STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL )

REGULATION, BOARD OF REAL )

ESTATE, )

)

Petitioner, )

)

vs. ) CASE NO. 81-2011

)

CRAIG J. KRUSE T/A KRUSE )

REALTY, )

)

Respondent. )

)

RECOMMENDED ORDER

This matter came on for hearing in Ft. Walton Beach, Florida, before the Division of Administrative Hearings and its duly appointed Hearing Officer, R.

1. Carpenter, on November l9, 1981. The parties were represented by:

   
   

   For Petitioner: J. Riley Davis, Esquire

   320 Barnett Bank Building Tallahassee, Florida 32301

   
   

   For Respondent: Robert E. Lee, Esquire

   Post Office Box 1447

   Ft. Walton Beach, Florida 32549

   
   

   This matter arose on Petitioner's Administrative Complaint which alleges that Respondent misrepresented property sold in the course of his business as a licensed real estate broker. Petitioner charges that Respondent thus violated the provisions of Subsection 475.25(1)(b), Florida Statutes (F.S.), and should be disciplined accordingly.

   
   

   The parties submitted proposed findings of fact and conclusions of law. To the extent these proposed findings have not been adopted or otherwise incorporated herein, they have been specifically rejected as irrelevant or not supported by the evidence.

   
   

   FINDINGS OF FACT

   
   

   1. Craig J. Kruse, Respondent, has held real estate broker's license number 0049367 at all times relevant to this proceeding. Fred Chamberlain and JaNell Eisler were licensed real estate salesmen in Respondent's employ (Kruse Realty) at all times relevant.

      
      

   2. On December 1, 1978, through the efforts of Chamberlain, Respondent obtained an exclusive right of sale listing agreement from Jack Piediscalzi on a tract located in rural Okaloosa County. The property was thereafter divided into nineteen lots and offered to the public for sale.

   3. A Mr. and Mrs. Lyons contacted Respondent's brokerage office on November 17, 1979, seeking to purchase a lot for residential construction. They were assisted by JaNell Eisler, who subsequently arranged the sale of a lot in the Piediscalzi tract.

      
      

   4. Prior to entering the contract, the Lyons had qualified for Farmers Home Administration (FHA) financing, and advised Eisler that any property they purchased must meet FHA requirements. Eisler assured them that the Piediscalzi property was FHA qualified, and, on this representation, the Lyons purchased the property.

      
      

   5. The Lyons then attempted to obtain their FHA loan but were informed that the property did not qualify as it failed to meet the FHA requirement that it be located on a public road. The property was further objectionable from the FHA standpoint as it was not in compliance with the Okaloosa County subdivision ordinance.

      
      

   6. The Lyons immediately contacted Kruse Realty regarding these problems. Respondent thereafter attempted to obtain subdivision approval from Okaloosa County but was unsuccessful, primarily because the road fronting the lots was too narrow to be accepted as a public road.

      
      

   7. The Lyons then sought to rescind the contract and recover their purchase money. However, Eisler had not placed a contingency clause in the contract, and Piediscalzi rejected the Lyons' request, contending that he had relied on Respondent to take care of the details of sale and was not responsible for any misunderstanding. Respondent eventually returned sales commissions and offered to reimburse any closing expenses to the Lyons. However, Respondent was not willing to purchase the property or otherwise compensate the Lyons for their losses.

      
      

   8. Respondent and Eisler erroneously believed the property qualified for FHA financing because of building activity thee had observed in the area and the statements of other salesmen, but made no inquiry to the FHA. Based on his discussion with the Okaloosa County attorney, Respondent believed the Piediscalzi tract would meet building and zoning requirements as they were then being enforced. Respondent did not, however, make an independent determination that the property was in compliance prior to the Lyons transaction.

      
      

      CONCLUSIONS OF LAW

      
      

   9. Section 475.01, F.S., provides in part:

      
      

      1. "Broker" means a person who, for another, and for a compensation appraises, auctions, sells, exchanges, buys, rents, or offers, attempts or agrees to appraise, auction, or negotiate the sale, exchange, purchase, or rental of any real property . .

         . .or who advertises or holds out to the public by any oral or printed solicitation or representation that he is engaged in the business of appraising, auctioning, buying, selling, exchanging, leasing, or renting real property of others. . .or who takes any part in the procuring of sellers, purchasers, lessors, or lessees of the real property of

         another. . .or who directs or assists in the procuring of prospects or in the negotiation or closing of any transaction which does, or is calculated to, result in a sale . . . .

      2. "Salesman" means a person who performs any act specified in the definition of "broker," but who performs such act under the direction, control, or management of another person.

      3. "Broker-salesman" means a person who is registered as a broker, but who performs the duties of a salesman for another person, and who is designated as a broker-salesman in the registration list of the board.

         
         

   10. Subsection 475.42(1)(d) , F.S., provides in part:

       
       

       No salesman shall collect any money in connection with any real estate brokerage transaction, whether as a commission, deposit, payment, rental, or otherwise, except in the name of the employer and with the express consent of the employer. . .

       
       

   11. Subsection 475.25(1), F.S., provides in part:

       
       

       The board may deny an application for licensure or renewal, may suspend a license for a period not exceeding 10 years, may revoke a license, may impose an administrative fine not to exceed $1,000 for each count or separate offense, or may issue a reprimand, if it finds that the licensee or applicant has:

       1. Violated any provision of s. 475.42 or of s. 455.227(1);

       2. Been guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme, or device, culpable negligence, or breach of trust in any business transaction in this state or any other state, nation, or territory. . .

       
       

   12. Under the above provisions, Respondent is accountable for misrepresentation or culpable negligence 1/ in his business transactions and those of salesmen/broker-salesmen under his supervision. Here, Respondent and his sales personnel were culpably negligent in failing to ascertain the status of the Piediscalzi property with the Okaloosa County planning and zoning office, and in failing either to determine the qualification of the property for FHA financing or to include an appropriate contingency clause in the contract. 2/ Further, Respondent's employee misrepresented the property as FHA qualified. Respondent, as the broker, was responsible for this misrepresentation and should be disciplined accordingly.

   13. In determining the appropriate discipline, it should be recognized that the above statutory violation involved only one business deal. Further, the evidence did not establish that Respondent or his employee acted wilfully or for a corrupt purpose in misrepresenting the status of the property. Finally, Respondent has not profited by this violation.

RECOMMENDATION

From the foregoing findings of fact and conclusions of law, it is RECOMMENDED:

That Respondent be found guilty of misrepresentation and culpable negligence in violation of Subsection 475.25(1)(b), Florida Statutes (1979) , as charged in the Administrative Complaint. It is further

RECOMMENDED:

That Respondent be fined $1,000 for said violation.

DONE AND ENTERED this 14th day of December, 1981, in Tallahassee, Florida.

R. T. CARPENTER, 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 14th day of December, 1981.

COPIES FURNISHED:

J. Riley Davis, Esquire

320 Barnett Bank Building Tallahassee, Florida 32301

Robert E. Lee, Esquire Post Office Box 1447

Ft. Walton Beach, Florida 32549

Docket for Case No: 81-002011

Orders for Case No: 81-002011