STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND ) PROFESSIONAL REGULATION, )

DIVISION OF REAL ESTATE, )

)

Petitioner, )

)

vs. ) CASE NO. 95-1276

)

KIRK D. OLIVER, T/A ) OLIVER REALTY AND MANAGEMENT, )

)

Respondent. )

)

RECOMMENDED ORDER

A formal hearing was conducted in this proceeding before Daniel Manry, a duly designated Hearing Officer of the Division of Administrative Hearings, on May 30, 1996, in Orlando, Florida.

APPEARANCES

For Petitioner: Steven W. Johnson, Esquire

Department of Business and Professional Regulation

Division of Real Estate

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

For Respondent: Kirk D. Oliver, pro se

Oliver Realty and Management 1414 Drayton Court

Orlando, Florida 32825 STATEMENT OF THE ISSUES

The issues for determination are whether Respondent violated Sections 475.42(1)(a), 475.25(1)(e), and 475.25(1)(b), Florida Statutes (1995), 1/ by committing the acts alleged in the Administrative Complaint and, if so, what, if any, penalty should be imposed.

PRELIMINARY STATEMENT

Petitioner filed an Administrative Complaint against Respondent on January 23, 1995. Respondent timely requested a formal hearing.

At the formal hearing, Petitioner presented the testimony of four witnesses and submitted six exhibits for admission in evidence. Respondent cross examined Petitioner's witnesses, did not testify in his own behalf, called no witnesses, and submitted one exhibit for admission in evidence.

The identity of the witnesses and exhibits, and the rulings regarding each, are set forth in the transcript of the formal hearing filed with the undersigned on June 21, 1996.

Petitioner timely filed its proposed recommended order ("PRO") on June 26, 1996. Respondent timely filed his PRO on July 15, 1996. Proposed findings of fact in the parties' PROs are addressed in the Appendix to this Recommended Order.

FINDINGS OF FACT

1. Petitioner is the governmental agency responsible for issuing licenses to practice real estate. Petitioner is also responsible for regulating the practice of real estate on behalf of the state.

   
   

2. Respondent is licensed as a real estate broker under license number 0602015. The last license was issued to Respondent as a broker t/a Oliver Realty and Management, 2431 Lot a Fun Avenue, Winter Park, Florida.

   
   

3. On August 23, 1994, Respondent was licensed as a real estate sales person. He was employed by Mr. Kevin Jon Pribell, a licensed real estate broker.

   
   

4. On August 29, 1994, Mr. Pribell terminated Respondent's employment. On August 30, 1994, Mr. Pribell delivered a copy of a termination form to Respondent at Respondent's residence. Mr. Pribell agreed to compensate Respondent on all transactions that were pending on or before the date of termination.

1. The First Transaction

   
   

   1. On August 23, 1994, Respondent made an offer to purchase residential property for $80,500. Mr. Bruce and Mrs. Benitta Tegg owned the property (the "sellers").

      
      

   2. The details of the offer were described in a standard contract for sale and purchase approved by the Florida Association of Realtors and the Florida Bar Association and in an attached addendum. The addendum required the sellers to hold a purchase money first mortgage of $80,500, amortized over 12 years at an annual interest rate of 8.5 percent.

      
      

   3. The addendum stated that the sellers were to receive $29,000 at closing as payment of the first 48 months payments. The sellers would then receive 30 equal monthly installments of $893.60, which would total $26,808. The unpaid balance was due in a balloon payment of $46,980.47 at the end of 78 months. The total amount to be paid the sellers, including interest, was $102,788.47.

      
      

   4. Respondent included a $1,000 earnest money deposit with the contract for sale and purchase. The sellers accepted Respondent's offer. Closing was set for September 6, 1994. 2/

      
      

   5. On September 1, 1994, Respondent submitted a document to the sellers for their acceptance and signature. The document was entitled, "Partial Purchase/Cash Flow Agreement" (the cash flow agreement"). Respondent never mentioned the cash flow agreement to the sellers as part of the original offer.

   6. The cash flow agreement required the sellers to assign the mortgage of

      $80,500 to Orange Hearing Aid Center Employee Pension Plan (the "pension plan"). Respondent would have no money invested in the property initially. The initial payment of $29,000 would be a loan from the pension plan to Respondent.

      
      

   7. Respondent would repay the pension plan over time. The loan from the pension plan to Respondent was to be secured by the sellers' property.

      
      

   8. In the event Respondent defaulted on the loan from the pension plan, the sellers' property would be sold. The sale proceeds would first pay off the loan from the pension plan to Respondent. Any remaining sale proceeds would go the sellers.

      
      

   9. The sellers refused to accept Respondent's amendment of the original offer. Respondent defaulted on his original offer.

      
      

   10. The transaction did not close. The sellers' real estate agent divided Respondent's $1,000 earnest money deposit with the sellers because Respondent defaulted on the original offer accepted by the sellers.

       
       

   11. Respondent did not attempt to engage in "equity skimming." 3/ The sellers were not required to transfer title to Respondent prior to receiving

       $29,000. Respondent would not receive any other equity in the property. 4/

       
       

   12. The cash flow agreement had the effect of converting Respondent's obligation on the purchase money mortgage from recourse to non-recourse debt. 5/ It also had the effect of subordinating the purchase money mortgage to the

       $29,000 loan to Respondent. 6/

       
       

   13. Respondent is not guilty of violating Section 475.25(1)(b). Respondent is not guilty of dishonest dealing by trick, scheme, or device, culpable negligence, or breach of trust in a business transaction.

       
       

   14. Respondent disclosed the terms of the cash flow agreement to the sellers approximately six days before the scheduled closing. The sellers had adequate time to review the proposal. They chose to reject it.

       
       

   15. The sellers received approximately $500 after Respondent's default. That amount was reasonable compensation for taking their property off of the market for two weeks.

       
       

2. The Second Transaction

1. On September 1, 1994, Respondent offered to purchase a residential property owned by Ms. Gloria Alexander. Respondent offered to purchase the property for $114,500. Ms. Alexander accepted the offer.

   
   

2. On September 1, 1994, Respondent was not licensed as a broker. Respondent's employing broker had terminated Respondent's employment two days before the contract for the second transaction was executed.

   
   

3. The second transaction was not pending on or before August 29, 1994, when Respondent was still employed by Mr. Pribell, and Mr. Pribell was not legally entitled to a commission on the second transaction. In an abundance of caution, Respondent indicated on the contract that the selling broker was Mr. Pribell.

4. Respondent acted in his own behalf in the second transaction. He was the buyer, i.e., a principal and not an agent for a principal.

   
   

5. Respondent indicated on the written offer that he was acting as the buyer's agent. Respondent made a good faith attempt to disclose on the contract that he had been terminated from Mr. Pribell's employment and was not acting as the agent of the selling broker.

   
   

6. Respondent did not deceive anyone and did not intend to do so. Respondent did not violate Sections 475.42(1)(a) and 475.25(1)(e) by operating as a broker without a valid broker's license.

   
   

   CONCLUSIONS OF LAW

   
   

7. The Division of Administrative Hearings has jurisdiction over the subject matter and parties in this proceeding. The parties were duly noticed for the formal hearing.

   
   

8. Petitioner has the burden of proof in this proceeding. Petitioner must show by clear and convincing evidence that Respondent committed the acts alleged in the Administrative Complaint and the reasonableness of any penalty to be imposed. Ferris v. Turlington, 510 So.2d 292 (Fla. 1987).

   
   

9. Respondent did not violate Section 475.25(1)(b). Petitioner failed to show by clear and convincing evidence that Respondent is guilty of dishonest dealing by trick, scheme, device, culpable negligence, or breach of trust in a business transaction.

   
   

10. Respondent fully disclosed the cash flow agreement. The sellers had adequate time to review the agreement and rejected the offer. The sellers were adequately compensated for removing their property from the market for two weeks.

    
    

11. Respondent did not violate Sections 475.42(1)(a) and Section 475.25(1)(e). Petitioner failed to show by clear and convincing evidence that Respondent operated as a broker without a valid broker's license in the second transaction.

    
    

12. Respondent operated in his own behalf in the second transaction. He did not represent a principal. An individual is entitled to buy and sell real property in his or her own behalf without the need for a real estate license.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a Final Order finding Respondent not

guilty of violating Sections 475.25(1)(b), 475.25(1)(e), and Sections 475.42(1)(a).

RECOMMENDED this 14th day of August, 1996, in Tallahassee, Florida.

DANIEL MANRY, 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 August, 1996.

ENDNOTES

1/ All section and chapter references are to Florida Statutes (1995) unless otherwise stated.

2/ Closing was originally scheduled for September 2, 1994, but was re-scheduled for September 6, 1994, pursuant to the agreement of the sellers and Respondent.

3/ Equity skimming occurs when an investor incurs a debt intending to walk away from the transaction and leave another person responsible for his debt.

4/ Petitioner failed to show that the equity in the property exceeded $29,000.

5/ Recourse debt provides the sellers with personal recourse against Respondent's other assets in the event Respondent defaults on the purchase money mortgage. Non-recourse debt limits the sellers' recourse to the property securing the mortgage.

6/ Petitioner failed to show whether the purchase money mortgage was a first mortgage or was subordinate to a pre- existing first mortgage. Petitioner also failed to show whether Respondent was an owner or beneficiary of the pension plan.

APPENDIX

Petitioner's Proposed Findings of Fact 1.-9. Accepted in substance

10. Sellers' opinion rejected as recited testimony, and the remaining findings are rejected as not supported by credible and persuasive testimony

11.-14. Accepted in substance

15. Rejected as not supported by credible and persuasive evidence Respondent's Proposed Findings of Fact

1.-4. Accepted in substance

5. Rejected as irrelevant and immaterial

COPIES FURNISHED:

Henry M. Solares, Division Director Division of Real Estate

Department of Business and Professional Regulation

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

Lynda Goodgame, General Counsel Department of Business and

Professional Regulation Northwood Centre

1940 North Monroe Street Tallahassee, Florida 32399-0792

Steven W. Johnson, Esquire Department of Business and

Professional Regulation Division of Real Estate

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

Kirk D. Oliver, pro se Oliver Realty and Management 1414 Drayton Court

Orlando, Florida 32825

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.

Docket for Case No: 95-001276

Orders for Case No: 95-001276