STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

vs. ) CASE NO. 88-1294

)

MARGARET ANN REESE, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to written notice a formal hearing was held in this case before Larry J. Sartin, a duly designated Hearing Officer of the Division of Administrative Hearings, on October 31, 1988, in Ocala, Florida.

APPEARANCES

For Petitioner: Steven W. Johnson, Senior Attorney

Division of Real Estate

Department of Professional Regulation Post Office Box 1900

Orlando, Florida 32802

For Respondent: Frederick E. Landt, III, Esquire

Post Office Box 2045 Ocala, Florida 32678

INTRODUCTION

The Petitioner, the Department of Professional Regulation, Division of Real Estate, filed an Administrative Complaint dated February 22, 1988, against the Respondent, Margaret Ann Reese, alleging that she had violated Section 475.25(1)(b), Florida Statutes. Ms. Reese executed an Election of Rights form on March 9, 1988, disputing the allegations of fact contained in the Administrative Complaint and requesting a formal administrative hearing. The Administrative Complaint and request for hearing were forwarded to the Division of Administrative Hearings by letter dated March 14, 1988. The request for hearing was assigned case number 88-1294 and was assigned to Hearing Officer Michael M. Parrish. On October 31, 1988, the case was transferred to the undersigned.

At the formal hearing the Petitioner presented the testimony of Mary Kennedy, Robert M. Connell, John J. Korsun, Sr., and Ben A. Carroll. The Petitioner offered seven exhibits which were accepted into evidence.

Ms. Reese testified on her own behalf and presented the testimony of Nehimiah Clark David and the deposition testimony of Frederick W. Holm.

Respondent's exhibit 1 was also accepted into evidence.

The parties have filed proposed recommended orders containing proposed findings of fact. A ruling on each proposed finding of fact has been made either directly or indirectly in this Recommended Order or the proposed finding of fact has been accepted or rejected in the Appendix which is attached hereto.

ISSUE

Whether Margaret Ann Reese is guilty of, and should be disciplined for committing, fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme, or device, or breach of trust in a business transaction?

FINDINGS OF FACT

1. At all times relevant to this proceeding, Margaret Ann Reese was licensed by the State of Florida pursuant to Chapter 475, Florida Statutes. She holds license number 0454079.

   
   

2. At all times relevant to this proceeding, Ms. Reese was licensed as a real estate salesman, c/o Ellison Realty, Inc., 2226 E. Silver Springs Boulevard, Ocala, Florida 32671.

   
   

3. During 1986, Ms. Reese showed certain real property and a mobile home (hereinafter referred to as the "Property"), which was owned by Frederick W. and Mary Holm to Mary Kennedy and John J. Korsun, Sr., her father. The Property is located in Oxford, Sumter County, Florida.

   
   

4. The Property was listed by Nehimiah Clark David, another real estate salesman with Ellison Realty, Inc.

   
   

5. Ms. Kennedy and Mr. Korsun inspected the Property several times. Water damage to the ceilings of the mobile home was noticed during the inspections. Ms. Kennedy and Mr. Korsun expressed concern about the condition of the roof of the mobile home. The roof was, therefore, repaired by the owners.

   
   

6. On November 5, 1986, Ms. Reese obtained a Contract of Sale, wherein Ms. Kennedy and Mr. Korsun offered to purchase the Property. Because of their concern about the condition of the roof, Ms. Reese added the following under paragraph X, "Special Clauses," in the Contract of Sale: "Seller warrants roof for 1 year."

   
   

7. The Contract of Sale was mailed to Mr. and Mrs. Holm in Punta Gorda, Charlotte County, Florida. Mr. and Mrs. Holm struck the language included by Ms. Kennedy and Mr. Korsun in the Contract of Sale concerning the one year warranty of the roof and added "sold as is" in paragraph X, "Special Clauses." Mr. and Mrs. Holm then executed the Contract of Sale, as modified, and mailed it to Ellison Realty, Inc.

   
   

8. Ms. Reese, after receiving the Contract of Sale from Mr. and Mrs. Holm, informed Ms. Kennedy and Mr. Korsun that their offer had been accepted. Ms. Reese did not inform Ms. Kennedy or Mr. Korsun that the sellers had modified the Contract of Sale by deleting the one year warranty of the roof and adding the language that the sale was "as is." Ms. Reese failed to provide a copy of the

   Contract of Sale signed by the Holms or have Ms. Kennedy and Mr. Korsun initial the modifications made by the Holms. A copy of the Contract of Sale, as modified by the Holms, was not provided to Ms. Kennedy until February or March, 1987.

   
   

9. The sale of the Property was closed on December 5, 1986. Closing took place at the offices of Advanced Title Searching, Inc., and was conducted by the President of Advanced Title, Robert M. Connell. At the closing Ms. Kennedy and Mr. Korsun decided that the Property would be sold only to Ms. Kennedy.

   
   

10. Ms. Kennedy was not specifically informed during the closing that the language concerning the one year warranty of the roof had be stricken and that the language "sold as is" had been added. She was told, however, that the Property was being sold "as is" by Mr. Connell. Mr. Connell also followed his routine of reviewing paragraph X of the Contract of Sale with Ms. Kennedy and having her initial and sign a Buyers Affidavit. Among other things, Ms. Kennedy acknowledged by signing the Buyers Affidavit that she had reviewed paragraph X of the Contract of Sale. The Buyers Affidavit also refers to the only special clauses in paragraph X of the Contract of Sale as executed by Mr. and Mrs. Holm

    
    

11. Although the terms of the sale were generally described by Mr. Connell and Ms. Kennedy signed the Buyers Affidavit, Ms. Kennedy was not shown the Contract of Sale as executed by Mr. and Mrs. Holm, she was not specifically told about the removal of the special clause concerning the one year warranty on the roof or that the roof was "as is," and she did not understand what she was signing.

    
    

12. In approximately February, 1987, following Ms. Kennedy's purchase of the Property, the roof of the mobile home began leaking water during a rain storm. Ms. Kennedy called Ms. Reese to report the damage. Ms. Reese then informed Ms. Kennedy for the first time that the language concerning the one year warranty of the roof had been stricken and that the language "sold as is" had been added to the Contract of Sale.

    
    

13. Ms. Reese offered to pay the cost of repairing the roof. Ms. Kennedy declined this offer because she wanted the roof replaced.

    
    

    CONCLUSIONS OF LAW

    
    

14. The Division of Administrative Hearings has jurisdiction of the parties to and the subject matter of this proceeding. Section 120.57(1), Florida Statutes (1987).

    
    

15. This proceeding is penal in nature. Bach v. Florida Board of Dentistry, 378 So.2d 34 (Fla. 1st DCA 1980). Because Ms. Reese's license is at stake, the evidence to support the charges against her must be clear and convincing. Ferris v. Turlington, 510 So.2d 292 (Fla. 1987).

    
    

16. Section 475.25(1), Florida Statutes, provides that the Petitioner "may deny an application ... ; 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 of the foregoing ... " if a licensee is found to have committed any of the acts specified in Section 475.25(1)(a)-(p), Florida Statutes.

17. In the Administrative Complaint filed against Ms. Reese in this case, Ms. Reese has been charged with violating the following prohibited act of Section 475.25(1), Florida Statutes:

    
    

    (b) Has been found 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 ...

    
    

18. The evidence in this case supports a conclusion that Ms. Reese has violated the portion of Section 475.25(1)(b), Florida Statutes, quoted, supra. Ms. Kennedy relied upon Ms. Reese to insure that Ms. Kennedy purchased the Property under the terms and conditions offered in the Contract of Sale executed by Ms. Kennedy and Mr. Korsun. In particular, she intended to purchase the Property with a one year warranty on the roof. Ms. Reese failed to insure that Ms. Kennedy was aware of the fact that the Property was being sold without the one year warranty. At no time either before or during the closing of the sale of the Property did Ms. Reese, or any other person, specifically inform Ms. Kennedy that the Contract of Sale had been modified with regard to the roof warranty. Ms. Reese admitted this fact to the Petitioner's investigator. Ms. Reese also failed to provide a copy of the Contract of Sale or insure that Ms. Kennedy initialled the modifications to the Contract of Sale, as executed by Mr. and Mrs. Holm, until approximately two months after closing on the Property. Finally, although Ms. Kennedy did have the general terms of the sale explained to her at the closing, she was never specifically informed that "the one year warranty of the roof" had been rejected.

    
    

19. Ms. Reese's actions constitute concealment and negligence in the practice of real estate in violation of Section 475.25(1)(b), Florida Statutes.

    
    

20. Rule 21V-24.001, Florida Administrative Code, provides that a minimum penalty of a reprimand and/or a fine of up to $1,000.00 and a maximum penalty of a suspension or revocation of license for up to five years should generally be imposed for a violation of Section 475.25(1)(b), Florida Statutes. Both the parties in this proceeding have recommended that Ms. Reese be reprimanded and that she be required to pay a fine of $500.00. The facts of the case support this recommendation.

    
    

21. Additionally, the Petitioner has recommended that Ms. Reese be required to pay restitution to Ms. Kennedy in the amount of $2,400.00. The Petitioner has not cited any authority for this recommendation. Additionally, the evidence in this case failed to prove what action should be taken to correct the problem with the Property's roof.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Margaret Ann Reese by found guilty of violating Section

475.25(1)(b), Florida Statutes. It is further

RECOMMENDED that Ms. Reese be reprimanded and required to pay a fine of

$500.00.

DONE and ENTERED this 14th day of February, 1989, in Tallahassee, Florida.

LARRY J. SARTIN

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 14th day of February, 1989.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 88-1294

The parties have submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s) in the Recommended Order where they have been accepted, if any. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted.

The Petitioner's Proposed Findings of Fact

Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection

1 1.

2 2.

3 3-6.

4 7.

5 8. A copy of the contract was provided in 1987, not 1988.

6 9-10.

7 See 10-11.

8 10. The last two lines of this proposed finding of fact are not supported by the weight of the evidence.

9 12.

10 Not supported by the weight of the evidence.

11 13.

12-13 Hereby accepted.

The Respondent's Proposed Findings of Fact

Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection

1 1.

2 2.

3 3-6.

4 7.

5 Not supported by the weight of the evidence. Mr. David's testimony was

contradicted by Ms. Reese's admissions to the Petitioner's investigator.

6 8.

7 10. See 11.

8 See 10-11.

9 12.

10 Not supported by the weight of the evidence.

11 13.

12-13 Hereby accepted.

COPIES FURNISHED:

Darlene F. Keller, Executive Director Department of Professional

Regulation

Division of Real Estate Post Office Box 1900 Orlando, Florida 3280

Steven W. Johnson Senior Attorney Division of Real Estate

Department of Professional Regulation Post Office Box 1900

Orlando, Florida 32802

Frederick D. Landt, III, Esquire Post Office Box 2045

Ocala, Florida 32678

Kenneth E. Easley, Esquire Department of Professional Regulation

130 North Monroe Street Tallahassee, Florida 32399-0750

Docket for Case No: 88-001294

Orders for Case No: 88-001294