STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FLORIDA REAL ESTATE COMMISSION, )

)

Petitioner, )

)

vs. ) CASE NO. 79-392

)

PRESTIGE REALTY, INC. and )

ANTHONY C. CAPPELLO, )

)

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 7 June 1979 at Fort Lauderdale, Florida.

APPEARANCES

For Petitioner: John Namey, Esquire

Staff Attorney

Florida Real Estate Commission

400 W. Robinson Street Orlando, Florida 32801

For Respondents: Lawrence J. Meyer, Esquire

2435 Hollywood Boulevard

Hollywood, Florida 33020

By Administrative Complaint filed 7 December 1978, the Florida Real Estate Commission (FREC), Petitioner, seeks to suspend or otherwise discipline the corporate real estate broker's license of Prestige Realty, Inc. and the real estate broker's license of Anthony C. Cappello, Respondents. As grounds therefor it is alleged that Respondents, through Cappello, untruthfully represented to the seller in a real estate transaction that the sale of his home was conditioned upon the purchase of an BBP Buyers Protection Plan by seller, and unless seller agreed to pay for such plan, the deal would not go through; and that Respondents failed to disclose to the seller that Respondents would receive 25 percent of the premium for the Buyers Protection Plan. Both counts are alleged to violate the Provisions of Section 475.25(1)(a), (c) and (d), Florida Statutes and Rule 21V-10.13, Florida Administrative Code.

Four witnesses were called by Petitioner, four witnesses were called by Respondent and 3 exhibits were admitted into evidence.

FINDINGS OF FACT

1. Prestige Realty, Inc. and Anthony C. Cappello were at all times here relevant registered with the FREC as alleged. Mrs. Cappello, wife of Respondent, is a salesperson with Prestige Realty, Inc.

2. Prestige Realty, Inc. is an Electronics Realty Associates (ERA) franchisee and actively promotes the ERA Homeowners warranty Plan which will, for a fee, warrant to pay for repairs to structure and equipment within the first year of purchase all costs over the minimum for which the policy is written.

   
   

3. While showing prospective purchasers William and Dora Keys various properties, Mrs. Cappello told them about the ERA Buyers Protection Plan (BPP) and the Keys expressed an interest in having same, particularly if the seller would pay for it. Mrs.. Cappello has worked with the Keys for several months showing them various properties for sale.

   
   

4. Thomas Hanrahan listed his home for sale with B & M Real Estate as listing agent at a price of $52,000 on 31 January 1977.

   
   

5. On April 28, 1977 Mrs. Cappello obtained an offer from William and Dora Keys to purchase Hanrahan's house for $49,000.

   
   

6. Keys had inherited some money, and after seeing the Hanrahan house which they liked, made an offer to purchase the property for $49,000 including the drapes and BPP. Inclusion of the BPP in the offer was suggested by Respondent Cappello and/or Mrs. Cappello.

   
   

7. The fact that an offer had been received was communicated to the listing salesperson and the listing agent met the Cappellos to present the offer to Hanrahan.

   
   

8. Respondent Cappello, who had accompanied his wife to present the offer, first discussed the contract conditions, including drapes and BPP, before revealing the offering price to Hanrahan and the listing broker's agent. When Respondent revealed the $240 premium for BPP Hanrahan remarked it was a "rip- off"; however, Respondent Cappello emphasized that the seller shouldn't mind paying this premium if the selling price of the home is right. After obtaining Hanrahan's agreement to the BPP "if the price is right', Respondent disclosed the offering price of $49,000. Hanrahan refused this offer and made a counter offer of $51,000, which was communicated to the buyers who re-countered with a

   $50,000 offer. At no time during these negotiations did Respondents advise Hanrahan that Prestige Realty would receive 25 percent of the premium the contract provided the seller would pay for the ERA BPP. Of the $240 premium paid for the BPP, $C0 was retained by Respondent, Prestige Realty, and the remaining $180 was forwarded to ERA.

   
   

9. When the offer of $50,000 was presented to Hanrahan by Respondent Cappello, it was represented to be the buyers' final offer, that the ERA BPP was an essential element of the offer, and if not accepted by the seller they would find the buyers another house.

   
   

10. The Keys never insisted to Cappello that the BPP be included in their offer, and both William and Dora Keys testified they would have paid $50,000 for the Hanrahan home without the BPP. Attempts by Hanrahan to share the cost of BPP with the buyers or discourage their insistence upon having this policy provided were rebuffed by Respondents.

    
    

11. Following the closing the Keys were offered the option of taking a lower deductible on the BPP than $100, but after being advised the additional cost to them for a lower deductible, it was declined.

12. Respondents and other ERA franchisees consider the BPP to be a good selling tool in the conduct of their business. In addition to the BPP, ERA offers a sellers protection plan which, if the seller lists his house with an ERA franchisee and agrees to pay for a BPP when the house is sold, will insure the seller from failure of certain equipment (less a deductible) during the period the house is listed before sale.

    
    

    CONCLUSIONS OF LAW

    
    

13. The Division of Administrative Hearings has jurisdiction over the parties and subject matter of these proceedings.

    
    

14. Section 475.25(1), Florida Statutes, provides that the registration of a registrant may be suspended for a period not exceeding two years upon a finding of fact showing the registrant has:

    
    

    1. Been guilty of fraud, misrepresentation, concealment . . . dishonest dealing, trick, scheme or device . . in any bus

       transaction . . .

       
       

15. Rule 21V-10.13, Florida Administrative Code, provides:

    
    

    Any real estate broker or salesman who receives, or makes any arrangement or agree- ment to receive, directly or indirectly, any compensation, fee, kickback, rebate, bonus or other remuneration or valuable considera- tion, for the placement of, or favor in, any business transaction which forms a part of, or is incident to, any transaction or trans- actions negotiated or handled by said broker or salesman as an agent, shall be deemed to

    be in violation of Subsection 475.25(1)(a) or Subsection 475.25(1)(c), or both of said Subsections of the Florida Statutes, unless prior to the time of the placement of, or favor In, said business transaction, the broker or salesman shall have fully and com- pletely advised his principal and all affected parties in the transaction, or transactions, which the broker or salesman is handling, of all facts pertaining to the arrangement or agreement for compensation, fees, kickback, rebate, or other remuneration or valuable consideration. In all such cases proof of receipt of such compensation, fee, kickback, rebate, or other remuneration or valuable con- sideration by a real estate broker or sales- man will be deemed prima facie evidence of such violation.

    
    

16. Here, as in many real estate transactions, the selling broker appears to have misconstrued for whom he is agent. While real estate brokers and salesmen are independent contractors for all matters relating to liability, they nevertheless retain the relationship of agent to their principal, the seller.

    Inasmuch as an agent is obligated to exercise the utmost good faith in all matters connected with the subject of his employment, it follows that an agent may not, acting as such, make a secret personal profit out of any transaction wherein he acts, or should act, for his principal. 2 Fla Jur 2d Sec. 71 Agency.

    
    

17. Similarly in 7 Fla Jur Sec. 68 Brokers it is stated:

    
    

    The well-established principle of the law of agency which forbids an agent from acting for himself in relation to the subject of his agency, and from placing himself in a position adverse to, or in conflict with, the interests of his principal, applies to brokers as well as to other agents. The law does not permit a broker to advance his own personal interests by discharging the duties of his position in such a manner as to make a secret profit for himself. [Citations omitted]

    
    

18. The testimony of the President of Prestige Realty was that they actively promote the ERA Buyers Protection Plan and encourage their salesmen and brokers to include the BPP in the contract. Furthermore, they considered the BPP to be a valuable tool in promoting the sale of realty. Thus the broker was expecting a two-fold benefit from this program: (1) a part of the premium and

    (2) increased sales.

    
    

19. Promoting this program at the expense of the seller is not in the best interests of the seller. Making a profit which is not disclosed to the principal on such a transaction violates the law of agency and Rule 21V-10.13, Florida Administrative Code, above quoted.

    
    

20. Representations by Respondent Cappello that the Keys' offer for

$50,000 which included the BPP was a final offer and that the BPP was an essential part of the offer without which the Keys would not deal was false. While the Keys were interested in the BPP if the premium was paid by the seller, no evidence was presented that they would have opted for the BPP if the direct cost thereof was added to the purchase price as a separate item for which they would pay. The evidence presented is that Cappello suggested that the Keys ask for the BPP. His sales technique thereafter was to get the seller to agree. By telling the seller that the Keys' final offer, including the BPP charges to be paid by the seller, was a take-it-or-leave-it proposition, Respondent Cappello violated the fiduciary duty of honesty and fair dealing owed by an agent to his principal.

From the foregoing it is concluded that the Respondents, Prestige Realty, Inc. and Anthony Cappello, are guilty of violations of Section 475.25(1)(a) and

(d) Florida Statutes, and Rule 21V-10.13, Florida Administrative Code, as alleged. It is

RECOMMENDED that Prestige Realty, Inc. and Anthony Cappello be issued public reprimands.

Entered this 22nd day of June, 1979.

K. N. AYERS, Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301

(904) 488-9675

COPIES FURNISHED:

John Namey, Esquire Staff Attorney

Florida Real Estate Commission

400 W. Robinson Street Orlando, Florida 32801

Lawrence J. Meyer, Esquire 2435 Hollywood Boulevard

Hollywood, Florida 33020

Docket for Case No: 79-000392

Orders for Case No: 79-000392