STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FLORIDA REAL ESTATE COMMISSION, )

ex rel. H.F. McCUE, )

)

Petitioner, )

)

vs. ) CASE NO. 77-013

)

ROBERT H. GREENE, )

)

Respondent. )

)

Progress Docket No. 3021 )

)

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 April 14, 1977, at Winter Park, Florida.

APPEARANCES

For Petitioner: Bruce I. Kamelhair, Esquire

Staff Attorney

Florida Real Estate Commission 2699 Lee Road

Winter Park, Florida 32789

For Respondent: Benjamin P. Shumann, Esquire

1800 West Colonial Drive Orlando, Florida

By Administrative Complaint filed October 4, 1976, the Florida Real Estate Commission (FREC) ex rel. H. F. McCue, seeks to revoke, suspend or otherwise discipline the real estate broker's license of Robert H. Greene and registrant's right to practice thereunder. As grounds therefore, it is alleged that in negotiating the sale of real property between Marino and Borsack, respondent was guilty of misrepresentation, concealment, trick, scheme or device, culpable negligence or breach of trust in a business transaction in violation of Section 475.25(1)(a) F.S. Eight witnesses were called by petitioner, three witnesses including respondent were called by respondent and eleven exhibits were admitted into evidence.

FINDINGS OF FACT

1. The complaining witnesses in this case, the Marino's, owned real property in Fern Park, Florida that they listed in November, 1973, with Area One, Inc., a corporate broker. They were very anxious to sell this property.

   
   

2. At all times here involved, respondent was a registered real estate broker and was employed as a salesman and office manager of Area One, Inc.

3. The property was listed through salesman Eleanor Stanfield although respondent Greene accompanied her to the Marino's when the listing was obtained.

   
   

4. Approximately two weeks thereafter, respondent obtained a prospective buyer for the property who was willing to purchase but couldn't meet the cash down payment required to make up the balance over a 95 percent mortgage.

   
   

5. The buyer, Borsack, was an acquaintance respondent had known socially for a year or so.

   
   

6. The suggestion was made that if Marino could loan Borsack the money for the down payment the latter would sign a balloon note payable twenty dollars per month for the first five years with the balance then due and payable.

   
   

7. When bringing this proposal to Marino, respondent told him it was not the best deal but it was the best he could offer at the moment. At the time, Borsack was employed as a salesman and was apparently earning a good salary.

   
   

8. Marino was receptive to the idea and agreed to loan the buyer $2400. Marino was advised by his lawyer that he should have more security for the loan than the note signed by Borsack alone and respondent agreed to guarantee the note.

   
   

9. Marino prepared a check for $2400 which he exchanged for a cashier's check for a like amount. This was given to respondent when he executed as the guarantor and was subsequently given to the closing agent.

   
   

10. There was conflicting testimony regarding the dispenser of the information that the existence of the note should be withheld from the mortgage broker at the closing. The complaining witnesses contended that respondent so advised them, but he denies ever giving such advice. Regardless of the complicity of respondent in this regard, both parties to the contract were aware that the mortgage would not be approved if the existence of the loan was disclosed to the mortgagee.

    
    

11. To account for his cash payment at closing, Borsack produced for the mortgage a letter from his sister reciting a gift from her of $2200. Borsack also signed a residential loan application (Exhibit 8) in which he indicated no financing other than first mortgage and the cash he would pay at closing.

    
    

12. Both buyer (Borsack) and seller (Marino) executed an affidavit (FNMA Form 1009)(Exhibit 10) on which they advised the mortgagee no secondary financing was involved in the transaction.

    
    

13. At the time the loan was made by Marino to Borsack the former's attorney was aware of the circumstances surrounding the transaction and this attorney advised Marino that it would be all right for him to accept the note provided payment was guaranteed by respondent. Although no testimony was elicited from the attorney in this regard, I would expect him to be cognizant of the fact that the mortgage would not be approved if the mortgagee was aware of the loan from seller to buyer.

    
    

14. Considerable testimony was adduced regarding whether or not the promissory note given by the buyer to the seller constituted secondary financing as intended on Exhibits 8 and 10. Since this determination is not necessary to the results reached below, respondent's understanding that "secondary financing"

    relates only to that financing that would create a lien on the property is likewise immaterial to the result.

    
    

15. During a 60 day period including the time this transaction occurred, respondent sold four pieces of property for the Marino's. At no time during the negation which resulted in the sales of the property from Marino to Borsack did respondent give any false or misleading information to the Marinos.

    
    

16. Although no evidence was presented to this effect, the complaint alleges, and the answer admits, that after the transaction closed Borsack subsequently defaulted on his mortgage and on his note to Marino; that respondent made a few payments on the note he had guaranteed before stopping these payments; and that Marino obtained a judgment against respondent for the amount of the promissory note. Thereafter, in December 1975, some two years after any act of respondent in this transaction that could have given rise to a violation of Chapter 475, F.S. occurred, the Marinos filed a complaint with the FREC and the investigation and administrative complaint here involved followed.

    
    

    CONCLUSIONS OF LAW

    
    

17. Section 475.25(1)(a), F.S. 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 facts showing that the registrant has:

    
    

    "Been guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing, trick, scheme or devise, culpable negligence, or breach of trust in any business transaction in this state."

    
    

18. Certainly with respect to the complaining witnesses, none of respondent's acts constituted fraud. He made no misrepresentation, committed no tricks, scheme or breach of trust, and did nothing, except fail to make good on the promissory note on which he was guarantor, which in any manner harmed the complaining witnesses.

    
    

19. Here, both the buyer and the seller made false affidavits in order to secure the consummation of a real estate transaction they both wanted to occur. The complaining witness engaged the services of an attorney to prepare the note and to represent him at the closing. If the acts of respondent, which were well known to everyone involved, were so culpable, it would appear that Marino's attorney would have advised Marino of the consequences.

    
    

20. While the fraud, if you will, of the buyer, seller and respondent induced the mortgagee to put up 95 percent of the purchase price of the house, this is not the fraud that is the subject of this administrative complaint. This complaint purports to allege that the client, i.e. the seller, was defrauded by respondent.

    
    

21. Taking the entire testimony in the light most favorable to the respondent, respondent gave no false information to Marino, practiced no deceit which induced Marino to take disadvantageous action, was totally honest in telling Marino the contract presented was not the best for him, and even attempted to make good on the promissory note which he had signed as guarantor.

22. Taking the evidence in the light most unfavorable to respondent, he signed a note he was unable to pay and was in pari delicto with the buyer and seller viv a vis the mortgagee.

    
    

23. From the foregoing it is concluded that the acts of respondent here involved do not reach that degree of culpability proscribed by Section 475.25(1)(a), F.S. above quote. It is therefore,

RECOMMENDED that the complaint be dismissed.

DONE and ENTERED this 3rd day of May, 1977, in Tallahassee, Florida.

K. N. AYERS Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 3rd day of May, 1977.

COPIES FURNISHED:

Bruce I. Kamelhair, Esquire Staff Attorney

Florida Real Estate Commission 2699 Lee Road

Winter Park, Florida 32789

Benjamin P. Shumann, Esquire 1800 W. Colonial Drive Orlando, Florida

Docket for Case No: 77-000013

Orders for Case No: 77-000013