STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL ) REGULATION, DIVISION OF REAL ) ESTATE, )

)

Petitioner, )

)

v. ) CASE NO. 85-0140

)

WINFIELD EZELL, SR. and )

EZELL REALTY, INC., )

)

Respondents. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in the above case before the Division of Administrative Hearings by its duly designated Hearing Officer, Donald R. Alexander, on June 19, 1985, in Orlando, Florida.

APPEARANCES

For Petitioner: Arthur R. Shell, Jr., Esquire

Post Office Box 1900 Orlando, Florida 32802

For Respondents: Julius L. Williams, Esquire

Post Office Box 2629 Orlando, Florida 32802

BACKGROUND

By administrative complaint filed on September 5, 1984, petitioner, Department of Professional Regulation, Division of Real Estate, has charged that respondents, Winfield Ezell, Sr. and Ezell Realty, Inc., both licensed by petitioner, had violated Subsection 475.25(1)(b), Florida Statutes, for which disciplinary action against their licenses should be taken.

Generally, petitioner has alleged that respondent Ezell and his wife were owners of a parcel of property in Orlando, Florida; that they solicited and obtained a sales contract on the

property from certain buyers for the purpose of allowing the buyers to obtain new financing on the property and to then immediately reconvey the property back to Ezell in exchange for

$1,000, that the transaction was closed by the buyers who then obtained new financing, and that contrary to prior promises Ezell did not make timely mortgage payments on the property while the buyers held the property thereby resulting in the initiation of mortgage foreclosure proceedings against the buyers. The property was eventually reconveyed to Ezell who paid the buyers $1000 for their services. Petitioner alleges that such conduct on the part of Ezell and his realty firm constituted fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence and breach of trust in a business transaction within the meaning of Subsection 475.25(1)(b).

Respondents disputed the above allegations and requested a formal hearing pursuant to Subsection 120.57(1), Florida Statutes. The matter was referred to the Division of Administrative Hearings by petitioner on January 14, 1985, with a request that a Hearing Officer be assigned to conduct a formal hearing. By notice of hearing dated February 22, 1985, the final hearing was scheduled for April 17, 1985 in Orlando, Florida. By agreement of the parties the hearing was rescheduled to May 20, 1985, and upon request of respondents, reset for June 19, 1985, at the same location.

At final hearing petitioner presented the testimony of Grover Crawford, Robert W. Geisler, Jr., Dabney Mergendahl and Bonnie Kew, and offered petitioner's exhibits 1-6 and 9-13. All were received in evidence except exhibits 10, 11 and 12.

Respondent Winfield Ezell, Sr. testified on his own behalf.

The transcript of hearing was filed on July 8, 1985.

Proposed findings of fact and conclusions of law were filed by respondents on July 23, 1985. None were filed by petitioner. 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, or immaterial or unnecessary.

At issue herein is whether respondents' real estate licenses should be disciplined for the alleged violations set forth in the administrative complaint.

FINDINGS OF FACT

1. At all times relevant hereto, respondent, Ezell Realty, Inc., was a licensed corporate real estate broker having been issued license number 0231943 by petitioner, Department of Professional Regulation, Division of Real Estate. Respondent, Winfield Ezell, Sr., held real estate broker's license number 0309739 issued by petitioner and was the sole qualifying broker and officer of Ezell Realty, Inc. The firm is located at 1512 West Gore Street, Orlando, Florida.

   
   

2. Grover Crawford was an acquaintance of Ezell who was interested in purchasing certain rental property on Coretta Way in Orlando, Florida. When he was unable to purchase the property Crawford told Ezell to let him know if anything else became available in that area. Ezell happened to own a rental house at 1121 Coretta Way which he had just purchased several months earlier in a foreclosure proceeding, and the two eventually began discussions concerning a possible sale. At all times relevant thereto, the house was rented to tenants, and Crawford intended the property to remain as investor-owned property rather than owner-occupied property.

   
   

3. Ezell initially agreed to sell the property for $70,000 and the two entered into a contract on January 8, 1983, using this sales price. However, the lender's appraisal of the residence came in far below this figure, and the parties eventually agreed on a sales price of $55,450. A second contract for sale and purchaser was executed on June 22, 1983. Although the contract provided that Crawford would pay a cash deposit of $2,300 to be held in escrow by Ezell Realty, none was paid since Ezell was given $2,300 by the tenants of the house to make needed repairs to the property prior to the sale. This arrangement was agreeable with Crawford. The contract also required the seller (Ezell) to pay all closing coats.

   Therefore, Crawford was not required to pay any "up front" costs in order to buy the property.

   
   

4. Under the terms of the second contract, Crawford was to obtain FHA financing on the property in the amount of $53,150. This type of financing is the most desirable from an investor standpoint since the mortgage can be easily transferred to another buyer for a small transfer fee without lender approval.

   
   

5. After executing the first contract on January 8, 1983, Ezell and Crawford executed an "Addendum to Contract For Sale and Purchase" on the same date which provided in pertinent part:

   This contract is for the sole purpose of having the buyer obtain an assumable FHA mortgage for the seller and reconveying title to the seller. The seller hereby irrevocably assumes the said FHA mortgage from the buyer immediately after closing and the buyers hereby agree to that assumption.

   
   

   For this, Crawford was to receive $1,000. The parties agreed that this addendum would apply to the second contract executed on June 22, 1983.

   
   

6. At the suggestion of Ezell, Crawford made application for a $53.150 FHA loan with Residential Financial Corporation (RFC) in Maitland, Florida, a lending institution which Ezell had done business with on a number of prior occasions. However, Ezell was not present at any meetings between Crawford and RFC. When Crawford applied for the mortgage, he indicated the property would be used for investment purposes and would not be owner-occupied. For some reason, RFC assumed the property would be owner-occupied and structured the-loan in that manner. Because of this, Crawford's down payment was slightly less than 5% of the value of the property with the remainder being financed by the institution. Had RFC treated the loan as an investor-loan, the down payment would have been increased to around 15%. Neither Crawford or Ezell advised RFC of the Addendum to the contract which required Crawford to reconvey the property to Ezell for $1,000 once the FHA mortgage was obtained. Had RFC known of this it would not have approved the loan.

   There was no competent evidence that such an agreement was illegal or violated any federal laws or contravened any real estate industry standard or ethical consideration.

   
   

7. The loan was eventually approved, and a closing held on September 22, 1983. After closing, Crawford retained the property in his name with Ezell making all payments from the rent proceeds. This was consistent with an oral agreement between the two that such an arrangement would last for an indefinite period as long as the payments were current. When Crawford later received several notices from the lender stating that mortgage payments were in arrears, he hired an attorney and demanded that Ezell fulfill the terms of the Addendum. He also filed a complaint against Ezell with petitioner which precipitated the instant proceeding. After the closing, Ezell had intended for the tenants to assume the mortgage since they had expressed an interest in buying the property. However, such a sale never materialized. In July, 1984, the property was

   reconveyed to Ezell, and Ezell paid Crawford $1,000 as required by the Addendum.

   
   

   CONCLUSIONS OF LAW

   
   

8. The Division of Administrative Hearings has jurisdiction of the subject matter and the parties thereto pursuant to Subsection 120.57(1), Florida Statutes.

   
   

9. Respondent is charged with a single count of violating Subsection 475.25(1)(b), Florida Statutes, by virtue of his conduct in the Crawford transaction. Specifically, he is charged with fraud, misrepresentation, false promises, false pretenses, concealment, culpable negligence, dishonest dealing by trick, scheme or device and breach of trust in a business transaction.

   
   

10. Since no post-hearing pleading has been filed, petitioner's theory as to what specific conduct violates the foregoing statute is not known. However, counsel have agreed at hearing that the effect of the delinquent notices on Crawford's credit rating is immaterial to the allegations, and the undersigned assumes that the charges are apparently based upon

(a) the agreement between the parties that the buyer reconvey the property to the seller immediately after the mortgage had been obtained, and (b) the failure of Ezell to require a cash deposit from Crawford even though the contract called for one. But no competent evidence was received which shows that such a buy-back arrangement is illegal under federal law, or violates any real estate industry standard, practice or ethical requirement. As to the cash deposit, the parties agreed that even though the contract called for one, Ezell would expend

$2.300 given to him by the tenants to make needed house repairs in lieu of a cash deposit. Therefore, it is concluded that no violation of Subsection 475.25(1)(b) has occurred, and that the administrative complaint should be dismissed.

RECOMMENDATION

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

RECOMMENDED that the administrative complaint be dismissed, with prejudice.

DONE and ORDERED this 7th day of August, 1985, in Tallahassee, Florida.

DONALD R. ALEXANDER

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, FL 32301

(904)488-9675

Filed with the Clerk of the Division of Administrative Hearings this 7th day of August, 1985.

COPIES FURNISHED:

Arthur R. Shell, Jr., Esq.

P. O. Box 1900 Orlando, FL 32802

Julius L. Williams, Esq.

P. O. Box 2629 Orlando, FL 32802

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AGENCY FINAL ORDER

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STATE OF FLORIDA DEPARTMENT OF PROFESSIONAL REGULATION

FLORIDA REAL ESTATE COMMISSION

DEPARTMENT OF PROFESSIONAL REGULATION, FLORIDA REAL ESTATE COMMISSION,

Petitioner,

Respondents.

/

FINAL ORDER

The Florida Real Estate Commission heard this case on October 22, 1985 to issue a Final Order.

Hearing Officer Donald R. Alexander of the Division of Administrative Hearings presided over a formal hearing on June 19, 1985. On August 7, 1985, he issued a Recommended Order which is adopted by the Florida Real Estate Commission as to all Findings of Fact, except the last sentence of paragraph 6 of said Findings of Fact. The Conclusions of Law in paragraph 3 as contained in the Recommended Order are rejected based upon page 34, paragraphs 8 and 11 of the transcript of the June 19,1985 hearing. Therefore, the recommendation contained in the Recommended Order is rejected. A copy of this Recommended Order is attached hereto as Exhibit A and made a part hereof.

Petitioner's Exceptions to the Recommended Order are accepted and attached hereto and incorporated herein as Exhibit B.

The Florida Real Estate Commission therefore ORDERS that Respondents pay an administrative fine in the amount of $500. to be paid to the Secretary of the Department of Professional Regulation. The Florida Real Estate Commission further ORDERS that Respondents real estate licenses be suspended for a period of ninety (90) days.

This Order shall be effective thirty (30) days from the date of filing with the Clerk of the Department of Professional Regulation.

DONE and ORDERED this 22nd day of October, 1985 in Orlando, Florida.

Director

Florida Real Estate Commission

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true copy of the foregoing was sent by U.S. Mail to: Julius Williams, Esquire, Post Office Box 2629, Orlando, Florida 32802; to Hearing Officer Donald R. Alexander, Division of Administrative Hearings, The Oakland Building, 2009 Apalachee Parkway, Tallahassee, Florida 32301; and to Arthur R. Shell, Jr., Attorney for Petitioner, Department of Professional Regulation, Post Office Box 1900, Orlando, Florida 32802, this

22 day of October, 1985.

Docket for Case No: 85-000140

Orders for Case No: 85-000140