Elawyers Elawyers
Washington| Change

DIVISION OF REAL ESTATE vs. G. M. CRANDALL & COMPANY, INC., AND ARTHUR G. DELOR, 76-001819 (1976)

Court: Division of Administrative Hearings, Florida Number: 76-001819 Visitors: 12
Judges: K. N. AYERS
Agency: Department of Business and Professional Regulation
Latest Update: Jun. 22, 1977
Summary: Respondent didn't deposit downpayment in escrow and surrendered same to buyer on demand because listing realtor lied about land. Recommend dismissal.
76-1819.PDF

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS


FLORIDA REAL ESTATE COMMISSION ) ex rel. ROBERT MAXWELL, )

)

Petitioner, )

)

vs. ) CASE NO. 76-1819

)

G. M. CRANDALL & CO., INC. ) Corporate Broker and ARTHUR )

  1. DELOR, Broker, )

    )

    Respondent. )

    )


    RECOMMENDED ORDER


    Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, K. N. Ayers, held a public hearing in the above styled case on December 29, 1976 at Ft. Lauderdale, Florida.


    APPEARANCES:


    For Petitioner: Frederick H. Wilsen, Esquire

    Staff Attorney

    Florida Real Estate Commission 2699 Lee Road

    Winter Park, Florida 32789


    For Respondent: Burton Burdick, Esquire

    303 Southeast 17th Street

    Ft. Lauderdale, Florida 33316


    By Administrative Complaint filed June 23, 1976, the FREC ex rel. Robert Maxwell seeks to revoke, suspend, or otherwise discipline the broker's license of Arthur G. Delor and the corporate broker's license of G. M. Crandall Company, Inc. As grounds therefor it is alleged that the Defendants failed to immediately place upon receipt funds received by them as brokers in escrow with a bank or other financial institution in violation of s475.25(1)(i) F.S. One witness was called by the Commission, two witnesses including Defendant, were called by Defendants, and four exhibits were admitted into evidence.


    FINDINGS OF FACT


    1. The facts surrounding the events here involved were not in dispute. Ann Ford Realty Office obtained a listing on the property here under consideration and published information relative to this property in Multiple Listing Service (MLS)(Exhibit 3). Price, legal description, zoning, etc. were included but soil type, elevation, fill req'd and piling req'd blocks were left blank. Two contracts were actually negotiated on the sale of this property. Only the second contract, on which conditions had been added regarding the cost of providing foundation grouting, was introduced into evidence.

    2. Floyd Worthen, a salesman with Defendants, obtained an offer from the buyer to purchase this commercial property. The buyer intended to use the property to erect a warehouse. Previous potential buyers of this property had withdrawn when they discovered the soil conditions were bad for building purposes. This information was known to the listing broker but not to the selling broker, defendant herein.


    3. At the time the offer to purchase (Exhibit 1) was submitted to the seller the buyer was aware that soil conditions were not good but was led to believe that only additional grouting would be required in the foundation. Nevertheless he engaged the services of an engineer to make soil tests on the property.


    4. The offer provided that the buyer would put up an additional deposit of

      $1950 upon acceptance of the offer by the seller. When accepted by the seller on October 28, 1975, the offer ripened into a contract and buyer was advised by the Defendant that the additional deposit was now due. Defendant was advised that the additional deposit could be picked up on October 29. Buyer's check for

      $1950 was picked up by Worthen en route home on October 29 after the banks were closed. This check was delivered to the Defendants the following morning.


    5. Early on the morning of October 30, 1975, the buyer learned from his engineer that the soil conditions of the property were much worse than he had been led to believe and that piling would be required to support the proposed warehouse. He immediately called Defendant to inquire if his check had been deposited and when advised that it had not (because the banks were not yet open) he advised Defendants of the bad soil report, and requested the return of his check.


    6. The salesman and the Defendant broker, Delor, discussed the request of the buyer and decided that the equities of the situation required them to return the buyer's check. They also properly concluded that the buyer could stop payment on the check and that by refusing to return the check to him, they would probably lose him as a potential client in the future. Accordingly, they advised the buyer that his check would not be deposited and would be returned to him. The listing broker was advised after the decision was made to return the buyer's check. It further appears that the listing broker's complaint led to the charges considered at this hearing, but no charges have been brought against the listing broker for failure to disclose material facts when listing the property.


      CONCLUSIONS OF LAW


    7. Section 475.25(1)(i) F.S. provides that the registration of a registrant may be suspended for a period not to exceed two years upon a finding of facts showing that the registrant has:


      "(i) Failed, if a broker, to immediately place, upon receipt, any money, fund, deposit, check

      or draft, entrusted to him by any person dealing with him as a broker, in escrow with a title company or banking institution located and doing business in Florida, or, deposit said funds in a trust or escrow bank account maintained by him with some bank located and doing business in Florida, wherein said funds shall be kept until

      disbursement thereof is properly authorized, or, if a salesman, fail to immediately place with

      his registered employer any money, fund, deposit, check or draft, entrusted to him by any person dealing with him as agent of his registered employer. The commission shall establish rules and regulations to provide for records to be maintained by the broker and the manner in which such deposits shall be made."


    8. Rule 21V-14.04 F.A.C. entitled "Rights of Broker in Deposits" provides in pertinent part:


      "A depositor has the right to demand return of a deposit until such time as another party has acquired some interest or equity therein, subject to the right to make an expressed agreement to compensate the broker for his time and expense incurred prior to a demand for the return of the deposit; and such

      right to demand a return of the deposit shall again accrue upon the breach by the other party of the contract or agreement under which it is held. "


    9. Literal compliance with the above statutory requirement is impossible unless "immediately" is defined to mean as soon as practicable. Since the buyer's check was not received until after the banks were closed the check could not be placed in escrow until the following morning after the bank had reopened. True the check could have been deposited in the U.S. mail but even this would require the person in temporary possession of the check to have access to deposit slips, and perhaps authority to endorse the check, before the check could be safely deposited in the escrow account. This procedure would have delayed the arrival of the check in the escrow account more than holding the check over night and depositing it when the bank opened the following morning.


    10. Since the depositor's check had not been placed in the Defendants' escrow account it could be argued that he had the right, pursuant to the rule above quoted, to demand the return of his deposit. The selling broker, Defendant herein, apparently did not seriously question the depositor's right to the return of his deposit when the request for such return was made.


    11. By failing to immediately place the buyer's deposit in escrow the Defendants are technically in violation of the provisions of s475.25(1)(i) F.S. above quoted. However, a serious legal question is presented with respect to whether or not the buyer could be required to purchase the property or forfeit his down payment.


    12. All parties were aware of the use of the property intended by the buyer. Failure to disclose facts known to the seller and to the listing broker, which would indicate the property was not suitable for the use intended by the buyer, could constitute adequate grounds for the buyer to rescind the contract. The old rule of caveat emptor has been modified in many instances. In Gables v. Silver, 258 So.2d 11 (Fla. App. 1972); aff'd 264 So.2d 418 (Fla. 1972) the court adopted the modern rule that implied warranties of fitness apply to real estate and stated:

      "We flatly declare that implied warranties of fitness and merchantability extend to the purchase of new condominiums in Florida from builders."


    13. Here we are not concerned with the legal rights of the parties to this contract; only with whether Defendants violated the real estate license law. Refunding money held in escrow to a party to a real estate transaction that does not close is done every day. The only burden placed upon the broker is to refund the money to the party entitled thereto.


    14. The buyer's check had not reached the broker's escrow fund when the buyer notified the broker that he did not intend to go through with the contract. Had the broker refused to return the check to the buyer payment thereon could readily be stopped by the buyer and the money would not reach the Defendant's escrow account. The only purpose to be served by the broker refusing to return the undeposited check would be to alienate the buyer and lose a potential customer.


    15. From the foregoing it is concluded that Defendants, G. M. Crandall & Company, Inc. and Arthur G. Delor, were in technical violation of s475.25(1)(i)

F.S. It is further concluded that under the circumstances no disciplinary action against the registrations of the Defendants is warranted. It is therefore,


RECOMMENDED that the charges against G. M. Crandall & Company, Inc., corporate broker, and Arthur G. Delor, broker, dismissed.


DONE and ENTERED this 26th day of January, 1977, in Tallahassee, Florida.


K. N. AYERS Hearing Officer

Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304

(904) 488-9675


Filed with the Clerk of the Division of Administrative Hearings this 26th day of January, 1977.


COPIES FURNISHED:


Frederick H. Wilsen, Esquire 2699 Lee Road

Winter Park, Florida 32789


Burton Burdick, Esquire

303 S. E. 17th Street

Ft. Lauderdale, Florida 33316


Docket for Case No: 76-001819
Issue Date Proceedings
Jun. 22, 1977 Final Order filed.
Jan. 26, 1977 Recommended Order sent out. CASE CLOSED.

Orders for Case No: 76-001819
Issue Date Document Summary
Apr. 18, 1977 Agency Final Order
Jan. 26, 1977 Recommended Order Respondent didn't deposit downpayment in escrow and surrendered same to buyer on demand because listing realtor lied about land. Recommend dismissal.
Source:  Florida - Division of Administrative Hearings

Can't find what you're looking for?

Post a free question on our public forum.
Ask a Question
Search for lawyers by practice areas.
Find a Lawyer