STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FLORIDA REAL ESTATE COMMISSION ) ex rel. UPTON B. MACKALL, )

)

Petitioner, )

)

vs. ) CASE NO. 76-2194

)

HORACIO A. SOTOLONGO, T/A )

LAKE HARBOUR REALTY, )

)

Respondent. )

)

Progress Docket No. 2888 )

)

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 March 30, 1977 at West Palm Beach, Florida.

APPEARANCES

For Petitioner: Bruce I. Kamelhair, Esquire

Staff Attorney

Florida Real Estate Commission 2699 Lee Road

Winter Park, Florida 32789

For Respondent: Horacio A. Sotolongo was not present.

By Administrative Complaint filed July 26, 1976, FREC ex rel. Upton B. Mackall seeks to revoke, suspend or otherwise discipline the real estate brokers license of Horacio A. Sotolongo (Respondent) and Respondent's right to practice thereunder. As grounds there for it is alleged in Count I that when the original prospective buyer who had been produced by Respondent, was unable to close the contract, Respondent produced a second buyer to whom the contract to purchase was assigned; that Respondent advised the seller that the new buyer owned a Miami lumber company and could not speak English, both of which were false; and that thereby Respondent was guilty of misrepresentation, fraud, and breach of trust in a business transaction. In Count II it is alleged that the buyer made an offer to purchase real property through Respondent and gave Respondent an earnest money deposit of $2500; that this deposit was not placed in Respondent's escrow account; that when the offer was not accepted by the seller and buyer demanded return of his deposit Respondent delayed some two months in returning the deposit; and that thereby Respondent failed to place funds received in an escrow account. Count III alleges that in the event the

$2500 was placed in an escrow account it was not kept there until disbursement was properly authorized. Seven witnesses were called by Petitioner, and 22 exhibits were admitted into evidence.

FINDINGS OF FACT

1. Horacio A. Sotolongo (Respondent) is, and at all times involved in the Administrative Complaint was, a real estate broker registered with the FREC.

   
   

2. Respondent was served with a copy of the Administrative Complaint and requested a hearing on the charges. Thereafter Respondent was notified of the time and place of the scheduled hearing by Registered/Certified Mail sent to the last address registered with the FREC.

   
   

3. In May, 1974 Respondent negotiated the sale of a tract of land near Stuart, Florida between Hypoloxo Enterprises, Inc. seller, and Harry Soccorso, buyer. When the buyer was unable to close the transaction Respondent procured another buyer to whom the contract was assigned by the original buyer. Respondent told the seller that the new buyer (Enrique Torres) was the owner of the Florida Lumber Company located in Miami and that Torres could not speak English. The property was deeded to Torres in accordance with the contract. Subsequent thereto Torres became delinquent in his mortgage payments and quitclaimed the property back to the seller in satisfaction of the mortgage. At no time was Torres more than an employee of Florida Lumber Company and he owned no stock and held no corporate office in this company. Torres is fluent in English and was so fluent at the time of the transaction.

   
   

4. On August 29, 1974 Respondent produced a potential buyer for property owned by Ft. Pierce Sand and Minerals, Inc. and presented an offer to purchase the property for $150,000 under terms specified in the offer. Although the contract recited an earnest money deposit by buyer of $5,000, only $2,500 was received by Respondent. The offer was not accepted by the seller and buyer demanded return of his deposit. Upon receipt of the check representing the earnest money deposit Respondent did not deposit it in his escrow account but cashed the check at the First National Bank and Trust Company of Tequesta on which the check had been drawn. At the time of receipt of the $2,500 deposit Respondent's escrow account balance was zero and there has been no activity in the account since that time. The $2,500 deposit was returned to the buyer some two months after the offer had been refused by the seller.

   
   

   CONCLUSIONS OF LAW

   
   

5. Respondent received proper notice of the time and place of the hearing and of the charges preferred against him. There- fore, the Hearing Officer had jurisdiction over the Respondent and the offense.

   
   

6. There are two basic accusations here involved. Essentially the first alleges that Respondent was guilty of fraud, misrepresentation, and breach of trust in a business transaction by reason of his misrepresentations to the seller regarding the assignee of the contract, thereby inducing the seller to rely on these representations to his subsequent injury.

   
   

7. The seller had accepted a contract that provided for a sale price of

   $180,000 with a $7,000 deposit, $128,000 purchase money mortgage to be held by seller, and $45,000 cash at time of closing. Thus the seller was to receive approximately thirty percent of the purchase price of the property in cash by the time of closing and take back a purchase money mortgage for the balance.

   This contract was assigned (Exhibit 16) to Torres and when Torres complied with the terms of the contract the property was deeded to him. The seller's consent to the assignment of this contract was neither necessary nor given. Accordingly it is difficult to see how any misrepresentation of Torres' position with

   Florida Lumber Company or his ability to speak English could have had any effect upon this transaction.

   
   

8. While it is true that the broker owes the duties of a fiduciary to his principal, the seller, and this includes the duty to be honest and to make no misrepresentations; nevertheless, unless the misrepresentations made are material they do not reach the type of conduct proscribed by Section 475.25(1)

   P.S. which provides in pertinent part that the registration of a registrant may be suspended for a period not to exceed two years upon a finding of fact that the registrant has:

   
   

   "(a) Been guilty of fraud, misrepresentation, concealment... or breach of trust in any business transaction. ...

   
   

9. At the closing Torres complied with all terms of the contract thereby fully meeting the obligations the contract imposed upon the buyer. Regardless of the identity, race, creed or reputation of the assignee of a contract, so long as he complies with the contractual duties imposed upon him and the contract does not specifically prohibit an assignment, the other party must also comply with his contractual duties.

   
   

10. While an individual may refuse to enter into a contract to sell property he owns, and is not offering to the general public, to another of a race or creed to which he objects, once he has entered into a contract to sell he cannot thereafter rescind such contract on the grounds that had he known the true identity of the purchaser he would not have sold. Accordingly regardless of Torres' financial stability or ability any representations made by Respondent on this subject to the seller could have had no effect upon the seller's duty to convey the property under the terms of the contract. Under these circumstances the position of Torres with the Florida Lumber Company was totally irrelevant and the misrepresentation made by Respondent could have had no material effect on the contract.

    
    

11. The evidence was unrebutted that when Respondent received the earnest money deposit on August 29, 1974 he did not place this in his escrow account. Section 475.25(1)(i) provides an additional ground for the suspension of a license if the registrant has:

    
    

    "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 account maintained by

    him in some bank located and doing business in Florida, wherein such funds shall

    be kept until disbursement thereof is properly authorized...

    
    

12. From the foregoing it is concluded that Respondent misrepresented the financial status of the assignee of a real estate contract to the seller but that this was not a material misrepresentation and could not have had any relevance with respect to the legal duties of the seller under the contract. It is further concluded that Section 475.25(1)(a) F.S. above quoted refers only to

material misrepresentations and not to immaterial statements. It is further concluded that Respondent broker failed to place funds entrusted to him in escrow and thereby violated Section 475.25(1)(i) F.S. It is therefore,

RECOMMENDED that the registration of Horacio A. Sotolongo as a broker be suspended for a period of six (6) months.

DONE and ENTERED this 25th day of April, 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 25th day of April, 1977.

COPIES FURNISHED:

Bruce I. Kamelhair, Esquire 2699 Lee Road

Winter Park, Florida 32789

Mr. Horacio A. Sotolongo 1429 Tenth Street

Lake Park, Florida 33403

Docket for Case No: 76-002194

Orders for Case No: 76-002194