Judges: STEPHEN F. DEAN
Agency: Department of Business and Professional Regulation
Latest Update: Jan. 28, 1977
Summary: Whether Norman Wayne Lund, an active broker in Lund Realty, Inc., a licensed corporate broker, failed to account or deliver to Daisy and Kenneth Parnell money in the form of a deposit which had come into his hands and which was not his property or which he was not in law or equity entitled to retain, under the circumstances, and at the time which was agreed upon or which was required by law or, in the absence of an agreed upon time, upon demand of the Parnells, who were entitled to such an accou
Summary: Whether Norman Wayne Lund, an active broker in Lund Realty, Inc., a licensed corporate broker, failed to account or deliver to Daisy and Kenneth Parnell money in the form of a deposit which had come into his hands and which was not his property or which he was not in law or equity entitled to retain, under the circumstances, and at the time which was agreed upon or which was required by law or, in the absence of an agreed upon time, upon demand of the Parnells, who were entitled to such an accounting or delivery.Realtor's decision to retain money in escrow when competing claims arose was a techinical violation. He should have disbursed or interpleaded funds.
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CHARLES E. KIMMIG, SR., )
vs. ) CASE NO. 76-2104
) PD NO. 3071
Respondent. )
A hearing was held in the above styled case on January 7, 1977 at 9:00 a.m. in the County Commission Chambers, Osceola County Courthouse, 12 South Vernon Avenue, Kissimmee, Florida, before Stephen F. Dean, assigned Hearing Officer of the Division of Administrative Hearings. This matter came on to be heard upon an Administrative Complaint filed against Norman Wayne Lund by the Florida Real Estate Commission. This case was consolidated for the purposes of hearing pursuant to a Joint Stipulation of the Parties with Case Number 761453, PD Number 2847.
Whether Norman Wayne Lund, an active broker in Lund Realty, Inc., a licensed corporate broker, failed to account or deliver to Daisy and Kenneth Parnell money in the form of a deposit which had come into his hands and which was not his property or which he was not in law or equity entitled to retain, under the circumstances, and at the time which was agreed upon or which was required by law or, in the absence of an agreed upon time, upon demand of the Parnells, who were entitled to such an accounting or delivery.
For Petitioner: Manuel E. Oliver, Esquire
Carleen Chalk Lund and Norman Wayne Lund are registered real estate brokers holding current registration from the Florida Real Estate Commission and are active brokers in Lund Realty, Inc., a corporate broker registered with the Florida Real Estate Commission.
On or about January 4, 1975, Daisy and Kenneth Parnell, the buyers, signed an offer to purchase the following real property from David and Wilma Hammer:
East 184.5 ft. of NW 1/4 of SW 1/4 of Sec 6, Twp. 26 S, Range 29 E, N Osceola County.
Said offer was accepted by the sellers.
Subsequently, the buyers sent a telegraphic money order in the amount of $2,200 to Lund Realty, Inc. The afore said money was deposited in the escrow account of Lund Realty, Inc. $2,000 as deposit on the Hammer's property and $200 to be used for closing costs.
The following provisions of the Contract for Purchase between the buyers and the sellers are specifically noted and referenced:
In accordance with provisions of paragraph 4, the contract was to be closed and the deed delivered on or before January 31, 1975.
In accordance with the provisions of paragraph 6, the seller was to convey title to the aforesaid property to the buyer by agreement for deed.
In accordance with the provisions of paragraph 7, the costs, if any, of preparation of closing documents and closing fee shall be borne equally
by the seller and buyer.
In accordance with the provisions of paragraph 9, all closing costs were to be divided equally between the buyer and seller including title insurance.
In accordance with paragraph G of said standards, if the buyer failed to perform any of the covenants of the contract within the time specified, the deposit paid by the buyer might be retained by or for the account of the
seller as consideration for the execution of the contract and in full settlement of any claims far damages and all parties would be relieved
of all obligations under the contract and each party would execute a separate release of the other at that time.
In accordance with the provisions of paragraph P of the standards, in the event that the buyer failed to perform and the aforesaid deposit was retained, the amount of the deposit was to have been divided equally between the realtor and the seller provided that the amount to be retained and received by the realtor
would not exceed the full amount of the commission and that any excess would be paid to the seller.
In accordance with the provisions of the paragraph `Commission to Realtor", the seller acknowledged the employment of Lund Realty, Inc.
and agreed to pay Lund Realty a commission in accordance with the commission agreement.
On January 25, 1975, copies of the articles of agreement, closing statement, and title insurance cost disclosure were sent by Chelsea Title and Guaranty Company to Mrs. Daisy Parnell at 88 North Pasack Road, Spring Valley, New York, 10977. The letter accompanying the aforementioned documents indicated that the sellers had executed the closing papers on that date. Said letter further indicated that as soon as the papers were signed by the recipient, that Dee A Burttram, manager of Chelsea Title and Guaranty Company, would record the articles of agreement and insure title to property. These papers were not signed and returned to Chelsea Title, and on February 14, 1975 a subsequent letter was addressed from Dee A. Burttram to Mrs. Daisy Parnell at the aforestated address indicating that Chelsea Title had not received the documents forwarded to Mrs. Parnell and offering further information if they had not been completed. See Composite Exhibit 10.
Between January 25 and February 28, 1975 efforts were made by Lund Realty, Inc. to contact Mrs. Daisy Parnell without success. On February 28, 1975 it was determined that Frank Townsend, Attorney at Law practicing in Kissimmee, had been engaged by Sidney Schwartz, Attorney at Law practicing in New York, to review the contract entered into by Mrs. Daisy Parnell.
According to his testimony, Frank Townsend recommended to Schwartz that Mrs. Parnell not go through with the contract until certain discrepancies in the contract were clarified. The discrepancies involved were the conflict between the provision of paragraph 2 stating that $8,000 purchase money note and mortgage to the seller while paragraph 6 indicated that the seller would convey title by an agreement for deed; the lack of a scribner's statement note on the papers to be filed with the Court; and a discrepancy between the amount of monthly payment as stated in the Contract for Sale and Purchase and the Agreement for Deed. However, by his letter of March 5, 1975 to Mrs. Daisy Parnell, Townsend refers only to problems involving the use of the Agreement for Deed which he concluded was not a problem if the sellers insisted on that form of conveyance, and the fact that the Agreement for Deed is unacceptable because it is unrecordable (an apparent reference to the fact that a scribner's notation was not made on the Agreement for Deed).
By his letter of April 3, 1975 to Mr. Sidney Schwartz, Mr. Townsend indicates that he had completed all back ground work on the transaction and had advised Mr. Murray W. Over street, attorney for Mr. and Mrs. Hammer three weeks prior that he (Townsend) was ready to provide a note and mortgage in exchange for a Warranty Deed and had requested that Overstreet arrange a closing date. Mr. Townsend closes indicating that he had again contacted Mr. Overstreet reminding him that the Parnells wished to close.
Several things are apparent from Townsend's letters of March 5 and April 3, 1975. It is apparent from the letter to Mrs. Parnell from Townsend dated March 5, 1975 that substantial concern existed on the part of Schwartz that the use of an Agreement for Deed in the transaction would provide to Mrs. Parnell less protection than she would have in a situation in which a note and mortgage was used. However, as stated above, Townsend pointed out that the use of an Agreement for Deed under the Florida Law would afford Mrs. Parnell the same protection as a mortgage. It is also clear from the April 3 letter that all problems related to the Parnell-Hammer transaction had been resolved, that they were ready to close but insisted upon a note and mortgage in exchange for a
warranty deed, and their position had been communicated to counsel for the Hammers.
The demand for the use of a note and mortgage by the Parnells is contrary to the provisions of the Contract for Sale and Purchase between these parties entered into on January 4, 1975 and as of April 3, 1975 was the only reason for the Parnell's refusing to close. On April 3, 1975, Mr. Murray Overstreet attorney for Mr. and Mrs. Hammer, advised Frank N. Townsend, attorney for Mrs. Parnell, that the Hammers considered their Contract for Sale and Purchase with Mrs. Parnell to be null and void because the transaction was to be closed on or before January 31, 1975 and that as of April 3, 1975 the matter had not been completed. Mr. Overstreet further advised that his clients made no claim on the deposit made to Lund Realty and that said deposit might be returned to the buyers. A copy of this letter was sent to Lund Realty, Inc.
Pursuant to the provisions of paragraph G of the Contract for Sale and Purchase referenced above, upon default of the buyer, the deposit paid by the buyer could be retained by or for the account of the sellers as consideration for the execution of the contract and in full settlement of any claims for damage. Under the provisions of paragraph P of said contract, said deposit would be divided equally between the realtor and seller; provided, however, that the amount retained or received by the realtor was not to exceed the full amount of the commission, in this instance $600.
On April 4, 1975 in response to the copy of the letter from Overstreet to Townsend in which the Hammers declared the Contract for Purchase and Sale null and void, Lund Realty, Inc. wrote Frank Townsend advising him that the expenses for sales commission, cancellation fee, and termite inspection should be considered before any escrow funds were disbursed and requesting that Lund Realty be advised as to how Mrs. Parnell would like to handle the charges. Clearly, Lund Realty considered the Parnells to be in default and asserted a claim for commission. No evidence was received regarding any response from Townsend to the letter of Lund Realty, Inc. dated April 4, 1975. On May 14, 1975 Lund Realty wrote Mrs. Daisy Parnell sending her a check in the amount of
$1,466, the amount of her deposit less expenses incurred by her for sales commission, cancellation fee, termite inspection, and insurance. The amounts of each of the expenses and copies of statements were enclosed.
Although the check in question was retained by Mrs. Parnell, Lund Realty received a letter from Sidney Schwartz dated May 23, 1975 which states in pertinent part as follows:
"I am led to believe that the seller in the proposed transaction did not perfect title and waived and/or released its interest in
the contract. If this be so, the entire down pay ment of Mrs. Parnell must be returned to her imme- diately.
Please inquire into this matter.
You no doubt are aware that Mrs. Parnell has retained Florida counsel, namely, Frank N. Townsend, Esquire, Post Office Box 847, Kissimmee, Florida.
This is further to advise that in the event there has been a wrongful retention of any of Mrs. Parnell's funds, complaints shall be lodged with all appropriate authorities including licen- sing authorities in the State of Florida."
The next contact between the parties was a letter to Lund Realty from Frank Townsend dated June 19, 1975. In that letter, Mr. Townsend stated as follows:
"This confirms our request in accordance with Mr. Overstreet's letter wherein no demand is made for any funds on behalf of the Hammers, the return of all funds deposited with you by the Parnells is specifically requested."
A second follow-up letter was addressed to Lund Realty on July 14,1975 requesting a response to the aforementioned letter of June 19, 1975.
It is clear that the basis for demand of return i of the deposit receipt in its entirety was based on the statements in Overstreet's letter to Townsend dated April 3, 1975, that the Hammers made no claim to the deposit to Lund Realty, Inc.
This position of the Hammers was subsequently clarified by Mr. Hammer in his letter of August 12 (Exhibit 7) and by Mr. Overstreet, who at the hearing, testified that the Hammers never intended to waive the amount of the commission and the cost.
Lund Realty was entitled to its commission
and the Hammers would have had a cause of action against the Parnells under the contract for the entire amount of the deposit. However, the existence of a dispute over claims to all or portions of the escrow funds developed slowly, and was based on whether the Hammers waived their rights to all or any portion of the escrow funds.
In September 1975' Lund Realty requested an advisory opinion of the Florida Real Estate Commission regarding its duties. The conclusion of that advisory opinion was that disbursement should be made to the Parnells, and that the claims that Lund, Chelsea Title and any other individuals should be filed in a court of competent jurisdiction. The advisory opinion was silent, however, on Hammer's subsequent claim for the commission and cost from the deposit.
As of the date of hearing, the $2,200 was on deposit in the escrow account of Lund Realty, Inc.
CONCLUSIONS OF LAW
Section 475.25(1)(c) provides that any registrant who fails to make an accounting and to deliver monies on deposit to one entitled to them and to which the registrant did not have a claim in law or equity may be suspended for up to two years or until compliance with a lawful order of the Commission or both.
It is clear that a dispute over the deposit funds did not exist until May 23, 1975. The basis for Parnell's demand for all the deposit was the apparent waiver of any claim for the deposit which they might be called upon to
pay themselves. Therefore, a controversy exists between the Hammers and the Parnells. However, while this dispute might excuse Lund Realty from disbursing the money to the Parnells, it created a duty on Lund to take affirmative action to resolve the conflicting claims. Clearly, the most expedient method to clarify this would have been to interplead all of the claimants. By failing to act to resolve the conflict or to disburse the funds, the Respondents violated the provisions of Section 475.25(1)(c), Florida Statutes.
The position and actions of the various individuals should also be considered in this case in arriving at a penalty because none of the parties have completely "clean hands." The Parnells precipitated the breach by insistence on a note and mortgage; the Hammers have made no attempt to clarify the situation by paying the commission and cost; and the attorneys kept Lund Realty completely in the dark about what was transpiring. The Lunds are the only ones involved in the transaction who have tried to carry out their obligation. Further, they also are the only one who stand to lose financially with out seeking judicial relief.
Based on the foregoing Findings of Fact, Conclusions of Law, and other factors bearing on the case, the Hearing Officer would recommend that the Florida Real Estate Commission place Norman Wayne Lund on probation for one year, and suspend the registration of Lund Realty, Inc. until the escrow funds concerned have been interplead in a court of competent jurisdiction to resolve the conflicting claims to said funds.
DONE and ORDERED this 28th day of January, 1977 in Tallahassee, Florida.
STEPHEN F. DEAN
Division of Administrative Hearings Room 530 Carlton Building Tallahassee, Florida 32304
Manuel E. Oliver, Esquire Florida Real Estate Commissions 2699 Lee Road
