On January 4, 2010, a duly-noticed hearing was held by video teleconference with sites in Tallahassee and Jacksonville, Florida, before Lisa Shearer Nelson, an administrative law judge assigned by the Division of Administrative Hearings.
For Petitioner: Patrick J. Cunningham, Esquire
Daniel Villazon, P.A.
The issue to be determined is whether Respondent violated Section 475.25(1)(b), Florida Statutes (2006), as alleged in the
On April 21, 2009, the Department of Business and Professional Regulation (DBPR), filed an Administrative Complaint against Respondent, Maria V. King, alleging a violation of Section 475.25(1)(b), Florida Statutes (2006). Respondent disputed the allegations and requested a hearing pursuant to Section 120.57(1), Florida Statutes. On August 3, 2009, the matter was referred to the Division of Administrative Hearings for assignment of an administrative law judge.
On August 19, 2009, the case was noticed for a hearing to be conducted on October 29, 2009. On October 15, 2009, Petitioner filed a Motion to Continue and Reschedule Formal Hearing. An Order Granting Continuance was issued on
October 26, 2009, and the hearing was rescheduled for January 4, 2010.
On November 20, 2009, the Petitioner filed a Motion to Amend the Administrative Complaint, which was granted on December 1, 2009. The parties filed a Joint Pre-hearing Statement on December 23, 2009, and to the extent relevant, the stipulated facts contained in the Prehearing Statement have been incorporated into the findings of fact below.
The hearing was held on January 4, 2010. Petitioner presented the testimony of Frank Gregoire, and Petitioner’s Exhibits 1-7 were admitted into evidence. Respondent testified on her own behalf, but presented no exhibits. A Transcript of the proceedings was filed on January 20, 2010. Respondent filed a Proposed Recommended Order on February 9, 2010, which has been considered in the preparation of this Recommended Order. To date, no post-hearing submission from Petitioner has been filed with the Division. All references to Florida Statutes are to the 2006 codification unless otherwise indicated.
Petitioner is the agency responsible for licensing and regulation of real estate brokers, pursuant to Section 20.165 and Chapters 455 and 475, Florida Statutes.
At all times relevant to these proceedings, Respondent Maria V. King, has been a licensed Florida real estate broker, issued license number 662452 in accordance with Chapter 475, Florida Statutes. Her address with the DBPR is 900 Cesery Boulevard, Suite 107, Jacksonville, Florida 32211.
Charles Wettstein was the listing broker for the property located at 3216 Randall Street, Jacksonville, Florida 32205 (subject property) for the owner/seller, Abdul R. Elsharif.
The subject property was listed on the MLS for
$269,900.
A representative of Developing Entrusted Capital Counseling, LLC (DECC or buyer), came to the Respondent’s office and indicated that she wanted to purchase the subject property.
On or about December 2, 2006, Respondent, on behalf of DECC, forwarded an offer to Wettstein for the property with a purchase price of $410,000. The offer was contingent on the following conditions: (1) buyer to choose closing agent; (2) an appraised value of $410,000; (3) satisfactory WDO and 4 point inspection; (4) assignable contract; and (5) an acceptance of a (legal) addendum between the buyer and seller only.
In the cover letter sent by Respondent to Wettstein, Respondent states that there will be an assignment fee comprising the difference between the appraised value and sale price ($410,000 and $269,900).
The cover letter also states that the MLS will need to be changed to the contract price of $410,000, which is usually done after an appraisal of the property, and that the appraisal would be paid for by the buyer and done immediately after the contract is signed.
Respondent advised the buyer's representative that she was offering much more than the listing price for the property. Respondent testified that the buyer represented to her that the
buyer was aware of the listing price, but that she had done her homework and she knew what she was doing in offering the price of $410,000.
Respondent also testified that the proposed addendum to the contract and the assignment documents were given to her by the buyer. The buyer represented to Respondent that she had legal counsel who had advised her regarding the assignment and other stipulations in the contract.
All documents given to her by the buyer, including the addendum to the contract, were not concealed from the seller and were in fact, submitted with the offer to the listing agent, Wettstein.
Respondent was not involved in obtaining a mortgage for the buyer or doing an appraisal of the subject property, and did not intend to perform either function.
Respondent did not benefit from this transaction, other than the potential commission based upon a sale price of
$410,000, as opposed to the listed price of $269,900.
Respondent had concerns about the purchase price but was following the instructions of her buyer.
Respondent sent all documents, including the addendum and the assignment documents, to the seller because she was aware that he had an attorney who would be looking at the information sent.
Respondent informed the buyer that she would submit all documents to the listing agent and her reasons for doing so. She also informed the buyer that she would only do the contract for the purchase of the subject property.
Respondent did not think that the subject property would appraise for $410,000 as required by the conditions of the contract. In other words, Respondent doubted the actual sale would go through.
The offer communicated by the Respondent to Wettstein, was presented to the seller and rejected.
A mortgage loan was not obtained and an appraisal was not completed on the subject property in connection with the offer by DECC. Any appraisal of the subject property would have been arranged by the lending institution as opposed to Respondent, and would not have been performed by Respondent.
Respondent was aware that the MLS for Duval County documents a history of the MLS listing prices. Respondent testified that based on her understanding of Duval County policy, the listing price of the subject property can only be increased if a legal, legitimate appraisal is submitted or seen by MLS. Therefore, if the subject property appraised for
$410,000, and the listing price was changed as a result, the MLS would show the property’s previous listing price of $269,900.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter and the parties to this action in accordance with Sections 120.569 and 120.57(1), Florida Statutes (2009).
This disciplinary action by Petitioner is a penal proceeding in which Petitioner seeks to suspend or revoke Respondent’s license as a real estate broker. Petitioner bears the burden of proof to demonstrate the allegations in the Administrative Complaint by clear and convincing evidence. Department of Banking and Finance v. Osborne Stern & Co., 670 So. 2d 932 (Fla. 1996); Ferris v. Turlington, 510 So. 2d 292 (Fla. 1987).
As stated by the Florida Supreme Court:
Clear and convincing evidence requires that the evidence must be found to be credible; the facts to which the witnesses testify must be distinctly remembered; the testimony must be precise and lacking in confusion as to the facts in issue. The evidence must be of such a weight that it produces in the mind of the trier of fact a firm belief or conviction, without hesitancy, as to the truth of the allegations sought to be established.
In re Henson, 913 So. 2d 579, 590 (Fla. 2005), quoting Slomowitz
v. Walker, 429 So. 797, 800 (Fla. 4th DCA 1983).
The Administrative Complaint alleges that the Respondent’s conduct violated Section 475.25(1)(b), Florida
Statutes (2006). Section 475.25(1)(b), Florida Statutes, provides in pertinent part, that the Florida Real Estate Commission may discipline a licensee who:
(b) Has been 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 or any other state, nation, or territory; has violated a duty imposed upon her or him by law or by the terms of a listing contract, written, oral, express, or implied, in a real estate transaction; has aided, assisted, or conspired with any other person engaged in any such misconduct and in furtherance thereof; or has formed an intent, design, or scheme to engage in any such misconduct and committed an overt act in furtherance of such intent, design, or scheme. It is immaterial to the guilt of the licensee that the victim or intended victim of the misconduct has sustained no damage or loss; that the damage or loss has been settled and paid after discovery of the misconduct; or that such victim or intended victim was a customer or a person in confidential relation with the licensee or was an identified member of the general public.
The factual allegations in the Amended Administrative Complaint include the following:
On or about December 2, 2006, Respondent, on behalf of Developing Entrusting Capital Counseling, LLC submitted an offer to Complainant Wettstein for Subject Property for the purchase price of
$410,000.
In the cover letter, Respondent states that there will be an assignment fee comprised of the difference between $410,000 and $269,900.
In the cover letter, Respondent states that the MLS will need to be changed to the contract price of $410,000.
Respondent made these statements about changing the MLS to the contract price in order to mislead the lender.
Respondent knew or should have known that offering a price more than the listing price with an assignment fee is mortgage fraud.
Petitioner has not met its burden of proving by clear and convincing evidence that Respondent has violated the above- cited statute and is therefore subject to license disciplinary action. The evidence did not establish the commission of any fraud. Respondent disclosed all information available to her as opposed to concealing anything provided to her. Likewise, no evidence of false promise, false pretense, dishonest dealing by trick, scheme or device, culpable negligence or breach of trust was presented. Finally, no violation of a duty imposed by law or the terms of a listing contract, or aid, assistance or conspiracy to commit any of the acts described above has been proven.
The evidence established that there was no intent by Respondent to commit mortgage fraud, as alleged in the Administrative Complaint. Respondent was approached by the
buyer (DECC) about offering $410,000 for the subject property. Respondent advised the buyer that she was offering well above the asking price of $269,900 for the subject property.
Respondent accepted the buyer’s representation that she was aware of this fact and was being advised by legal counsel on the conditions of the offer.
The evidence also established that because Respondent still had some concerns about the conditions of the contract, she disclosed all documents given to her by DECC, to the seller’s agent, and included the requirement that the property be appraised for $410,000. Nothing indicates any intention by Respondent to withhold any information from the seller. The evidence shows that all documents, including the addendum to the contract and the assignment, were sent to the listing agent because the Respondent was aware that they had an attorney who would examine all information provided in connection with the offer. As a result, the seller was well aware of all the conditions of the proposed contract and was free to reject the offer forwarded by Respondent, which in fact he did.
The more credible evidence demonstrates that in addition to revealing all known documents to the seller, the Respondent did not assist the buyer in obtaining a mortgage loan or in arranging for an appraisal on the subject property, did not intend to do so, and informed the buyer she would not do so.
Furthermore, no appraisal was performed or mortgage obtained as a result of the offer.
Chapter 475, Florida Statutes, imposes a responsibility upon persons licensed in this state to act in a fiduciary capacity while engaged in real estate transactions. The licensee, as the agent, must act in good faith with his principal, which in this case was the buyer. Van Woy v. Willis,
153 Fla. 189, 190 (1943); Silverman v. Pitterman, 574 So. 2d 275 (Fla. 3d DCA 1991). The agent has a duty to the buyer to present all offers to the seller, and the Department has offered no evidence or legal argument indicating circumstances where the duty to forward the offer received is negated. If the Commission had a rule excusing the broker from forwarding an offer where the broker had concerns about the propriety of the transaction, the result in the case might be different. In the absence of such a rule, Respondent did what she could to fulfill her responsibility, yet not participate in what she considered to be questionable.
The evidence in this case indicates that the buyer was adamant in offering $410,000 for the subject property. Respondent, therefore, fulfilled her fiduciary duty by following the instructions of her buyer and offering this contract price to the seller. Nonetheless, because Respondent had some reservations about the stipulations in the contract, she
included a provision to the contract stating that the sale was contingent on the house being appraised for $410,000.
Respondent did not think that the subject property would appraise for that amount, but recognized the need for a third- party, objective assessment of the property's value in order to support the sale of the property at the higher price.
Her actions had the effect of attempting to ensure that no fraud would be committed, as opposed to demonstrating an intent to defraud.
To be guilty of a violation of Section 475.25(1)(b), a licensee must have the requisite knowledge and intent that his or her actions are unlawful or improper. Morris v. Department
of Professional Regulation, Division of Real Estate, 474 So. 2d 841 (Fla. 5th DCA 1985). Here, the evidence did not prove that Respondent knew that her representation of DECC was unlawful or incorrect. In addition, the evidence does not indicate that Respondent intended to deceive the seller in this transaction. The stipulations for the assignable contract were never concealed from the seller, including information on how the assignable fee would have been calculated from the sale. Her belief was that the subject property would not appraise for
$410,000, which she indicated to her client. As a result, the Respondent genuinely thought that the sale would not go through.
Moreover, the Amended Administrative Complaint alleged that Respondent “knew or should have known that offering a price more than the listing price with an assignment fee is mortgage fraud.” The record does not establish by clear and convincing evidence, that a real estate broker should be knowledgeable of all of the iterations of mortgage fraud and should be charged with preventing it. Even assuming such a duty exists in Chapter 475, Florida Statutes, breach of such a duty was not proven in this case where Respondent made certain that the contract required an appraisal indicating that the property was worth the higher price.
That the Florida Real Estate Commission enter a Final Order dismissing the Administrative Complaint in its entirety.
DONE AND ENTERED this 24th day of February, 2010, in Tallahassee, Leon County, Florida.
Filed with the Clerk of the Division of Administrative Hearings this 24th day of February, 2010.
Daniel Villazon, Esquire Daniel Villazon, P.A.
Patrick J. Cunningham, Esquire Department of Business and
Thomas W. O'Bryant, Jr., Director Division of Real Estate Department of Business and
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.
