STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FLORIDA DEPARTMENT OF BUSINESS ) AND PROFESSIONAL REGULATION, ) DIVISION OF REAL ESTATE, )

)

Petitioner, )

)

vs. ) Case No. 97-3557

) JUDI ANNE CAREY, and CRESCENT ) PROPERTIES, INC., )

)

Respondents. )

)

RECOMMENDED ORDER

An administrative hearing was conducted on November 28, 1997, in Orlando, Florida, by Daniel Manry, Administrative Law Judge, Division of Administrative Hearings. The parties, witnesses, and court reporter attended the hearing in Orlando. The undersigned participated by video conference from Tallahassee, Florida.

APPEARANCES

For Petitioner: Christine M. Ryall, Senior Attorney

Florida Department of Professional Regulation Division of Real Estate

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

For Respondents: Judi Anne Carey, pro se

Crescent Properties, Inc.

200 N. Denning Drive No. 2 Winter Park, Florida 32789-3762

STATEMENT OF THE ISSUES

The issues in this case are whether Respondents violated Sections 475.25(1)(e) and (b), Florida Statutes

(1995),1 by failing to provide timely written notification to the Florida Real Estate Commission (the "Commission") of any good faith doubt as to whom funds in Respondents' escrow account should be disbursed; by engaging in fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence, or breach of trust; and, if Respondents violated either or both statutes, what, if any, penalty should be imposed against Respondents' licenses.

PRELIMINARY STATEMENT

On November 19, 1996, Petitioner filed an administrative complaint against Respondents alleging that Respondents violated Sections 475.25(1)(b) and (e).

Respondents timely requested an administrative hearing.

At the hearing, Petitioner presented the testimony of one witness and submitted nine exhibits for admission in evidence. Respondent Carey testified on behalf of Respondents and submitted no exhibits for admission in evidence.

The identity of the witnesses and exhibits, and the rulings regarding each, are set forth in the transcript of the hearing filed on November 25, 1997. Petitioner timely filed its proposed recommended order ("PRO") on December 3, 1997. Respondent did not file a PRO.

FINDINGS OF FACT

1. Petitioner is the state agency responsible for the regulation and discipline of licensees in the state. Respondents are both licensed in the state.

   
   

2. Respondent Carey is licensed as a real estate broker and holds license number 0577832. The last license was issued to Respondent Carey as a broker at Crescent Properties, Inc., 200 N. Denning Drive, Suite 2, Winter Park, Florida 32789-3762. Respondent Carey was licensed and operating as broker and officer of Respondent Crescent Properties, Inc. ("Crescent").

   
   

3. Crescent is registered as a real estate broker corporation and holds registration number 0577832. The last registration was issued to Crescent as a broker, Crescent Properties, Inc., 200 N. Denning Drive, Suite 2,

   Winter Park, Florida 32789-3762.

   
   

4. On October 10, 1995, Respondents and Estrella Acosta entered into a property management agreement for a residence located at 563 Northbridge Drive, Altamonte Springs, Florida. The landlord agreed to pay Respondents half of the first month's rent for securing a tenant and 10 percent of all rent payments for managing the property.

   
   

5. On December 16, 1995, Respondents, as Acosta's agent, leased the property to Victor and Maria Thompson (the "tenants"). The lease agreement provided in relevant part that: the tenants would pay a $735.00 security deposit and $735.00 a month in rent for 12 months; Crescent would act as the landlord's agent and would collect all funds due under the lease.

   
   

6. The tenants paid the $735.00 security deposit to Respondents. Respondents placed the security deposit into the escrow account. However, the tenants paid monthly rent directly to the landlord.

   
   

7. By letter dated January 31, 1996, Acosta advised Respondents that Acosta was terminating the property management agreement. The letter requested that Respondents release the $735.00 security deposit to Acosta.

   
   

8. On February 12, 1996, Respondents mailed a letter to the tenants. The letter requested the tenants' consent to release the security deposit to Acosta. The tenants did not respond to the letter.

   
   

9. Respondents did not know whether the tenants agreed to or objected to release the security deposit. Respondents continued to hold the security deposit in Respondents' escrow account.

   
   

10. Respondent Carey sought advice from the legal hot line service made available by the local Realtor association. Respondent Carey was confused and erroneously believed that the hot line acted as an agent for the Commission.

    
    

11. Respondents did not advise the Commission in writing that Respondents had a good faith doubt as to whom the security deposit should be disbursed. Respondents did not send the tenants a certified letter advising that the

    tenants must respond by a date certain or Respondents would disburse the security deposit to Acosta. Respondents did not institute one of the settlement procedures set forth in Section 475.25(1)(d)1 including a request that the Commission issue an escrow disbursement order.

    
    

12. Respondents had a good faith doubt as to whom the security deposit should be disbursed. Respondents mailed Acosta a monthly accounting dated February 6, 1996, which stated in relevant part:

    
    

    SECURITY DEPOSIT: $735.00 IN DISPUTE AN ESCROW DISBURSEMENT ORDER HAS BEEN FILED.

    
    

    The reference to a disbursement order was not a misrepresentation. Respondent believed that she was undertaking the appropriate steps for a disbursement order by following the advice obtained on the hot line provided by the local Realtor association.

13. On February 12, 1996, less than two weeks after the landlord advised Respondents that the landlord had terminated the lease, Acosta filed a complaint against Respondents with Petitioner. By letter dated February 26, 1996, Petitioner notified Respondent Carey of Acosta's complaint.

    
    

14. Respondents did not know whether Acosta's termination of the lease was based on a default by the tenants or was itself a default by the landlord. Pursuant to the terms of the lease agreement, Respondents asserted an offset against the landlord for half of the first month's lease and 10 percent of the lease payments due for the 12 month lease term.

    
    

15. In a letter to Acosta dated August 27, 1996, Respondents stated in relevant part:

    
    

    Per my conversation with the Department of Business and Professional Regulation Division of Real Estate: It has been determined that your claim against us was unwarranted and false . . . You have caused everyone

    us, DBPR, our attorney, a great deal of unwarranted lost time . . . .

    
    

    CONCLUSIONS OF LAW

    
    

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

    
    

17. The burden of proof is on Petitioner. Petitioner must show by clear and convincing evidence that Respondent committed the acts alleged in the administrative complaint and the reasonableness of any proposed penalty. Ferris v. Turlington, 510 So. 2d 292 (Fla. 1987).

    
    

18. Section 475.25(1)(d)1, Florida Statutes (1995), provides in relevant part:

    
    

    . . . if the licensee, in good faith, entertains doubt as to what person is entitled to the . . . delivery of the escrowed property . . . which property he still maintains in his escrow or trust account, the licensee shall promptly notify the [Commission] of such doubts . . . and shall promptly:

    
    

    1. Request that the commission issue an escrow disbursement order determining who is entitled to the escrowed property;

       
       

    2. With the consent of all parties, submit the matter to arbitration;

       
       

    3. By interpleader or otherwise, seek adjudication of the matter by a court; or

       
       

    4. With the written consent of all parties, submit the matter to mediation . . .

    
    

19. Florida Administrative Code Rule 61J2 10.032(1) 2 provides in relevant part:

    
    

    1. A broker, who has a good faith doubt as to whom is entitled to any trust funds held in the broker's escrow account, must provide written notification to the Commission within 15 business days after having such doubt and must institute one of the settlement procedures as set forth in s. 475.25(1)(d)1., Florida Statutes, within 15 business days after the date the notification is received by the Division. The determination of good faith doubt is based upon the facts of each case brought before the Commission. Based upon prior decisions of the Commission, good faith doubt shall be deemed to exist in the following situations:

       
       

    2. If one of the parties to a failed real estate . .

    . transaction does not respond to the broker's inquiry as to whether that party is placing a demand on the trust funds or is willing to release them to the other party, the broker may send a certified notice letter, return receipt requested, to the nonresponding party. This notice should include the information that a demand has been placed by the other party, that a response must be received by a certain date, and that failure to respond will be construed as authorization for the broker to release the funds to the other party. Before releasing said trust funds, the broker must have the return receipt as proof the notice was delivered.

    
    

20. Respondents were required to notify the Commission that they had a good faith doubt as to who was entitled to disbursement of the security deposit. One of

    the parties to the lease, Acosta, had made a demand for the escrowed security deposit, but the tenants failed to respond to Respondents' request for authorization to disburse the funds to Acosta.

    
    

21. Respondents violated Section 475.25(1)(e) and Rule 61J210.032(1)(b). Respondents failed to provide written notification to the Commission of their good faith doubt as to whom the security deposit in Respondents' escrow account should be disbursed.

    
    

22. Respondents did not violate Section 475.25(1)(b). Respondents engaged in activity which was erroneous and, at worst, negligent. Simple negligence is not a violation of Section 475.25(1)(b).

    
    

23. Respondent Carey erroneously inquired of the local Realtor association concerning the proper procedure to follow. She had the mistaken belief that the Realtor association acted as an agent of the Commission.

    
    

24. The testimony of Respondent Carey was credible and persuasive. In any event, the evidence was less than clear and convincing that Respondents engaged in fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme, or device, culpable negligence, or breach of trust within the meaning of Section 475.25.

    
    

25. Section 475.25 authorizes the Commission to suspend or revoke a real estate license, impose an administrative fine not to exceed $1,000 for each separate offense, and to reprimand Respondents for violations of Sections 475.25(1)(b) or (e). Petitioner failed to submit any evidence of prior disciplinary history or aggravating circumstances.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is

RECOMMENDED that the Commission enter a final order finding Respondents guilty of violating Section 475.25(1)(e), not guilty of violating Section 475.25(1)(b), issuing a written reprimand to Respondents, and requiring Respondent Carey to complete seven hours of continuing

education in one or more escrow management courses for real estate brokers.

DONE AND ENTERED this 6th day of January, 1998, in Tallahassee, Leon County, Florida.

Hearings

Hearings

DANIEL MANRY

Administrative Law Judge Division of Administrative

The DeSoto Building 1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 4889675 SUNCOM 278-9675

Fax Filing (850) 921-6847

Filed with the Clerk of the Division of Administrative

this 6th day of January, 1998.

ENDNOTES

1/ All chapter and section references are to Florida Statutes (1996) unless otherwise stated. S

2/ Unless otherwise stated, all references to rules are to rules promulgated in the Florida Administrative Code in effect on the date of this Recommended Order.

COPIES FURNISHED:

Christine M. Ryall, Senior Attorney Florida Department of

Professional Regulation Division of Real Estate

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

Judi Anne Carey, pro se Crescent Properties, Inc.

200 N. Denning Drive #2

Winter Park, Florida 32789-3762

Henry M. Solares, Division Director Department of Business and

Professional Regulation Post Office Box 1900 Orlando, Florida 32802-1900

Lynda L. Goodgame General Counsel

Department of Business and Professional Regulation

1940 North Monroe Street Tallahassee, Florida 32399-0792

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within 15 days from the date of 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: 97-003557

Orders for Case No: 97-003557