STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL )

REGULATION, DIVISION OF )

REAL ESTATE, )

)

Petitioner, )

)

vs. ) CASE NO. 84-4021

)

ELDON M. MCDONALD, )

)

Respondent. )

)

RECOMMENDED ORDER

This matter came on for hearing on March 26, 1985, in Tampa, Florida, before the Division of Administrative Hearings and its duly appointed Hearing Officer, R. T. Carpenter. The appearance was as follows:

For Petitioner: James R. Mitchell, Esquire

Department of Professional Regulation Division of Real Estate

Post Office Box 1900 Orlando, Florida 32802

For Respondent: No appearance

This matter arose on Petitioner's Administrative Complaint charging Respondent with falsely advertising and misrepresenting real property which he contracted to sell, with misrepresenting the mortgage interest rate and closing costs on such real property, and with wrongfully withholding refunds due the buyer-renter after the transaction was terminated.

FINDINGS OF FACT

1. At all times pertinent to the charges, the Respondent Eldon M. McDonald was a licensed real estate salesman in the State of Florida, holding license number 0142977.

   
   

2. At all times pertinent to the charges, College Hill Builders, Inc., was a corporation organized under the laws of Florida. As of 1982, Eldon McDonald was vice-president of College Hill Builders, Inc.

   
   

3. On or before July 7, 1982, College Hill Builders, Inc., was the owner of Lot 22, Block 2, Parkwood Manor First Addition, Hillsborough County, Florida, a/k/a 4208 Helene Place, Valrico, Florida. On or about July 7, 1982, College Hill Builders, Inc., through its president, Gerald J. McDonald, quitclaimed said property to Eldon M. McDonald. On or about May 1, 1981, College Hill Builders, Inc., secured a renegotiable rate mortgage from Amerifirst Savings and Loan Association on Lot 22, Block 2, Parkwood Manor First Addition, Hillsborough, Florida, a/k/a 4208 Helene Place, Valrico, Florida.

4. On August 11, 1983, and August 25, 1983, ads appeared in the "Brandon News" for the subject property stating that the interest rate was 11 3/4 percent and that the property was new. These ads were placed under the name of College Hill Builders, Inc., by the Respondent, Eldon McDonald. As the evidence discussed below demonstrates, the mortgage rate on the subject property was not

   11 3/4 percent on the dates indicated in the ads but was in fact 14 1/2 percent to 14 3/4 percent, nor was the property new" as advertised.

   
   

5. In June 1983, Mr. and Mrs. Thomas Atchison learned that the house at 4208 Helene Place, Valrico, Florida was for sale. Respondent was contacted regarding the offer of sale, and thereafter accompanied the Atchisons, along with a Mr. and Mrs. McDaniel, to view the property and discuss the terms.

   
   

6. Respondent told the Atchisons, in the presence of the McDaniels, that the house was new and had never been lived in. In addition, Respondent told them that the mortgage was assumable with no qualifying at 11 3/4 percent interest, and that closing costs would be no more than $250. Based upon these representations, the Atchisons executed a contract with Respondent as agent for College Hill Builders, Inc., on June 13, 1983, for the purchase of Lot 22, Block 2, Parkwood Manor First Addition, Hillsborough County, Florida, a/k/a 4208 Helene place, Valrico, Florida.

   
   

7. The contract provided for an earnest money deposit of $1,000 to be placed with College Hill Builders, Inc. In addition, the contract provided that the mortgage referred to by the Respondent was assumable at a rate not to exceed

   11 3/4 percent and that the buyer would apply for assumption of the mortgage within 24 hours. Finally, the contract provided that College Hill Builders, Inc., would rent the property to the Atchisons for a period of one month at a rental of $500 to be prorated to the day of closing. Pursuant to the terms of the contract and representations made therein, the Atchisons placed a $1,000 deposit with the Respondent and College Hill Builders, Inc., and also issued a check in the amount of $500 to College Hill Builders, Inc., as rent for the period specified in the contract.

   
   

8. Pursuant to the terms of the contract, the Atchisons proceeded to Amerifirst Federal Savings and Loan Association, the mortgagees on the property referred to by Respondent. Through discussion with the loan agent, the Atchisons learned that the mortgage was not assumable at 11 3/4 percent as represented by the Respondent, but was then at a rate of 14 1/4 percent to 14 1/2 percent. In addition, the Atchisons learned that there were qualifying requirements, and that closing costs would be approximately $7,900 as opposed to the $250 represented to them by Respondent.

   
   

9. Thereafter, the Atchisons also discovered that the house was not new but was in fact two years old, and had been lived in as evidenced by food particles in the oven and dishwasher along with various minor damage throughout the house. In fact, the house had been lived in for at least four months prior to the Atchisons signing the contract.

   
   

10. The Atchinsons confronted Respondent with their findings as to the mortgage rate and the used condition of the house. The Atchisons contended the contract had been breached by Respondent and demanded return of their $1,000 deposit and the prorated amount of the $500 rental payment.

    
    

11. Respondent advised them the rent was $800, not $500 as stated in the contract since they failed to close. He then issued to the Atchisons one check

    for $1,000 representing refund of the deposit, and a second check for $303.31 representing prorated rent based on an $800 per month rate. The Atchisons went to the Brandon State Bank on which the checks were drawn, but were informed that Respondent had called in a stop payment order on the checks. Shortly thereafter, Respondent appeared at the bank and signed a stop payment request as to the two checks.

    
    

12. Thereafter, demands were made upon Respondent for return of the monies being held by him and College Hill Builders, Inc., but were not answered. On or about July 26, 1983, the Atchisons filed a civil complaint against College Hill Builders, Inc., seeking return of their monies, and on or about November 7, 1983, a Final Judgment was entered against College Hill Builders, Inc., in the amount of $1,588. This judgment was ultimately satisfied on or about March 29, 1984.

    
    

    CONCLUSIONS OF LAW

    
    

13. Section 475.25, Florida Statutes (F.S.) provides in part:

    
    

    1. 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. 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 terri- tory; has violated a duty imposed upon him

          by law or by the terms of a listing contract, written, oral, express, or implied, in a real estate transaction. . . .

       2. Advertised property or services in a manner which is fraudulent, false, deceptive, or misleading in form or content. . . .

          
          

14. The advertisements placed by Respondent falsely stated that the house was "new" and that 11 3/4 percent interest was available. Respondent necessarily knew that the house was used and either knew that 11 3/4 percent interest was not available or negligently failed to confirm the available interest rate with the lender. Respondent is therefore guilty of false advertising as charged under Subsection 475.25(1)(c), F.S. quoted above.

    
    

15. Respondent made similar misrepresentations to the potential buyers in contract discussions, inducing them to move into the house on a rental basis pending their purchase. Additionally, Respondent materially understated the closing costs which these buyers would be required to pay. He is therefore guilty of misrepresentation in this business transaction as charged under Subsection 475.25(1)(b), F.S. quoted above.

    
    

16. Respondent is further charged with wrongfully withholding a deposit and with increasing the amount of rent due. However, Respondent was not charged

    under Subsection 475.25(1)(d), F.S. 1/ which relates to such deposits. Rather he was charged with the dishonesty and misrepresentation provisions of Subsection 475.25(1)(b), F.S. quoted above.

    
    

17. The contract called for $500 per month rent. The $800 prorated figure was substituted by Respondent in violation of contract provisions. Further, there was no contract or other agreement which permitted Respondent to retain the $1,000 deposit after the transaction was terminated. He is therefore guilty of breach of trust in this business transaction as charged under the provisions of Subsection 475.25(1)(b), F.S. quoted above.

    
    

18. Petitioner submitted proposed findings of fact pursuant to Subsection 120.57(1)(b)4, F.S. These proposed findings have been substantially incorporated herein with the exception of proposed finding number 8 which asserted that "the house had been lived in for a period of at least six (6) months prior to the Atchisons signing the contract. The finding of the Hearing Officer 2/ reduced this period to "at least four months" based on the testimony of Mr. William A. Coggins. 3/

RECOMMENDATION

Based on the foregoing, it is

RECOMMENDED that Petitioner enter a Final Order suspending Respondent's real estate salesman's license for a period of two years and fining him $500.

DONE and ORDERED this 16th day of April, 1985, 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 16th day of April, 1985.

ENDNOTES

1/ Subsection 475.25(1)(d), F.S. provides in part: Failed to account or deliver to any person, including a licensee under this chapter, 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, fund, deposit, check,

draft, abstract of title, mortgage, conveyance, lease, or other document or thing of value,

. . .

2/ See paragraph number 9 above.

3/ Transcript page 48, lines 13, 14, 23, and 24.

COPIES FURNISHED:

James R. Mitchell, Esquire Department of Professional

Regulation

Division of Real Estate Post Office Box 1900 Orlando, Florida 32802

Eldon M. McDonald Post Office Box 1330

Brandon, Florida 33511

Harold Huff, Director Division of Real Estate Post Office Box 1900 Orlando, Florida 32802

Fred Roche, Secretary Department of Professional

Regulation

130 North Monroe Street Tallahassee, Florida 32301

Salvatore Carpino, Esquire General Counsel

Department of Professional Regulation

130 North Monroe Street Tallahassee, Florida 32301

Docket for Case No: 84-004021

Orders for Case No: 84-004021