty of the allegations contained in the Administrative Complaint filed against them, and, if so, what disciplinary action should be taken against them, if any.
Petitioner filed an Administrative Complaint against Respondents alleging that they had violated several of the statutes and rules regulating their practice as real estate brokers in the State of Florida, and Respondents timely requested a formal hearing on the allegations contained within that Administrative Complaint. This matter was thereafter transferred to the Division of Administrative Hearings for the conduct of that formal proceeding.
Petitioner presented the testimony of Respondent Lori Wilk, Howard Gordon, Gil Amara, Celeste A. Wohl, and George B. Sendon. Additionally, Petitioner's Exhibits numbered 1-18 and 20 and Respondents' Exhibits numbered 1-3 were admitted in evidence.
Both parties submitted post-hearing proposed findings of fact in the form of proposed recommended orders. A ruling on each specific proposed finding of fact can be found in the Appendix to this Recommended Order.
At all times material hereto, Respondent Lori Wilk has been a licensed real estate broker in the State of Florida, having been issued license number 0349551. The last license issued was as a broker in care of Stars and Stripes Realty, Inc.
At all times material hereto, Respondent Stars and Stripes Realty, Inc., has been a corporation registered as a real estate broker in the State of Florida, having been issued license number 0253076.
At all times material hereto, Respondent Wilk has been licensed and operating as a qualifying broker and officer of Respondent Stars and Stripes Realty, Inc.
Gwendolyn Taylor-Herbert, as owner, had listed for sale certain real property with Coldwell Banker Residential Real Estate, Inc./Gil Amara. Respondents obtained LPS Investments, Inc., as purchaser pursuant to a sales contract which was accepted by the seller on March 14, 1989. LPS Investments is owned by Leo and Patricia Scarola. Patricia Scarola was a former salesperson for Respondents.
That Contract for Sale And Purchase of Real Property provided that a total of $500 as deposit monies was to be held in escrow by Stars and Stripes Realty. Respondent Wilk executed the portion of the Contract which acknowledged receipt of the first $100 of the deposit monies. Respondents' escrow account deposit slips reveal the first $100 was deposited into Respondents' escrow account. No proof of receipt of the additional $400 exists among the escrow account deposit slips admitted in evidence; however, Respondent Wilk's testimony is accepted that Respondents received in trust a total earnest money deposit in the sum of $500.
Thereafter, LPS Investments, Inc., refused to close, alleging misrepresentation by the seller of the property. Although the property had been advertised as a "handyman special" and the Contract provided that the property was accepted in an "as is" condition, the Scarolas who never saw the property before they entered into the Contract to purchase it discovered that it would cost more to improve the property than they had guessed. They decided not to close.
Rather, Pat Scarola instructed Respondents to transfer the $500 earnest money deposit to another piece of property not involving Gwendolyn Taylor- Herbert. Without the prior knowledge or consent of the seller or of the listing broker, Respondents transferred the Scarolas' earnest money deposit to another transaction for the benefit of the purchaser (LPS Investments, Inc.) and not involving the same seller. This was done without even considering whether the seller or the seller's agent might have an interest in the deposit.
At no time prior to the time that the Respondents' transferred the deposit to a different property did the Respondents give the listing broker or the seller an opportunity or notice to make a demand upon the Respondents for the deposit. After the transfer, and after the contract failed to close, the seller and the seller's agent made a demand that the $500 deposit be accounted for and delivered. It was not.
On June 1, 1989, Respondents obtained an offer from Herb Sider, as purchaser, for the property owned by Gwendolyn Taylor-Herbert. That offer was accepted by the seller. The Contract for Sale and Purchase of Real Property provided that a total deposit of $1,000 was to be held in escrow by Stars and Stripes Realty. Respondent Wilk executed that portion of the Contract acknowledging that the first $100 of the earnest money deposit had been received by Respondents.
That representation was false. Sider never gave Respondents the earnest money deposit specified in the Contract, and Respondents failed to advise anyone that the representation in the Contract was false.
Although Respondent Wilk testified that she would "normally" keep $100 of Sider's money in her escrow account to be applied to the various contracts that he entered into through her, there is no evidence that there was $100 in Respondents' escrow account at the time or that it was available to be applied to this Contract. Rather, Respondent Wilk's testimony is accepted that she never received either the initial $100 or the additional $900 deposit monies from Sider for this property.
Herb Sider refused to close. The seller, Gwendolyn Taylor-Herbert, agreed to lower the sales price, and a modified contract was executed between Taylor-Herbert and Sider. Thereafter, Sider again refused to close. At no time did Respondents notify anyone that they did not have an earnest money deposit in escrow for the Taylor-Herbert/Sider transaction.
Diane Quigley, branch manager of Coldwell Banker Residential Real Estate, Inc., sent a letter dated July 11, 1989, to the Respondents transmitting release of deposit receipt forms and instructing Respondents to release the $500 earnest money deposit of LPS Investments, Inc., and the $1,000 earnest money deposit of Herb Sider to the seller Gwendolyn Taylor-Herbert. Respondents ignored that demand letter. By letter dated August 25, 1989, Quigley again wrote to Respondents demanding the release of the Sider and the LPS Investments, Inc., deposits to the seller. That letter referred to the July 11th letter which Respondents had ignored and the numerous phone calls placed by Quigley to Respondents which had not been returned.
On September 13, 1989, Respondents for the first time notified Petitioner of possible conflicting demands. That letter misrepresented the facts of the situation and suggested that the seller and buyer might still be able to strike a deal.
On October 3, 1989, Respondents again wrote to the Florida Real Estate Commission advising that "there is now a conflicting demand" on the deposits relative to the Gwendolyn Taylor-Herbert property. Respondents' letters reveal a lack of understanding of the basics of a real estate contract. Neither letter advised the Commission that Respondents did not have any of the monies in escrow at any rate.
On December 27, 1988, Respondent Wilk made an offer to purchase real property from Bel-Properties, Inc., which offer provided that $100 earnest money deposit would be held in escrow by Stars and Stripes Realty, Inc., and an additional $2,050 earnest money deposit would be placed in the Stars and Stripes escrow account within 72 hours of acceptance. Respondent Wilk executed the portion of the Contract for Sale and Purchase of Real Property acknowledging that the initial $100 deposit had been received. That representation was false.
The Contract which she prepared listed as the buyer "Lori Wilk, a lisenced [sic] real estate broker, and/or assigns." The offer was accepted by the seller on December 30, 1988.
In connection with that offer, Respondent Wilk represented that she was the purchaser when, in fact, she was acting on behalf of the actual purchaser HBS Investments, Inc., a corporation owned, controlled, and operated by Herb Sider. Immediately upon the acceptance of Respondent Wilk's offer, she assigned the sales contract to HBS Investments, Inc. At no time did Respondent Wilk or HBS Investments, Inc., place the $2,150 earnest money deposit in the escrow account of Stars and Stripes Realty, Inc., as represented by Respondent Wilk to the seller and as required by the Contract. Further, at no time did Respondents advise the seller that they did not have an earnest money deposit in the Stars and Stripes escrow account.
On November 28, 1988, Respondent "Wilk, a lisenced [sic] real estate broker, and/or assigns" made an offer to purchase real property from Darlene Farris. Farris accepted that offer on December 6, 1988. That Contract for Sale and Purchase of Real Property provided that an initial deposit of $100 had been placed in the escrow account of Stars and Stripes Realty and that an additional earnest money deposit of $1,900 would be placed in escrow within 72 hours of acceptance. Respondent Wilk executed the portion of the Contract acknowledging that she had received the initial $100 earnest money deposit. That representation was false. In fact, Respondent Wilk never placed any of the
$2,000 earnest money deposit in her escrow account and never advised the seller or the seller's listing broker that no earnest money deposit had been made.
On or about February 2, 1989, Respondents solicited and obtained Willy Pearson as a tenant for the Farris property. Respondents represented to Pearson that the lessor was HBS Investments, Inc. Respondent Wilk prepared a Memorandum to Enter Into a Lease acknowledging the receipt of $550 as a deposit from Pearson, although Respondent Wilk only received $250 from Pearson. When Respondent Wilk received half of the rental deposit, she gave Pearson both a receipt and immediate possession of the property.
Respondents obtained the tenant without the prior knowledge and consent of Darlene Farris, owner of the property. Further Respondents did not notify Farris or Farris' broker that Respondents had rented Farris' property until sometime after Respondents had received the $250 deposit from Pearson and had given him possession of Farris' property.
Neither Respondent Wilk nor HBS Investments, Inc., ever closed on the Farris property. Further, Respondent Wilk never obtained authority from Darlene Farris to obtain or place a tenant in Farris' property.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter of and the parties to this proceeding. Section 120.57(1), Florida Statutes (1990).
Counts I through VI of the Administrative Complaint involve the contract entered into between Gwendolyn Taylor-Herbert and LPS Investments, Inc. Counts I and II allege that Respondent Wilk and Respondent Stars and Stripes, respectively, are guilty of culpable negligence or breach of trust in a business transaction, in violation of Section 475.25(1)(b), Florida Statutes. It is undisputed that Respondents, at the request of Pat Scarola, switched the Scarolas' earnest money deposit from the pending contract with Gwendolyn Taylor- Herbert and applied it to a different real estate transaction without the knowledge or consent of the seller or the seller's broker. The fact that Respondents did not receive a demand from the seller or the seller's broker for the release of the Scarola deposit to them before Respondents released the deposit is irrelevant since any knowledgeable real estate broker would have foreseen the demand to be forthcoming. Petitioner has met its burden of proving Respondents guilty as alleged in Counts I and II of the Administrative Complaint.
Counts III and IV charge Respondent Wilk and Respondent Stars and Stripes, respectively, with having failed to account and deliver a deposit, in violation of Section 475.25(1)(d), Florida Statutes. Petitioner has met its burden as to Counts III and IV. Respondents have never accounted for or delivered the deposit in question.
Counts V and VI charge Respondent Wilk and Respondent Stars and Stripes, respectively, with having failed to maintain trust funds in the real estate brokerage escrow account or some other proper depository until disbursement thereof was properly authorized, in violation of Section 475.25(1)(k), Florida Statutes. Petitioner has met its burden as to these counts. It is uncontroverted that Respondents failed to maintain the earnest money deposit from LPS Investments, Inc., in their escrow account or some other proper depository until disbursement was authorized.
Counts VII through XII of the Administrative Complaint relate to the contract between Herb Sider as purchaser and Gwendolyn Taylor-Herbert as seller. Counts VII and VIII allege that Respondent Wilk and Respondent Stars and Stripes, respectively, are guilty of culpable negligence or breach of trust in a business transaction, in violation of Section 475.25(1)(b), Florida Statutes. Petitioner has met its burden as to these counts. Respondents falsely represented in the contracts between Sider and Taylor-Herbert that $1,000 in earnest money deposits were being held in the Stars and Stripes escrow account. In fact, no monies had been received by Respondents.
Counts IX and X charge Respondent Wilk and Respondent Stars and Stripes, respectively, with having failed to account and deliver a deposit, in violation of Section 475.25(1)(d), Florida Statutes. The evidence is uncontroverted that Respondents failed to account for and deliver the $1,000 deposit which they never received from Herb Sider. Petitioner has met its burden.
Counts XI and XII allege that Respondent Wilk and Respondent Stars and Stripes, respectively, failed 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. Respondents' argument that the monies may have been placed by Sider in an attorney's trust account is irrelevant since the Contract specifically provided that the earnest money deposit from Sider was to be placed in and maintained in the Stars and Stripes escrow account, and Respondent Wilk signed the portion of that Contract acknowledging receipt. That signature was false, and Respondents never notified anyone that the monies had not been placed in Stars and Stripes' escrow account.
Counts XIII and XIV allege that Respondent Wilk and Respondent Stars and Stripes, respectively, failed to notify the Florida Real Estate Commission of a deposit dispute within five working days of the last party's demand, in violation of Rule 21V-10.032, Florida Administrative Code, and, therefore, in violation of Section 475.25(1)(e), Florida Statutes. Petitioner has met its burden of proof as to these counts. As to the Scarola deposit, the "last party's demand" was made by Coldwell Banker at the latest in July of 1989, and was reiterated by letter dated August 25, 1989. Although Respondents' first letter to the Commission written on September 13, 1989, mentions the Scarolas in the caption, the entire letter is about the contract between Sider and Taylor- Herbert. Similarly, Respondents' letter to the Commission dated October 3, 1989, names the Scarolas in the caption, but the letter itself deals with the Sider/Taylor-Herbert transaction.
As to the Sider/Taylor-Herbert transaction, Respondents received a written demand on behalf of the seller and the seller's broker in July of 1989 and again in August of 1989. When Respondents finally contacted the Commission in September, they represented to the Commission that there might not be a problem of conflicting demands and did not actually notify the Commission that there were conflicting demands until October of 1989. Respondents are guilty as alleged in Counts XIII and XIV. It is clear that Respondents have failed to comply with Rule 21V-10.032 or Section 475.25(1)(e).
Counts XV and XVI allege that with regard to the contract between Respondent Wilk and Bel-Properties, Inc., Respondent Wilk and Respondent Stars and Stripes, respectively, are 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, in violation of Section 475.25(1)(b), Florida Statutes. Petitioner has met its burden of proof. Respondent Wilk represented that she was the purchaser when she had no intention of purchasing the property on her own behalf. Similarly, Respondents represented that Respondent Wilk was placing $2,150 in Respondent Stars and Stripes' escrow account as an earnest money deposit on that contract. That representation was false.
Counts XVII and XVIII relate to the contract between Respondent Wilk and Darlene Farris and allege that Respondent Wilk and Respondent Stars and Stripes, respectively, are guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealings by trick, scheme or device, culpable negligence, or breach of trust in a business transaction, in violation of Section 475.25(1)(b), Florida Statutes. Petitioner has met its burden of proof. Respondents falsely represented that $2,000 was being held in the Stars and Stripes escrow account as an earnest money deposit on behalf of Respondent Wilk as the buyer. Additionally, prior to any closing on the property and prior
to seeking permission from the owner of the property, Respondents rented Darlene Farris' property to Willy Pearson. Respondents failed to even notify the owner of the property that they had rented the property until after they had received money from Pearson and had already placed Pearson in possession of Farris' property.
Respondents' violations are not merely technical in nature; rather, they are violations of the most basic responsibilities of licensed real estate brokers in this state. Respondents represented that they were holding earnest money deposits in their trust account when they knew they had not received the earnest money deposits in question; they released escrowed funds without the knowledge or consent of the persons entitled to receive those monies; they failed to notify the Florida Real Estate Commission of conflicting demands and when forced to do so made misrepresentations in their notification letters as to the facts of the situation; and they rented real estate that they did not own or have the right to rent. Respondents' on-going course of unlawful conduct can only evidence either incompetency to act as real estate brokers in the State of Florida due to a lack of understanding of basic real estate transactions or a deliberate disregard of the statutes and rules regulating the conduct of real estate brokers in the state of Florida.
In its Proposed Recommended Order Petitioner recommends that all certificates, licenses, permits, and registrations of Respondent Stars and Stripes Realty, Inc., be revoked. Yet, curiously, Petitioner recommends that Respondent Wilk only be ordered to pay a fine of $2,000 and be placed on probation for a period of one year during which time she shall be required to complete 60 hours of approved real estate post-licensure education courses. No explanation is offered by Petitioner as to why Respondent should only pay a fine while the license for her corporation should be revoked, thereby allowing her to simply open a new business.
Respondent Wilk's testimony at the final hearing does not indicate that she understands what she did wrong in the transactions which were the subject matter of the Administrative Complaint. For example, she seems to believe that there would be no conflicting demands on the Scarola deposit since she had found a subsequent purchaser for the property, a fact which is irrelevant to the rights of the parties to the Scarola/Taylor-Herbert Contract. Similarly, Respondent Wilk admitted at the final hearing that she gave tenant Pearson a receipt for $550 although he had only given her $250 as a deposit on the real property owned by Farris. She admitted that at the time she executed that document the information she placed on it was not correct. Yet, she intended people to rely on it. Similarly, Respondent Wilk's position that Farris ratified the rental of Farris' property after-the-fact (a position contradicted by Respondents' own documentary evidence) totally misses the point that Respondents had no right to rent someone else's property.
Respondent Wilk did testify at the final hearing that since June of 1990 she has taken 55 to 60 hours of additional continuing education and will soon receive a master's degree from Nova University in real estate development and management. However, many of the violations found herein involve false representations, and there is no showing that the advanced real estate courses teach the concept of honesty. It is also reasonable to assume that Respondent Wilk would have learned that one cannot rent someone else's property without the owner's permission long before she completed the educational requirements necessary to obtain her earlier real estate salesman's license and her current real estate broker's license. There is no showing that the advanced real estate
courses Respondent Wilk is taking will afford the public the protection it is entitled to expect from a licensed real estate broker. Respondent Wilk's license, like Stars and Stripes' license, should be revoked.
Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that a Final Order be entered finding Respondents guilty of the allegations contained in the Administrative Complaint filed against them and revoking the licenses of Respondents Lori Wilk and Stars and Stripes Realty, Inc.
RECOMMENDED this 8th day of May, 1991, in Tallahassee, Florida.
LINDA M. RIGOT
Filed with the Clerk of the Division of Administrative Hearings this 8th day of May, 1991.
APPENDIX TO RECOMMENDED ORDER, CASE NO. 90-2468
James H. Gillis, Esquire Department of Professional
Monte K. Rassner, Esquire Rassner, Malove, Rassner, Kramer
Darlene F. Keller, Division Director Department of Professional Regulation Division of Real Estate
P.O. Box 1900
All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should contact the agency that will issue the final order in this case concerning agency rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.
