and 475.25(1)(e), Florida Statutes. Counts III and IV of the Administrative Complaint alleged that Respondent Batchelor and Respondent Adventure Properties, Inc., respectively, were guilty of fraud, misrepresentation, concealment, false promises, false pretenses and dishonest dealing by trick, scheme or device, in a business transaction in violation of Section 475.25(1)(b), Florida Statutes.
At the hearing, Petitioner offered ten exhibits which were accepted into evidence without objection. The parties offered one composite joint exhibit which was accepted as a late- filed exhibit. Respondent offered three exhibits, each of which was accepted into evidence. Petitioner presented the testimony of Joel Wingate, Sharon Thayer, and Terry Giles. Mr. Wingate was a party to the subject transaction while Ms. Thayer and Ms. Giles are investigators employed by Petitioner. Respondent Batchelor testified on her own behalf and also presented the testimony of William S. Vander Meer, a general contractor and business associate of Ms. Batchelor. Official recognition was taken of Section 20.30 and Chapters 120, 455, and 475, Florida Statutes.
A transcript of the proceedings was filed on October 29, 1990. Rulings on the parties' proposed findings of fact may be found in the Appendix to this Recommended Order.
Petitioner is a state government licensing and regulatory agency charged with the responsibility and duty to prosecute Administrative Complaints related to the real estate profession pursuant to the laws of the State of Florida.
Respondent Valyne Batchelor is now and was at all times material hereto a licensed real estate broker in the State of Florida, having been issued license number 0311190 in accordance with Chapter 475, Florida Statutes. The last license issued to Respondent Batchelor was in care of Adventure Properties, Inc., 10800 N. Military Trail, Palm Beach Gardens, Florida 33410.
Respondent Adventure Properties, Inc. was at all times pertinent to this proceeding a corporation registered as a real estate broker in the State of Florida having been issued license number 0238654 in accordance with Chapter 475, Florida Statutes. The last license issued to Respondent Adventure Properties, Inc., was at the address of 10800 N. Military Trail, Palm Beach Gardens, Florida 33410.
At all times pertinent hereto, Respondent Batchelor was licensed and operating as a qualifying broker and officer of Respondent Adventure Properties, Inc.
At all times pertinent hereto, Respondent Batchelor was a one-half owner of Dream Home Builders of Royal Palm Beach, Inc. (Dream Home).
Joel B. Wingate was in the land clearing business and had done work prior to September 1988 for Dream Home and Dream Home's subsidiary, Redi Concrete.
On September 18, 1988, Dream Home, the owner of a house located at 5510 Royal Palm Beach Boulevard, Royal Palm Beach, Florida, entered into a contract to sell that house to Joel B. Wingate, his wife, Eva C. Wingate, and his mother, Sarah F. Wingate.
The contract reflected that the purchase price of the property was
$87,400. The contract reflected that the sum of $4,400 was received by Adventure Properties as a deposit. The balance of the purchase price was to be paid by a first mortgage in the amount of $69,900 to be obtained by the Buyers from a lending institution and by a second mortgage in favor of Seller in the amount of $13,100 that was to be amortized over a period of 30 years with a balloon payment at the end of 5 years.
Respondent Batchelor executed the contract on behalf of Adventure Properties and on behalf of Dream Home. In addition, Respondent Batchelor signed a statement on the face of the contract which acknowledged receipt of the deposit that was to have been held in escrow.
The sum of $4,400 was not paid over to Respondent Adventure Properties or to Respondent Batchelor by the Wingates at the time the contract was executed and there never was a deposit made into the escrow account of Adventure Properties. Instead, Mr. Wingate agreed to pay the sum of $4,400.00 prior to the closing from sums he would earn from work he was performing for Redi Concrete. All parties pertinent to this transaction, including the bank that financed the first mortgage, knew that the Wingates had not paid that sum.
The Wingates applied for financing with Security First Federal for financing of the first mortgage. The application for the loan was in the name of Sarah F. Wingate because of Joel Wingate's poor credit. On September 17, 1988, a "Good Faith Estimate of Settlement Charges" was prepared by Security First Federal which estimated that the settlement charges that would be due from the Wingates at closing would equal $4,328.30.
On September 19, 1988, the Wingates, as buyer, and Dream Home, as seller, executed an addendum to the contract which provided that the Seller would pay up to $4,400 in closing costs and that the amount of the second mortgage would be increased from the sum of $13,100 to the sum of $17,500. The addendum provided, in pertinent part, as follows:
Seller to pay up to $4,400 in closing costs.
Buyer agrees to give seller a second mortgage in the amount of $17,500. Said Mortgage to be for a term of one year from date of contract and is to be paid as follows:
Buyer agrees to do work for Redi Concrete, Inc. consisting of clearing, digging of necessary fill, building and compact ion of house pads according to Palm Beach County Building Codes, all grading and trash removal at contract price of $2,450 per lot. Of this amount
$1,250 is to be applied to second mortgage until mortgage is paid in full. Additionally, any unused portion of the
$4,400 allowance for closing costs not
used for that purpose is to be applied to the second mortgage of $17,500.
If any portion of this agreement is not kept, Redi Concrete, Inc. reserves the option to impose interest at the rate of 10% per annum against any unpaid amount
of second mortgage.
The fact that the amount of closing costs Dream Homes agreed to pay on behalf of the Wingates ($4,400) was identical to the amount that the Wingates were supposed to pay as a deposit ($4,400) was coincidence. Respondent Batchelor executed the addendum to the contract in her capacity as an officer of Dream Home. There was no attempt on the part of Respondents to deceive the Wingates, who had agreed to this method of financing the purchase.
On October 24, 1990, the transaction closed. The buyers executed the first mortgage in favor of Security First Federal Savings and Loan Association in the principal amount of $69,900, and a second purchase money mortgage in favor of Dream Home in the principal amount of $13,100. (There was no explanation as to why the second mortgage that was executed at the closing was for $13,100 instead of for $17,500. Dream Home's letter of October 27, 1988, to the Wingates, signed by Ms. Batchelor, refers to a revised second mortgage that should be executed by the Wingates and recorded. There was no evidence that the revised second mortgage was, in fact, delivered to the Wingates or executed by them.) The second mortgage note required monthly payments commencing November 24, 1988, with a balloon payment of $12,965.22 due on October 24, 1991.
The Wingates were aware of the manner in which their purchase of this property was financed. There was insufficient evidence to establish that Respondents dealt with the Wingates in anything other than an honest, straightforward manner. The unusual owner financing involved in this transaction was an attempt to accommodate the buyers. There was no intent by Respondents to deceive the Wingates, Dream Home, Security First Federal, or any other party pertinent to these proceedings. There was insufficient evidence to establish that the Wingates, Dream Home, Security First Federal, or any other party pertinent to these proceedings was, in fact, deceived or tricked by any act of Respondents.
The Wingates moved into the premises prior to the closing of the transaction. Ms. Batchelor did not give the Wingates permission to move into the house prior to closing and she did not personally inform the Wingates that they would have to pay rent if they moved in prior to closing. Ms. Batchelor had been told by her business associate, Mr. Vander Meer, that the Wingates would pay a per diem rental fee until the closing. On October 27, 1990, Ms. Batchelor, on behalf of Dream Home, advised the Wingates that they were being charged a rental fee of $27.54 per day that they had occupancy prior to the closing. For the 36 days the Wingates were in the house prior to closing, the total rental claimed came to $920.52. The Wingates disputed the amount claimed for rent and had not, as of the date of the formal hearing, paid that amount. There was no evidence that Respondents were attempting to deceive, trick, or defraud the Wingates in any manner by claiming rent for the period between the time the Wingates moved in to the house and the time of the closing.
By letter dated September 20, 1989, Ms. Batchelor, on behalf of Dream Home, notified the Wingates that the second mortgage balloon payment was
$12,795.52 and that, according to her records, would become due on May 1, 1990. Although this statement of the due date is inconsistent with the instrument
executed by the Wingates, there was no evidence that this statement was anything other than a mistake.
The Wingates have defaulted on the first and the second mortgages.
When Petitioner's investigator, Sharon Thayer, conducted an office inspection and escrow audit of Respondents' offices on March 13, 1990, Respondents did not have an enclosed room within which negotiations and closings of real estate transactions could be conducted and carried on with privacy. The negotiations between the buyers and sellers in the Wingate transaction were, however, conducted in private.
Buyers were prompted to file a complaint against Respondents approximately one year after the closing when an unidentified bank officer told them they may have committed a fraud. Without knowledge or complicity of Respondents, Sarah F. Wingate falsified her loan application with Security First Federal Savings and Loan Association.
Respondents received no commission in regard to the Wingate transaction.
Respondents moved their offices and have corrected the deficiency related to the absence of an enclosed, private area.
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.
Section 475.25(1), Florida Statutes, provides, in pertinent part, as follows:
The commission may ... place a licensee ... on probation; may suspend a license ... for a period not exceeding
10 years; may revoke a license ...; may impose an administrative fine not to exceed $1,000 for each count or separate offense; and may issue a reprimand, and any or all of the foregoing, if it finds that the licensee ....
* * *
(b) Has been guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme, or device, culpable negligence, or breach of trust in any business transaction in this state ...
* * *
(e) Has violated any of the provisions of this chapter or any lawful order or rule made or issued under the provisions of this chapter or chapter 455.
Rule 21V-10.002, Florida Administrative Code, provides, in pertinent part, as follows:
Each active broker is required to have an office and the office must be registered with the Department. The office shall consist of at least one enclosed room or building or stationary construction wherein negotiations and closings of real estate transactions of others may be conducted and carried on with privacy and wherein the said
broker's books, records, and files pertaining to real estate transactions of others are maintained. ...
Petitioner has the burden of proving by clear and convincing evidence the allegations against Respondent. See Ferris v. Turlington, 510 So. 2d 292 (Fla. 1987).
Petitioner established the allegations of Counts I and II of the Administrative Complaint and Respondents' violation of Section 475.25(1)(e), Florida Statutes, by establishing that Respondents' office failed to include an enclosed room wherein negotiations and closings could occur as required by Rule 21V- 10.002, Florida Administrative Code.
Petitioner also established Respondents' violation of Section 475.25(1)(b), Florida Statutes, as alleged by Counts III and IV of the Administrative Complaint, by establishing that Respondent Batchelor executed a false statement on behalf of Respondent Adventure Properties relating to the receipt of the escrow deposit. The signing of this false statement constitutes a misrepresentation within the meaning of Section 475.25(1)(b), Florida Statutes. There was insufficient evidence to establish that Respondents committed any act, including the signing of the statement relating to the receipt of the deposit, with the intent to deceive or defraud any party involved in the Wingate transaction.
The pertinent disciplinary guidelines adopted by the Florida Real Estate Commission may be found in Rule 21V-24.001(3), Florida Administrative Code. These guidelines provide that the minimum penalty to be imposed for a violation of Section 475.25(1)(b), Florida Statutes, is a reprimand for each count, a fine up to $1,000 per count, or both a reprimand and a fine up to
$1,000 per count. The maximum penalty for a violation of Section 475.25(1)(b), Florida Statutes, is revocation of licensure. The guidelines provide the same penalty ranges for violations of Section 475.25(1)(e), Florida Statutes. The guidelines provide that a combination of the possible penalties is permissible pursuant to Section 475.25(1), Florida Statutes.
In recommending the penalty that should be imposed in this matter, it is appropriate to consider that Respondents' violation of Section 475.25(1)(b), Florida Statutes, was not intended to nor did it have the effect of deceiving or defrauding any party to the subject transaction. It is also appropriate to consider that Respondents' violation of Section 475.25(1)(e), Florida Statutes was technical in nature and was not shown to have had any bearing on the negotiations that accompanied the subject real estate deal involving the Wingates or on any other transaction.
Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Florida Real Estate Commission enter a final order which finds that Respondent violated the provisions of Rule 21V-10.002, Florida Administrative Code, and consequently, Section 475.25(1)(e), Florida Statutes, which finds that Respondents violated the provisions of Section 475.25(1)(b), Florida Statutes, and which provides for the issuance of a letter of reprimand to said Respondents for such violations and the assessment of an administrative fine against Respondents in the amount of $500.00.
DONE AND ENTERED this 3rd day of December, 1990, in Tallahassee, Leon County, Florida.
CLAUDE B. ARRINGTON
Filed with the Clerk of the Division of Administrative Hearings this 3rd day of December, 1990.
APPENDIX TO THE RECOMMENDED ORDER IN CASE NO. 90-3587
The following rulings are made on the proposed findings of fact submitted on behalf of the Petitioner.
