Findings Of Fact 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. 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. 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. 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. The First Transaction 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"). 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. 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. 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/ 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. 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. Respondent would repay the pension plan over time. The loan from the pension plan to Respondent was to be secured by the sellers' property. 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. The sellers refused to accept Respondent's amendment of the original offer. Respondent defaulted on his original offer. 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. 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/ 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/ 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. 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. 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. The Second Transaction 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. 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. 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. 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. 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. 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.
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.
The Issue The issues in this case are whether Respondents violated Subsection 475.25(1)(k), Florida Statutes (1999), by failing to maintain an escrow deposit in a trust account until properly authorized; whether Respondents violated Subsection 475.25(1)(d)1, Florida Statutes, by failing to account for or deliver funds; whether Respondents violated Subsection 475.25(1)(b), Florida Statutes, by committing a breach of trust or culpable negligence in a business transaction; and, if so, whether the proposed penalty is reasonable.
Findings Of Fact Petitioner is the state agency responsible for the regulation and discipline of real estate licensees in the state. Simons is licensed in the state as a real estate broker/officer of Respondent, Home Hunters USA, Inc. (Home Hunters), pursuant to license number BK-0159866. Home Hunters is a corporation registered as a Florida real estate broker pursuant to license number CQ-0146369. On March 21, 1996, Respondents entered into a property management contract (amended contract) with Max and Mary Newman (Newmans). The amended contract authorized Respondents to lease and manage real property owned by the Newmans and located at 1555 Whiskey Creek Drive, Ft. Myers, Florida 33919 (the property). The original contract that Respondents proposed to the Newmans was dated March 11, 1996. The original contract contained a clause that would have obligated the Newmans to pay a sales commission to Respondents in the event Respondents sold the property to a tenant or certain other purchasers. The Newmans deleted that language from the original contract, initialed the deletion, dated the deletion "3/21/96," signed the amended contract on March 21, 1996, and returned the amended contract to Respondents. The deleted language in the amended contract signed by the Newmans provided: Owner agrees to pay Agent a sales commission for the sale of said property to the tenant, or any other the tenant relates or refers. Agent will perform any services normally performed to consummate the sale to the tenant in a professional and diligent manner. Owner shall notify Agent at earliest possible time so that Agent may perform services (prequalify, arrange financing, closing, repairs, etc.). It is the owners [sic] responsibility to pay said fee to Agent upon closing of sale. Petitioner's Exhibit 5 (P-5) at 19 (the second unnumbered page of the exhibit). On or about February 1, 1999, Respondents brokered a lease of the property from the Newmans to Ms. Lilly Gilson (Gilson). Mr. Newman signed the lease agreement on February 14, 1999, and Gilson signed it on February 23, 1999. The lease agreement, in relevant part, obligated the Newmans to pay Respondents a "fee" in the event the "tenant should enter into a lease purchase, lease option, or purchase through their tenancy." The lease agreement states that the fee is for Respondents "serving the sale as a broker" but does not specify the amount of the fee, does not express the fee as a percentage of the purchase price, and does not otherwise specify how the fee is to be determined. Neither of the Respondents is a signatory to the lease agreement. At the time Gilson entered into the lease agreement, Gilson paid a deposit of $650 to Respondents as a security deposit in accordance with the lease agreement. Respondents placed this deposit into a trust account. At some point prior to December 1999, the Newmans entered into a purchase and sale contract to sell the property to Mr. Gary Newman (Buyer). The Buyer is unrelated to the Newmans, but is a relative of Gilson. The Newmans closed on the sale to the Buyer on December 28, 1999. The parties to the sale used other brokers in the transaction over Respondents' objections, and neither of the Respondents served the sale as a broker. The closing statement shows that the Buyer was obligated to pay the $635 security deposit to the Newmans. Subsequent to the closing, Respondents transferred the security deposit from their trust account to their operating account. Simons believed he was entitled to a commission on the sale from the Newmans to Buyer. Respondents had actual knowledge that the Newmans claimed entitlement to the security deposit and disputed Respondents' entitlement to the security deposit. Simons was aware as early as December 11, 1999, that the Newmans did not knowingly consent to pay Respondents a commission on the sale transaction. Respondents failed to notify the Florida Real Estate Commission (Commission) of the dispute concerning entitlement to the security deposit. Respondents did not institute the settlement procedures prescribed in Subsection 475.25(1)(d)1, Florida Statutes (1999).
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Commission enter a Final Order finding that Respondents violated Subsections 475.25(1)(b), (d), and (k), Florida Statutes (1999), by committing the acts alleged in the Administrative Complaint; imposing a fine of $1,000 against each licensee; and suspending Respondents' licenses concurrently for 30 days. DONE AND ENTERED this 4th day of December, 2003, in Tallahassee, Leon County, Florida. S DANIEL MANRY 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 4th day of December, 2003. COPIES FURNISHED: Christopher J. DeCosta, Esquire Department of Business and Professional Regulation 400 West Robinson Street, Suite 801-N Orlando, Florida 32801 Larry A. Simons Home Hunters USA, Inc. 1415 Colonial Boulevard, Suite 3 Fort Myers, Florida 33907 Nancy P. Campiglia, General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-2202 Nancy P. Campiglia, Acting Director Division of Real Estate Department of Business and Professional Regulation 400 West Robinson Street, Suite 802-N Orlando, Florida 32801-1772
Findings Of Fact Petitioner is a state governmental licensing and regulatory agency charged with the responsibility and duty to prosecute administrative complaints relative to real estate transactions. (Official recognition of Florida Statutes, TR 6-7) Respondent is now and was at times material hereto, a licensed real estate broker in Florida, having been issued License No. 0149408. The last license to Respondent was as a broker, t/a Marathon Realty at Post Office Box 2386, Marathon Shores, Florida 33052. (Petitioner'S Exhibit 1) On or about May 2, 1985, Respondent solicited and obtained a sales contract entered into by Emily Cathy Cronnon, as purchaser, and W. J. and Delores Sarver , as sellers, for the purchase and sale of certain residential property (contract for sale). (Petitioner'S Exhibit 2) The sales transaction was scheduled to close on or about July 1, 1985, but the transaction did not close. On or about December 2, 1985, the purchaser and sellers terminated the sales contract. (Petitioner'S Exhibit 3) On or about May 13, 1985, the Respondent allowed Emily Cathy Cronnon and her live-in boyfriend, Billy Hull, to take possession and occupy the property with the knowledge and consent of seller W. J. Sarver. In this regard, W. J. Sarver denies giving permission to Ms. Cronnon to occupy the property prior to closing. However, it is found herein and the testimony of Billy Hull and Respondent substantiate the fact that Emily Cronnon and Billy Hull visited Respondent's office during early May, 1985, to find out whether they could move into the Sarver property with their furnishings prior to closing. Initially, Ms. Diabo advised Cannon and Hull that she was not at liberty to permit them to move in. However, she told them that if they liked, they could phone Mr. Server and get his permission. This was done and it is found that Mr. Sarver gave his permission to Respondent to allow Ms. Cronnon and Billy Hull to occupy the premises prior to closing, provided they turned the utilities off and then had the same turned on in their name. This was done, and the contract purchaser (Cronnon) and her boyfriend, Billy Hull, moved in prior to the time that the transaction closed. Respondent received a $500 rental payment from the purchaser on August 19, 1985. (Respondent's Exhibits 1 and 2) Respondent deposited said check in an appropriate bank account and waited eleven (11) days for that check to clear. On August 30, 1985, she wrote a $500 check to the Sarvers indicating that the same was rental payment to them for the use of their property by Cronnon and Hull. Respondent customarily waits at least ten (10) days for any check to clear before she writes a check drawn on those same funds.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That the Administrative Complaint filed herein be DISMISSED. RECOMMENDED this 9th day of July, 1987, in Tallahassee, Leon County, Florida. JAMES E. BRADWELL Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this 9th day of July, 1987. APPENDIX Rulings on Petitioner's proposed findings: 1. Accepted as modified. 7. Rejected based on credible evidence herein which reveals that Emily Cathy Cronnon and her live-in boyfriend, Billy Hull, took possession and occupied the property with the prior knowledge and consent of seller, W. J. Sarver. Rejected based on credible evidence which reveals that Respondent did not conceal the rent payment, but rather deposited the rent payment until the funds cleared her bank and she immediately thereafter transmitted the proceeds to the Sarvers. Rejected as irrelevant and unnecessary to decide the issues posed. Rejected as a conclusion and not a finding of fact. Respondent's proposed findings and conclusions are largely a brief in the form of resolutions of credibility, conflicts, recommendations as to how those conflicts should be resolved, and conclusions in the form of ultimate findings of fact. As such, they are not specifically addressed in the Appendix, but were carefully considered and reviewed by the under signed in preparation of the Recommended Order. COPIES FURNISHED: JAMES H. GILLIS, ESQUIRE SENIOR ATTORNEY DIVISION OF REAL ESTATE POST OFFICE BOX 1900 ORLANDO, FLORIDA 32802 MICHAEL H. DAVIDSON, ESQUIRE WATSON & CLARK POST OFFICE BOX 11959 FORT LAUDERDALE, FLORIDA 33339 HAROLD HUFF, EXECUTIVE DIVISION OF REAL ESTATE POST OFFICE BOX 1900 ORLANDO, FLORIDA 32502 HONORABLE VAN B. POOLE, SECRETARY DEPARTMENT OF PROFESSIONAL REGULATION 130 NORTH MONROE STREET TALLAHASSEE, FLORIDA 32399-0750 JOSEPH A. SOLE, ESQUIRE GENERAL COUNSEL DEPARTMENT OF PROFESSIONAL REGULATION 130 NORTH MONROE STREET TALLAHASSEE, FLORIDA 32399-0750
