(1)(b), Florida Statutes, by being guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence, and breach of trust in a business transaction. On May 4, 1987, the Respondent, N. Gene Watson, for himself and as qualifying broker for Blue Chip Properties, Inc., executed Elections of Rights forms in which he disputed the allegations of fact contained in the Administrative Complaint and requested a formal hearing. Thereafter, on May 8, 1987, the file was forwarded to the Division of Administrative Hearings, and on June 10, 1987, Linda M. Rigot, Hearing Officer, set the case for hearing on August 20, 1987.
However, subsequent to that time, the parties agreed to a continuance and on July 21, 1987, Ms. Rigot entered an Order granting the continuance and rescheduling the hearing for October 28, 1987 when it was heard by the undersigned to whom the case was transferred in the interim.
At the hearing, Petitioner presented the testimony of Clara M. Persinger, the individual to whom Respondent allegedly sold the property in question and introduced Petitioner's Exhibits 1 through 9. Respondent testified in his own behalf and introduced Respondent's Exhibits A and B.
Subsequent to the hearing, Petitioner provided the undersigned with a transcript of the proceedings and both parties submitted proposed Findings of Fact which have been ruled upon in the Appendix to this Recommended Order.
At all times pertinent to the matters addressed herein, the Respondents were licensed as registered real estate brokers in Florida. Respondent Watson was issued license number 0404402 as Broker in care of Blue Chip Properties, Inc. Respondent Blue Chip Properties, Inc., was issued license number 0240115.
In mid-April, 1985, International Tax Institute, (ITI), a financial consulting firm in Marco Island, Florida, entered into a contract with Ms. Clara
Persinger, a married woman who was, at the time, considering terminating her marriage, to provide financial planning and tax consultant services. At that time, ITI was a corporation, the two stockholders of which were the Respondent,
Gene Watson, and W. J. Ferguson. The Respondent Watson was also a director of the corporation as was Mr. Ferguson, along with two other individuals by the name of Fine and Leszcek.
The contract between ITI and Ms. Persinger called for her to pay a yearly fee of $2,000.00 in quarterly installments of $500.00 each. Any additional fees incurred in the rendering of services, such as attorney, accountant, or documentary fees were not included but were to be paid in addition to the annual fee.
On December 17, 1985, Ms. Persinger entered into what purported to be a real estate contract with Mr. Watson for the purchase of a condominium in Spring Haven Condominium, located in Pasco County, Florida. This condominium was the second unit Respondent had advised Ms. Persinger to buy, having previously advised her to purchase a higher priced unit in the same development. The closing on that unit did not take place.
According to Ms. Persinger, Respondent indicated that the condominium in question belonged to him and his wife and in fact, it had at one time. However, on October 28, 1985, some month and a half prior to the execution of this purported contract, Mr. Watson and his wife transferred the property to ITI by Quit Claim Deed which was properly recorded on November 13, 1985.
The purported contract reflected ITI as seller in place of the Watsons, and Ms. Persinger as the buyer. The terms of the sale called for a $5,000.00 deposit on a $62,500.00 purchase price with Buyer to assume the existing mortgage of $57,500.00. Closing was set for December 31, 1985, some 13 days after execution of the contract by Ms. Persinger, and time was noted to be of the essence. At paragraph 8 of the contract, Respondent Watson reflected himself as the procuring real estate broker in this transaction though at the hearing, he denied ever considering himself a broker for this transaction, nor
did he ever anticipate he or Blue Chip, Inc., would ever receive a fee from this transaction. Instead, he claimed, it was a sale to Ms. Persinger of an ITI asset by him as President of the corporation - not as a procuring broker, and certainly without the participation of Blue Chip Realty, Inc. The documentation presented at the hearing, purporting to be the sales contract, reflects that the document was signed by Ms. Persinger on December 17, 1985, witnessed by Respondent Watson. There is no signature by any representative of ITI or any other individual purporting to be the seller. Mr. Watson contends he is certain he, or someone on behalf of ITI, subsequently signed the contract, but he does not recall having done so, nor does he recall having seen a signed copy. He bases his contention on the fact that the mortgage company agreed to the assumption on the basis of this agreement and would not have done so were it not a valid agreement.
At the time of the execution of the purported contract, Ms. Persinger gave Mr. Watson a check for $5,000.00 as the down payment called for in the contract, made payable to ITI at the request of Mr. Watson.
Somehow, Ms. Persinger, thereafter contacted the mortgage holder, Liberty Savings and Loan Association, in Port Richie, Florida, to inquire if the loan was assumable as represented by Watson. By letter dated January 14, 1986, Janet Thurnau, Loan Officer with Liberty Savings, indicated that the loan was assumable under its present conditions and enclosed a copy of the note supporting the existing loan, which reflected the Watsons as the owners. Thereafter, Ms. Persinger submitted an application for assumption of the loan which was processed by the lender. On April 21, 1986, the lender notified Ms. Persinger by letter that her assumption of the loan had been approved with certain conditions. An assumption fee on 1% of the unpaid balance was required to which Ms. Persinger agreed. However, there were certain other conditions imposed, some of which were objectionable. For example, the lender desired the loan balance be reduced from $57,383.71 (be brought down) to $50,000.00, requiring a substantial additional cash investment. Further, Ms. Persinger objected to providing a credit report on her husband and to the requirement that her husband sign the assumption papers. She was in the process of considering a divorce, and was aware that her husband was very much against her individual purchase and would not participate in it.
When these conditions were attached to the assumption, Ms. Persinger decided she did not desire to purchase the property and so notified Mr. Watson, requesting he refund her deposit.
On July 25, 1986, Mr. Watson forwarded to Ms. Persinger a check in the amount of $877.00 drawn on the account of ITI which reflected that certain sums had been deducted from the original deposit as expenses. These included
$1,400.00 for a refrigerator and window treatment; $515.00 for preparation of forms relative to the purchase; and $2,208.00 for unpaid charges on other ITI services provided to Ms. Persinger prior to that time.
This was totally unsatisfactory to Ms. Persinger who, nonetheless, did nothing about it for several months because she believed that by cashing the check, she would be accepting the validity of the deductions. She ultimately did deposit the check several months later and it was returned to her dishonored for insufficient funds. When Respondent was notified of this, he immediately provided Ms. Persinger with a cashier's check for the same amount in exchange.
On July 25, 1986, the same day as he issued the initial refund check, Mr. Watson also sent Ms. Persinger a personal and confidential letter in which
he informed her that the representation agreement that had existed between ITI and her was being cancelled because of the continued confusion over her intentions with regard to the advice ITI had rendered pursuant to her request. It should be noted that for the considerable time between the assumption response from the lender, several months after the closing date set in the contract, and Ms. Persinger's request for a refund of her deposit, no attempt was made by Respondent or ITI to terminate their agreement. Nonetheless, in that letter, Mr. Watson pointed out that Ms. Persinger had previously backed out of an agreement to buy a higher priced condominium unit from the same developer which resulted in a difficult situation for him with the developer who was somewhat mollified by her agreement to buy the second unit. Mr. Watson's explanation of why her agreement to purchase a unit which the developer did not own would mollify the developer was not clear.
In the letter, Mr. Watson also pointed out that the mere fact that the lender added substantial additional conditions to the assumption should not have precluded Ms. Persinger from continuing with the purchase even though the alterations were material since she was "accepted" as an assumee. Nonetheless, Mr. Watson pointed out an alternative method of purchase which Ms. Persinger did not agree to since she had decided to withdraw from the deal.
There appeared to be some alleged incidents of improper conduct on the part of Ms. Persinger which led to the cancellation of the representation agreement and thereafter Mr. Watson proceeded to outline the deductions he made from the deposit prior to the return of the balance.
In that regard, Mr. Watson contends that the property owned by ITI was being leased back to the developer for a rental of $450.00 per month. He believed this would be a good investment for Ms. Persinger by virtue of other tax considerations involved. She, on the other hand, contended that since the monthly mortgage payment was in excess of $550.00, the negative cash flow made the investment undesirable. She was willing to go through with it only if she could get a minimum of $550.00 per month in rent. Since the property was offered without window treatment and without a refrigerator, it would have been impossible, Watson claimed, to get that much rent, so the developer agreed to put in a refrigerator and window treatment at her expense and thereafter pay
$550.00 per month. Mr. Watson claims Ms. Persinger agreed to this but she denies it.
The $515.00 document preparation fee, according to Watson, was for attorney's fees due to the preparation of documents. However, upon examination, Watson stated that some of it was paid to a secretarial service and the balance was paid to an attorney firm which he could not name. The additional $2208.00 was attributed in part ($1200.00) to the design and installation of Persinger Insurance, Inc.'s profit sharing plan. Six hundred dollars additional was to be paid to ITI for the 1985 administration of the plan which was in addition to the
$500.00 quarterly fee paid by Ms. Persinger. Three hundred dollars was being charged for the preparation of Ms. Persinger's personal 1985 federal income tax return and the balance of $108.00 was for the preparation of certain forms relative to the business. At no time, however, did Ms. Persinger ever authorize or approve any deduction for any of the above fees or the setoff of the alleged unpaid service charges which Mr. Watson, on behalf of ITI, deducted from her deposit check. In that regard, it must be noted that Mr. Watson at no time put the $5,000.00 deposit check in an escrow account but immediately released it to ITI for deposit to the company's general fund.
Until the development of the profit sharing plan, Ms. Persinger had, according to Watson, paid for all services ITI had provided to her. According to him, Ms. Persinger agreed to the setup of the plan, but none of it was ever utilized by the business because of advice given her by her accountant. Ms. Persinger does not deny she authorized the work on the plan. She does deny, however, that she authorized any setoff. The issue of her indebtedness to ITI for the work done, however, is not the issue involved in this hearing.
Based on the evidence admitted it becomes clear that Ms. Persinger entered into what was presented to her as a contract for the purchase of a condominium apartment which did not consummate because she was unable to assume the existing mortgage as called for in the contract at terms reasonably consistent with her desires. When she requested a refund of the deposit paid by her, she was issued a check in an amount slightly less than one fifth of the amount she had paid. Certain expenses and other charges were deducted from the check. It is not significant that the original refund check was dishonored.
Ms. Persinger admittedly kept the check without depositing it for an extended period and this well may have been the basis for the dishonor. The issue that must be determined is whether at the time the purported contract was entered into, Mr. Watson and Blue Chip were acting as real estate brokers or not.
Though Mr. Watson contends he was acting as President of ITI and not as a broker during all the time he negotiated the sale, drafted the contract, received the deposit, and refunded some of the deposit, it is impossible to separate Mr.
Watson, the president of ITI, from Mr. Watson, the broker, especially in light of the fact that he reflected he was the broker on the contract he drafted.
Though the deposit was not placed in an escrow account pending closing, it should have been, regardless of the fact that neither Watson nor Blue Chip were to receive a commission on the sale.
Mr. Watson's testimony was so uncertain, and he was so unsure of his facts and equivocal in his answers that, for the most part, his testimony is unworthy of belief. It is found, therefore, that Mr. Watson did tell Ms. Persinger at the time she signed the agreement that he and his wife were the owners of the property even though the contract reflected ITI as seller. It is also found that Ms. Persinger at no time authorized ITI or Mr. Watson to withhold any funds from the deposit returnable to her when the sale could not be consummated because of circumstances not attributable to her actions. It is further found that Ms. Persinger did not authorize Respondent, ITI, or the developer, to purchase a refrigerator or window treatment for the apartment which she never saw, owned, or took possession of, and it is also found that at no time did Ms. Persinger authorize Mr. Watson or ITI to withhold or setoff either the $515.00 or the $2208.00 which it contends was owed by her for other matters totally unrelated to the purchase of the condominium.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and subject matter in this case. Section 120.57(1), Florida Statutes.
In Counts I and II of the Administrative Complaint, Petitioner alleges that Respondent Watson and Respondent Blue Chip Properties are 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 Subsection 475.25(1)(b), Florida Statutes.
That statutory provision permits the Florida Real Estate Commission to discipline a license or permit for various acts of misconduct by a licensee, including those cited here.
The evidence of record establishes without question that Respondent, Watson, made several misrepresentations of fact. One was that he and his wife owned the property in question when, as a matter of fact, ownership had previously been transferred to ITI.
The unprofessional manner of conducting the sale, such as the failure to procure signatures of a representative of the seller; the request that Ms. Persinger make the down payment to him rather than ITI; the failure to have the mortgage company records changed on sale of the property to ITI; and the failure to advise Ms. Persinger of the objectionable conditions to assumption, of which he must have been aware, all tend to cast a aura of deceit over the entire transaction and give question to Respondent, Watson's protestations of innocence.
Further, the unauthorized expenditure for window treatment and a refrigerator in the apartment prior to an agreed upon closing, and the unapproved offset for other charges by ITI against Persinger Insurance, Inc., not Ms. Persinger individually, constitute an improper conversion of her property and indicate dishonest dealing.
In addition, the intermingling of functions by Respondent, Watson, between the services of ITI as an adviser to Ms. Persinger and Persinger Insurance, Inc., and his relationship with Ms. Persinger as a real estate professional, regardless of his subsequent protestations that he did nothing here as a broker, constitute, at best, misrepresentation. His immediate release of her $5,000.00 deposit check to ITI without authority instead of placing it in the brokerage escrow account, was clearly improper.
It is clear, therefore, that Respondent, Watson is guilty of several violations of Section 475.25(1)(b) including, misrepresentation, concealment, dishonest dealing, and breach of trust in a business transaction. Discipline of his license is justified. Since the actions established were committed by Respondent, Watson, alone without the use of even the name Blue Chip Properties, it does not appear appropriate to discipline that licensee.
