STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL )

REGULATION, FLORIDA REAL ) ESTATE COMMISSION (DIVISION ) OF REAL ESTATE), )

)

Petitioner, )

)

vs. ) CASE NO. 84-0981

)

STEPHEN P. McCRADY, )

)

Respondent. )

)

RECOMMENDED ORDER

Consistent with the Notice of Hearing furnished the parties in this case by the undersigned on December 18, 1984, a hearing was held in this case before Arnold H. Pollock, a Hearing Officer with the Division of Administrative Hearings, in Ft. Lauderdale, Florida, on February 5, 1985. The issue for consideration is whether Respondent's license as a registered real estate broker in the State of Florida should be disciplined because of the alleged misconduct outlined in the Administrative Complaint filed in this case.

APPEARANCES

For the Petitioner: Arthur R. Shell, Esquire

Department of Professional Regulation Post Office Box 1900

Orlando, Florida 32801

For the Respondent: Ronald R. Rogowski, Esquire

208 Southeast Sixth Street Ft. Lauderdale, Florida 33301

BACKGROUND INFORMATION

On January 23, 1984, the Petitioner, Department of Professional Regulation, Division of Real Estate, (DRE), filed an Administrative Complaint herein alleging that Respondent is guilty of fraud, misrepresentation, concealment, false pretenses, false promises, dishonest dealing by trick, scheme or device, culpable negligence, and breach of trust in a business transaction, in violation of Section 475.25(1)(b), Florida Statutes. Thereafter, on March 7, 1984, Respondent submitted an Election of Rights form on which he disputed the allegations of fact contained in the Administrative Complaint and requested a formal hearing.

At the hearing, Petitioner presented the testimony of John J. Makos, III, a real estate broker in Ft. Lauderdale, Florida; W. Thomas Pospeshil, also a registered real estate broker and Mr. Makos' partner in Sophist Realty; and Abraham L. Starr, co-owner of the property in question here. Petitioner also

introduced Petitioner's Exhibits 1 through 3. Respondent testified in his own behalf and presented the testimony of Mr. Starr; Oliver A. Parker, an attorney specializing in real estate law; and Donald R. LeGault, a registered real estate broker in Ft. Lauderdale. Respondent also introduced Respondent's Composite Exhibit A.

The parties have submitted posthearing proposed findings of fact pursuant to Section 120.57(1)(b)4, Florida Statutes. A ruling on each proposed finding of fact has been made either directly or indirectly in this Recommended Order except where such proposed findings of fact have been rejected as subordinate, cumulative, immaterial, or unnecessary.

FINDINGS OF FACT

1. At all times pertinent to the issues involved in this hearing, Respondent, Stephen P. McCrady, was licensed by the State of Florida as a registered real estate broker.

   
   

2. Prior to the month of August 1983, Abraham L. Starr and John W. Dowler had listed their real property located at 1425 East Lake Drive, in Ft. Lauderdale, for sale with Sophist Realty, a Ft. Lauderdale real estate brokerage firm in which the two principal brokers were John J. Makos, III and W. Thomas Pospeshil. The asking price for the residential property was approximately

   $925,000.00. Prior to the time in issue here, no offers to purchase the property had been made as long as it was listed with Sophist Realty.

   
   

3. In late July or early August 1983, Respondent was approached by LaVern McDonald and a woman identified as Georgia Rhea, his fiancee, who indicated they were interested in buying residential property in the Ft. Lauderdale area. Respondent showed these individuals several pieces of property including that in issue here. During the course of the relationship with Respondent, McDonald had advised him that he was a wealthy man who was expecting considerable sums of money from his mother's estate in Germany. Respondent believed this story considering it credible. After Respondent had taken the prospects to the Starr property three times, McDonald finally indicated he was interested in making an offer to purchase it.

   
   

4. Thereafter, Respondent drew up a rough contract containing the basic terms for an original offer of approximately $775,000.00, typing the draft of the contract himself in his office on the evening of August 8, 1983. When he asked McDonald how much he was willing to put down as a binder, McDonald indicated $20,000.00 and Respondent entered that amount on the sales contract as the deposit. When he asked McDonald for a check to cover this sum, McDonald advised him that the money had to come through a bank in Atlanta and that he would have it there in less than 24 hours.

   
   

5. At that point, Respondent called Makes and told him that he had an individual who wanted to make an offer on the property but that the deposit money was not in hand yet. As a result, he did not take the contract to Mr. Makos then or, for that matter, on the next morning because the money had still not arrived.

   
   

6. In the interim, Mr. Makos' secretary called Mr. Starr on the evening of August 8, and advised him that an offer would be presented at 1 p.m. the next day. Mr. Starr and his partner were somewhat concerned as to why the offer was not presented immediately when the contract was signed by the prospective

   purchaser. When they checked with Makes office on the morning of August 9, they were told by Makos that he was waiting for a $20,000.00 check, which was to be the deposit, to be forwarded from Atlanta.

   
   

7. Mr. Makos confirms most of this indicating that prior to August 8, after being advised of the pending contract, he had several conversations with Respondent about the money which was expected but not yet received. He indicates, however, that after several notifications that the money was not in and that the contract would not be presented until it was, on August 8, Respondent called and requested an appointment with the sellers to present the offer contained in he proposed contract. Makos cannot be sure if Respondent made a positive representation at that time that he had the money in hand.

   
   

8. When the contract was presented the next morning, however, it showed in paragraph 2, "Method of Payment," the words, "Deposit herewith," and the figure

   $20,000.00. The contract also called for an "additional" deposit of $30,000.00 to be paid upon acceptance of the contract by both parties.

   
   

9. Both the original contract form and the re-typed copy executed somewhat later indicate a place for the escrow agent to show where the deposit has been received. On neither copy of the contract here is that particular clause filled in.

   
   

10. Neither Mr. Starr, his partner, his broker nor his lawyer noticed this omission at the time the contract was signed or shortly afterwards. After the contract was signed by both parties, Mr. Makes partner, Mr. Pospeshil, in placing into motion those steps necessary to bring about the closing, first noticed it on or about August 10.

    
    

11. He attempted to contact Respondent several times but was unable to reach him. Messages he left were unreturned until August 14, when he was finally able to reach McCrady to ask him for an escrow letter to cover not only the $20,000.00 but the $30,000.00 as well. At this point Respondent advised that no deposit money had been received and that both Makos and the seller knew this, a contention which Makos denies. Respondent also disputes Pospeshil's statement that he failed to return messages indicating he was either at home or available through his pager the entire time and got no calls on this matter until August 14.

    
    

12. Nonetheless, Respondent advised Mr. Pospeshil that he would get the deposit money that evening and call back when he had it. He did not call back and Pospeshil called Respondent's counsel to advise him of the situation. When the deposit money was not delivered even the next day, Pospeshil called the sellers and told them that there was no deposit. When advised that Respondent had indicated that they knew the money had not been in hand at the time the contract was signed, both denied this. Considering the evidence, it is obvious than neither did know.

    
    

13. The property was subsequently sold by Starr and Dowler for approximately $625,000.00.

    
    

14. Respondent urges that Makos concealed his knowledge that at the time the contract was signed the deposit money was not in hand because the listing on the property was about to expire and Makos wanted to present a contract so that he could get a renewal of the listing. There is no evidence to support this theory and it is rejected.

15. Respondent presented a series of contracts for the purchase and sale of real estate executed in other transactions in the Ft. Lauderdale area. Of these, however, the most recent is approximately three years before the instant situation and the oldest goes back to 1969. They were presented for the purpose of establishing the practice in the area of filling in the receipt portion of the contract form. This was supported by the testimony of Mr. LeGault, who had no participation in the instant case. He has presented contracts without the deposit being received but only upon full disclosure to the seller and then only when the seller requests that the contract be presented without the deposit. In his opinion, when the receipt portion of a contract is left blank, like here, it is more a letter of intent to open negotiations rather than a firm offer. The attorney, Mr. Parker, testifying for Respondent also related that the failure to show either a deposit received or a promissory note for the amount constitutes a failure of consideration and results in an invalid contract.

    
    

16. Both Respondent and Makos agree that the receipt portion on a sales contract is normally filled in. However, Makos was quite adamant as to the fact that when it is not, he always asks the presenting broker for an escrow letter establishing that receipt.

    
    

17. Whether the contract here is valid or not is immaterial to the issue in this case which is whether or not Respondent made a false representation when he presented the contract to the broker for the seller which indicated that a substantial down payment had been tendered. On the basis of the evidence outlined above, the inescapable finding is that Respondent, by either word or deed, communicated to Mr. Makos when he brought the offer, that the money had been received and was in his trust account as reflected in the upper portion of the contract form. Under the circumstances of this case where, among other things, nobody even noticed that the lower portion of the contract was not filled in, it is clear that Respondent intended to impart that idea.

    
    

18. It must also be noted that in September 1983, Respondent, without either admitting or denying the allegations against him, signed a stipulation with Petitioner which disposed of other allegations in a different Administrative Complaint resulting in his being reprimanded, paying a $500.00 administrative fine, and agreeing not to violate the statutes and rules governing the practice of real estate in Florida in the future.

    
    

    CONCLUSIONS OF LAW

    
    

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

    
    

20. In the Administrative Complaint, Respondent is alleged to have violated Section 475.25(1)(b), Florida Statutes, by representing to the sellers and their broker that the prospective purchasers of a piece of property had made and delivered to him a $20,000.00 earnest money deposit in connection with the purchase of said property. This provision of the statute permits the Florida Division of Real Estate to discipline a licensee when it finds that the licensee:

    
    

    Has 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.... It is immaterial to the guilt of the licensee that

    the victim ... has sustained no damage or loss....

    
    

21. Petitioner presented no evidence to show that Respondent is guilty of false promises, dishonest dealing by trick, scheme, or device, culpable negligence, or breach of trust. At most, Respondents conduct may constitute fraud, misrepresentation, and concealment.

    
    

22. In this case the evidence showed that Respondent prepared a contract for the purchase of real property which reflected that a $20,000.00 down payment was called for "herewith." Thereafter, he made much of the fact that the contract would not be presented until such time as the deposit was received and without any indication to the contrary, thereafter presented the contract allowing the seller s broker to infer from his past conduct that the deposit had been finally received. The fact that the contract itself may have been unenforceable between the buyer and the seller is immaterial to the issue here which is the misrepresentation on the part of the Respondent. This misrepresentation, if imputed to the Respondent's client, the prospective buyer, might well have been enough to defeat the contract.

    
    

23. It having been established that Respondent is in violation of the statute, the question remains as to what action should be taken based on his violation.

    
    

24. The evidence shows that on September 20, 1983, just one month after the incident in question here, Respondent entered into a stipulation with the Division of Real Estate which called for him to refrain from future violations of Section 475, Florida Statutes, to pay an administrative fine of $500.00, and to be reprimanded. On the basis of this second incident, it is appropriate that the Division's action be more severe than it would be if this were Respondent's only recorded infraction.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is, therefore:

RECOMMENDED that Respondent, STEPHEN P. McCRADY'S license as a registered real estate broker in Florida be suspended for one year; that he pay an administrative fine of $1,000.00; that he be reprimanded; and that upon the completion of the period of suspension, he be placed on probation for two years.

RECOMMENDED in Tallahassee, Florida, this 8th day of March, 1985.

ARNOLD H. POLLOCK

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 8th day of March, 1985.

COPIES FURNISHED:

Arthur R. Shell, Esquire Department of Professional

Regulation

130 North Monroe Street Tallahassee, Florida 32301

Ronald R. Rogowski, Esquire

208 Southeast Sixth Street Ft. Lauderdale, Florida 33301

Harold Huff, Executive Director Department of Professional

Regulation

P.O. Box 1900

Orlando, Florida 32802

Fred Roche, Secretary Department of Professional

Regulation

130 North Monroe Street Tallahassee, Florida 32301

Docket for Case No: 84-000981

Orders for Case No: 84-000981