STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FLORIDA DEPARTMENT OF PROFESSIONAL ) REGULATION, DIVISION OF REAL )

ESTATE, )

)

Petitioner, )

)

vs. ) CASE NO. 90-5945

) EDUARDO AVILA and BRICKELL KEY ) REALTY, INC., )

)

Respondents. )

)

RECOMMENDED ORDER

Pursuant to Notice, this cause was heard by Linda M. Rigot, the assigned Hearing Officer from the Division of Administrative Hearings, on January 11, 1991, in Miami, Florida.

APPEARANCES

For Petitioner: James H. Gillis, Esquire

Department of Professional Regulation

400 West Robinson Street Post Office Box 1900 Orlando, Florida 32801

For Respondents: Gregory P. Borgognoni, Esquire

Ruden, Barnett, McCloskey, Smith, Schuster & Russell P.A.

701 Brickell Avenue, Suite 1900

Miami, Florida 33131 STATEMENT OF THE ISSUES

The issue presented is whether Respondents, who are licensed real estate brokers, 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.

PRELIMINARY STATEMENT

Petitioner filed an Administrative Complaint against Respondents alleging that they had violated several of the statutes regulating their conduct as real estate brokers, and Respondents timely requested a formal hearing regarding the allegations in that Administrative Complaint. This cause was thereafter transferred to the Division of Administrative Hearings for the conduct of that formal proceeding.

Petitioner presented the testimony of Respondent Eduardo Avila, and Petitioner's Exhibits numbered 1-8 were admitted in evidence.

Both parties submitted post-hearing proposed findings of fact in the form of proposed recommended orders. A ruling on each proposed finding of fact can be found in the Appendix to this Recommended Order.

FINDINGS OF FACT

1. At all times material hereto, Respondent Eduardo Avila has been a licensed real estate broker in the State of Florida having been issued license numbers 0245377, 0258057, 0245792 and 0259595. The last licenses issued were as a broker for Very Important Properties Realty, Inc., 520 Brickell Key Drive #0- 301, Miami, Florida 33131-2620; Brickell Key Realty, Inc., 520 Brickell Key Drive #0-303, Miami, Florida 33131; Very Important Properties Realty 1, Inc., 1340 Gulf Boulevard #25, Clearwater, Florida 34630-2808; and Imperial Real Estate, Inc., 12311 N.W. 7th Lane, Miami, Florida 33182.

   
   

2. At all times material hereto, the Respondent Brickell Key Realty, Inc., has been a corporation registered as a real estate broker in the State of Florida having been issued license number 0248135. The last license issued was at the address of 520 Brickell Key Drive #0-303, Miami, Florida 33131.

   
   

3. For the last several years, Respondent Avila has been licensed and operating as the qualifying broker and an officer of Respondent Brickell Key Realty, Inc.

   
   

4. On January 25, 1990, Petitioner's investigator Robert M. Castro appeared at the office of Respondent Brickell Key Realty, Inc., to conduct an unannounced, random, routine audit of the real estate brokerage accounts maintained by the Respondents. Respondent Avila immediately made available to him all of the books and records of Respondent Brickell Key Realty.

   
   

5. At the time, Brickell Key Realty had three accounts: one escrow account which held deposit monies in connection with the sale and purchase of real estate, one management account which held monies relating to property management and rental transactions, and one real estate office operating account.

   
   

6. Of the three accounts, only one was interest-bearing -- the escrow account. Respondent Avila informed Castro that the escrow account was an interest-bearing account, with interest being accrued for the benefit of Respondent Brickell Key Realty. Avila further advised Castro that the owners of the funds had been notified verbally that the account was interest-bearing. The interest in that account had not been disbursed or removed from the account and had been allowed to continue to accrue.

   
   

7. Castro raised certain questions during the audit which Respondents were not in a position to fully answer immediately for the reason that Brickell Key Realty's bookkeeper had quit just before the audit and did not respond to Respondent Avila's request to assist in explaining various bookkeeping practices and procedures. Respondent Avila advised that he had engaged a certified public accountant to resolve all questions raised by Castro. In connection therewith, Castro gave Respondents an extension of three weeks to resolve all of his questions.

8. Respondent Avila was not aware of the requirement that monthly written reconciliation statements be prepared. Accordingly, Respondents did not have the required monthly written reconciliation statements at the time of the audit.

   
   

9. Respondents had been using a preprinted form furnished by the Miami Board of Realtors in their real estate transactions. That form included agency, real property sales and radon gas disclosures. Castro advised Respondents that the language in the disclosures was not acceptable to petitioner.

   
   

10. There was an overage of $64.10 in Brickell Key Realty's property management account which could not be explained. At Castro's suggestion, the overage Was transferred from the management account to Brickell Key Realty's operating account.

    
    

11. Respondents worked closely with Castro during his audit. Every suggestion made by Castro was immediately implemented by Respondents.

    
    

12. On May 18, 1990, Respondents sent a letter to Castro verifying the steps that they had taken to comply with all of his questions and concerns.

    That letter verified that Respondents had converted Brickell Key Realty's escrow account into a non-interest-bearing account, had separated Brickell Key Realty's management/operating and property management escrow trust account into a separate rental security deposits escrow account and a management account, had begun using the current board of realtors disclosure forms regarding agency and radon gas in every transaction, and had expanded their accounting and bookkeeper duties to monitor and reconcile Brickell Key Realty's escrow trust accounts.

    That letter also verified chat Respondent Avila, as the broker for Brickell Key Realty, had always been a signatory on the escrow accounts of Brickell Key Realty.

    
    

13. As a result of the audit perform by Castro, procedures were implemented so that the in-house bookkeeper would transmit records to Brickell Key Realty's C.P.A. on a monthly basis for monthly preparation of written reconciliation statements. Further, Brickell Key Realty no Longer has any interest-bearing accounts. Lastly, Respondents have been using a different board of realtors form in order to use disclosure language approved by Petitioner.

    
    

14. Respondents cooperated fully with Castro during his audit, and made all records available to him. They immediately made all changes recommended by him. No clients of Respondents suffered any harm as a result of the overage in Respondents' accounts or failure to make monthly reconciliation statements. The audit was simply a result of a random selection of Respondents and did not arise from client complaints.

    
    

15. No prior administrative complaints have been filed against either Respondent, and neither Respondent has been the subject of any prior disciplinary proceeding.

    
    

    CONCLUSIONS OF LAW

    
    

16. 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).

17. During the final hearing, Respondents' motion to amend their answer to request for admission numbered 6 was granted to specify that Respondent Avila was not the qualifying broker for Respondent Brickell Key Realty for the first year of that company's operations. Additionally, Petitioner voluntarily dismissed its allegations found in paragraph numbered 7(d) of the Administrative Complaint filed in this cause.

    
    

18. Counts I and II allege that Respondents Avila and Brickell Key Realty, respectively, have violated Section 475.25(1)(b), Florida Statutes, by committing fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence or breach of trust in a business transaction. The Administrative Complaint contains no factual basis for that allegation, and Petitioner has proven none. Accordingly, Petitioner has failed to prove that Respondents violated Section 475.25(1)(b).

    
    

19. Counts III and IV charge Respondents Avila and Brickell Key Realty, respectively, with having 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. The evidence is uncontroverted that there was an overage in Respondents' escrow account, and no evidence was offered regarding any failure to maintain trust accounts in a proper depository until disbursement was properly authorized. Accordingly, Petitioner has failed to prove that Respondents violated Section 475.25(1)(k).

    
    

20. Counts V and VI charge Respondents Avila and Brickell Key Realty, respectively, with commingling personal and trust funds in violation of Rule 21V-14.008, Florida Administrative Code, and failure to produce records for

    inspection and failure to prepare monthly reconciliation reports in violation of Rule 21V-14.012, Florida Administrative Code, and, therefore, in violation of Section 475.25(1)(e), Florida Statutes. Since Respondents' escrow account was at the time an interest-bearing account, and since the interest was accruing for the benefit of Respondent Brickell Key Realty, then Respondents are guilty of commingling personal and trust funds, in violation of Rule 21V-14.008. No evidence was offered that Respondents failed to produce any records for inspection. However, Respondents do admit that they failed to prepare monthly reconciliation reports, in violation of Rule 21V-14.012. Since Respondents did violate rules promulgated by Petitioner, then Respondents are guilty of violating Section 475.25(1)(e), Florida Statutes.

    
    

21. Counts VII and VIII charge Respondents Avila and Brickell Key Realty, respectively, with having held funds in an interest-bearing escrow account without the prior knowledge or consent of all parties, in violation of Rule 21V- 14.014, Florida Administrative Code, and, therefore, in violation of Section 475.25(1)(e), Florida Statutes. That Rule specifically provides that placing escrow money in an interest-bearing account is not prohibited. The Rule does, however, require the consent of all interested persons. The Rule does not require such consent to be in writing. Respondent Avila testified regarding oral notification and consent. Petitioner offered no evidence to the contrary. Accordingly, Petitioner has failed to prove that Respondents violated Rule 21V- 14.014, Florida Administrative Code, and, therefore, Section 475.25(1)(e), Florida Statutes, as alleged in Counts VII and VIII of the Administrative Complaint.

22. Counts IX and X charge Respondents Avila and Brickell Key Realty, respectively, with having failed to provide the radon gas disclosure required by Section 404.056(8), Florida Statutes, and therefore with violating a duty imposed by law, therefore violating Section 475.25(1)(b), Florida Statutes. Section 404.056(8), Florida Statutes, contains the specific language regarding radon gas which must be provided attendant to contracts for sale and purchase or rental of any buildings in Florida as of January 1, 1989. Respondents were using preprinted forms provided by the Miami Board of Realtors which did contain radon gas disclosure language. When Petitioner's investigator advised Respondent Avila that the language was not sufficient, Respondents immediately began using updated board of realtor forms for every transaction. Neither of the forms used by Respondents before the audit and after the audit was offered in evidence. Accordingly, it cannot be determined whether either form complies with the law, although it appears that the latter form complies with Petitioner's interpretation of the law. Although Respondents admit that Petitioner did not approve of the form they were using at the time of the audit and although Respondents have voluntarily changed the form that they were using, Respondents have not admitted that the form they were using violated Section 404.056(8), Florida Statutes. Similarly, Petitioner has not proven that the former forms violated that statute and has not, therefore, proven that Respondents violated Section 475.25(1)(b), Florida Statutes, by violating a duty imposed by law on them.

    
    

23. In determining the disciplinary action to be taken against Respondents, the specific violations found and the circumstances must be considered. Petitioner has proven Respondents guilty of the allegations contained in Counts V and VI of the Administrative Complaint, i.e. commingling personal and trust funds and failing to prepare monthly reconciliation statements. As discussed above, the rules of the Division of Real Estate do not prohibit escrow accounts from being interest-bearing. Accordingly, Respondents' specific violation of Petitioner's rules arises from Respondents failure to remove the interest from the escrow account so that personal and trust funds became commingled. It must be remembered that there was no shortage in the escrow account. Further, Respondent Avila testified that he was not aware of the requirement for monthly reconciliation statements and therefore none had been prepared. When these violations were brought to the attention of Respondents, steps were immediately taken to correct these violations so that the escrow account is no longer interest bearing and a C.P.A. prepares reconciliation statements on a monthly basis. Under the facts and circumstances of this case, Respondents' violations were technical in nature only. No harm came to any clients or other persons as a result of Respondents' technical violations. Lastly, no prior administrative complaints have ever been filed against Respondents.

    
    

24. In its proposed recommended order Petitioner recommends that Respondent Avila be fined the amount of $500 and that both Respondents be placed on probation for a period of one year during which time Respondent Avila would be required to complete continuing education courses and then appear before the Florida Real Estate Commission prior to termination of that probation. In their proposed recommended order Respondents suggest that under the circumstances of this case any disciplinary action should be limited to the administrative fine recommended by Petitioner. Respondents' recommendation is appropriate. The two violations found, leaving interest in the trust account and failing to prepare monthly reconciliation statements have been remedied immediately upon those violations being brought to the attention of Respondents. All other

recommendations of the Department's investigator were also immediately implemented. Probation and continuing education courses are simply not justified in this matter.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered finding Respondents guilty of

some of the allegations contained in Counts V and VI of the Administrative

Complaint, as set forth above, dismissing the remainder of the Administrative Complaint filed against them, and imposing against Respondent Avila an administrative fine in the amount of $500 to be paid by a date certain.

DONE AND ORDERED in Tallahassee, Leon County, Florida, this 11th day of February, 1991.

LINDA M. RIGOT

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 11th day of February, 1991.

APPENDIX TO RECOMMENDED ORDER DOAH CASE NO. 90-5945

1. Petitioner's proposed findings of fact numbered 2-4, 7, 13, and 15-18 have been adopted either verbatim or in substance in this Recommended Order.

   
   

2. Petitioner's proposed finding of fact numbered 1 has been rejected as not constituting a finding of fact but rather as constituting a conclusion of law.

   
   

3. Petitioner's proposed findings of fact numbered 5 and 6 have been rejected as being irrelevant to the issues involved in this cause.

   
   

4. Petitioner's proposed findings of fact numbered 8-11 and 14 have been rejected as not being supported by the weight of the evidence in this-cause.

   
   

5. Petitioner's proposed finding of fact numbered 12 has been rejected since the basis for this finding of fact was voluntarily dismissed by Petitioner during the final hearing in this cause.

   
   

6. Respondents' proposed findings of fact numbered (a)-(h) have been rejected as not constituting findings of fact but rather as constituting argument of counsel.

COPIES FURNISHED:

Darlene F. Keller Division Director

Department of Professional Regulation Division of Real Estate

400 West Robinson Street Post Office Box 1900 Orlando, Florida 32801

Kenneth E. Easley General Counsel

Department of Professional Regulation Northwood Centre

1940 North Monroe Street Tallahassee, Florida 32399-0792

James H. Gillis, Esquire

Department of Professional Regulation

400 West Robinson Street Post Office Box 1900 Orlando, Florida 32801

Gregory P. Borgognoni, Esquire Ruden, Barnett, McCloskey, Smith,

Schuster & Russell, P.A.

701 Brickell Avenue, Suite 1900

Miami, Florida 33131

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: 90-005945

Orders for Case No: 90-005945