STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

vs. ) CASE NO. 86-1162

) RUTH SIMOWITZ AND THELMA A. ) JORDON, )

)

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 June 19, 1986, in Miami, Florida.

APPEARANCES

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

Post Office Box 1900 Orlando, Florida 32802

For Respondents: Gordon W. Taylor, Esquire

14837 Northwest 7th Avenue Miami, Florida 33168

BACKGROUND

In a two count administrative complaint filed on March 5, 1986, petitioner, Department of Professional Regulation, Division of Real Estate, has charged that respondents, Ruth Simowitz and Thelma A. Jordon, both licensed real estate salesmen, had violated Subsection 475.25(1)(b), Florida Statutes (1985), while participating in a real estate transaction in 1985. More specifically, it is alleged that Simowitz obtained an exclusive listing agreement on certain residential property in Dade County, Florida, in April, 1985, that Jordon obtained buyers for the property who made an offer in June, 1985, that based upon respondents' representation that the sellers would net a certain amount of proceeds on the sale the sellers accepted the offer; that after the offer was accepted respondents presented a new offer and represented that the sellers would incur no additional costs under the new offer; that based upon this representation, the sellers accepted the second offer; and that Simowitz represented the sellers at closing and the sellers received some $3,800 less than promised by respondents.

Respondents disputed the above allegations and requested a formal hearing pursuant to Subsection N20.57(1), Florida Statutes (1985). The matter was referred to the Division of Administrative Hearings by petitioner on April 9,

1986, with a request that a hearing officer be assigned to conduct a formal hearing. By notice of hearing dated May 12, 1986, the final hearing was scheduled for June 19, 1986 in Miami, Florida.

At final hearing, petitioner presented the testimony of David J. Alden and offered petitioner's exhibits 1-9. All were received in evidence. Respondents testified on their own behalf and offered respondents' exhibits 1-4. All were received in evidence.

The transcript of hearing was filed on July 1, 1986. Neither party filed proposed findings of fact and conclusions of law. However, respondents filed a brief on July 23, 1986.

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

Based on all the evidence, the following facts are determined:

FINDINGS OF FACT

1. At all times relevant hereto, respondent, Ruth Simowitz, held real estate salesman license number 0072273 issued by petitioner, Department of Professional Regulation, Division of Real Estate (Division). When the events herein occurred, she was employed by Coldwell Banker Real Estate, Inc. in North Miami Beach, Florida. She has been licensed for more than fifteen years. Respondent, Thelma A. Jordon, held real estate salesman license number 0002486 also issued by the Division. She has been licensed for some twelve years, and was a salesman for Associates Realty Corporation in Miami, Florida when the events herein occurred.

   
   

2. David J. Alden, a native of the United Kingdom, first moved to Florida in May, 1978. He purchased a house at 14615 Southwest South River Drive in Miami, Florida. The listing agent for the sellers was Simowitz. When Alden decided to sell his house in 1981 or 1982, he chose Simowitz as his listing agent. After the listing expired some six months later, he took the house off the market for a period of time. In April, 1985, Alden again listed the property with Simowitz.

   
   

3. Shortly before June 13, 1985, Simowitz telephoned Alden and said she had prospective buyers who wished to inspect the house. She asked if they could visit the house within the next few days. Alden agreed to this. On June 13, Jordon, who worked for a different firm, brought two prospective buyers named Nevell and Marilyn Johnson to inspect the Alden property. The Johnsons found it to their liking, and had Jordon prepare a contract with a purchase price of

   $95,000, conditioned upon their obtaining a conventional first mortgage in the amount of $76,000 at an interest rate of 10.5 percent. Both Jordon and Simowitz presented the offer to Alden on the morning of June 16. They told Alden he could net approximately $39,000 from the sale after subtracting out his share of the closing costs. This was confirmed in a "Seller's Estimated Net Proceeds" prepared by Jordon and given to Alden on June 18. It reflected approximate cash to seller at time of closing in the amount of $39,798. Although Alden and his wife were not happy with the price offered by the Johnsons, after mulling over the matter, they decided to accept the offer and signed the contract on June 18.

   
   

4. After the contract was accepted, Jordon arranged an appointment for the Johnsons on June 20 with State Wide Mortgage Corporation, a mortgage brokerage firm in Hollywood, Florida. After learning from a mortgage broker named Dean

Lakin that conventional loans could not be obtained at less than a 12 percent interest rate, which was in excess of that provided in the contract, Nevell Johnson decided to make application for a VA loan which he could obtain at a lower interest rate (11 1/2 percent). To do this, it was necessary that he and his wife get Alden's consent to execute a new contract with a provision that VA financing would be used. A new "Good Faith Estimate of Settlement Services" was prepared by Lakin while the Johnsons were in his office, and it reflected that the discount points ($2,280) on the VA loan would be paid by the buyers.

Believing that no additional charges would be borne by Alden under the new financing, Jordon prepared a new contract which the Johnsons executed on June

1. It contained the same purchase price, but specifically authorized VA financing. Jordon then called Simowitz, advised her of the change in financing, and suggested Simowitz make an appointment with the Aldens to discuss the change.

   
   

   1. On June 20 Simowitz telephoned Alden and said the buyer was a veteran and could obtain a lower interest rate with a VA loan. She asked if she and Jordon could meet with him and discuss the matter. Respondents and Alden met the same day. At that time, Alden said he would accept the new offer only if he could get the same net proceeds as had been previously promised and did not have to pay the discount points which he understood the seller would normally pay on a VA loan. Respondents assured him that the buyer would incur this charge.

      That representation was based upon the advice given Jordon by Lakin. The contract itself provided that "mortgage closing costs, including mortgage title insurance, notice documentary stamps, intangible taxes, origination fee, recording fees, closing fees, surety, etc., to be paid by BUYER." Relying upon respondents' representation, Alden executed the second contract on June 20, 1985. Alden had no further contact with Jordon after that date.

      
      

   2. Alden returned to the United Kingdom in August, 1985. Prior to leaving, Alden and his wife visited the offices of Consumer's Title Agency, Inc. (CTA), the title company handling the closing. At the request of CTA, Mrs. Alden executed several documents including a power of attorney form which gave Simowitz power of attorney "to execute any and all documents necessary to complete the sale of" Alden's home. Simowitz did not learn this until shortly before the closing.

      
      

   3. The closing took place on September 23, 1985. Both respondents attended the closing and Simowitz signed various documents on Alden's behalf. Respondents were given a settlement sheet which reflected that Alden, and not the Johnsons, would pay the points on the loan. Simowitz was surprised but did not object or otherwise attempt to rectify the matter. Jordon was also surprised but said nothing.

      
      

   4. Alden returned to Florida on October 1, 1985, and visited Simowitz's office to ask for his proceeds. She told him the title company was sending his check and it should arrive in England any day. She said nothing about him being charged for points.

      
      

   5. On October 4 Alden returned to England and found his check from the title company in the mail. Upon seeing that his proceeds were only $33,505.48, he immediately telephoned Simowitz who then told him that the buyers' attorney insisted at closing that Alden pay the points.

      
      

   6. Thereafter, Alden filed a complaint with petitioner, and contacted his Miami attorney seeking advice. After consultation, Alden's counsel made a written demand on Associates Realty Corporation and Coldwell Banker Real Estate,

      Inc. for approximately $4,500 in closing costs paid by Alden. After their firms received the demand, Simowitz and Jordon promptly agreed to reimburse Alden

      $3,927 of the $4,500 in dispute. The remainder represented termite repair charges ($575) and document preparation fees ($100) which the sellers were clearly obligated to pay under the contract. Alden accepted this amount in satisfaction of his claim and received payment from respondents on February 15, 1986.

      
      

   7. Respondents conceded they made an "honest mistake" in representing to Alden that the buyer would pay the points on a VA loan. They did so because they relied upon incorrect advice given by a mortgage broker. Although both were long-time licensees, neither was aware that federal law requires that the seller incur these charges. They contend they said nothing at closing because they desired to avoid litigation by the buyers against the Aldens which would further complicate the matter. When such advice was given to Alden on June 20 there was no intent by respondents to deceive or trick Alden into signing the contract. Neither licensees has been the subject of prior disciplinary action.

      
      

      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 (1985)

      
      

   9. In connection with the Alden transaction, respondents are charged in two counts with violating Subsection 475.25(1)(b), Florida Statutes (1985). That subsection reads as follows:

      
      

      "(1) The commission ... may suspend a license or permit for a period not exceeding

      10 years; may revoke a license or permit; may impose an administrative fine not to exceed

      $1,000 for each count or separate offense; and may issue a reprimand, or any or all of the foregoing, if it finds that the licensee, permittee, or applicant:

      
      

      (b) Has been guilty of fraud, misrepre- sentation, 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 territory; 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; has aided, assisted, or conspired with any other person engaged in any such misconduct and in fur- therance thereof; or has formed an intent, design, or scheme to engage in any such misconduct and committed an overt act in furtherance of such intent, design, or scheme. It is immaterial to the guilt of the licensee that the victim or intended victim of the misconduct has sustained no damage or loss; that the damage or loss has been set-

      tled and paid after discovery of the miscon- duct; or that such victim or intended victim was a customer or a person in confidential relation with the licensee or was an identi- fied member of the general public.

      
      

   10. Respondents concede they made an improper representation to Alden, a seller, concerning the net proceeds that he would receive, but contend it was an "honest mistake" and was not intentional. They further contend that by making restitution to Alden, they have rectified their mistake. However, this contention is unavailing since Subsection 475.25(1)(b) specifically provides that "it is immaterial to the guilt of the licensee that the damage or loss has been settled and paid after discovery of the misconduct."

       
       

   11. To be guilty of misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence and breach of trust in a business transaction, a licensee must have the requisite knowledge and intent that his actions are unlawful or improper. Morris v. Department of Professional Regulation, Division of Real Estate, 474 So.2d 841 (Fla. 5th DCA 1985). Here there was no such knowledge or scienter by Simowitz and Jordon on June 20 that their representations to Alden were incorrect. However, at the closing on September 23, neither respondent objected to Alden paying the points once they learned it was being handled in a manner inconsistent with the advice given by them. Moreover, after closing, neither initiated contact with Alden to advise him what had occurred. By failing to do this, both are guilty of concealment and culpable negligence since they knew or should have known that it was their duty to raise this matter at closing, and to thereafter promptly disclose this fact to the sellers. In addition, both are guilty of breach of trust in a business transaction since they had a fiduciary relationship with the sellers, and breached the trust imposed in them by the Aldens. All other charges must fail.

       
       

   12. Respondents seemed genuinely embarrassed, concerned and sorry about this whole affair. Both are long-time licensees with unblemished records. In addition, they have made the sellers whole. Under these circumstances, a $250 administrative fine and a public reprimand for each respondent is an appropriate penalty.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that both respondents be found guilty of breach of trust,

concealment and culpable negligence, and they be given public reprimands and

each pay a $250 administrative fine, to be paid within thirty days after date of Final Order.

DONE and ORDERED this 1st day of August, 1986, in Tallahassee, Florida.

DONALD R. ALEXANDER

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 1st day of August, 1986.

COPIES FURNISHED:

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

Orlando, Florida 32802

Gordon W. Taylor, Esquire 14837 N.W. 7th Avenue Miami, Florida 33168

Wings A. Benton General Counsel

Department of Professional Regulation

130 North Monroe Street Tallahassee, Florida 32301

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

Docket for Case No: 86-001162

Orders for Case No: 86-001162