vs. ) CASE NO. 76-1033
L. B. SLATER, )
Respondent. )
A hearing was held in the offices of the Florida Real Estate Commission, Las Olas Building, 305 South Andrews Avenue, Suite 210, Ft. Lauderdale, Florida, on September 24, 1976 before Stephen F. Dean, assigned Hearing Officer of the Division of Administrative Hearings. This matter came on to be heard upon the Administrative Complaint filed by the Florida Real Estate Commission alleging that L. B. Slater had violated Subsection 475.25(1)(a) and Subsection 475(1)(i), Florida Statutes, as alleged in the Administrative Complaint filed in this cause on March 10, 1976. The Respondent L. B. Slater requested a formal hearing and the matter was referred to the Division of Administrative Hearings to conduct a formal hearing pursuant to Chapter 120, Florida Statutes.
For Petitioner: Richard J. R. Parkinson, Esquire
For Respondent: L. B. Slater
L. B. Slater is a registered real estate broker holding Certificate No. 0081594.
On July 9, 1973 an office inspection of the office of L. B. Slater was made by Allen R. Kruteck, investigator for the Florida Real Estate Commission. An audit of Slater's escrow account indicated that $3,300 was pending on sales transactions; however, Slater's escrow account balance was $2,372.54 showing a shortage of $927.46.
Upon being advised of the shortage, L. B. Slater made out a personal check in the amount of $927.46 and deposited same to his escrow account, thereby making up the balance.
L. B. Slater testified that he had a one-man office without a secretary or bookkeeper and kept his escrow account records in the bank book for that account. Slater testified that the shortage in the account was due to an error in bookkeeping and that since the audit by Allen R. Krutich that he now reconciled the bank statement with the escrow account balance monthly.
Prior to December 4, 1972, L. B. Slater had been co-broker on the sale of property to R.J. Daniels Construction Company (herein after referred to as Daniels Construction). Daniels was constructing at that time townhouse-type structures on said property. Daniels had asked if Slater knew of any more property like that he had originally purchased. Slater had told Daniels that he knew of a parcel with 100 front feet that was for sale. Daniels told Slater that he would require 200 feet and Slater said that he would check with the owners of adjoining property to see if it was for sale.
Subsequently, Slater contacted Daniels and advised him that the parcel he had reference to was located immediately across the street from the first parcel which Daniels had purchased. The new property consisted of two parcels, each 100' by 205'. One parcel was owned by the grantor of the original parcel which Daniels had purchased, and the second parcel owned by Jerry D. Wray and Mary A. Wray, his wife. Slater indicated to Daniels that he had contacted the Wray's and determined that they were interested in selling.
Daniels, on behalf of Daniels Construction, subsequently entered into a contract for a purchase of the property with the Wrays and the other property owner.
The contract for purchase of the property from the Wrays was for a purchase price of $37,500 and Daniels paid Slater an earnest money deposit in the amount of $3,750.
Subsequently, Daniels was told casually by another realtor that the property which he had contracted to purchase was not zoned for multifamily dwellings but for duplex-type buildings only.
On January 18, 1974, Daniels made demand upon Slater for withdrawal from the contract of purchase with the Sellers and return of the earnest money deposit on the basis that the property was not zoned for multifamily dwellings.
Slater contacted the first seller and obtained a release from the contract for Daniels and release of the earnest money deposit.
Daniels' earnest money from the first seller was returned to him by Slater.
Slater then contacted the Wrays and indicated to them that Daniels desired to be released from contract, and desired a return of his earnest money deposit.
Between the date of entry into the contract and the date upon which Daniels learned that the property was not appropriately zoned, the Wrays had been asked by Daniels to have the tenant of a house on the property move out in order that Daniels could occupy a house on the property as a construction office. The Wrays had done this and thereby suffered the loss of rent and the loss of their tenant.
Slater received a letter from counsel for the Wrays advising him that the Wrays were exercising their right to make demand for payment of their portion of the earnest money deposit.
Having received demand from the Wrays for their portion of the earnest money deposit, Slater drew a check on his escrow account payable to the Wrays in the amount of $1,875 and drew another check payable on his escrow account which included the amount of $1,875 payable to himself as commission.
Daniels made subsequent demand upon Slater for the full amount of his earnest money deposit which was refused.
Daniels contends that he was induced to enter into the contract for the purchase of the Wray property by the representations of Slater that said property was zoned for multifamily housing units.
Slater contends that in the course of discussion prior to the contract, he represented that the property was restricted to single-story buildings and he through that Daniels could get approximately the same number of units on the property that he had built on the property across the street, but did not represent the property as being zoned multifamily.
Daniels did not check upon the zoning of the property prior to entering into the contract. Zoning is chaotic in this area.
CONCLUSIONS OF LAW
It is apparent from their conversations, particularly their initial one, that Daniels drew the inference that the property was zoned multifamily, because he thought he had asked Slater to find him property zoned multifamily like that which he had purchased. However, the requirement for zoning to be multifamily was not specifically stated to Slater, who tendered to Daniels property which was in the same location across the street from the original site and approximately the same size and zoning. Further, Slater had mentioned the zoning restriction to single-story dwellings to Daniels who, although on notice of some difference in zoning, never made an inquiry to Slater or others whether the zoning was suitable to his construction needs.
A real estate salesman or broker who is representing a party has a higher duty to his client than that owed by persons dealing at arms length. A broker or salesman has a duty to fully disclose any and all information which he knows would affect his client's interest. If Slater had intentionally withheld the information regarding the zoning to the prejudice of Daniels, Slater would have violated the duty owed Daniels. Both Slater and Daniels agree relative to the content of the key conversation. As to that conversation, it is clear that there was no intent on Slater's part to conceal or not fully reveal all pertinent information relative to the purchased property. There was definitely a misunderstanding between Daniels and Slater regarding what was important to Daniels. Daniels thought he had fully communicated his needs to Slater; however, as seen above, there was a failure in communications. Based upon the foregoing facts, the Hearing Officer concludes that Slater did not misrepresent the property to Daniels.
The facts clearly establish that Slater's escrow account was not properly maintained and that a shortage existed. Slater testified that this was a bookkeeping shortage. Rule 2IV-14.05 requires that accurate records be kept, and an error in bookkeeping would violate the rule.
RECOMMENDATION
The Hearing Officer would recommend that the Florida Real Estate Commission place L. B. Slater on probation for a period of one year for the failure of Slater to properly maintain the records of his escrow account.
DONE and ORDERED this 12th day of October, 1976, in Tallahassee, Florida.
STEPHEN F. DEAN
Division of Administrative Hearings Room 530 Carlton Building Tallahassee, Florida 32304
Richard J.R. Parkinson, Esquire Florida Real Estate Commission 2699 Lee Road
L. B. Slater
