STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

Petitioner,

vs.

CHRISTOS RALLIS,

Respondent.

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) Case No. 10-1153PL

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RECOMMENDED ORDER

Pursuant to notice, this cause was heard by Linda M. Rigot, the assigned Administrative Law Judge of the Division of Administrative Hearings, on May 25, 2010, by video teleconference with sites in Pensacola and Tallahassee, Florida.

APPEARANCES

For Petitioner: Patrick J. Cunningham, Esquire

Department of Business and Professional Regulation

400 West Robinson Street

Hurston Building-North Tower, Suite N801 Orlando, Florida 32801

For Respondent: Michael L. Guttmann, Esquire

314 South Baylen Street, Suite 201 Pensacola, Florida 32502

STATEMENT OF THE ISSUE

The issue presented is whether Respondent Christos Rallis is guilty of the allegations contained in the Administrative

Complaint filed against him, and, if so, what disciplinary action should be taken against him, if any.

PRELIMINARY STATEMENT

On January 22, 2010, Petitioner Department of Business and Professional Regulation, Division of Real Estate, issued an Administrative Complaint against Respondent Christos Rallis, alleging that he had violated certain statutes regulating his conduct as a licensed real estate sales associate. Respondent timely requested an administrative hearing, and this cause was transferred to the Division of Administrative Hearings to conduct the evidentiary proceeding.

At the commencement of the final hearing the Department announced its voluntary dismissal with prejudice of Counts Three and Four of its Administrative Complaint and also of paragraphs numbered 7 and 13 through 15.

The Department presented the testimony of Jack B. Case and Steven Hansen. Respondent testified on his own behalf and presented the testimony of Valerie Carrouso, Mark Scanlan, and Barbara McNeil. Additionally, the Department's Exhibits numbered 2, 3, and 8 and Respondent's Exhibits lettered A, I, and F were admitted in evidence.

The Transcript of the final hearing was filed on June 4, 2010, and the Department and Respondent filed their proposed recommended orders on June 24, 2010, and June 14, 2010,

respectively. Those documents have been considered in the entry of this Recommended Order.

FINDINGS OF FACT

1. At all times material hereto, Respondent Christos Rallis has been licensed as a real estate sales associate in the State of Florida, having been issued license number 3123174.

2. Respondent listed for sale a property located at 7240 Hilburn Road, Building A, in Pensacola, Florida, which property was owned by Mark Scanlan.

3. Respondent represented Steven Hansen, who represented himself to be a real estate investor. Hansen became a licensed sales associate after the closing in question in this proceeding but was not licensed at the time of the closing.

4. Hansen went with Respondent to look at the subject property. The property was a duplex located within a cluster of duplexes. Readily apparent were the enclosure surrounding a dumpster which served the residents in that cluster and security lighting on a pole in the parking area, along with electric meters, and a water meter. Each unit had its own electric meter, which meant that the freestanding electric meters served other than the units.

5. Hansen and Scanlan signed an agreement whereby Respondent would act as a transactional broker for the subject property.

   
   

6. Hansen ultimately purchased five of the duplexes for a total of ten units. Four of the duplexes were subsequently foreclosed on, and only the property at 7240 Hilburn Road is the subject of this proceeding.

7. The MLS listing advised that the "owner pays $140 per unit per year to assoc. for trash collection." Hansen denies seeing the listing until after the closing, although it was Respondent's practice to provide copies of MLS listings to prospective purchasers.

8. The Residential Sales and Purchase Contract in paragraph 7(d) provides as follows:

   Homeowners' Association: If membership in a homeowners' association is mandatory, an association disclosure summary is attached and incorporated into this Contract. Buyer should not sign this contract until buyer has received and read the disclosure summary.

   
   

   Neither a disclosure summary nor any other documentation referencing a homeowners' association is attached to the contract.

9. Similarly, the notation in the form addenda in paragraph 20 of the contract which references any homeowners' association was left blank.

10. Subsequent to the February 15, 2007, closing Hansen was contacted by someone who advised him that he owed homeowners' association dues. He paid approximately $1,600 for

    
    

    the ten units he owned, which covered trash pick-up, water for the open area, electricity for the security lighting, parking lot repairs, and other general maintenance.

11. There is no evidence in this proceeding that there was or is an actual homeowners' association. No one offered any formal paperwork to prove the existence of such an association, and the Department's investigator did not obtain any such documentation.

12. The amount paid by Hansen for all of those services is less than what he would be obligated to pay for only trash pick- up by the Escambia County Utilities Authority. Thus, the dues Hansen paid do not materially affect the value of the property he purchased. Even if there were an impact on the value of the property, the impact would be positive and would not adversely affect the value of the property.

13. Hansen knew that there were expenses associated with the common lighting, water, roadway, and trash pick-up, whether by a formal association or an informal gathering of owners of the cluster of duplexes. His denial of that knowledge is not credible.

    CONCLUSIONS OF LAW

    
    

14. The Division of Administrative Hearings has jurisdiction over the subject matter hereof and the parties hereto. See §§ 120.569 and 120.57(1), Fla. Stat.

    
    

15. The Department seeks to take disciplinary action against Respondent in this proceeding. The burden of proof, therefore, is on the Department, and the Department must prove the allegations in its Administrative Complaint by clear and convincing evidence. Dep't of Banking & Fin., Div. of Sec. & Investor Protection v. Osborne Stern & Co., 670 So. 2d 932 (Fla. 1996). The Department has failed in its burden of proof.

16. After the Department's voluntary dismissal of Counts Three and Four at the beginning of the final hearing, the Administrative Complaint filed in this cause contains two counts. Count One alleges that Respondent has violated Section 475.25(1)(b), Florida Statutes, by fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence, or breach of trust in any business transaction. The Department has failed to prove Respondent guilty of such conduct.

17. The Department's proof was limited, essentially, to Hansen's testimony that Respondent did not show him the MLS. It is not credible that Hansen purchased five buildings composed of ten rental units, all of which would be subject to the alleged homeowners' association dues without seeing the MLS listings which provide important information, including the size and number of rooms, construction materials, and sales price. It is more credible that Respondent's practice of providing the MLS

    
    

    listing to interested purchasers was followed in this instance. Lastly, there is no evidence that there is, in actuality, a homeowners' association, and there is no evidence that Respondent attempted to hide its existence from Hansen.

18. Count Two alleges that Respondent is guilty of failure to disclose known facts that materially affect the value of a property which were not readily observable, in violation of Section 475.278, Florida Statutes, and, therefore, in violation of Section 475.25(1)(e), Florida Statutes. The Department has failed to prove Respondent guilty of Count Two.

19. First, there is no proof that there was a legal homeowners' association with the authority to legally assess dues as opposed to a voluntary association among some or all of the owners of duplexes in that complex. The Department has, therefore, failed to prove that fact. Second, the conflict in testimony between Hansen and Respondent as to whether Respondent gave Hansen a copy of the MLS listing showing homeowners' dues of $140 per year before the closing has been resolved in Respondent's favor. Third, it has further been found that water, light, and trash pick-up services were available near the parking area and readily observable. Lastly, no evidence was offered that the alleged dues affected the value of the property; rather, the evidence reveals that regular trash pick- up by the municipal authority would have cost more.

    
    

20. Since the Department failed to prove that Respondent violated Section 475.278, Florida Statutes, then the Department has also failed to prove that Respondent violated Section 475.25(1)(e).

RECOMMENDATION

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

RECOMMENDED that a final order be entered finding Respondent not guilty of the violations alleged in Counts One and Two and dismissing the Administrative Complaint filed against Respondent in this cause.

DONE AND ENTERED this 28th day of July, 2010, in Tallahassee, Leon County, Florida.

S

LINDA M. RIGOT

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

Fax Filing (850) 921-6847 www.doah.state.fl.us

Filed with the Clerk of the Division of Administrative Hearings this 28th day of July, 2010.

COPIES FURNISHED:

Patrick J. Cunningham, Esquire Department of Business and

Professional Regulation

400 West Robinson Street

Hurston Building-North Tower, Suite N801 Orlando, Florida 32801

Michael L. Guttmann, Esquire

314 South Baylen Street, Suite 201 Pensacola, Florida 32502

Thomas W. O'Bryant, Jr., Director Division of Real Estate

400 West Robinson Street

Hurston Building-North Tower, Suite N801 Orlando, Florida 32801

Reginald Dixon, 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: 10-001153PL

Orders for Case No: 10-001153PL