STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FLORIDA REAL ESTATE COMMISSION, ) AND MYERS, )

)

Petitioners, )

)

vs. ) DOCKET NO. 76-009

)

BARRY P. RIFKIN )

FLAG REALTY, INC. )

BARTLEY C. JOHNSON, )

)

Respondents. )

)

RECOMMENDED ORDER

A hearing was held in the above styled cause, in the offices of the Florida Real Estate Commission, Las Olas Building Suite 210, 305 South Andrews Avenue, Fort Lauderdale, Florida, at 10:30 a.m. on July 29, 1976.

APPEARANCES

For Petitioner: Charles Felix, Esquire

Appeared for the Petitioner Florida Real Estate Commission

For Respondent: Barry D. Schreiber, Esquire

Attorney for Respondents

Barry P. Rifkin and Flag Realty, Inc.

Bartley C. Johnson Appeared in his own behalf

ISSUES

Under the Administrative Complaint filed by the Florida Real Estate Commission there were five counts containing allegations against Bartley C. Johnson, Anthony Johnson, Barry P. Rifkin, and Flag Realty, Inc. (hereinafter referred to as Flag). Prior to the commencement of the hearing, all allegations against Anthony Johnson were dropped by the Florida Real Estate Commission. The issues raised under the five counts of the Administrative Complaint were as follows:

1. Whether Barry P. Rifkin and Flag were guilty of negligence and breach of trust in a real estate transaction by violating a duty imposed upon them by law and the terms of a listing contract by allowing Bartley C. Johnson to handle a closing and prepare a closing statement reflecting the erroneous proration of taxes, and failing to refund the

   excess taxes upon demand by the Sanchez's contrary to 475.25(1)(a), F.S.

   
   

2. Whether Bartley Johnson failed to account for and deliver upon demand personal property in the form of money which he had in his possession and which was not his property or was not property which he was entitled to retain contrary to 475.25(1)(c), F.S.

   
   

3. Whether Barry P. Rifkin and Bartley Johnson were guilty of fraud and concealment by not revealing to the Sanchez's that Bartley Johnson was a licensed real estate salesman contrary to the provision of 475.25(1)(a), F.S.

   
   

4. Whether Barry P. Rifkin and Flag were found guilty of misconduct by the Florida Real Estate Commission warranting suspension of their licenses on August 8, 1975.

   
   

5. Whether Barry P. Rifkin and Flag if found guilty of counts one and three, would be guilty of a second offense warranting suspension of their registration and have demonstrated a course of conduct and practices which show that they are incompetent, negligent, dishonest and untruthful and that money, property, transactions and rights of investors are those with whom they may sustain a confidential relationship may not be entrusted to them whereupon their registrations should be revoked pursuant to 475.25(3), F.S.

FINDINGS OF FACT

1. Barry P. Rifkin is a registered real estate broker as stipulated by Counsel for Rifkin and Counsel for the Commission.

   
   

2. Bartley Johnson is a licensed real estate salesman as stipulated by Bartley Johnson and Counsel for the Commission.

   
   

3. Flag Realty, Inc. is a registered real estate broker corporation as stipulated by Counsel for Flag and Counsel for the Commission.

   
   

4. At no time has Bartley Johnson been employed by or working for Barry P. Rifkin or Flag.

   
   

5. About February 11, 1974 Vince Zarra, a salesman for Flag Realty, Inc. entered into an exclusive right of sale contract with Mr. and Mrs. Armando J. Sanchez (hereinafter referred as Sanchez) to sell certain real property located in Putnam County.

   
   

6. Subsequently, on or about April 29, 1974 Bartley Johnson and his wife, Dorothy M. Johnson, signed a deposit receipt contract to purchase the aforesaid

   property from Sanchez for $12,000. Said contract for purchase was negotiated by Vince Zarra, salesman for Flag Realty, Inc.

   
   

7. Prior to July 16, 1974, Vince Zarra arranged for a closing in the real estate transaction described above between Bartley C. Johnson and Sanchez. This closing was to take place on July 16, 1974 in the office of Flag Realty., Inc.

   
   

8. Vince Zarra was not present at the closing and made no arrangements for Flag to be represented at the closing but did advise a secretary at the Flag office to expect the arrival of the parties.

   
   

9. Bartley Johnson arrived at the closing first and obtained certain data from the files of Flag from their secretary. Subsequently, the Sanchez's arrived at the Flag office, unaware that Zarra was not going to be present at the closing.

   
   

10. The Sanchez's were greeted by Johnson and shown certain papers related to the closing. These papers indicated a purchase price of some $600 less than the contract price of $12,000. This $600 reduction was represented by Johnson to be the Sanchez cost of filling certain portions of the property. The Sanchez's did not agree to the reduction in the contract price but demanded and received the full $12,000 contract price.

    
    

11. The Sanchez's had had prepared by an out-of-town attorney a proposed closing statement which prorated the various costs of the transaction to include the real property taxes. Johnson controverted the proration of the real estate taxes as presented in the proposed closing statement.

    
    

12. Johnson attempted to determine the tax assessment for 1974 on the real property in question. Sanchez although not in agreement with the proration of the taxes, but, in an effort to conclude the closing, accepted proration of the taxes in accordance with the figures provided by Bartley Johnson.

    
    

13. Rifkin arrived at the Flag office after Bartley Johnson and the Sanchez's. Upon his arrival, Rifkin was made aware that the Johnsons and Sanchez's were closing on their real estate transaction and that Vince Zarra was not present. Rifkin introduced himself to the Sanchez's and Johnson, who he already knew, and advised the parties that he was available if they needed him. He subsequently wrote checks from Flag's account necessary to complete the transaction; however, he did not participate in the closing.

    
    

14. Although Rifkin had known Bartley Johnson and Anthony Johnson, his son, Rifkin did not know that Bartley Johnson was a licensed real estate salesman.

    
    

15. Johnson did not advise the Sanchez's of the fact that he was a licensed real estate salesman until after the closing. Within days after the closing, Sanchez began to make inquiries as to what the actual 1974 taxes were. He eventually determined that the proration of the taxes at the closing were incorrect, whereupon he made demands upon Johnson and Zarra for a refund of the excess taxes he had been assessed at closing.

    
    

16. At the time of the final hearing in this cause Sanchez had not received a refund of the excess taxes assessed at closing.

    
    

17. Bartley Johnson asserted at hearing that the property purchased was not as represented by the Sanchez's and that he had advised them by letter that

    he was willing to reconvey to them their property in return for his money. However, because of the misrepresentations he would not repay them the taxes.

    
    

18. Exhibit A, an Order of Dismissal and Final Order of the Florida Real Estate Commission, was presented as a joint exhibit of the Florida Real Estate Commission, Barry P. Rifkin and Flag. The Order of Dismissal states in pertinent part:

    
    

    "It is, therefore, ORDERED, that the above information be, and the same is hereby dismissed."

    
    

    CONCLUSIONS OF LAW

    
    

19. With regard to the allegations contained in counts four and five, count four relates to a finding that the Respondents have for a second time been guilty of conduct warranting suspension of their registration. The Order of Dismissal, Exhibit A, indicates clearly that the information, upon which the order of August 8, 1975 was based, was dismissed. The information having been dismissed, the proceeding is a nullity and the finding of guilt does not attach.

    
    

20. The Final Order of the Commission dated August 8, 1975 contains no facts relating to the conduct upon which the Commission based its finding. Therefore, the Final Order does not present any evidence or findings from which a course of conduct can be determined as alleged in count five.

    
    

21. Regarding the allegations of count two, Bartley Johnson was charged under the provisions of Section 474.25(1)(c) which provides that the registration of a registrant may be suspended upon a finding of fact showing that the registrant has:

    
    

    "(c) Failed to account or deliver to any

    person. . .any personal property such as money. . . which has come into his hands and is not his property, or which he is not in law or equity entitled to retain, under the circumstances,

    and at the time which has been agreed upon or is required by law or, in the absence of the fixed time, upon demand of the person entitled to such accounting and delivery: . . ." (emphasis supplied)

    
    

    The emphasized portion of the statute cited above is very important to the consideration of this case because it limits the operation of the statute to those required to account and deliver to those persons entitled to make such a demand. Before said statute can be applied to the Respondent Johnson, there must be a duty existing upon him to account for such property to Sanchez. The evidence clearly indicated that Johnson and the Sanchez's were purchaser and seller, respectively, of the real property involved and dealt at arms length in this transaction. There is no evidence to indicate that Johnson participated in this transaction in any capacity other than as private individual purchasing property. No special relationship existed between the Sanchez's and Johnson which entitled Sanchez to make demand for an accounting and delivery of monies which had passed into the hands of Johnson as a result of the transaction.

    
    

22. With regard to the allegations of count three, there is no evidence that Barry P. Rifkin knew that Bartley Johnson was a registered real estate

    salesman. Although clearly a fiduciary relationship existed between Flag, Rifkin and the Sanchez's, Rifkin could not reveal that which he did not know. Also, there is no basis for implying a duty on Rifkin's part to inquire of Johnson as to his status as a real estate salesman.

    
    

23. With regard to count 4 as it relates to Bartley Johnson, as stated above, Johnson and the Sanchez's dealt at arms length in a transaction for the purchase and sale of real property. No fiduciary relationship existed between Johnson and the Sanchez's. No special duty existed upon Johnson as a result of the fiduciary relationship between him and the Sanchez's. While dealing at arms length for the purchase of the property owned by the Sanchez's, Bartley Johnson's status as a licensed real estate salesman was not material to the transaction.

    
    

24. Regarding the allegations contained in count one against Rifkin and Flag that they were negligent and breached a duty of trust to the Sanchez's by allowing Bartley Johnson to handle the closing and by failure to refund excess taxes charged to the Sanchez's, it is clear that the real culprit in the situation presented in this case was the real estate salesman, Vince Zarra. However, a broker is responsible for the actions of his salesmen. This is particularly true in this instance as Rifkin was aware that the closing was taking place in his office between the two parties who he thought to be laymen, that the real estate salesman responsible was not present, and that the parties were not represented by attorneys. While a real estate broker may not be responsible for conducting a closing, he is responsible for the proper disbursement of funds as a result of the closing. Clearly, in this instance Rifkin did not exercise that degree of control of the operation of his office necessary to insure that such distribution was in fact correct although there was tacit agreement to the disbursement between the parties as evidenced by their signatures on the closing documents.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, the Hearing Officer finds the allegations contained in counts two, three, four and five unfounded and recommends that they be dismissed; and further the Hearing Officer finds that the allegations contained in count one were proven; however, the fact that Barry Rifkin was present and did offer his services if needed must be considered in mitigation together with the fact that the parties did tacitedly agree to the disbursement of the funds as presented in the closing statement. Based upon the factors in mitigation, the Hearing Officer would recommend that the registration of Barry P. Rifkin and Flag Realty not be suspended but that they be required to refund the excess taxes paid by the Sanchez's.

DONE and ORDERED this 12th day of August, 1976 in Tallahassee, Florida.

STEPHEN F. DEAN, Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304

(904) 488-9675

COPIES FURNISHED:

Richard J. R. Parkinson, Esquire Associate Counsel

Florida Real Estate Commission 2699 Lee Road

Winter Park, Florida 32789

Barry D. Schreiber, Esquire 2020 Northeast 163rd Street

North Miami Beach, Florida 33162

Bartley C. Johnson Ethel Birmingham

655 Northeast 123rd Street Miami, Florida 33162

Charles Felix, Esquire

Florida Real Estate Commission 2699 Lee Road

Winter Park, Florida 32789

Docket for Case No: 76-000009

Orders for Case No: 76-000009