STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

vs. ) CASE NO. 90-3271

)

STEWART J. LOVE )

T/A LOVE REALTY, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice this cause came on for formal hearing before P. Michael Ruff, duly-designated Hearing Officer of the Division of Administrative Hearings, on October 10, 1990, in Pensacola, Florida.

APPEARANCES

For Petitioner: Janine B. Myrick, Esq.

Senior Attorney Florida Department of

Professional Regulation Division of Real Estate

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

For Respondent: Stewart J. Love, pro se

t/a Love Realty 2120 Westfield Road

Pensacola, Florida 32505 STATEMENT OF THE ISSUE

The issues in this proceeding concern whether the Respondent's real estate licensure should be disciplined for alleged fraud, misrepresentation, concealment, false promises or pretenses, dishonest dealing, culpable negligence or breach of trust in a business transaction, in alleged violation of Subsection 475.25(1)(b), Florida Statutes; whether his licensure should be disciplined for having been found guilty of a crime directly related to the activities of a licensed real estate broker in alleged violation of Section 475.25(1)(f), Florida Statutes, and whether his licensure should be disciplined because of alleged guilt, for a second time, of misconduct warranting suspension or having been found guilty of a course of conduct or practices which show that the Respondent is incompetent, negligent, dishonest or untruthful, etc. in alleged violation of Subsection 475.25(1)(o), Florida Statutes.

PRELIMINARY STATEMENT

This cause arose upon the filing of an Administrative Complaint against the Respondent on April 26, 1990 in which the Petitioner alleges the Respondent has violated the above referenced subsections of Chapter 475.25, Florida Statutes.

The Petitioner thus seeks to impose discipline upon the Respondent's licensure in the manner provided in Section 475.25, Florida Statutes. The Respondent disputed the charges and requested a formal proceeding pursuant to Section 120.57(1), Florida Statutes. The cause was assigned to the undersigned Hearing Officer and a formal hearing ensued.

The cause proceeded to formal hearing as noticed at which the Petitioner presented the testimony of Theresa Winingar and Donald Winingar, her husband. The Respondent, Stewart J. Love, presented his own testimony and additionally cross-examined the witnesses presented by the Petitioner. Petitioner's Exhibits one through eight were received into evidence and the Respondent's Exhibits one through three were received into evidence. The parties availed themselves of the right to file proposed findings of fact and conclusions of law in the form of proposed recommended orders at the conclusion of the proceedings, requesting an extended period of time to file those pleadings, concomitantly waiving the requirements of Rule 28-5.402, Florida Administrative Code. The proposed findings of fact submitted by the parties have been treated in this Recommended Order and addressed in the Appendix incorporated by reference herein.

FINDINGS OF FACT

1. The Petitioner is an agency of the State of Florida charged, under Chapter 475, Florida Statutes, with enforcing the licensure standards embodied in Chapter 475, and regulating the manner of practice of licensed real estate brokers pursuant to the standards enumerated in Chapter 475, Florida Statutes and the rules promulgated pursuant thereto. The Respondent, Stewart J. Love, at all times pertinent hereto, has been a licensed real estate broker in the State of Florida, holding license number 0145076. That license is issued to Stewart

   J. Love, t/a Love Realty, 2120 Westfield Road, Pensacola, Florida 32505.

   
   

2. A previous Administrative Complaint was filed against the Respondent by Petitioner on June 23, 1988. That Complaint, in essence, also charged two violations of Section 475.25(1)(b), Florida Statutes involving alleged fraud and misrepresentation, concealment, dishonest dealing, culpable negligence and the like It involved two separate real estate transactions which the Respondent engaged in. The first transaction concerned a piece of property Respondent purchased with an existing mortgage and shortly thereafter resold. The Respondent was charged with failing to assume the existing mortgage and, in essence, with not keeping the mortgage payments current, with receiving funds from his purchasers without properly accounting for them in proper escrow accounts and with failing to formally consummate the sale, as well as with issuing a check to the mortgagee bank holding the delinquent mortgage upon insufficient funds. With regard to the other transaction, the Respondent, in essence, was charged with purchasing a piece of property, recording his warranty deed from the sellers, but never properly paying the sellers monies that were due them for the property nor carrying through with the promise to assume the mortgage on that piece of property. That complaint culminated in DOAH Case No. 88-4570, in which the Respondent was charged in pertinent part with violations of Section 475.25(1)(b), Florida Statutes. During the course of that proceeding the Petitioner and Respondent entered into negotiations such that a stipulated adjudication of that proceeding by the agency was effected. The Respondent neither admitted nor denied the charges, but rather agreed to a fine of $500.00,

   as well as to making restitution of all monies owed to the alleged injured parties and to having his license being placed on probationary status for a period of one year for "culpable negligence" in violation of 475.25(1)(b), Florida Statutes. A final order is in evidence as part of Petitioner's Exhibit

   1 in this proceeding.

   
   

3. Donald and Teresa Winingar, husband and wife, in 1986 found themselves in rather straitened financial circumstances. Their home mortgage was in arrears and was threatened by foreclosure by the mortgagee. The ultimate result of their financial problems caused them to search for a new place to reside. They located six acres of land owned by Donna Day Bowers. The acreage had a small frame house approximately 20 years of age on it. They began negotiating with Ms. Bowers concerning purchasing the property from her The Winingars discussed the price with Ms. Bowers and ultimately a purchase price of approximately $12,000.00 was agreed upon. The Winingars realized that they could not pay cash for the property but would have to secure financing arrangements in order to purchase it. The Winingars had approximately $4,500.00 in cash and at first attempted to have the balance financed by the owner and seller, Ms. Bowers. That arrangement did not come to fruition and so the Winingars searched for another source of funds in order to finance the purchase of the Bowers property in this search they somehow came in contact with the Respondent Stewart Love, a real estate broker. After negotiations with Mr. Love he agreed to finance the purchase of the Bowers property for the Winingars.

   
   

4. This resulted in a verbal agreement entered into between the Winingars and the Respondent whereby the Winingars would pay Love $4,500.00 in cash and he would finance the balance of $8,500.00 of the purchase price by a mortgage. Love, or the corporation of which he was president and part owner, Courthouse Investments, Inc., would collect interest on the $8,500.00 mortgage and note from the Winingars. Love also assessed the Winingars a $2,000.00 fee for handling the transaction, the purpose of the fee being unclear. It was apparently some sort of "broker's fee," although Love did not represent the Winingars as a realtor.

   
   

5. On October 16, 1986 Respondent entered into an agreement called a "Warranty Deed to Trustee Under Land Trust Agreement pursuant to Section 689.071, Florida Statues," with the seller of the property, Donna Day. That instrument conveyed title to the property to the Respondent as Trustee in fee simple. The "warranty deed to trustee" document granted the trustee, Love, full power and authority to sell, lease, encumber and otherwise manage and dispose of the property in accordance with the terms of that instrument and with a trust agreement. The trust agreement itself, providing for powers and duties of the trustee and beneficiary of the trust is not evidence and the terms of it are unknown.

   
   

6. In any event, having purchased the property from Donna Day (also known as Donna Day Bowers) the Respondent the following day, October 17, 1986, agreed to sell the property to Donald and Teresa Winingar. The Winingars on that day gave the Respondent $4,500.00 in cash as a down payment for the Bowers property. Thereafter, on or about October 31, 1986, the Winingars executed a mortgage note for the amount of $8,500.00 remaining on the purchase price, payable in favor of Courthouse Investments, Inc., a corporation partially owned by and represented by the Respondent Love and of which the Respondent was President. That mortgage note provides that the note was to be for a principal balance of $8,500.00 with payments of $130.00 per month for 265 months at an interest rate of 18% per annum. The note provided for no prepayment penalties and for $6.00 for late fees for each late payment.

7. Additionally, the Winingars executed a promissory note payable to Stewart J. Love for the above-mentioned fee, in the amount of $2,000.00. That note provided that one balloon payment was to be due six years from October 30, 1986 at the rate of 12% per annum, payable in one payment.

   
   

8. The Winingars began making monthly payments on the mortgage note of

   $130.00 per month and made those payments to Stewart J. Love. They were frequently behind in their payments but made payments sporadically until approximately May of 1988.

   
   

9. When the Winingars and Mr. Love first engaged in negotiating the financing arrangement, Love informed the Winingars that he would have his attorney draft an agreement whereby the property would be held in trust by Love on behalf of the Winingars allegedly so that it could not be attached by any creditors of the Winingars. This was apparently because the Winingars were involved in a foreclosure action concerning their previous residential property and feared a deficiency judgment from that foreclosure proceeding which might endanger their rights to the land in question. Whether or not their credit was in such peril, Love assured them that he would obtain title to the property from the seller in the form of a trust arrangement, with the beneficial interest to be conveyed to the Winingars, in order to allegedly protect their interest in the six acres from the claims of creditors. Love then at some point showed a photocopy of a document entitled "Warranty Deed to Trustee Under Land Trust Agreement pursuant to Section 689.071, Florida Statutes," to the Winingars and advised them that form of agreement would be drafted to represent their mutual arrangement regarding the sale and ownership of the property, pending final payment by the Winingars.

   
   

10. After the initial down payment of $4,500.00 was made by the Winingars, however, they had to make repeated demands of the Respondent for the execution of an agreement or contract to to formalize their arrangement regarding the purchasing of the Bowers property. The purchase arrangements from October 1986 to May 1987 were merely verbal aside from the execution of the mortgage note in question.

    
    

11. Finally, on May 1, 1987, a document entitled "Agreement to Convey Beneficial Interest" was signed and executed by the Respondent as President of Courthouse Investments, Inc., "beneficiary," and the Winingars. That agreement provided, in pertinent part, that the total purchase price should be $8,500.00, which acknowledged, in effect, that the remaining $4,500.00 of the originally agreed upon purchase price had already been paid. The agreement also provided that when the principal sum of the purchase price had been paid in full that the beneficiary would instruct the trustee (Stewart Love) to deliver to the grantees (the Winingars) a warranty deed showing good and marketable title to the property. The beneficiary held the beneficial equitable interest in the property with the legal title being held by the Respondent as trustee. The beneficiary was Courthouse Investments, Inc., of which the trustee, the Respondent, was the President. He signed the agreement to convey beneficial interest as the President of that corporation. The agreement also provided that the grantees would be, permitted to go into possession of the property immediately on the date of its execution (May 1, 1987) and would assume all liability for insurance, taxes and maintenance after that date. ,It was also expressly agreed that all oil, gas and mineral rights were to be conveyed to the grantee. Presumably, that meant that all gas and mineral rights were to be conveyed upon the conveying of the warranty deed to the grantees when the purchase price was paid in full. In any event, the agreement clearly provided

    that when the principal sum of the purchase price was paid in full that a warranty deed conveying good and marketable title would be immediately conveyed to the grantees and, in that connection, the mortgage note already executed at that time by the grantees and the respondent provided that there would be no penalty for early payment of the purchase price or principal amount of the mortgage note referenced in the Agreement to Convey Beneficial Interest.

    
    

12. This Agreement to Convey Beneficial Interest reveals additionally that Courthouse Investments, Inc. was the beneficiary of the trust set up by the above-mentioned warranty deed instrument from the original owner to the Respondent, as well as the fact that the Respondent is the President of the beneficiary corporation. Thus, there is no doubt, based upon the terms of the Agreement to Convey Beneficial Interest and the manner in which it was executed by the Respondent as President of the beneficiary corporation, that the Respondent knew that the parties thereto had agreed that all oil, gas and mineral rights were to be conveyed to the grantee upon the payment of the principal sum of the mortgage involved and that the trustee (the Respondent) would be obligated to transfer fee simple title to the grantees by warranty deed upon full payment, at any time, by the grantees.

    
    

13. The "Warranty Deed to Trustee . . . " referenced above, however, clearly reveals that the seller, Donna Day (a/k/a Donna Day Bowers) had retained one-half the mineral rights and thus neither the Respondent/Trustee nor the beneficiary corporation had any ability to convey all gas and mineral rights to the grantees simply because the Respondent as trustee with legal title and the beneficiary corporation, the holder of equitable title, only owned one-half of the oil, gas and mineral rights. Since the Respondent/trustee arranged and conducted the purchase transaction with Ms. Bowers whereby he took fee simple title as trustee to the property in question under an instrument which revealed on its face that Ms. Bowers retained half the mineral rights, and since that same Respondent executed the agreement to convey beneficial interest (analogous to a contract for deed) to the Winingars as president of the beneficiary corporation which was the Grantor under that instrument purporting to convey all oil, gas and mineral rights (upon payment of the full purchase price), the Respondent is chargeable with knowledge that the representation concerning oil, gas and mineral rights contained in the Agreement to Convey Beneficial Interest did not accurately represent the ownership situation with regard to those oil, gas and mineral rights.

    
    

14. After the Winingars made the initial down payment of $4,500.00 cash in October 1986 and during the time when they were making repeated demands for the execution of a contract to formalize their agreement regarding purchasing of the Bowers property, Mr. Love brought a representative of a financial institution known as "C&S Family Credit" (C&S) to the Winingars' home, sometime in January 1987. This representative and the Respondent informed Teresa Winingar that C&S Family Credit was considering the purchase of their mortgage from the Respondent. The Respondent and the C&S representative, however, advised Ms. Winingar to continue making her monthly payments of $130.00 to the Respondent and not to C&S.

    
    

15. The Following year, in May, 1988, Teresa Winingar went to the Respondent's office to pay off the balance of the $8,500.00 mortgage note. Mr. Love informed her at that time that he could not accept the payoff because he did not have a clear title to the property to transfer to the Winingars at that time. The Agreement to Convey Beneficial Interest required the Respondent to transfer marketable title by general warranty deed upon tender of the payoff of the principal balance on the mortgage note. This he did not do.

16. Thereafter, in June of 1988, a representative from C&S again visited the Winingars at their home. This time he informed Mrs. Winingar that his company was about to foreclose on the property at issue because a mortgage on the Winingar's property was in arrears. This was a mortgage executed by the Respondent in favor of C&S as mortgagee and which encumbered the property the Winingars were purchasing. At some point after that June 1988 visit by the C&S representative, C&S filed a foreclosure action against Stewart J. Love and the Winingars. Prior to the May 1988 offer by Mrs. Winingar to pay off the mortgage note, the Respondent's because he could not convey clear title, and the visit by the C&S representative informing Ms. Winingar of the delinquency of the Respondent's mortgage, the Winingars had no knowledge that the Respondent had executed a mortgage on their property in favor of another party.

    
    

17. The mortgage executed in favor of C&S encompassed several pieces of property owned by the Respondent, including the piece of property being purchased by the Winingars. The evidence does not reflect that the Respondent made any arrangements with C&S to obtain a partial release of that mortgage as to the Winingar's property at such point as they should tender full payment of the balance of their purchase money mortgage note. While the Respondent, as trustee and holder of fee simple title to the Winingars' property might have had legal authority to mortgage the property to C&S, he was equally obligated under the agreement to convey beneficial interest to insure that their equitable interest in the property was protected, such that he would be able to convey good and marketable title by warranty deed upon the payment by the Winingars of the principal sum of the purchase price. This he was unable to do because he had failed to make arrangements with C&S for a partial release of mortgage or other means of insuring that the Winingars' property was unencumbered at the point of their tendering payment of the remaining purchase price. This negligent failure to insure that the Winingars' equitable interest in the property was protected resulted in the foreclosure action filed by C&S against the Respondent and the Winingars' interest in the property because the Respondent had not made payments on the C&S mortgage in a timely manner.

    
    

18. The conveyance of fee simple title to the Respondent by the "Florida Land Trust Agreement" containing the reservation in the original owner of one- half of the oil, gas and mineral rights was recorded, so that any prospective purchaser or his representative searching the title of the subject property could have determined that the Respondent only owned one-half of the mineral rights to the property. Nevertheless, the Winingars were under the impression that they were to receive all mineral rights to the property. This impression may have arisen from the fact that the clause in the agreement to convey beneficial interest provides that . . . "All oil, gas and mineral rights are to be conveyed to the grantee." This agreement appears to be a form or "fill-in- the-blank" agreement prepared by the Respondent himself and not an attorney. Thus, it appears that the mineral rights clause referenced above is a "standard one" which was probably inadvertently left in that form in the agreement when it was executed due to the Respondent's negligence. It has not been established that he intentionally misrepresented the state of his ownership of mineral rights which he would be able to convey to the grantees.

    
    

19. In fact, some eighteen months after the original purchase transaction between the Winingars, the Respondent and Courthouse Investments, Inc. was entered into, the Respondent executed the renewal of a preexisting oil lease with regard to the subject property. He, or his corporation, collected the sum of $238.00 lease payment as a result of that renewal. At the time of that lease renewal the Respondent still had legal title to the property and one-half of the

    mineral rights. This would not have been the case, however, had he timely transferred title to the Winingars in May of 1988 when they tendered payment in full of the remaining balance of the purchase price and at which point he was unable to convey marketable title for the reasons delineated above. In any event, the Winingars were shown to have been entitled to the Respondent's mineral rights at the point of their tender of full payment of the remaining purchase price in May of 1988, at which point title should have been transferred, together with the mineral rights held by the Respondent, which did not occur.

    
    

20. As a result of the Respondent's failure to convey title upon the fulfillment of the condition in the above-referenced agreement regarding payment and the dispute which arose between the parties concerning the mineral rights and the proceeds from the lease, the Winingars apparently obtained counsel and instituted legal proceedings against the Respondent of an undisclosed nature.

    
    

21. Criminal proceedings were instituted by the State's attorney against the Respondent. These proceedings resulted in a plea of "Nolo Contendere" by the Respondent in order to avoid the expense and anguish of trial and was a negotiated settlement of the criminal charges. Through the plea negotiation arrangement which was accepted by the Court, on February 14, 1990, an order withholding adjudication of guilt and placing the defendant (Respondent) on probation was entered in the case of the State of Florida v. Stewart J. Love, Case NO. 88-5765 CFA. See Petitioner's exhibit (3) in evidence. That order was entered pursuant to the plea of Nolo Contendere entered by the Respondent to the offense of petit theft. The subject matter of the theft charge was the $238.00 lease payment which the Respondent had maintained he or his corporation was entitled to and which the Winingars believed they were entitled to. In any event, the Respondent was placed on probation for a period of six months and was ordered to pay restitution in the amount of the $238.00 to the Winingars. He was also ordered to pay certain costs and was ordered to set a firm closing date by which the Winingars could obtain clear title to the property upon their payment of the balance due, as well as applicable closing costs, including one- half title insurance. The Respondent was ordered by the Court to attend and assist in the closing of the transaction. The Court also ordered that the Respondent would not be liable to clear any encumbrances to the title to the property which had been caused by the Winingars. Ultimately, the Winingars failed to tender the remaining purchase price and therefore the closing never occurred.

    
    

    CONCLUSIONS OF LAW

    
    

22. The Division of Administrative Hearings has jurisdiction of the subject matter of the parties to this proceeding. Section 120.57(1), Florida Statutes, (1989).

    
    

23. Subsection 475.25, Florida Statutes (1989) provides that the Petitioner may suspend the license for a period not exceeding ten years; revoke a license; impose an administrative fine not to exceed $1,000.00 for each count or separate offense; and may impose a reprimand or any or all of the foregoing for violations of subsections 475.25(1)(b)(f), and (o), Florida Statutes.

    
    

24. Subsection 475.25(1)(b), Florida Statutes (1989) proscribes fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence or breach of trust in a business transaction.

25. Subsection 475.25(1)(f), Florida Statutes (1989) proscribes being convicted or found guilty, regardless of adjudication, of a crime in any jurisdiction which directly relates to the activities of a licensed real estate broker, salesman or appraiser or involves moral turpitude, fraudulent or dishonest dealing. Any plea of Nolo Contendere shall be considered a conviction for purposes of that paragraph.

    
    

26. Subsection 475.25(1)(o), Florida Statutes proscribes being found guilty for a second time of any misconduct which warrants suspension or being found guilty of a course of conduct or practices which shows that a broker is so incompetent, negligent, dishonest or untruthful that the money, property, transactions and rights of investors or others with whom he may sustain a confidential relation, may not be safely entrusted to him.

    
    

27. License disciplinary proceedings involving the potential loss of the valuable right to practice a livelihood or profession have been determined by the courts to be penal in nature. State Ex rel. Vining v. Florida Real Estate Commission, 281 So.2d 487 (Fla. 1973). The burden of proof in such proceedings is on the Petitioner/agency such that the factual and legal allegations of the Administrative Complaint must be supported by clear and convincing evidence. See Balino v. Department of Health and Rehabilitative Services, 348 So.2d 349 (Fla. 1st DCA 1977); Hel Heifetz d/b/a Key Wester Inn v. Department of Business Regulation, Division of Alcoholic Beverages and Tobacco, 475 So.2d 1277 (Fla. 1st DCA 1985), and Ferris v. Turlington, 510 So.2d 292 (Fla. 1987).

    
    

28. The above findings of fact show that the Winingars gave the Respondent

    $4,500.00 as a down payment for purchase of the subject property and made monthly payments of $130.00 pursuant to the mortgage note executed by them and held by the Respondent, although they were frequently behind in their payments. They verbally agreed to an arrangement whereby legal title to the subject property would be held by the Respondent in trust and that by agreement they would be conveyed a general warranty deed with good marketable title on their payment of the full purchase price. It was further agreed that there would be no prepayment penalty and this provision was inserted in the mortgage note. It was understood between the parties that they could pay the entire amount of the purchase price at any time, at which point the Respondent, as Trustee, would convey to them a warranty deed with good and marketable title. This arrangement was belatedly formalized into the written Agreement to Convey Beneficial Interest dated May 1, 1987. While this agreement was between the corporate beneficiary of the Florida land trust, (of which the Respondent was trustee), the Respondent is chargeable with knowledge of and liability under its terms because he executed the agreement as President of the beneficiary corporation.

    That agreement conveyed possession of the property to the Winingars, and provided that payment of the remaining $8,500.00 balance of the purchase price would result in the trustee delivering to the Winingars the warranty deed to the property. Soon after his acceptance of the $4,500.00 down payment and the execution of the mortgage note and acceptance of monthly payments on the property from the Winingars, the Respondent entered into the mortgage with C&S as delineated in the above Findings of Fact. This was probably some time around January of 1987, as that was the approximate time when the Respondent brought the representative of C&S to visit the Winingars and informed them that he was contemplating "selling their mortgage" to C&S. In reality, he had mortgaged the property which they were in the process of purchasing to C&S. While the Respondent had legal authority to mortgage the property to C&S, he was also under a legal and fiduciary obligation to insure that the interest of the purchasers in the property was protected from the encumbrance of that mortgage. He should have done this by insuring that he had a legal arrangement with C&S

    whereby a partial release of mortgage could be issued by the lender upon payment by the Winingars of the purchase price for their property to the Respondent so that the title to their property could be conveyed to them free and clear of the encumbrance of that C&S mortgage. He could also protect their interest by insuring that the payments on that mortgage were kept current in order to prevent arrearage and foreclosure. The Respondent failed to provide either protection to the interests of the Winingars. There is no evidence that he had arranged with C&S that the encumbrance of their mortgage could be released as to the subject property at any time, which would have accommodated the provision in the agreement with the Winingars providing that they could pay off their purchase price at any time and gain good and marketable title. The Respondent also allowed the mortgage to C&S to become delinquent which ultimately resulted in a foreclosure action which endangered the equitable interest of the Winingars in their property. The encumbrance of the C&S mortgage on the property also prevented the Winingars from being able to timely gain fee simple marketable title to the property when they tendered payment in full of their purchase price balance in May of 1988.

    
    

29. If the Respondent had dealt with them fairly and openly, he would have made arrangements with C&S to remove the lien of the C&S mortgage from their property so that title could have been conveyed to them at that time free of encumbrance, which would have saved their property from the risk of foreclosure, which ultimately resulted. This is a clear departure from acceptable, professional practice standards for realtors envisioned by Section 475.25(1)(b) quoted above and, because of the fiduciary duty owed the Winingars, constitutes culpable negligence and a breach of trust in a business transaction, regardless of the fact the Respondent ultimately brought the payments on the C&S mortgage current add regardless of the fact that the Winingars ultimately failed to pay the balance of their purchase price as of the date of the hearing.

    
    

30. The Agreement to Convey Beneficial Interest constituted an executory contract for the sale of land and conveyance of good and marketable title between the beneficiary corporation of which the Respondent was president and the purchaser. This trust conveyance by which the Respondent was trustee for the beneficiary corporation of which he was president, when it is considered together with the agreement to Convey Beneficial Interest, establishes that there was a trust relationship between the Respondent and the purchasers, the Winingars, whereby the trustee, had a fiduciary duty to them to protect and insure that good and marketable title could be conveyed to them upon the occurrence of the condition precedent involved (payment). The Respondent breached that trust relationship by encumbering the property without the knowledge of the purchasers and, although he had a legal right to encumber it with a mortgage, since he was record title holder, with failing to insure that the encumbrance did not endanger their equitable interest in the property. The rights of a purchaser under a executory contract for the sale of real property such as this have been held consistently to constitute an equitable interest in real estate, that is, equitable title. See 37 Florida Jur 2d, Sections 1 through 17; Sections 124 through 125; Bauman Peacock, 80 So.2d 365 (Fla. 1955); Holbrook v. Betton, 5 Fla. 99 (1853).

    
    

31. The Respondent's failure to maintain the currency of the mortgage payments to C&S, complicated by his failure to timely convey good and marketable title to the Winingars when they tendered full payment of the purchase price under the above-referenced agreement, thus imperiled their equitable interest in the property and their right to use, possess and enjoy that property, by the risk of the foreclosure action and, as such, this conduct constituted culpable

    negligence and a breach of trust in a business transaction. In construing Subsection 475.25(1)(b), Florida Statutes, the Court of Appeal for the First District has defined the duties of a real estate broker as follows:

    
    

    The Statute is not ambiguous, and the words used therein must be construed according to their usual and natural meaning. It requires nothing more of a real estate dealer or broker than honest, open and fair relationship with his client, such as is normally expected of a businessman of sound integrity. Rivard v. McCoy, 212 So.2d 652, 674 (1st DCA 1968).

    
    

32. Respondent's actions, although they may riot have been intentionally fraudulent or dishonest did, however, amount to culpable negligent, untrustworthy conduct with regard to the subject transactions and were antithetical to an open and fair relationship with the purchasers. Although the purchasers were not his clients in a strict broker-client relationship sense, the Respondent cannot evade responsibility for his conduct in this transaction merely because his actions were not those of a real estate broker representing a client. It was held in LaRossa v. Department of Professional Regulation, Division of Real Estate, 475 So.2d 322, 324 (3rd DCA 1985) that "a register" real estate broker may be disciplined not only for dishonest conduct in transactions in which his only interest is as a broker, but also for such conduct in his own personal business affairs. [cases cited omitted]." Although the Respondent may not have engaged in outright intentional, dishonest conduct, his failure to comply with the terms of the Agreement to Convey Beneficial Interest and the mortgage note was clearly culpably negligent and constituted a breach of his trust relationship to the purchasers.

    
    

33. It has also been established by the above Findings of Fact that the Respondent is guilty of a violation of Subsection 475.25(1)(f), Florida Statutes by being found guilty, regardless of whether adjudication was withheld, under the specific statutory provision which provides "any plea of nolo contendere shall be considered a conviction for purposes of this paragraph." The Respondent plead nolo contendere to a charge oil petit theft. Additionally, the above Findings of Fact established that the Respondent is guilty of a violation of Section 475.25(1)(o), Florida Statutes, by being disciplined by the Florida Real Estate Commission in an earlier proceeding for culpable negligence and ordered to pay restitution to the victims in that case. Inasmuch as real estate licensees in Florida occupy a legal status with recognized privileges and responsibilities and belong to a privileged class, they are held to a high standard of ethical conduct and qualification. The law requires that such licensees so conduct their professional activities as to appear honest, truthful, trustworthy, of good character and with good reputations for fair dealing. See Zichlin v. Dill, 25 So.2d 4 (Fla. 2nd DCA 1946); McKnight v. Florida Real Estate Commission, 209 So.2d 199 (Fla. 2nd DCA 1967); Shelton v. Florida Real Estate Commission, 120 So.2d 191 (Fla. 2nd DCA 1960). The Respondent's conduct in the above particular instance does not establish that his mode of practice is consistently characterized by trustworthiness and a good reputation for fair dealing, and the Petitioner's proof being clear and convincing in establishing the above-referenced violations, a substantial penalty is warranted. Accordingly, in consideration of the fact that the although not engaging in intentional fraudulent or dishonest or deceitful

    conduct, committed a breach of trust in c4 business transaction, culpable negligence, and the other violations mentioned in paragraphs (f) and (o) of the above cited Statutes, it is therefore

    
    

34. Recommended that a Final Order be entered by the State of Florida Department of Professional Regulation, Division of Real Estate, finding the Respondent guilty of the charged violations in accordance with the considerations, findings and conclusions expressed above, and that his license be suspended for a period of one year.

DONE AND ENTERED this 5th day of February, 1991, in Tallahassee, Leon County, Florida.

P. MICHAEL RUFF 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 5th day of February, 1991.

APPENDIX

Petitioner's Proposed Findings of Fact Proposed Finding of Fact Number 1-23 Accepted.

24 Rejected as subordinate to the hearing officer's Findings of Fact on the

subject matter.

25-26 Accepted

27-30 Rejected as subordinate to the hearing officer's Findings of Fact on the subject matter.

1. Accepted.

2. Accepted.

33-34 Rejected as not clearly established by the clear and convincing evidence of record.

35 Accepted.

The Respondent's Proposed Findings of Fact Proposed Finding of Fact Number 1-3 Accepted but not material to resolution of the material issues presented.

1. Accepted.

2. Accepted.

3. Accepted.

8-11 (There is no NO. 7) Accepted.

12 Accepted, but immaterial.

13-15 Accepted, but immaterial.

16 Accepted.

17-22 Accepted, but not really material to resolution of the issues presented for adjudication.

23-25 Accepted. 26 Accepted 27 Rejected as constituting argument rather than a proposed finding of fact. 28-29 Accepted, but immaterial.

COPIES FURNISHED:

Darlene F. Keller Division Director

Department of Professional Regulation Division of Real Estate

Post Office Box 1900 Orlando, Florida 32802

Kenneth E. Easley, Esq. General Counsel

Department of Professional Regulation 1940 North Monroe Street

Tallahassee, FL 32399-0792

Janine B. Myrick, Esq. Senior Attorney

Florida Department of Professional Regulation Division of Real Estate

Post Office Box 1900 Orlando, Florida 32802

Stewart J. Love, pro se t/a Love Realty

2110 Westfield Road

Pensacola, Florida 32505

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

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.

Docket for Case No: 90-003271

Orders for Case No: 90-003271