STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

vs. ) Case No. 85-2369

) JUAN RIOS and VICTORIA R. RIOS, )

)

Respondents. )

)

RECOMMENDED ORDER

Pursuant to notice, the above matter was heard before the Division of Administrative Hearings by its duly designated Hearing Officer, Donald R. Alexander, on November 25, 1985 in Miami, Florida.

APPEARANCES

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

Post Office Box 1900 Orlando, Florida 32802

For Respondent: Juan and Victoria R. Rios, pro se

855 80th Street, No. 1 Miami Beach, Florida 33141

BACKGROUND

By administrative complaint filed on March 6, 1985, petitioner, Department of Professional Regulation, Division of Real Estate, has charged that respondents, Juan and Victoria R. Rios, licensed by petitioner as a real estate broker and real estate broker-salesman, respectively, had violated Subsections 475.25(1)(b), (d) and (k), Florida Statutes. Generally, petitioner has alleged that in December, 1982 respondents solicited and obtained exclusive listing agreements on two parcels of property in Miami, Florida from Mercedes Garcia, that in February and July, 1983 respondents obtained tenants for the two properties, that respondents never gave a proper accounting to the owner, that an attorney on behalf of the owner eventually requested a full accounting in April, 1984, and the transfer of a

$500 security deposit in July, 1984, and that a civil action was then filed against respondents after the attorney's requests were ignored. The complaint goes on to allege that after the civil action was filed, respondents acknowledged to Garcia in a letter that they owed her $4,400.17 in rents collected plus an additional $600 in interest for a total of $5,015.20, Petitioner alleges that these rental monies were unlawfully converted to respondents' own use and benefit without Garcia's knowledge and consent, and that respondents have refused to refund them to the rightful owner.

Respondents disputed the allegations and requested a formal hearing pursuant to Section 120.57(1), Florida Statutes. The matter was referred to the Division of Administrative Hearings by petitioner on July 15,-1985, with a request that a Hearing Officer be assigned to conduct a final hearing. By notice of hearing dated August 22, 1985, the final hearing was scheduled for November 25, 1985, in Miami, Florida.

At final hearing, petitioner presented the testimony of Luis Lucas Fernandez and James Williams and offered petitioner's exhibits 1-8. All were received in evidence. Respondents testified on their own behalf.

The transcript of hearing was filed on December 23, 1985.

Proposed findings of fact and conclusions of law were due on January 7, 1986. None were filed by either party.

ISSUE

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

Based upon all of the evidence, the following facts are determined:

FINDINGS OF FACT

1. At all times relevant hereto, respondent, Juan Rios, was a licensed real estate broker having been issued license number 0155126 by petitioner, Department of Professional Regulation, Division of Real Estate. Respondent, Victoria R. Rios, is a licensed real estate broker-salesman having been issued license number 0331183 by petitioner. The Rios are husband and wife and presently reside at 855 80th Street, #1, Miami Beach, Florida.

   
   

2. On December 13, 1982, Juan Rios obtained a six-month multiple listing agreement to sell a house located in Hacienda Estates at 11451 S.W. 33rd Lane, Miami, Florida. The agreement

   was executed by Rios "As Realtor" and by the property owner, Mercedes Garcia. At Mercedes' request, the Rios placed an initial sales price of $145,000 on the home. On December 15, a similar agreement was executed by Rios and Garcia on condominium unit 9B, Laguna Club Condominium, 10710 N. W. 7th Street, Miami, Florida. That property was also owned by Garcia. Although the agreement introduced into evidence does not contain Rios' signature, at final hearing Juan Rios acknowledged that he had executed such an agreement.

   
   

3. The listing agreements provided that if the properties were leased during the term of the agreements, the listing realtor would receive a brokerage fee of 10% for such leasing. The agreement also provided that the realtors were not responsible for vandalism, theft or damage of any nature to the property.

   
   

4. Garcia is a native and resident of Venezuela, where she owns a radio station. The two properties in question were previously owned by her father. When the father died, apparently sometime in 1982, Mercedes inherited the house and condominium. The Rios were friends of the father, and agreed to list and manage the properties as a favor to the deceased. Mercedes left the country after the agreements were signed, and has apparently not returned. Although she is the complainant who initiated this matter, she did not appear at final hearing.

   
   

5. The house at 11451 S. W. 33rd Lane had been vandalized prior to the listing agreement being signed. According to documents introduced into evidence, the property has also been the subject of subsequent vandalisms, the nature and extent of which are unknown. A tenant was eventually procured by Mercedes' aunt in February, 1983 at a monthly rate of $800. The tenant, a Mrs. Ramirez, paid some $4,800 in rents and deposits before she was killed at the home in June, 1983. The Rios spent some

   $2,644.36 of the $4,800 on repairs to the vandalism and for general maintenance. They also retained a 10% commission for their services, or $480. That left $1,675.64 owed to Mercedes. No lease was apparently ever signed by Ramirez, or at least none was given to the Rios by the relative who procured the tenant.

   The home was eventually sold to Mercedes' aunt for $85,000.1

   None of the rental monies were placed in the Rios' trust account.

   
   

6. The condominium unit was rented in June, 1983. The tenant, Oscar Ruiz, had answered an advertisement run by the Rios in a local newspaper. Although Ruiz executed a lease to rent the unit at a monthly rate of $500, the Rios did not have a copy of same, and claimed none was kept in their records. According to the Rios, Ruiz continued to rent the unit through April, 1984, or for eleven months. Total monies collected by the Rios from Ruiz,

   including a $500 security deposit, were $6,000, of which

   $3,364.86 was spent for maintenance, utilities, two mortgage payments, and a $500 payment to the owner (Mercedes). An additional $40.33 was spent on a plumbing bill, and $600 was retained as a commission by the Rios. This left $2,724.53 owed to Mercedes. None of the rental monies were placed in the Rios' trust account.

   
   

7. In the spring of 1984, Mercedes retained the services of an attorney in Miami to seek her monies due from the Rios. Up to then, she had received no income or accounting on the two properties. The attorney wrote the Rios on several occasions beginning in April 1984, asking for a copy of the lease on the condominium unit, the security deposit, an accounting of the funds, and all other documents relating to the two, properties. He received his first reply from the Rios on May 3, 1984 who advised him that they had attempted to reach Mercedes by telephone on numerous occasions but that she would never return their calls. They explained that rental proceeds had been used to repair vandalism damage and structural defects. When the attorney did not receive the satisfaction that he desired, he filed a civil action against the Rios on October 10, 1984.

   
   

8. On October 26, 1984 the Rios sent Mercedes a letter containing an accounting on the two properties reflecting that she was owed $4,400.17 by the Rios. To pay this, they sent a

   $140 "official check," and a promissory note for the balance to be paid off in 40 monthly installments at 10% interest. They explained that their real estate business had closed, and due to financial problems, they were unable to pay off the monies due any sooner. They also asked that she instruct her attorney to drop the suit. Mercedes rejected this offer and has continued to pursue the civil action. It is still pending in Dade County Circuit Court.

   
   

9. At final hearing, the Rios characterized their involvement with Mercedes as a "professional mistake," and one undertaken out of friendship for Mercedes' father. They acknowledged they did not use a trust account on the transactions and that they had used the $4,400 in rental money due Mercedes for their own use. They considered the excess rent proceeds to be compensation for other "services" performed by them on behalf of Mercedes. However, there is no evidence of any such agreement between the parties reflecting that understanding.

   CONCLUSIONS OF LAW

   
   

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

11. In conjunction with the Mercedes transaction, the Rios are charged with (a) fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence and breach of trust in a business transaction in violation of Subsection 475.25(1)(b), Florida Statutes (Count I), (b) failing to account and deliver

    rental receipts amounting to $4,400.17 to the rightful owner in violation of Subsection 475.25(1)(d), Florida Statutes (Count II), and (c) failing to place and maintain rental receipts amounting to $4,400.17 in their brokerage trust account without the knowledge of the owner in violation of Subsection 475.25(1)(k), Florida Statutes (Count III). The charges will be dealt with in reverse order.

    
    

12. The evidence discloses that respondents did not place and maintain the rental receipts in their brokerage trust account as required by law. Therefore, it is concluded they violated Subsection 475.25(1)(k), Florida Statutes, as alleged in Count

    III. Next, there is clear and-convincing evidence that the Rios did not account and deliver the rental funds to Mercedes as required by Subsection 475.25(1)(d), Florida Statutes. Even though the parties did not agree on a time certain for making such an accounting, the law requires that it be done upon demand of the person entitled to such an accounting and delivery. In this case, the demand was made through an attorney in April and May, 1984. Although the Rios eventually gave one to Mercedes in October, 1984, it was done only after a lawsuit had been filed, and even then the monies were not paid but were instead promised to be repaid over a 40-month time period. Therefore, the charges in Count II have been proven. Finally, Mercedes did not testify in this proceeding. The record is unclear as to what her specific understanding, if any, was with the Rios concerning the renting of her properties. Moreover, it is not clear as to what, if any, promises were made by the Rios to Mercedes since the agreements seemed to have been executed more out of friendship for her father than on a professional basis. In view of this, the allegations that the Rios committed fraud, misrepresentation, concealment, false promises, false pretenses and dishonest dealing must fail. However, they are guilty of culpable negligence (by failing to properly account for the funds) and of breach of trust (by breaching the trust that was imposed in them as realtors by Mercedes).

13. Juan Rios is far more culpable than his wife. It was he who signed the agreements, and who was the broker in this matter. Indeed, the wife seemed to have much less knowledge concerning the transactions in question. Accordingly, it is recommended that Juan's broker's license be suspended for one

year, and that Victoria Rios' broker-salesman license be suspended for three months.

RECOMMENDATION

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

Recommended that Juan and Victoria Rios be found guilty as charged in Counts II and III, and be found guilty of culpable negligence and breach of trust in Count I. It is further recommended that Juan Rios' license be suspended for one year and that Victoria Rios' license be suspended for three months.

DONE and ORDERED this 20th day of January, 1986, in Tallahassee, Florida.

DONALD R. ALEXANDER, Hearing Officer Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 20th day of January, 1986

ENDNOTE

1/ Testimony concerning the supposed loss in value of the home from the $140,000 original asking price to $85,000 is irrelevant to the issues in this complaint. Parenthetically, it is noted that the Rios claimed the $140,000 to be a grossly inflated asking price. In addition, the sale of the property to a relative can hardly be considered an arms-length transaction for measuring the value of the home.

COPIES FURNISHED:

Juan and Victoria R. Rios 855 80th Street, #1

Miami Beach, Florida 33141

Arthur R. Shell, Jr., Esquire Post Office Box 1900

Orlando, Florida 32802

Salvatore A. Carpino General Counsel

Department of Professional Regulation

130 North Monroe Street Tallahassee, Florida 32301

Harold Huff, Director

Florida Real Estate Commission

400 West Robinson Street Orlando, Florida 32801

Docket for Case No: 85-002369

Orders for Case No: 85-002369