STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL )

REGULATION, DIVISION OF )

REAL ESTATE, )

)

Petitioner, )

)

vs. ) CASE NO. 93-0606

) ALBERT R. DEERING AND ADVANTAGE ) REALTY OF SARASOTA INC., T/A ) CENTURY 21 ADVANTAGE )

)

Respondents. )

)

RECOMMENDED ORDER

Upon due notice, the Division of Administrative Hearings by its duly assigned Hearing Officer, William R. Cave, held a formal hearing in the above- captioned matter on May 17, 1993 in Sarasota, Florida.

APPEARANCES

For Petitioner: Steven W. Johnson, Esquire

Department of Professional Regulation, Division of Real Estate

Hurston North Tower #308A

400 West Robinson Street Orlando, Florida 32801

For Respondent: Albert R. Deering, Pro se

c/o Advantage Realty of Sarasota, Inc., t/a Century

21 Advantage

4121 Bee Ridge Road Sarasota, Florida 34233

STATEMENT OF THE ISSUE

Whether Respondents' license as real estate brokers in the state of Florida should be revoked, suspended or otherwise disciplined based upon the allegations of misconduct in the Administrative Complaint.

PRELIMINARY STATEMENT

By an Administrative Complaint served on the Respondent on January 8, 1993 and filed with the Division of Administrative Hearings on February 8, 1993, the Petitioner seeks to revoke, suspend or otherwise discipline the Respondents' license as real estate brokers in the state of Florida. As grounds therefor, it is alleged that an audit of Respondent, Advantage Realty of Sarasota, Inc., t/a

Century 21 Advantage (Advantage) reflected shortages in the security deposit escrow account and the rental distribution escrow account of Respondent, Advantage in violation of Section 475.25(1)(b)and (k), Florida Statutes, and that Respondent, Albert R. Deering (Deering) had failed to sign and properly reconcile Advantage's escrow accounts in violation of Rule 21V-14.012(2), Florida Administrative Code, and was therefore in violation of Section 475.25(e), Florida Statutes.

The Respondents disputed the allegations of fact contained in the Administrative Complaint and requested a formal hearing pursuant to Section 120.57(1), Florida Statutes. Petitioner referred this matter to the Division of Administrative Hearings for the assignment of a Hearing Officer and the conduct of a hearing. A hearing was held in this matter on May 17, 1993 in Sarasota, Florida.

At the hearing, the Petitioner presented the testimony of Majorie May and Albert R. Deering. Petitioner's exhibits 1 through 4 were received as evidence in the case. Respondents presented the testimony of Albert R. Deering but did not call any other witness. Respondent's exhibits 1 and 2 were received as evidence in this case.

There was no transcript of the proceeding filed with the Division of Administrative Hearings. The parties timely filed their Proposed Findings of Fact and Conclusions of Law. A ruling on each proposed finding of fact submitted by the parties has been made as reflected in an Appendix to the Recommended Order.

FINDINGS OF FACT

Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant findings of fact are made:

1. At all times material to this proceeding, the Respondent, Deering, was licensed as a real estate broker in the state of Florida, having been issued license number 0563366.

   
   

2. At all times material to this proceeding, Respondent, Advantage, was licensed as a real estate broker, having been issued license number 0273342.

   
   

3. At all times material to this proceeding, Respondent, Deering, was licensed and operating as the qualifying broker for Respondent, Advantage.

   
   

4. On October 22, 1992, Petitioner conducted an office inspection and audit of Advantage. The audit reflected what appeared to be a shortage in Advantage's security deposit escrow account (Number 027000122700) in the amount of $580.00, calculated as $6,600.00 in total trust liability, but only $6,020.00 as a reconciled bank balance.

   
   

5. The audit also reflected what appeared to be a shortage in Advantage's rental distribution escrow account (Number 27000121900) in the amount of

   $369.40, calculated as $3,174.82 in total trust liability, but only $2,805.42 as reconciled bank balance.

   
   

6. The audit also reflected that Deering, as the qualifying broker, failed to sign and properly reconcile Advantage's escrow accounts by comparing the total trust liability with the reconciled bank balance of the escrow accounts for the months of September and October, 1992. Marie Deering, Respondent,

   Deering's, wife and a corporate officer of Respondent, Advantage, signed the reconciliation form for the months of September and October, 1992. It appears from the record (Petitioner's Exhibit 1, Respondents' Licensure file) that Roger

   J. Kathman was the Broker of Record for Respondent, Advantage until August 21, 1992, when he resigned.

   
   

7. Apparently, part of the problem stemmed from using a form developed by the previous real estate agency which was not the form suggested by the Petitioner for this purpose. Since being advised about the form and that comparing the total trust liability of each escrow account with the reconciled the bank balance of each escrow account and signing the reconciliation form was the responsibility of the broker of record, Deering has been properly fulfilling that responsibility and reporting on the correct form.

   
   

8. The total trust liability of Advantage's security deposit escrow account should have been $5,700.00 rather than the $6,600.00 indicated by the audit because the $900.00 included in the audit figure from the San Juan lease should not have been included since this amount was not to be escrowed pursuant to the lease. This was a verbal agreement between the parties that was later executed as an addendum to the lease.

   
   

9. Advantage's reconciled bank balance for the security deposit escrow account should also be $5,700.00, calculated as $6,020.00 reflected in the audit, minus $1,000.00 that was erroneously disbursed from the Rental distribution escrow account (also called the property management escrow account) instead of the security deposit escrow account , plus $680.00 that was erroneously deposited into the rental distribution escrow account instead of the security deposit escrow account ( $6,020.00 - $1,000.00 + $680.00 = $5,700.00).

   
   

10. The total trust fund liability of the rental distribution escrow account should be $3,175.42, calculated as $3,174.82 as reflected in audit plus

    $0.60 to correct bookkeeping error ($3,174.82 + $0.60 = $3,175.42).

    
    

11. The reconciled bank balance for the rental distribution escrow account should be $3,175.42, calculated as $2,805.42 reflected in the audit, plus

    $1,000.00 transferred from the security deposit escrow account as reflected in Finding of Fact 8, minus $680.00 transferred to the security deposit escrow account as reflected in Finding of Fact 8, plus a deposit of $50.00 to correct an error made in crediting a tenant account with $50.00 more than was deposited from tenant ($2,805.42 + $1,000.00 - $680.00 + $50.00 = $3,175.42).

    
    

12. Although there were clerical or bookkeeping errors made in the handling of Advantage's escrow accounts, there was no evidence that Deering failed to immediately deposit funds received in trust in an escrow account, albeit not always the correct one.

    
    

13. After the audit, Respondent, Deering promptly and properly corrected the escrow accounts and accounted for the funds resulting in balanced escrow accounts.

    
    

14. While the Respondents were negligent in the handling of the escrow accounts, there is insufficient evidence to establish facts to show that Respondents were culpably negligent or that there was a breach of trust.

    
    

15. The Respondents' license as real estate brokers in the state of Florida has never been disciplined.

    CONCLUSIONS OF LAW

    
    

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

    
    

17. Based on the factual allegations contained in the Administrative Complaint, the Respondents: (a) are charged in Count I and Count II as being guilty of culpable negligence or breach of trust in a business transaction in violation of Section 475.25(1)(b), Florida Statutes; (b) are charged in Count III and Count IV as being guilty of failing to maintain trust funds in the real estate brokerage escrow bank account or some other proper depository until disbursement thereof was properly authorized in violation of Section 475.25(1)(k), Florida Statutes, and; (c) are charged in Count V and VI as being guilty of the failure to prepare the required written monthly escrow statement- reconciliations in violation of Rule 21V-14.012(2) and (3), Florida Administrative Code, and therefore in violation of Section 475.25(1)(e), Florida Statutes.

    
    

18. Section 475.25(1)(b)(e) and (k), Florida Statutes, provides in pertinent part as follows:

    
    

    1. The commission may ... place a licensee

       ...on probation; may suspend a license ... for a period not exceeding 10 years; may revoke a license ... may impose an administrative fine not to exceed $1,000 for each count or separate offense; may issue a reprimand ...

       if it finds that the license ...:

       . . . .

       (b) Has been guilty of ...culpable negligence, or breach of trust in any business transaction ....

       . . . .

       (e) Has violated any of the provisions of this chapter or any lawful order or rule made

       or issued under the provisions of this chapter or chapter 455.

       . . . .

       (k) Has failed, if a broker, to immediately place, upon receipt, any money, fund, deposit, check, or draft entrusted to him by any person dealing with him as a broker in escrow with a title company, banking institution, credit union, or savings and loan association located and doing business in this state, or to deposit such funds in a trust or escrow account maintained by him with some bank, credit union, or savings and loan association located and doing business in this state wherein the funds shall be kept until disbursement thereof is properly

       authorized ....

19. Rule 21V-14.012(2) and (3), Florida Administrative Code, provides in pertinent part as follows:

    
    

    1. At least monthly, a broker shall cause to be made a written statement comparing the broker's total liability with the reconciled bank balance(s) of all trust accounts. The

       broker shall review, sign and date the monthly statement-reconciliation.

    2. Whenever the trust liability and the bank balances do not agree, the reconciliation shall contain a description or explanation for the difference(s) and any corrective action taken in references to shortages or overages of funds in the account(s)....

    
    

20. In a disciplinary proceeding, the burden is upon the regulatory agency to establish facts upon which its allegation of misconduct are based by clear and convincing evidence. Ferris v. Turlington, 510 So.2d 392 (Fla. 1987).

    
    

21. There was no evidence that the discrepancies in the escrow/trust accounts were the product of anything other than clerical or bookkeeping errors. There was no showing of culpable negligence or a breach of trust or that Respondents had violated a duty imposed upon them in violation of Section 475.25(1)(b), Florida Statutes. Consequently, it concluded that Petitioner failed to establish that Respondents violated the provisions of Section 475.25(1)(b), Florida Statutes.

    
    

22. Petitioner has established that trust funds were erroneously deposited in the wrong escrow account and that funds were erroneously disbursed from the wrong escrow account. While this failure to properly deposit and disburse funds may technically be a violation of Section 475.25(1)(k), Florida Statutes, the discrepancies in the escrow/trust accounts were nothing more than clerical or bookkeeping errors. There was no evidence that these errors involved dishonest or unscrupulous behavior.

    
    

23. Petitioner has also established that Respondent Deering failed to follow the procedures specified by Rule 21V-14.012(2), Florida Administrative Code, in that Deering failed to review and sign the monthly statement- reconciliation for the months of September and October, 1992, which constitutes a violation of Section 475.25(1)(e), Florida Statutes. There was no evidence that Deering's failure to properly review and sign the monthly statement- reconciliation involved dishonest or unscrupulous behavior.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Commission enter a Final Order finding Respondent Deering and Respondent Advantage guilty of technical violations of Section 475.25(1)(e) and (k), Florida Statutes. For such violations, Respondent Advantage should be given a written reprimand and Respondent Deering should be given a written reprimand and required to complete a 30-hour broker management course. Counts I and II of the Administrative Complaint should be dismissed. In making this recommendation, consideration has been given to the mitigating factors in relation to the disciplinary guidelines set out in Chapter 21V-24, Florida Administrative Code. Also, taken into consideration was the purpose of regulating any profession, the protection of the public by requiring compliance

with those laws governing the profession. In this case, the recommended penalties will serve that purpose, the public has not been harmed, compliance has been accomplished and the penalty sufficient to remind the Respondents to be more diligent in the future. Adding any further penalty, including an administrative fine, would be unduly punitive.

DONE AND ENTERED this 12th day of October, 1993, in Tallahassee, Florida.

WILLIAM R. CAVE

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 12th day of October, 1993.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 92-0606

The following constitutes my specific rulings, pursuant to Section 120.59(2), Florida Statutes, on all of the proposed findings of fact submitted by the parties in this case.

Petitioner's Proposed Findings of Fact.

1. Unnecessary.

2.-12. Adopted in substance as modified by Findings of Fact

1 through 13.

Respondent's Proposed Findings of Fact.

1. Adopted in substance as modified in Findings of Fact 4, 5 and 8 through 13.

2. Adopted in substance as modified in Findings of Fact 6 and 7.

3. Adopted in Finding of Fact 15.

COPIES FURNISHED:

Steven W. Johnson, Esquire

Department of Professional Regulation, Division of Real Estate

Hurston North Tower #308A

400 West Robinson Street Orlando, Florida 32801

Albert R. Deering, Pro se

c/o Advantage Realty of Sarasota, Inc. t/a Century 21 Advantage

4121 Bee Ridge Road Sarasota, Florida 34233

Darlene F. Keller, Director Division of Real Estate

400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802-1900

Jack McRay, Esquire Acting General Counsel

Department of Business and Professional Regulation

1940 North Monroe Street Tallahassee, Florida 32399-1900

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to the Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should consult with the agency that will issue the final order in this case concerning their rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.

Docket for Case No: 93-000606

Orders for Case No: 93-000606