STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FLORIDA DEPARTMENT OF PROFESSIONAL ) REGULATION, FLORIDA REAL ESTATE ) APPRAISAL BOARD, )

)

Petitioner, )

)

vs. ) CASE NO. 93-3987

)

SUSAN LYNN KRAMER, )

)

Respondent. )

)

RECOMMENDED ORDER

The final hearing in the above-styled matter was heard pursuant to notice by Stephen F. Dean, assigned Hearing Officer of the Division of Administrative Hearings, on March 31, 1994, in Daytona Beach, Florida.

APPEARANCES

For Petitioner: Steven W. Johnson, Esquire

Senior Attorney

Department of Business and Professional Regulation

Division of Real Estate Post Office Box 1900

Orlando, Florida 32802-1900

For Respondent: Arthur M. Ossinsky, Esquire

500 North Oleander Avenue Daytona Beach, Florida 32118

STATEMENT OF ISSUES

The legal issues are:

1. Whether the Respondent violated Section 475.624(2), Florida Statutes, by culpable negligence or breach of trust in a business transaction;

   
   

2. Whether the Respondent violated Section 475.624(14), Florida Statutes, by violating standards for the development or communication of a real estate appraisal or other provision of the Uniform Standards of Professional Appraisal Practice;

   
   

3. Whether the Respondent violated Section 475.624(15), Florida Statutes, by having failed to exercise reasonable diligence in the developing or preparing an appraisal.

PRELIMINARY STATEMENT

The Petitioner filed an Administrative Complaint against the Respondent alleging that she had violated the sections of Chapter 475, Florida Statutes, cited above, in preparing an appraisal, and seeking to discipline her. The Respondent requested a formal hearing pursuant Section 120.57, Florida Statues, and the Petitioner forwarded the matter to the Division of Administrative Hearings.

The case was initially noticed for hearing on September 17, 1993. After a continuance to permit settlement discussions, the case was reset for hearing on March 31, 1994 and was heard as scheduled.

Posthearing briefs and findings were submitted by the parties which were read and considered. The Appendix attached to this Recommended Order states which of the proposed findings were adopted, and which were rejected, and why.

FINDINGS OF FACT

1. Petitioner is a state agency charged with regulation of real estate appraisers.

   
   

2. Respondent is a licensed state-certified general real estate appraiser holding license number 0479378 issued by the Petitioner. Her most recent business address is 416 Oleander Avenue, Daytona Beach, Florida 32118-4034.

   
   

3. In July 1991, Neil A. Braley and Charlene J. Johnson engaged Lawrence Johnson and Associates, Inc. to make an appraisal of a business and real property located at 729 Broadway, Daytona Beach, Florida. Mr. Braley specifically asked for an investment value on the property for the purpose of dissolving the partnership which operated the business to be appraised. TX-74, line 10.

   
   

4. Harold Rose, the owner and president of Lawrence Johnson and Associates, Inc., (hereafter "Johnson Associates") contracted with the Respondent to "work up the numbers for an income approach of what the business, land, and improvements which belonged to the partnership." The Respondent was charged to work up what that partnership had invested in that property; business, land, and improvements. See TX-75, line 16.

   
   

5. Johnson Associates prepared the appraisal and Rose reviewed the finished product. Because of the demands for completion by Braley, Rose did not carefully review the appraisal, which was the first one prepared by the Respondent. Rose failed to catch the fact that the appraisal stated that it was based on "market value" rather than investment value.

   
   

6. Braley received the appraisal, and was pleased, thanking Rose for the job. See TX 80, line 10.

   
   

7. The appraisal states under the "Assumptions and Limiting Conditions" that "no right is given to publish this report, or any part of it, without written consent of the maker." No request for release of the appraisal was ever received by Rose.

   
   

8. The appraisal which the Respondent worked up, and which she signed, states that the fair market value of the subject property is $570,000. It should have stated that the investment value of the business was $570,000.

9. In December 1991, Raymond H. Heffington and Mark A. Carper did another appraisal of 729 Broadway and determined that the fair market value of the real property was $220,000. At the time of the appraisal, the business was in the process of closing out.

   
   

10. In Heffington's opinion, Respondent's appraisal was deficient in required analysis, documentation, and presentation based upon the Respondent's reliance on the income approach for the basis of her evaluation of the real property. TX-28, line 22.

    
    

11. Clifford E. Fisher, an expert in real estate appraisal, opined that the Respondent's appraisal report did not make it clear what interests were being appraised, and went beyond appraising the fee simple interest, i.e., appraised more than the real property. Fisher stated that both failings were a violation of uniform standards.

    
    

12. The Respondent admitted that she failed to catch the statement in the appraisal report, which she signed, that stated that it was an appraisal of the fair market value.

    
    

    CONCLUSIONS OF LAW

    
    

13. The Division of Administrative Hearings has jurisdiction over the subject matter and the parties to this action in accordance with Section 120.57(1), Florida Statutes.

    
    

14. The Petitioner, which is charged with regulating real estate appraisers, charged the Respondent with three violations of statute: breach of trust in a business transaction or culpable negligence, contrary to Section 476.624(2), Florida Statutes; violation of numerous standards for the development or communication of a real estate appraisal or other provision of the Uniform Standards of Professional Appraisal Practice, contrary to Section 475.624(14), Florida Statutes; and failure to exercise reasonable diligence in developing and preparing an appraisal report, contrary to Section 475.624(15), Florida Statutes.

    
    

15. The statement of underlying assumptions and limiting conditions provides that the report was not to be republished without the written permission of the maker. This permission was not sought and was not given.

    
    

16. The only persons who were entitled to rely on the report were the partners who ordered the appraisal of the value of the business.

    Notwithstanding the error, the partners presumably understood that the appraisal was of the entire business and not just the real property. There is no evidence in the record that they were misled or were damaged. No one else was in privity with Johnson Associates and the Respondent, and was entitled to rely on the report. Therefore, there was no breach of a duty or negligence.

    
    

17. Both Heffington and Fisher opined that Respondent's appraisal was deficient in two regards; (1) it went beyond appraising just the real property, and (2) it was unclear exactly what was being appraised.

    
    

18. Their criticisms of the report are consistent with the admission of the Respondent and testimony of Rose that the report incorrectly stated that it was an appraisal of the fair market value of the real property when it was intended to be an appraisal of the investment value of the business. The

    criticisms of Heffington and Fisher address the same failing, or alternative failings, i.e., if it was an appraisal of the business, it did not clearly identify it as such, or, alternatively, it went beyond an appraisal of the fee simple interest. This failing is admitted by Respondent.

    
    

19. This mistake is a violation of both appraisal standards and a failure to exercise due diligence. However, it is only one act, and penalties cannot be stacked.

    
    

20. It is concluded, based upon the facts presented and the expert testimony, that the Respondent failed to exercise reasonable diligence in preparing (drafting) the appraisal report, contrary to Section 475.624(15), Florida Statutes, and Section 475.624(14), Florida Statutes, by violating standards.

    
    

21. It is further concluded that in this case, this failure was technical in nature. While the Respondent admittedly failed to properly proof the report and catch the error in the statement clarifying the type of appraisal being rendered, this mistake was limited by the report's own terms restricting further publication of the report. The persons who ordered the report knew the nature of the appraisal, and the text of the report is sufficient to put one on notice that the appraisal goes beyond assessing the value of the fee simple interest of the real property.

    
    

22. One of the experts explained that an appraisal was analogous to a financial report. This is a reasonable analogy. If so, then the limiting conditions are like the accountant's notes. They must be read and followed. If the bank or another person received the appraisal, they received the limiting conditions and were on notice that the maker should be contacted. The bank, had it followed this process, would have learned the purpose of the report and understood the nature of the error.

RECOMMENDATION

Based upon the consideration of the facts found and the conclusions of law reached, it is,

RECOMMENDED:

That the Respondent be fined $500.

DONE and ENTERED this 23rd day of May, 1994, in Tallahassee, Florida.

STEPHEN F. DEAN, 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 23rd day of May, 1994.

APPENDIX CASE NO. 93-3987

Both parties submitted proposed findings which were read and considered.

The following states which of those findings were adopted, and which were rejected, and why:

Petitioner's Findings Action Taken Paragraphs 1-9 Adopted.

Respondent's Findings Action Taken/Why

Paragraph 1 First portion adopted; second portion

irrelevant.

Paragraph 2 First portion irrelevant; second

portion adopted; lending institution's losses are irrelevant because the report on its face should have only been provided upon written permission of the report's maker.

Paragraph 3 Adopted.

COPIES FURNISHED:

Steven W. Johnson, Esquire Department of Business and

Professional Regulation Division of Real Estate Post Office Box 1900 Orlando, FL 32802-1900

Arthur M. Ossinsky, Esquire

500 North Oleander Avenue Daytona Beach, FL 32118

Darlene F. Keller, Director Division of Real Estate Department of Business and

Professional Regulation

P.O. Box 1900

Orlando, FL 32802-1900

Jack McRay, Esquire Department of Business and

Professional Regulation Northwood Centre, Suite 60 1940 North Monroe Street Tallahassee, FL 32399-0792

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this 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 contact the agency that will issue the final order in this case concerning agency 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.

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AGENCY FINAL ORDER

=================================================================

STATE OF FLORIDA

DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION FLORIDA REAL ESTATE APPRAISAL BOARD

DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION, DIVISION OF REAL ESTATE APPRAISAL BOARD

Petitioner CASE NO. 92-81845 vs. DOAH NO. 93-3987

SUSAN LYNN KRAMER

Respondent

/

FINAL ORDER

On October 11, 1994, pursuant to s.120.57(1), Florida Statutes, the Florida Real Estate Appraisal Board heard this case to issue a Final Order.

Hearing Officer Stephen F. Dean of the Division of Administrative Hearings presided over a formal hearing on March 31, 1994. On May 23, 1994, he issued a Recommended Order. A copy of this Recommended Order is attached hereto as Exhibit A and made a part hereof.

The Board adopted the Hearing Officers Findings of Fact and Conclusions of Law. After completely reviewing the record and being otherwise fully advised the Board determined that in the Hearing Officer's Findings of Fact, paragraph 3, the Hearing Officer acknowledged that the appraisal report requested by Mr. Braley was for the investment value on the property for the purpose of dissolving the partnership which operated the business to be appraised. (T. 74, line 10) The Board concluded there was an omission in the Findings of Fact in that the Hearing Officer failed to reflect that the appraisal report did not state in the limiting conditions portion any reference to the fact the report

was specifically designed to find an investment value. (Exhibit 1, T. 78, lines

3 - 14). However, the Hearing Officers conclusions were based upon the explanation provided that the report was for the purpose of investment value.

The Board concurred with the Hearing Officers Findings of Fact, paragraph II in that the expert witness, Clifford E. Fisher, opined that the Respondent's appraisal report did not make it clear what interests were being appraised and went beyond appraising the fee simple interest and appraised more than the real property. The Board concluded both failings as cited by Mr. Fisher were violations of the Uniform Standards of Professional Appraisal Practice. (T. 61, lines 6 and 7)

Based upon the testimony of Mr. Fisher and the fact that his testimony indicated there were violations of the Uniform Standards and several violations of Chapter 475, Part II, F. S., which were cited in the Hearing Officers Conclusions of Law, paragraph 14, the Board concluded that the appraisal report was misleading. The Board further concluded that the record supported the Boards reasons for increasing the Hearing Officer's recommended penalty. The Florida Real Estate Appraisal Board therefore ORDERS that the Respondent pay a

$2,000 administrative fine within thirty days (30) after the filing of the Final Order. The Board further orders that the Respondent be placed on probation for a period of two years subject to the following terms and conditions:

1. The licensee shall notify the Division of Real Estate of any changes in address or employment.

   
   

2. The licensee shall not violate any provisions of Chapter 475, II, Florida Statutes, or Rules adopted by the Board.

   
   

3. The licensee shall not be convicted or found guilty of a crime in any jurisdiction.

   
   

4. The licensee shall enroll in and satisfactorily complete AB III with 15 hours of USPAP within one (1) year of the filing date of this Order. These course hours are in addition to any other education required to maintain a valid and current license.

This Order shall be effective 30 days from date of filing with the Clerk of the Department of Business and professional Regulation. However, any party affected by this Order has the right to seek judicial review, pursuant to s.120.68, Florida Statutes, and to Rule 9.110, Florida Rules of Appellate Procedure.

Within 30 days of the filing date of this Order, review proceedings may be instituted by filing a Notice of Appeal with the Clerk of the Department of Business and professional Regulation at 400 West Robinson Street, Suite N309, Orlando, Florida 32801. At the same time, a copy of the Notice of Appeal, with applicable filing fees, must be filed with the appropriate District Court of Appeal.

DONE AND ORDERED this 11th day of October 1994 in Tallahassee, Florida.

Darlene F. Keller, Director Division of Real Estate

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true copy of the foregoing was sent by U.S. Certified Mail to: Arthur M. Ossinksy, Esquire, 500 North Oleander Avenue, Daytona Beach, Florida 32118; by U.S. Mail to Hearing Officer Stephen F. Dean, Division of Administrative Hearings, 1230 Apalachee Parkway, Tallahassee, Florida 32399- 1550; and a copy provided to Steven W. Johnson, Esquire, DBPR, Post Office Box 1900, Orlando, Florida 32802-1900, this 24th day of October 1994.

================================================================= AGENCY FINAL ORDER

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STATE OF FLORIDA

DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION FLORIDA REAL ESTATE APPRAISAL BOARD

DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION, DIVISION OF REAL ESTATE

Petitioner

vs. FREAB CASE NO. 92-81845

DOAH No. 93-3987

SUSAN LYNN KRAMER

Respondent

/

ORDER

On August 1, 1995 the Florida Real Estate Appraisal Board heard this case upon the Respondent's Motion for Reconsideration of Final Order. After being apprised in the matter, the Board finds and states as follows:

On October 24, 1994 a Final Order was filed whereby the Board adopted the Hearing Officer's Findings of Fact and Conclusions of Law. The Board concluded, based on the record, to increase the Hearing Officer's recommended penalty. On December 20, 1994 the Respondent wrote a letter requesting a hearing before the Board to explain "to them what really took place" and time to pay the administrative fine.

The Respondent was properly served with the Notice of Hearing on the Motion for Reconsideration of Final Order. Respondent appeared at the hearing to further explain the Motion for Reconsideration

After completely reviewing the record and being otherwise fully advised, the Board concluded:

That the Respondent's Motion was not filed within the thirty (30) day period following the filing of the Final Order; and

that the Respondent's Motion does not allege any grounds upon which to revisit this matter.

Therefore the Board is without jurisdiction to grant the Respondent' s Motion.

The Florida Real Estate Appraisal Board ORDERS that the Respondent's Motion be denied.

This Order shall be effective 30 days from date of filing with the Clerk of the Department of Business and Professional Regulation. However, any party affected by this Order has the right to seek judicial review, pursuant to s.120.68, Florida Statutes, and Rule 9.110, Florida Rules of Appellate Procedure.

Within 30 days of the filing date of this Order, review proceedings may be instituted by filing a Notice of Appeal with the Clerk of the Department of Business and Professional Regulation at 400 West Robinson Street, Suite N309, Orlando, Florida 32801. At the same time, a copy of the Notice of Appeal, with applicable filing fees, must be filed with the appropriate District Court of Appeal.

DONE AND ORDERED this 1st day of August 1995 in Orlando, Florida.

Henry M Solares, Director Division of Real Estate

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true copy of the foregoing was sent by Certified

U.S. Mail to: Arthur M. Ossinsky, Esquire, 500 North Oleander Avenue, Daytona Beach, Florida 32118; to Susan Kramer, 416 North Oleander, Daytona Beach, Florida 32118; and a copy provided to Steven W. Johnson, Esquire, DBPR, Post Office Box 1900, Orlando, Florida 32802-1900, this 17th day of August, 1995.

Donna C. Kirk

Docket for Case No: 93-003987

Orders for Case No: 93-003987