Whether the Respondent's guilty of failing to return an earnest money deposit upon demand, in violation of Section 475.25(1)(d), Florida Statutes, and of failing to comply with the directives of this statute when conflicting demands were made upon him concerning escrowed property.
By Administrative Complaint issued on September 2, 1981, the Petitioner seeks to revoke or suspend the Respondent's real estate license, or otherwise discipline him, for alleged violations of Section 475.25(1)(b) and Section
475.25(1)(d), Florida Statutes. The Petitioner presented two witnesses in support of the Administrative Complaint, together with eleven exhibits which were received in evidence. The Respondent testified in his own behalf, along with one other witness, and introduced two exhibits which were received in evidence.
Based upon the testimony and exhibits in evidence, the stipulations of the parties, and the observed candor and demeanor of the witnesses, the following are found as facts:
The Respondent, Robert W. Browning, is a licensed real estate broker, having been issued License No. 0112998.
The Respondent has a 25 percent interest in a Florida Partnership known as WTBS. The remaining partners are Orian P. Wells, John S. Thompson, and Luther W. Strickland.
The Partnership WTBS purchased many acres of land in Dixie County, Florida from Georgia- Pacific, platted this land into lots, and offered these lots for sale.
The Respondent was the registered real estate broker responsible for sales of property for the Partnership WTBS, and he was the person who had the authority to sign all closing documents in connection with transactions on behalf of the partnership.
Dale Herring a licensed salesman working for the Respondent, conducted sales of the Dixie County parcels while acting under the brokerage license of the Respondent.
Dale Herring negotiated a contract dated December 13, 1980, in which Robert and Frances Harburg agreed to purchase approxi- mately 14 acres of the Dixie County property. Mr. Harburg wrote a check for $2,850, payable to the Respondent, and gave the check to Dale Herring as a deposit on the property described in the contract.
The Respondent placed this deposit check in his escrow account.
The Respondent signed the Purchase and Sale Agreement with the Harburgs on behalf of the Partnership WTBS, as Seller, on December 16, 1980.
This purchase and Sale Agreement contained the following pertinent provisions:
Closing was to take place December 29, 1980.
Graded-road access would be completed within four weeks of the contract.
Conveyance of the property was to be by warranty deed.
Seller would pay for stamps on the deed, title insurance, survey, and real estate commission.
Paragraph 10 of this Agreement states: "If the Seller fails to perform any of the covenants of this contract, the [deposit] paid by the Buyer, at the option of the Buyer, shall be returned to the Buyer on demand.
The closing was to take place by mail. When the Harburgs did not receive their closing docu- ments on the date set for closing, they telephoned the Respondent's real estate office. The Respondent did not return their call.
The Harburgs received the closing documents January 5, 1981. The documents received conflicted with the Purchase and Sale Agreement by indicating:
Conveyance was to be by contract for deed rather than by warranty deed.
The Purchaser could not transfer the property without approval of the Seller.
If the Seller could not give clear title
to the property for any reason, the purchase price could be refunded with no interest.
The contract for deed provided for a five day default period.
The contract for deed required the buyer to pay certain monies to Georgia-pacific in the event of a release request.
The contract for deed required the Buyer to pay for stamps on the deed.
After reviewing the submitted closing documents, Mr. Harburg sent a letter to the Respondent dated January 7, 1981, requesting the return of his earnest money deposit because the closing documents submitted were in conflict with the sales contract. The purpose of this letter was to put the Respondent on notice of the Harburg's dissatisfaction with the submitted documents.
The Respondent did not reply to Mr. Harburg's letter of January 7, 1981. The Harburgs visited the subject property on January 19, 1981, and found that there had been no material progress made on completion of the graded access road as required by the Purchase and Sale Agreement.
On January 20, 1981, Mr. Harburg sent a second letter to Mr. Browning, requesting the return of his earnest money deposit because:
The closing papers were received seven days late.
The closing papers were in conflict with the Purchase and Sale Agreement.
The graded access road was not completed.
Upon receiving no reply from the Respondent, the Harburgs retained Richard Oehler, Esquire, to recover their earnest money deposit.
Mr. Oehler wrote to the Respondent on February 6, 1981, demanding the return of this deposit within ten days.
The Respondent replied to Mr. Oehler on February 10, 1981, agreeing to return the deposit upon resale of the subject property. The Respondent indicated that this would be within 30 days.
Mr. Oehler wrote the Respondent on February 12, 1982, advising that the Harburgs would not wait 30 days, and that if the deposit was not returned immediately the Harburgs would file suit to recover the deposit.
Mr. Oehler talked with the Respondent on February 9, 1981, March 13, 1981, March 30, 1981, and April 6, 1981, without success in securing return of the deposit.
The Harburgs filed suit seeking return of the deposit in September, 1981.
In mid-1981, the Respondent withdrew the deposit money from his escrow account, and deposited it into the escrow account of the attorney who represented both himself as broker and WTBS as Seller of the subject property.
The Respondent neither offered to rectify the conflict in the closing documents, nor did he advise the Harburgs of any dispute between them and the Seller, WTBS, con- cerning their right to the earnest money deposit.
The Respondent failed to notify the Florida Real Estate Commission concerning the dispute between the Buyer and Seller as to their rights to the earnest money deposit.
The lawsuit filed by the Harburgs in September, 1981, was dismissed upon the return of their earnest money by the Respondent in February, 1982.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter and the parties to this action. Section 120.57(1), Florida Statutes.
Section 475.25(1)(b), Florida Statutes, authorizes the Board of Real Estate (now Florida Real Estate Commission) to suspend or revoke a real estate license, or impose an administrative fine not to exceed $1,000 for each separate offense, if it finds that a licensee has been guilty of "fraud, misrepresentation, concealment, false promise, false pretenses, dishonest dealing by trick, scheme, or device, culpable negligence, or breach of trust in any real estate transaction. . . ." The Administrative Complaint charges the Respondent with violating this statute by failing to return the Harburgs' deposit money upon demand, as required by the Sales Contract, upon breach of contract by the Seller in (1) submitting closing documents after the date required for closing, which (2) materially differed from the documents required by the contract, and (3) by the Seller's failure to complete the graded access road as required.
Section 475.25(1)(d), Florida Statutes, authorizes the Board of Real Estate to suspend or revoke a real estate license, or impose an administrative fine not exceeding $1,000 for each separate offense, if it finds that a licensee failed to account or deliver to any person at the time which has been agreed upon or is required by law or, in the absence of a fixed time, upon demand of the person entitled to such accounting and delivery, any personal property such as money. These sanctions are also authorized if the Board finds that a licensee, when faced with conflicting demands upon him for escrowed property that is still in his escrow or trust account, fails to promptly notify the Board as to his doubts relative to what person is entitled to the escrowed property, and fails to promptly:
Request that the Board issue an escrow disbursement order determining who is entitled to the escrowed property; or
With the consent of all parties, submit the matter to arbitration; or
By interpleader or otherwise, seek adjudication of the matter by a court.
The Respondent knew or should have known that the closing documents submitted materially differed from those required by the Purchase and Sale Agreement because he signed the Purchase and Sale Agreement.
By refusing to tender the closing documents required by the contract until seven days after the date set for the closing, and failing to complete the graded access road as required, the Seller, WTBS, breached the Purchase and Sale Agreement with the Harburgs. The Respondent participated in these actions in his capacity as a Seller, and as the Seller's broker.
"A registered real estate broker may be disciplined for his dishonest conduct of business affairs for his own account, as well as for such conduct in transactions in which his only interest is as a broker." Sellers v. Florida Real Estate Commission, 380 So.2d 1052 (Fla. 1st DCA 1980).
In addition to the duty brokers have to their principals, in Florida brokers are "statutorily charged with a duty to prospective buyers as well as to the principals whom they represent. The statutes regulating the activities of real estate brokers in their business were designed to protect the public and to safeguard those persons who put their money and trust in the hands of real estate brokers." Shelton v. Florida Real Estate Commission, 120 So.2d 191 (Fla. 2nd DCA 1960).
The refusal of the Respondent to attempt to rectify the conflict in the closing documents, his persistence in refusing to discuss this matter with the Harburgs, and his failure to return the deposit money upon demand until five months after suit was filed, constitutes fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme, or device, culpable negligence and breach of trust in a business transaction, and is in violation of Section 475.25(1)(b), Florida Statutes. .Whether a loss was sustained by the Harburgs is immaterial to these disciplinary proceedings. Shelton, supra.
By failing to return the Harburgs' deposit money upon demand after the Seller's breach of contract, the Respondent is also guilty of violating Section 475.25(1)(d) Florida Statutes, by failing to: "account or deliver to any person
. . . at the time which has been agreed upon or is required by law or, in the absence of a fixed time, upon demand of the person entitled to such accounting and delivery, any personal property such as money.
The Respondent contends that he was faced with conflicting demands for the earnest money deposit; therefore, he was unsure as to who was entitled to the deposit. However, the Respondent failed to comply with the mandates of Section 475.25(1)(d), Florida Statutes, which sets out the procedures a broker must follow when such a situation arises. The Respondent failed to notify the Board as required by this statute, and he also failed to:
Ask the Board to issue an order as to who was entitled to the deposit.
With the consent of all the parties, seek arbitration.
By interpleader or otherwise, seek adjudi- cation of the matter by a court.
Instead the Respondent refused to release the money from his escrow account. Only after the threat of civil litigation by the Harburgs, did he transfer the deposit out of his escrow account. But he deposited the money into the escrow account of the Seller's attorney, who was also his own attorney in his capacity as one of the Sellers, as well as his attorney in his capacity as a licensed real estate broker, rather than comply with the statutory mandates
