STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FLORIDA REAL ESTATE COMMISSION, )

)

Petitioner, )

)

vs. ) CASE NO. 78-1485

) LLERA REALTY, INC., J.M. LLERA, ) CORAL REALTY CORP., ALBERTO E. ) TRELLES, )

)

Respondent. )

)

RECOMMENDED ORDER

This case was heard on October 19, 1978, pursuant to notice in Miami, Florida, by Stephen F. Dean, assigned Hearing Officer of the Division of Administrative Hearings. The Recommended Order in this cause was delayed upon stipulation of the parties to permit them the opportunity to file memoranda of law, which were presented on March 8, 1979.

This case was presented upon an Administrative Complaint filed by the Florida Real Estate Commission against the Respondents alleging that they had violated Section 475.42(1)(j), Florida Statutes, by having filed a Notice of Lis Pendens affecting the title to or encumbering certain real property to collect a real estate brokerage commission.

The issue presented is whether the Respondents violated the provisions of Section 475.42(1)(j), Florida Statutes.

APPEARANCES

For Petitioner: Harold E. Scherr, Esquire

Florida Real Estate Commission

400 West Robinson Street Orlando, Florida 32801

For Respondent: Peter M. Lopez, Esquire

202 Roberts Building

28 West Flagler Street Miami, Florida 33130

FINDINGS OF FACT

1. The Respondent, Llera Realty, Inc., is a corporate real estate broker, and J.M. Llera is the active real estate broker in that corporation. Llera Realty, Inc., and J.M. Llera represented the buyers in the negotiations for purchase and sale of the subject real property.

   
   

2. Coral Realty Corporation is a corporate real estate broker, and Alberto

   E. Trelles is the active real estate broker with that corporation. Coral Realty

   Corporation and Alberto Trelles represented the seller in the negotiations for purchasee and sale of the subject property.

   
   

3. The property in question was owned by Saul Lerner, who was represented in these negotiations by Julius Friedman, attorney at law.

   
   

4. The purchasers were Messrs. Delgado, Salazar and Espino, who are officers of Inter-America Housing Corp., said corporation eventually being the purchaser of the subject property.

   
   

5. Lerner made an oral open listing on a piece of real property which included the subject property. Trelles, learning of the open listing, advertised the property to various brokers. Llera was made aware of the availability of the property through Trelles' ad and presented the property to Delgado, Salazar and Espino. Lengthy negotiations followed during which various offers were tendered by the buyers through Llera to Trelles to Friedman in Lerner's behalf. These offers were rejected.

   
   

6. Eventually, negotiations centered on a segment of the property, and an offer was made by the buyers for $375,000 on this 7.5-acre tract. This offer was made through Llera to Trelles to Friedman, and was also rejected by Lerner.

   
   

7. The buyers then asked to negotiate directly with the seller and agreed to pay a ten percent commission to the brokers in the event of a sale. The buyers then negotiated with the seller and eventually reached a sales price of

   $410,000 net to the seller for the 7.5 acres which had been the subject of the preceding offer. Buyers executed a Hold Harmless Agreement with the seller for any commission that might become due, agreeing to assume all responsibility for such commissions.

   
   

8. The buyers through their corporation, Inter-America Housing Corp., purchased the property and refused to pay commissions on the sale and purchase.

   
   

9. Thereafter, the Respondents brought suit against the buyers and their corporation. The Respondent's suit alleges the facts stated above in greater detail and asserts that the buyers took the Respondent's commission money to which they were entitled under the oral agreement with the buyers and used this money to purchase a portion of the property. The Respondents asked the court to declare them entitled to a commission and declare an equitable lien in their behalf on a portion of the subject property together with punitive damages.

   
   

10. In conjunction with this suit, counsel for the Respondents filed a Notice of Lis Pendens. The Respondents questioned the propriety of this in light of Section 475.42(1)(j), Florida Statutes, and were advised by their counsel that the filing of Lis Pendens in this case was proper.

    
    

11. The court subsequently struck the Lis Pendens on motion of the defendant buyers; however, the court refused to strike the portion of the complaint asserting the right to and requesting an equitable lien in behalf of the Respondents.

    
    

    CONCLUSIONS OF LAW

    
    

12. The Florida Real Estate Commission has charged the Respondents with violation of Section 475.42(1)(j), Florida Statutes. This statute appears at first reading to restrict the right of a broker or salesman to file upon the public records any writing which purports to affect the titled of or encumber

    any real property. However, upon careful reading, this statute does not merely restrict this right but eliminates it by requiring the authorization of the property owner to file. Further, the language of the statute does not limit the type of writing one may file and does not limit the statute's application to situations involving a real estate transaction in which the broker or salesman functioned in his licensed capacity. Technically, any writing, to include a complaint filed in the circuit court, which raises an issue of the title to real property not owned by the broker would fall within the statute's prohibition.

    The scope of the statute has not been limited and defined by rule adopted by the Florida Real Estate Commission, and there are no judicial opinions examining the scope of the statute. On its face and without such limitations, the statute has a chilling effect of the right of the broker or salesman to seek redress in the courts because persons subject to the statute may have their license revoked or suspended and be prosecuted criminally.

    
    

13. This aspect of the statute is discussed above, although this forum may not adjudicate the constitutionality of the statute, because it directly affects the interpretation given to it. Where possible, it must be interpreted and applied in a manner that avoids any constitutional infringements. The intent of the legislature to prevent brokers and salesmen from affecting the alienability of land in transactions in which they are involved limits applicability of the statute to circumstances directly involving their work as licensees. The scope of documents covered within the ambit of the statute may not be extended to include complaints duly filed in the courts of the state. The statute's provision requiring authorization of the owner to file such writings must be limited to those writings which would require the owner's authorization or interpreted to modify and form an exception to the first tow restrictions presented in the statute. Coercion to pay money to a broker, salesman, or other person may not be presumed from the mere filing of such documents but must be proved based upon the nature of the documents filed and the circumstances of the filing. Finally, if such a filing is for the purpose of collecting a commission, the filing must be legally authorized and ethically proper.

    
    

14. Turning to the facts of this case, the writing filed was a Notice of Lis Pendens. Under most circumstances such a notice is not proper in a suit for the collection of a commission, because the obligation sued upon is purely contractual and generally exists between the seller and broker. Therefore, the broker who sues on the contract has no right, title or interest in the land and a Lis Pendens is not appropriate. In the instant case, the contract was with the buyers who were obligated to pay a ten-percent commission to the brokers. The buyers sought to avoid the commission and purchased the property for an amount very close to the last offer tendered through the brokers plus their commissions. The law recognizes that when such an event occurs the brokers may have an equitable interest in the property. Under these facts, the brokers' claim is justiciable as recognized by the circuit court's refusal to dismiss that portion of their complaint requesting an equitable lien be placed on the property. The court did strike the Lis Pendens, but it may have done so on the basis that the contract was oral and not written [see Section 48.23(3), Florida Statutes]; however, this does not affect the propriety of the initial filing. Further, as a practical matter, the court's refusal to dismiss the claim for an equitable lien is a bar to the alienability of the property and is "of record."

    
    

15. In summary, the brokers had the right to file the suit against the buyers, had the statutory right to file the Lis Pendens and, although their claim arose in contract, it does affect the title to the property in question. The present owners of the property, against whom the suit was brought, were in privity with the Respondents, obligated to pay the commission, and used the

    money as a portion of the payment for the property. The filing of the Notice of Lis Pendens was legally authorized and ethically proper under these facts.

    
    

16. Based on the facts in this case and the limited interpretation of Section 475.42(1)(j), Florida Statutes, which is necessary to avoid an overbreadth of regulation, the Respondents have not violated the provisions of Section 475.42(l)(j), supra, by filing a Lis Pendens.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law the Hearing Officer recommends that no action be taken against the real estate licenses of the Respondents.

DONE AND ORDERED this 29th day of March, 1979, in Tallahassee, Leon County, Florida,

STEPHEN F. DEAN, Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304

(904) 488-9675

COPIES FURNISHED:

Harold E. Scherr, Esquire Florida Real Estate Commission Post Office Box 1900

Orlando, Florida 32801

Peter M. Lopez, Esquire

202 Roberts Building

28 West Flagler Street Miami, Florida 33130

=================================================================

DISTRICT COURT OPINION

=================================================================

NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION AND, IF FILED, DISPOSED OF

LLERA REALTY, INC., J. M. IN THE DISTRICT COURT OF APPEAL LLERA, CORAL REALTY CORP. OF FLORIDA

and ALBERTO TRELLES, THIRD DISTRICT

JANUARY TERM, A.D. 1980

Appellants,

vs.

BOARD OF REAL ESTATE (formerly Florida Real Estate Commission),

Appellee.

/ Opinion filed July 1, 1980.

An Appeal from the Board of Real Estate.

Lopez & Harris and Peter M. Lopez, for appellants.

Howard Hadley and Kenneth M. Meer and Salvatore A. Cappino, for appellee. Before NESBITT, PEARSON, DANIEL, JJ., and PEARSON, TILLMAN (Ret.),

Associate Judge.

PEARSON, TILLMAN, (Ret.), Associate Judge.

This appeal by respondents Llera Realty, Inc., J.M. Llera, Coral Realty Corp. and Alberto Trelles is brought to review the administrative decision of the Florida Real Estate Commission (now known as the Board of Real Estate), which suspended the licenses of the respondents for thirty days. The complaint filed by the Commission charge that the respondents had violated Section 475.42(l)(j), Florida Statutes (1977), by filing a notice of lis pendens on real estate in a court action brought to recover a real estate commission. 1/

The hearing officer entered a recommended order finding that the respondents had, in fact, recorded a lis pendens on real estate in order to collect the commission, and concluding that as a matter of law, the cited section was unconstitutional as applied in this case because "[o]n its face and without such limitations, the statute has a chilling effect on the right of the broker or salesman to seek redress in the courts because persons subject to the statute may have their license revoked or suspended and be prosecuted criminally."

The commission rejected that portion of the hearing officer's conclusions of law which held the application of the statute to the respondents to be unconstitutional and, accordingly, the respondents were found guilty and their licenses suspended for thirty days. We affirm.

The only substantial question argued in this court is whether the classification by the statute of real estate brokers and salesmen as a class of person who may not use the filing of a lis pendens in connection with a civil lawsuit filed in order to collect a real estate commission is a classification so unreasonable because real estate brokers and salesmen are privileged by the statutory law of this state in the collection of commissions. Section 475.41, Florida Statutes (1977), in effect, provides that only a real estate broker who is properly registered". . . at the time the act or service was performed "may maintain a court action for the collection of a commission for the sale of real estate. As stated in Quinn v. Phipps, 93 Fla. 805, 113 So. 419, 425 (1927), with regard to the real estate business, "No business known to modern society has a longer or more respectable history." In this regard, the statutory law of this state demands a high standard of those engaging in the real estate business. Section 475.17 et seq., Florida Statutes (1977), through the onus of revocation or suspension of registration, demands an exemplary level of behavior within the profession; Section 475.42, Florida Statutes (1977), enumerates various violations and the consequent penalties to be exacted against those who are not properly registered; and Sections 475.482 et seq., by creating the Florida Real Estate Recovery Fund to reimburse persons who have suffered monetary damages at the hands of those registered under this chapter, demonstrate this state's recognition of the sensitive and privileged position of those engaged in real estate to the public at large. Furthermore, it is well- established by the case law of this state that real estate brokers and salesmen occupy a position of confidence toward the public. See the discussion in Foulk

v. Florida Real Estate Commission, 113 So. 2d 714, 717 (Fla. 2d DCA 1959). And see Gabel v. Kilgore, 157 Fla. 420, 26 So.2d 166 (1946); and Ahern v. Florida Real Estate Commission ex rel. O'Kelley, 149 Fla. 706, 6 So.2d 857 (1942).

The work of real estate brokers and salesmen is intimately connected with the transfer of title to real estate. It is natural that their experience and knowledge in such matters should be greater than that of the people they serve in their profession. The denial to this privileged group of the availability of a lis pendens when used to collect a commission on the sale of the same real estate on which they have secured, or have attempted to secure, the transfer of title is not the denial of a right of access to the courts. It is simply the denial of a special tool which might be misused by some members of his privileged group to the disadvantage of the public.

Finding no error, we affirm the administrative decision.

ENDNOTES

1/ S 475.42(1)(j), Fla. Stat. (1977), provides: "No real estate broker or salesman shall place, or cause to be placed, upon the public records of any county, any contract, assignment, deed, will, mortgage, lien, affidavit, or other writing which purports to affect the title of, or encumber, any real property ... maliciously or for the purpose of collecting a commission, or to coerce the payment of money to the broker or salesman or other person, or for any unlawful purpose."

Docket for Case No: 78-001485

Orders for Case No: 78-001485