STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

vs. ) CASE NO. 90-6189

)

SANDRA B. FRAZIER, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in this case on December 20, 1990, in Tallahassee, Florida, before the Division of Administrative Hearings, by its designated Hearing Officer, Diane K. Kiesling.

APPEARANCES

For Petitioner: Janine B. Myrick

Senior Attorney

DPR Division of Real Estate Post Office Box 1900 Orlando, Florida 32801-1772

For Respondent: William J. Haley

Attorney at Law

Post Office Box 1029

Lake City, Florida 32056-1029 STATEMENT OF ISSUES

The issue is whether the real estate license held by the Respondent, Sandra

1. Frazier, should be revoked or otherwise penalized based on the acts alleged in the Amended Administrative Complaint.

   
   

   PRELIMINARY STATEMENT

   
   

   The Petitioner, Department of Professional Regulation (DPR), presented the testimony of Susan Day, Jesse M. Day, Mary Helen Wheatley, and Marcie Doolittle. Petitioner's Exhibits 1-3 and 5-8 were admitted in evidence. Frazier presented the testimony of Larry Elliot, Thomas Allan Bryant, Leon C. Allen, and Sandra B. Frazier. Respondent's Exhibits 1, 2, and 4 were admitted in evidence and Exhibit 3 was proffered.

   The record was left open until January 11, 1991, for the filing of the deposition of Howard Burkholz. The deposition was taken on January 8, 1991, and was transcribed on January 21, 1991. It was not filed until February 21, 1991, and is untimely. However, these has been no objection raised to including this late exhibit in the record. Accordingly, it will be considered.

   
   

   The transcript of the hearing was filed on January 11, 1991. Proposed recommended orders were to have been filed on February 1, 1991. By letter dated February 18, 1991, DPR waived the filing of a proposed order. Frazier's Motion for Extension of Time for filing proposed orders was granted on February 26, 1991, and the parties were granted an extension until March 1, 1991. Frazier timely filed proposed findings of fact and conclusions of law on March 1, 1991. Frazier's proposed findings of fact are not in compliance with Rule 22I- 6.031(3), Florida Administrative Code, which requires citations to the record to support each proposed finding of fact. All proposed findings of fact and conclusions of law have been considered. To the extent possible, since there are no citations to the record to support each proposed finding of fact, a specific ruling on each proposed finding of fact is made in the Appendix attached hereto and made a part of this Recommended Order.

   
   

   FINDINGS OF FACT

   
   

   1. At all times material to this proceeding, Sandra B. Frazier was a licensed real estate broker-salesman in the State of Florida, License No. 0185565, as an associate with Property Associates, Inc., Tallahassee, Florida.

      
      

   2. On July 1, 1989, Howard M. Burkholz, Leslie Burkholz, and Jacob H. Schiff entered into an Exclusive Right of Sale Agreement with Property Associates, through its agent, Frazier, for the sale of a house located in Forest Green Subdivision, at 2062 Pepperidge Way, Tallahassee, Florida.

      
      

   3. The Exclusive Right of Sale Agreement states in part:

      
      

      Seller further certifies and represents that the property has no latent defects except the following: septic tank is pumped monthly at Sellers request. [sic]

      
      

   4. Mr. and Mrs. Burkholz both told Frazier that the septic tank was not a problem, but Frazier had previous knowledge of septic tank problems in the vicinity and of the significance of needing septic tank pumping.

      
      

   5. Frazier sold the house across from the Burkholz's house. That house, at 2061 Pepperidge Way, was bought by Marcie Doolittle in December of 1988. The listing information and Notice to Prospective Buyers showed that, due to the composition of the soil and heavy rains, it was necessary to have the septic tank pumped. The seller offered an offset to the buyer for the cost of additional drainfield. Only after Doolittle bought the house did Frazier learn of the severity of the problems and the necessity for pump outs every two weeks. In a letter written by Frazier to Doolittle on February 9, 1989, Frazier indicated that "once a septic tank fails it does not correct itself. It then requires regular pumping." Frazier suggested that the only resolution was more drainfield or regular pumping.

   6. After Frazier listed the Burkholz house, she mentioned to Mrs. Doolittle that she could not show the Burkholz house during wet weather because the backyard, in which the septic tank and drainfield was located, was too boggy. Further, Frazier discussed with Mrs. Doolittle that the city was going to install sewer in the area because of the septic tank failures.

      
      

   7. In conformance with the Exclusive Right of Sale agreement with the Burkholzs, Frazier listed the house through the Multiple Listing Service. The data on the house was input on an input sheet. If there are defects, they can be listed on lines RE1-RE4 on the input form. Despite her knowledge about the Burkholz's septic tank and the Doolittle's septic tank, Frazier did not list this as a defect.

      
      

   8. Mary Wheatley, a sales associate with Bob Wolfe Real Estate, worked with Jesse and Susan Day to locate a house to purchase. She showed the Days the Burkholz house. Her only knowledge of that house came from the MLS listing, the brochure entitled Highlights of this Home prepared by Frazier, and from information verbally given by Frazier. Wheatley had no knowledge of the septic tank problems and Frazier did not tell her anything about the septic tank or the potential hook up to city sewer.

      
      

   9. After various offers and counteroffers, the Days and the Burkholtzs signed a contract for the sale and purchase of the house on November 24, 1989. The Contract states in paragraph 14:

      
      

      CONDITION OF PROPERTY: BUYER ACKNOWLEDGES THAT HE HAS NOT RELIED UPON ANY REPRESENTA- TIONS MADE BY A REALTOR(S) AS TO THE CONDI- TION OF THE PREMISES. . . .SELLER warrants

      that the . . . septic tank . . . shall be in working order on the date of closing.

      SELLER agrees to repair any of the preceding items not in working order. BUYER agrees to inspect the property prior to closing to determine condition of said items; . . . If BUYER fails to make inspections as required, BUYER agrees to accept property in "as is" condition. BUYER and SELLER will diligently learn and disclose to each other prior to closing all facts affecting the value of the property.

      
      

   10. On December 26, 1989, the night before the closing, the Days, the Burkholzs, Frazier, and Wheatley did the final walk through. While Wheatley and Susan Day were in another room measuring for curtains, Mr. Day flushed a toilet and noted that it went down very slowly. He asked if there were septic tank problems. Mr. Burkholz indicated that there were, but that sewer hookup was coming and the septic tank was pumped out monthly by the city at no cost. Mr. Day asked about the costs and was told that the pumpouts were free and the sewer would cost several hundred dollars.

       
       

   11. There is a clear conflict in the testimony of the various witnesses about the sewer cost estimate given to Mr. Day, but the exact figure is of no consequence to the ultimate outcome of the case. Therefore the conflict is not resolved.

   12. The Days discussed the septic tank and sewer hookup and decided to go through with the closing. After the walk through, they signed an inspection sheet in which they accepted the premises as inspected, without any noted exceptions, and they relieved the sellers and the realtor from further warranty or responsibility for the condition of the property.

       
       

   13. According to Thomas Bryant, an engineer with the City of Tallahassee, in December, 1989, no one knew whether there would be sewer installed in Forest Green or the potential cost of sewer hookup. No one knew that even on the date of hearing. The city did enter into an agreement to charge $650 for sewer hookup in Forest Green, but there are additional charges and costs to the homeowner which are as yet undetermined.

       
       

   14. The septic tank problems constitute a latent defect which should have been disclosed to the buyers before a contract was agreed upon. The failure to disclose is not egregious since the regular pumping of the septic tank is done at no cost to the homeowner and results in no liability to the homeowner. The projected sewer hook up was too uncertain to have required such disclosure.

       
       

       CONCLUSIONS OF LAW

       
       

   15. The Division of Administrative Hearings has jurisdiction of the parties to and subject matter of these proceedings. Section 120.57(1), Florida Statutes.

       
       

   16. Frazier is charged with violation of Section 475.25(1)(b), Florida Statutes, which imposes disciplinary action when a licensee:

       
       

       (b) Has been guilty of fraud, misrepresenta- tion, 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 or any other . . . .

       
       

   17. The Amended Administrative Complaint specifically charged Frazier with concealment, culpable negligence or breach of trust in connection with the failure to disclose both the septic tank problems and the potential hook up to sewer lines.

       
       

   18. DPR has the burden of proving the allegations in the Amended Administrative Complaint by clear and convincing evidence. It has failed to carry that burden in this case except as it relates to concealment of the septic tank problems. The clear and convincing evidence shows that Frazier knew of the septic tank problem at the Burkholz house and that she knew of the ramifications of similar problems from her dealings with the Doolittle house. She did not disclose the existence of this problem in any of the written documentation made available to the Days prior to the walk through the evening before the closing. Even then she did not disclose it to the Days, but Mr. Burkholz did upon direct inquiry from Mr. Day. This failure to disclose comes within the bounds of concealment as that term is used in Section 475.25(1)(b).

       
       

   19. Because the concealment of the need for septic tank pumping was not one which could or would cost the buyers any additional money, the offense is not egregious. Additionally, Frazier's reputation for fair dealing and honesty

in real estate dealings in the community was proven by uncontroverted testimony. These factors are considered in arriving at the recommended penalty for this single isolated offense.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Florida Real Estate Commission enter a Final Order and therein:

1. Find Sandra B. Frazier guilty of one Count of concealment in violation of Section 475.25(1)(b), Florida Statutes.

   
   

2. Based on the mitigating factors set forth above and on the relatively minor nature of the offense, impose a fine of $100.00 on Sandra B. Frazier.

   
   

3. Issue a written reprimand to Sandra B. Frazier.

RECOMMENDED this 27th day of March, 1991, in Tallahassee, Florida.

DIANE K. KIESLING

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 27th

day of March, 1991.

APPENDIX TO THE RECOMMENDED ORDER, CASE NO. 90-6189

The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on the proposed findings of fact submitted in this case.

Specific Rulings on Proposed Findings of Fact Submitted by Respondent, Sandra B. Frazier

1. Each of the following proposed findings of fact is adopted in substance as modified in the Recommended Order. The number in parentheses is the Finding of Fact which so adopts the proposed finding of fact: 1(1).

   
   

2. Proposed findings of fact 2-9 are subordinate to the facts actually found in this Recommended Order.

COPIES FURNISHED:

Janine B. Myrick Senior Attorney

Department of Professional Regulation Division of Real Estate

400 West Robinson Street Post Office Box 1900 Orlando, FL 32801-1772

William J. Haley Attorney at Law

Post Office Box 1029

Lake City, FL 32056-1029

Jack McRay, General Counsel Department of Professional Regulation 1940 North Monroe Street

Tallahassee, FL 32399-0792

Darlene F. Keller Division of Real Estate

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

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: 90-006189

Orders for Case No: 90-006189