The Issue Whether Respondent violated section 475.624(15), Florida Statutes (2010), as alleged in the Administrative Complaint; and if so, the appropriate penalty.1/
Findings Of Fact Department is the state agency charged with regulating the practice of real estate appraisal pursuant to section 20.165 and chapters 455 and 475, Florida Statutes. Mr. Butterfield is licensed as a state-certified general real estate appraiser, holding state license number RD 1063. Consequently, he is certified to give residential and commercial appraisals in Florida. Further, Mr. Butterfield has been a licensed appraiser in Florida since 1991. In addition to being licensed in Florida, Mr. Butterfield is licensed in 11 other states, holding seven active and four inactive licenses. There is no evidence that Mr. Butterfield has any prior discipline. On April 26, 2010, Mr. Butterfield issued the Appraisal Report, which is at issue in this administrative hearing. He prepared the Appraisal Report for Charles Morgan, P.A., a law firm located in North Miami Beach, Florida. The Appraisal Report identified the law firm as the intended user and that the appraisal would be used in litigation. The stated purpose of the Appraisal Report was to provide a market value for the subject property. The subject property of the appraisal is located at 1500 Brickell Avenue, Miami, Florida.2/ The subject property is a unique parcel located on Brickell Avenue, near the heart of Miami's Financial District. The subject property's site is approximately 15,286 square feet with a 6,497 square foot building. The building is a French Chateau home constructed in 1928 by John Murrell, a prominent Miami attorney that helped develop Miami and Coral Gables. The subject property was the home of Mr. Murrell and his wife Ethel Murrell. Ms. Murrell was a noted attorney, author, lecturer and known as one of Florida's leading feminists. Consequently, the subject property has significant historical value. The building, as described by the Appraisal Report, "contains two octagonal towers with tent roof, parpet roof and dormers, crenellated garage roof, and trefoil arch windows with leaded and stained glass." Clearly, this is a unique historical building situated on one of Miami's most prestigious streets, Brickell Avenue. The Appraisal Report does not identify whether it is a self-contained appraisal report, a summary appraisal report or a restricted use appraisal report, as required by Standards Rule 2-2 of USPAP. Similarly, Mr. Butterfield's work file does not identify the type of appraisal he performed on the subject property. Rather, Mr. Butterfield's work file shows that he contracted to provide a "Commercial Narrative Appraisal Report." Mr. Butterfield's uncontradicted testimony that the Appraisal Report is a summary appraisal report for the intended user, a law firm, is credible. The complaint against Mr. Butterfield was instigated by Scott Taylor (Mr. Taylor). Mr. Taylor, a licensed residential appraiser, initially contacted Mr. Butterfield requesting assistance in appraising the subject property. Because the subject property appeared to be a commercial property, Mr. Taylor was not qualified to give an appraisal. Consequently, Mr. Taylor requested Mr. Butterfield's assistance. Mr. Taylor assisted Mr. Butterfield in the preparation of the appraisal with the taking of photographs and gathering of information. However, Mr. Taylor became unhappy with Mr. Butterfield concerning the payment of Mr. Taylor's fee. According to Mr. Butterfield, Mr. Taylor threatened to file a complaint with the Department, if Mr. Butterfield did not pay the fee. Mr. Butterfield refused to pay the disputed amount. Consequently, Mr. Taylor filed a complaint against Mr. Butterfield for perceived errors in the appraisal. The record contains no evidence that the intended user, the law firm, had any complaint concerning the quality of the work or that the law firm was misled by the Appraisal Report. The Department's expert witness, Mr. Spool, has 39 years of experience as an appraiser in the Miami-Dade, County area. Further, he has taught appraisal practice at Miami-Dade College, and published numerous articles concerning appraisal practice. Mr. Spool identified USPAP as the standards used by appraisers in conducting real estate appraisals. Further, he credibly testified that USPAP standards related to an appraiser using "reasonable diligence" in preparing an appraisal by requiring that the appraiser correctly use recognized methods and techniques to create a credible appraisal. The Appraisal Report contains Mr. Butterfield's certification that the appraisal was conducted in compliance with USPAP. The Department's case at the hearing proceeded to show that Mr. Butterfield did not use reasonable diligence in the preparation of the Appraisal Report along the following four general lines: The Highest and Best Use section of the Appraisal Report did not contain any supporting analyses or discussion; The Zoning section of the Appraisal Report did not contain any supporting analyses or discussion; The comparables used by Mr. Butterfield were inappropriate, and that he used an incorrect methodology for determining the subject property's market value; and The Appraisal Report contained numerous errors that call into question its credibility. Each of these areas is discussed separately in this Recommended Order. Highest and Best Use The Appraisal Report here sets out the Highest and Best Use of the subject property as following: The Highest and Best Use of the subject property could accommodate office usages. The structure represents a significant portion of the total value of the whole property. Therefore, due to the contributory value of the improvements and our estimate of the Highest and Best use of the subject property is its present usage, as would benefit an owner occupant, or as present building may generate lease income. The Appraisal Report's discussion of the subject property's highest and best use contains what could be best described as "boilerplate language," setting out definitions and the appropriate tests to be applied when reviewing the subject property.3/ Mr. Spool's criticism of the Appraisal Report is not that Mr. Butterfield reached an inappropriate conclusion, but rather the lack of analysis. Mr. Butterfield credibly testified, however, that this appraisal was a summary appraisal report, and that further analysis was not required. The undersigned rejects Mr. Spool's testimony that a more detailed analysis needed to be contained in the Appraisal Report because the report is a summary. A review of the appraisal shows that it summarized the highest and best use of subject property as its existing use. Consequently, the undersigned finds that Mr. Butterfield's determination of the subject property's highest and best use complied with USPAP 2-2(b). Moreover, the Comment to Standard 2-2(b)(vii) provides that "[b]ecause intended users' reliance on a appraisal may be affected by the scope of work, the report must enable them to be properly informed and not misled." In the instant case, the Department did not bring forward any evidence showing that the intended user, a law firm, had been misled by Mr. Butterfield's determination of the subject property's highest and best use. The record shows that the Department did not prove by clear and convincing evidence that Mr. Butterfield failed to use reasonable diligence in the preparation of the appraisal's determination of highest and best use. Zoning Mr. Butterfield specifically identified the subject property's zoning, at the time of the appraisal, as "R-3 Multi- Family with HC-Residential Office Heritage Conservation District overlay." Mr. Spool's criticism of the Appraisal Report's zoning section is that Mr. Butterfield's analysis is lacking. A review Appraisal Report's section titled zoning again includes mostly "boilerplate language" without analysis, as to the meaning of the zoning and historical overlay. However, considering that the Appraisal Report here is a summary appraisal report prepared for a law firm, the Department did not prove by clear and convincing evidence that Mr. Butterfield did not use reasonable diligence. There was no evidence that Mr. Butterfield's identification of the zoning, without further analysis, was a lack of reasonable diligence in the context of a summary. Moreover, there was no evidence that the intended user, the law firm, was misled by Mr. Butterfield's identification of the proper zoning, without a further analysis. Market Value Determination The Department questioned Mr. Butterfield's choice of his direct sales and rental comparisons, and his methodology in determining the subject property's market value. Mr. Spool offered properties that, in his opinion, were more appropriate comparisons with the subject property and questioned Mr. Butterfield's methodology. The discussion of each test used to determine the subject property's market value is discussed separately. Direct sales comparison The Appraisal Report here shows that Mr. Butterfield identified the three approaches used by appraisers to determine a property's market value: 1) the cost approach; 2) direct sales comparisons; and 3) an income approach. Further, the Appraisal Report shows that Mr. Butterfield used a direct sales comparison methodology and income approach to determine the subject property's market value. In the direct sales comparison, the Appraisal Report shows that Mr. Butterfield used four comparable direct sales within the location of the subject property for his analysis. Of the four comparable sales identified by Mr. Butterfield, one involved an office and three involved residential homes. The record shows that Mr. Butterfield chose to use both an office and residential properties in the sales comparison because both uses were permitted by the subject property's zoning. At the time of the appraisal, the subject property could have been used as either a residence or an office. Consequently, the direct sales comparison which included both office and residential sales was appropriate for valuing the subject property. Based on Mr. Butterfield's testimony and the Appraisal Report, the key consideration in choosing these comparable sales was the proximity to the subject property's Brickell Avenue address. Further, a review of Mr. Butterfield's work file shows that he considered numerous properties for direct sales comparisons in developing his market value opinion. The key factor for Mr. Butterfield in preparing his sales comparisons was the Brickell Avenue location. The undersigned finds Mr. Butterfield's testimony concerning his use of the comparative properties and methodology credible. Mr. Spool's first criticism was that Mr. Butterfield used an incorrect methodology in conducting the direct sales comparison. Specifically, Mr. Spool testified that the highest and best use of the property, as identified by Mr. Butterfield, was an office. Consequently, Mr. Butterfield used an incorrect methodology when he used direct sales from residences for comparison. In essence, the correct methodology required that any comparison be made with direct sales of office space or rather compare "apples to apples and oranges to oranges." Mr. Spool's criticism that Mr. Butterfield used an incorrect methodology is rejected because it is based on a wrong premise. Mr. Butterfield did not identify the subject property's highest and best use as only an office. The record shows that Mr. Butterfield identified the subject property's highest and best use as its permissible uses, which at the time was either a residence or office. Mr. Butterfield used reasonable diligence in comparing direct sales from nearby residences and an office in his analysis. Next, Mr. Spool identified other properties, which in his opinion, were more appropriate as sales comparisons, such as a historic home near the Miami River that had been converted into office space. However, the identification of other properties that could have been used by Mr. Butterfield does not show that Mr. Butterfield did not use reasonable diligence in preparing his report. It is noted that the properties offered by Mr. Spool did not share the Brickell Avenue address, which is highly desirable. Consequently, the undersigned finds that the Department did not prove by clear and convincing evidence that Mr. Butterfield failed to use reasonable diligence in the preparation of his direct sales comparison. Income approach Next, the Appraisal Report shows that Mr. Butterfield used an income approach to determine the subject property's market value. The record credibly shows that Mr. Butterfield identified four rental comparables all located on Brickell Avenue within close proximity to the subject property, and verified the rental rate per square foot in the range of $24.00 to $37.00 per square foot. Mr. Spool offered alternative properties that in his opinion were more appropriate for making a rental comparison. The crux of the Department's testimony was that Mr. Butterfield's use of rental space from new high rises was inappropriate for comparing with the subject property, which is an older property. The undersigned, however, finds that Mr. Butterfield's explanation that he chose comparable rental properties based on the Brickell Avenue address credible. Again, the fact that other properties may be used as comparable properties does not show that Mr. Butterfield did not prepare the Appraisal Report without reasonable diligence. Next, Mr. Spool's explanation that Mr. Butterfield used an incorrect methodology for determining an income approach by using residential properties is rejected. As found earlier, Mr. Butterfield determined that the subject property's highest and best use could be either as an office or residence. Therefore, it was appropriate to determine the rental income from residences and office space. Moreover, the record shows that Mr. Butterfield gathered information to determine the per square-foot income. Therefore, the Department did not prove by clear and convincing evidence that Mr. Butterfield failed to use reasonable diligence in the preparation of the appraisal's income approach analysis. Miscellaneous Errors The Appraisal Report does contain several admitted errors. Examples of the errors are that the Appraisal Report wrongly indicates that ingress and egress to the subject property was from Brickell Avenue; that Brickell Avenue was a minor north-south thoroughfare; that the three residences used for direct sales comparison were "historic," as opposed to being located in "historic South Miami"; that it failed to designate the type of appraisal that was conducted; and that it did not state in the certification that Mr. Butterfield had not personally viewed the subject property. The undersigned finds that these errors do not rise to the level of showing a lack of reasonable diligence or could mislead the intended user. For example, the Appraisal Report attached photographs of the three residences used in the direct sales comparison. The photographs clearly show that the three residences were not historical homes, but modern construction. Therefore, it is clear that Mr. Butterfield took steps to insure that the intended user of the report would know the type of residences which were being used for comparison with the subject property. Moreover, concerning the errors about Brickell Avenue, one could safely assume that a law firm in Miami Beach would know that Brickell Avenue is a major and desirable location in Miami. Therefore, the undersigned finds that although the appraisal contains errors, which were admitted by Mr. Butterfield, those errors are not of such a nature as to show a lack of reasonable diligence.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Real Estate Appraisal Board enter a final order dismissing the Administrative Complaint against Mr. Butterfield. DONE AND ENTERED this 12th day of December, 2012, in Tallahassee, Leon County, Florida. S THOMAS P. CRAPPS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 12th day of December, 2012.
Findings Of Fact § 57.111(3)(f) Fla. Stat. (2003) "state agency" DBPR meets the definition found within Section 120.52(1)(b)1, Florida Statutes (2003), as an "agency." § 57.111(3)(b)2. and 3., Fla. Stat. (2003) "initiated by a state agency" As reflected in the file related to DOAH Case No. 06- 3387PL, on August 6, 2003, the Florida Real Estate Appraisal Board in Florida Department of Business and Professional Regulation, Division of Real Estate, Petitioner vs. Victor Harrison, Respondent, FDBPR Case No. 2001-80524, charged Victor Harrison with violations of Chapter 475, Part II, Florida Statutes (2005), in his capacity as a certified real estate appraiser. This was action "initiated by a state agency." The Administrative Complaint was directed to Victor Harrison who held Certificate No. RH-119 issued by DBPR on November 18, 1996. On December 10, 2003, Harrison responded to the Administrative Complaint concerning his position on factual allegations alleging violations found in Counts I through V to the Administrative Complaint. This was treated as a request for formal hearing pursuant to Sections 120.569 and 120.57(1), Florida Statutes (2005). On September 11, 2006, DOAH received the case from DBPR. On March 20, 2007, a formal hearing was held to consider the Administrative Complaint. On May 30, 2007, a Recommended Order was entered recommending that the case be dismissed. § 57.111(3)(c)1., Fla. Stat. (2003) "prevailing small business party" On October 18, 2007, the Division of Real Estate on behalf of the Real Estate Appraisal Board, in the case before DBPR, Florida Department of Business and Professional Regulation, Division of Real Estate, Petitioner, vs. Victor Harrison, Respondent, DBPR Case No. 2001-80524, by Final Order dismissed the Administrative Complaint. § 57.111(3)(d), Fla. Stat. (2003) "small business party" Harrison conducts his appraisal business as Gulf Coast Appraisals, a sole proprietorship. On August 6, 2003, when the Administrative Complaint was signed accusing him, Harrison operated as Gulf Coast Appraisals. At times relevant, he had no other employees and his net worth did not exceed two (2) million dollars. § 57.111(4)(b), Fla. Stat. (2003) "itemized affidavit" An itemized affidavit was submitted, as amended, to DOAH revealing the nature and extent of the services rendered by Harrison's attorney. In all respects concerning the proceeding, the parties agree that the total amount of attorney's fees and costs was $31,919.23. DBPR accepts the amount as reasonable and just, should Harrison prevail in his overall claims, that is should Harrison be found to be a "prevailing small business party," in a setting where it was decided that DBPR was not "substantially justified" in its actions pursuant to the Administrative Complaint in the underlying case. § 57.111(4)(b)2., Fla. Stat. (2003) "filing of the application" The application for attorney's fees and costs was filed on January 16, 2008. § 57.111(4)(d)1., Fla. Stat. (2003) "nominal party" When DBPR undertook its prosecution directed to Harrison, it was not acting as a nominal party. § 57.111(3)(e), Fla. Stat. (2003) "substantially justified" On January 9, 1997, Harrison rendered a Uniform Residential Appraisal Report on property at 693 Broad Street, Pensacola, Florida. Daniel A. Ryland, another real estate appraiser doing business in Pensacola, Florida, made a complaint against Harrison in relation to the appraisal report prepared by Harrison. On November 21, 2001, he was interviewed by Benjamin F. Clanton, an investigator with DBPR concerning the nature of his complaint. During the course of the interview, Ryland provided Clanton a completed Uniform Complaint Form outlining the concerns expressed by Ryland about the aforementioned appraisal at 693 Broad Street in Pensacola, Florida, performed by Harrison. In his remarks, Ryland, in great detail, explained why he thought the earlier appraisal by Harrison was questionable. In carrying out an investigation of the Ryland complaint, Clanton interviewed Harrison, Fred R. Catchpole, and Rhonda Guy, all persons involved with the January 9, 1997, appraisal, and all persons performing various functions as appraisers. Clanton interviewed others as well. He collected a number of exhibits concerning specific information about the appraisal and related data. All of this information was made part of an investigative report completed by Clanton on December 26, 2001, and approved by a supervisor, Sydney B. Miller, two days later. The predicate for the investigative report by Clanton came from Ryland's complaint, in which there was some allusion to a violation of Section 475.624(14), (15) and (17), Florida Statutes, on Harrison's part. In summary, the complaint addressed the contention that the January 9, 1997, appraisal on property at 693 Broad Street, Pensacola, Florida, overvalued the property in comparison with other properties thought to be superior in their value. As the table of contents associated with the Clanton investigative report describes, Respondent's Exhibit numbered 3, materials in association with the investigation numbered over 320 pages. On August 4, 2003, the Florida Real Estate Appraisal Probable Board meeting on probable cause was held. In the course of that meeting, the matter of Victor Harrison, referred to as item number 200180524 was considered by panel members, with Cynthia A. Wright, sitting as the chairperson, Clay Ketcham, and Mary Calloway, serving as the additional members. At the same time the cases involving Rhonda E. Guy and Fred R. Catchpole were under consideration. In the panel discussion, it was noted that Catchpole and Harrison were licensed real estate appraisers and Guy was a registered trainee appraiser. Discussion was made of the January 9, 1997, appraisal of the aforementioned residential property. Information was imparted concerning the method or approach in performing the appraisal and perceived failings in the process. In the discussion, generally stated, Respondent was charged " . . . with failure to exercise reasonable diligence in developing an appraisal, violating a standard for the development or communication of an appraisal, breach of trust in any business transaction." There was additional discussion that Harrison " . . . failed to produce or provide the data that he (Harrison) and Guy both relied upon in communicating and developing the appraisal." Further there was a discussion to the effect " . . . that Respondent Guy completed an inspection of the property without the assistance of Respondent Harrison. Respondent Harrison did not inspect the comparables until after the report was submitted." As a result, the discussion at the meeting went on to say ". . . we charge Respondent Harrison with failure to obtain records for at least five years, guilty of obstructing or hindering the enforcement of [sic] license law." Then the presenter stated, "We asked that you find probable cause and issue the filing of an Administrative Complaint in Case . . . 200180524, regarding Victor Harrison . . . ". Following the presentation concerning Harrison, the August 4, 2003, excerpt of the meeting indicates: CHAIRPERSON WRIGHT: Mr. Ketcham? MR. KETCHAM: Do you want to take up the first one, the Victor Harrison case first; is that the one we want to deal with. MS. WATKINS: Yes, sir, that's fine. MR. KETCHAM: Okay. I did not really have any questions and I wanted to make sure also we're charging them with failure to maintain records and that's because they didn't deliver a copy of the requested report. MR. SMITH: Yes. If that question is -- I'm sorry for misspeaking. But if that question is designed for me, yes, that's one of the reasons. MR. KETCHAM: Okay. Then I don't have any other questions. And after a complete review of the file, I would find probable cause and recommend the opening of an administrative complaint. CHAIRPERSON WRIGHT: Thank you, Mr. Ketcham. Ms. Calloway? Ms. CALLOWAY: Calloway here. After a complete review of the record I find probable cause recommend the filing of an administrative complaint on Victor Harrison. CHAIRPERSON WRIGHT: And after a complete review of the record I find probable cause and recommend an administrative complaint be filed on Mr. Harrison. (Whereupon, this concludes this portion of Florida Real Estate Appraisal Board Meeting, In Re: Victor Harrison.) The action by the probable cause panel led to the Administrative Complaint in Case No. 200180524 in relation to the January 9, 1997, appraisal report for the property at 693 Broad Street, Pensacola, Florida, for alleged misconduct referred to in the Administrative Complaint. Harrison was alleged to have violated Sections 475.624(2), (4), (14), and (15), and 475.626(1)(f), Florida Statutes, as follows: COUNT I Based upon the foregoing, Respondent is guilty of failure to retain records for at least five years of any contracts engaging the appraiser's services, appraisal reports, and supporting data assembled and formulated by the appraiser in preparing appraisal reports in violation of Section 475.629, Florida Statutes, and, therefore, in violation of Section 475.624(4), Florida Statutes. COUNT II Based upon the foregoing, Respondent is guilty of having failed to exercise reasonable diligence in developing an appraisal report in violation of Section 475.624(15), Florida Statutes. COUNT III Based upon the foregoing, Respondent has violated a standard for the development or communication of a real estate appraisal or other provision of the Uniform Standards of Professional Appraisal Practice in violation of Section 475.624(14), Florida Statutes. COUNT IV Based upon the foregoing, Respondent is guilty of misrepresentation, culpable negligence, or breach of trust in any business transaction in violation of Section 475.624(2), Florida Statutes. COUNT V Based upon the foregoing, Respondent is guilty of having obstructed or hindered in any manner the enforcement of Chapter 475, Florida Statutes or the performance of any lawful duty by any person acting under the authority of Chapter 475, Florida Statutes in violation of Section 475.626(1)(f), Florida Statutes. § 57.111(4)(a), Fla. Stat. (2003) "special circumstances" DBPR has made no argument and no evidence was presented by DBPR in this case, to show that special circumstances exist that would make the award of attorney's fees and costs unjust.
The Issue Whether the Respondent committed the violations alleged in the Administrative Complaint dated March 3, 2004, and, if so, the penalty that should be imposed.
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made: The Division is the state agency responsible for investigating complaints filed against registered, licensed, or certified real estate appraisers and for prosecuting disciplinary actions against such persons. § 455.225, Fla. Stat. (2005). The Florida Real Estate Appraisal Board ("Board") is the state agency charged with regulating, licensing, and disciplining real estate appraisers registered, licensed, or certified in Florida. § 475.613(2), Fla. Stat. (2005). At the times material to this proceeding, Mr. Rutan was a certified residential real estate appraiser in Florida, having been issued a license numbered RD 2791. Mr. Rutan had been a certified residential real estate appraiser in Florida for approximately 10 years. At the time of the events giving rise to this action, Mr. Rutan was employed by Excel Appraisal. Mr. Rutan interviewed and hired Frank Delgado, Juan Carlos Suarez, and Ricardo Tundador to work at Excel Appraisal as state-registered assistant real estate appraisers. At all times material to this proceeding, Mr. Rutan was Mr. Suarez’s supervisor and was responsible for Mr. Suarez’s appraisals. On or about June 16, 1999, Mr. Suarez prepared an appraisal for property located at 9690 Northwest 35th Street, Coral Springs, Florida, in which he valued the property at $325,000. The property is a multi-family, four-plex property. Mr. Rutan signed Mr. Suarez's appraisal as the supervisory appraiser and certified on the appraisal that he had inspected the property by placing an “X” in the "Inspect Property" box. The appraisal form signed by Mr. Rutan contains a "Supervisory Appraiser's Certification" that provides: If a supervisory appraiser signed the appraisal report, her or she certifies and agrees that: I directly supervise the appraiser who prepared the appraisal report, have reviewed the appraisal report, agree with the statements and conclusions of the appraiser, agree to be bound by the appraiser's certifications numbered 4 through 7 above, and am taking full responsibility for the appraisal and the appraisal report. It is the custom in the industry that a supervisory appraiser who certifies that he or she has inspected the property in question must inspect the property inside as well as outside before he or she can sign the appraisal. Mr. Rutan inspected the property the day after he signed the appraisal and only inspected the property from the outside. The appraisal report on the property at issue herein listed a prior sale of the property from Rodney Way to Doyle Aaron for $325,000 on April 28, 1999. The appraisal failed to list the sale of the property on the same day from Julius Ohren to Rodney Way for $230,000. Mr. Rutan did not investigate the relevant sales history of the property and was unaware, therefore, that the property had been “flipped” and was considerably overvalued in the appraisal report.2 Mr. Rutan admitted that he did not investigate prior sales and that the property was substantially overvalued. Mr. Suarez listed in the appraisal report three "comparable sales," that is, sales of properties similar in type and location to the property being appraised, to support the valuation of $350,000. The first comparable property used in the appraisal was property located at 4102 Riverside Drive, Coral Springs, which was listed in the appraisal report as being previously sold for $315,000. Earlier on the day that the Riverside Drive property was sold for $315,000, however, it had been sold for $185,000. Mr. Rutan failed to research and review the sales of the comparable properties that were included in Mr. Suarez's appraisal report, and the "comparable sale" of property on Riverside Drive was not properly used to value the property that was the subject of the appraisal report at issue herein. Mr. Suarez failed to make the proper adjustments in value on the Riverside Drive property based on the features of that property that were superior to the features of the subject property. The Riverside Drive property was located on a canal and should have had a negative adjustment with respect to the subject property, which was not on a canal. Mr. Suarez included a positive adjustment in the comparable sales data for the Riverside Drive property. Mr. Rutan failed to review the comparable property adjustments submitted by Juan Carlos Suarez for the appraisal of the subject property. Mr. Suarez overstated the rental income of the subject property in his appraisal report. Mr. Rutan failed to research and review the rental figures Mr. Suarez submitted. When Mr. Rutan was notified by Brokers Funding, a company that purchased the loans on the subject property, that there were problems with the appraisal done by Mr. Suarez, Mr. Rutan checked additional comparable sales and interviewed the tenants in the building. He also hired another appraiser to conduct an appraisal of the subject property. Based on his investigation and Mr. Salimino’s appraisal, Mr. Rutan discovered the problems in Mr. Suarez's appraisal and report of the subject property. Mr. Salimino’s appraisal for the subject property was $290,000, but Mr. Rutan estimated that his appraisal would have been approximately $250,000. Mr. Rutan fired Mr. Suarez, as well as Frank Delgado, and Ricardo Tundador, all three of whom were subsequently indicted on federal charges relating to real-estate-appraisal scams. In a Final Order entered on April 22, 2002, Mr. Rutan was found guilty by the Board of violating Sections 475.624(14) and 475.624(15), Florida Statutes, and was ordered to pay an administrative fine of $1,000. Mr. Rutan trusted Mr. Suarez to do an honest and competent appraisal and was rushed by Mr. Suarez to approve the appraisal on the subject property. The evidence presented by the Division is sufficient to establish with the requisite degree of certainty that Mr. Rutan failed to carry out his responsibilities as Mr. Suarez's supervisory appraiser, failed to review Juan Carlos Suarez’s appraisal for accuracy, and failed to inspect the inside of the subject property, which caused or contributed to the substantially over-stated valuation of the subject property.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Real Estate Appraisal Board enter a final order finding that William Rutan is guilty of violating Section 475.624(10), (14), and (15), Florida Statutes, as alleged in Counts I through IV of the Administrative Complaint and revoking Mr. Rutan's Florida certification as a real estate appraiser. DONE AND ENTERED this 31st day of August, 2005, in Tallahassee, Leon County, Florida. S PATRICIA M. HART 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 31st day of August, 2005.
The Issue The issues in this case are whether Respondent, Jessalyn Rodriguez, committed the violations alleged in a seven-count Administrative Complaint, filed with the Petitioner Department of Business and Professional Regulation on June 10, 2008, and, if so, what disciplinary action should be taken against her Florida real estate appraiser certification.
Findings Of Fact The Parties. Petitioner, the Department of Business and Professional Regulation, Division of Real Estate (hereinafter referred to as the “Division”), is an agency of the State of Florida created by Section 20.165, Florida Statutes. The Division is charged with the responsibility for the regulation of the real estate industry in Florida pursuant to Chapters 455 and 475, Florida Statutes. Respondent, Jessalyn Rodriguez, is, and was at the times material to this matter, a Florida-certified residential real estate appraiser having been issued license number 4120. The last license issued to Ms. Rodriguez is now an inactive Florida-certified residential real estate appraiser license at 12071 Southwest 131st Avenue, Miami Florida 33166. Appraisal of 6496 Southwest 24th Street. On or about June 1, 2007, Ms. Rodriguez developed, signed and communicated an appraisal report (hereinafter referred to as the “Appraisal”), for property located at 64967 Southwest 24th Street, Miami, Florida 33155 (hereinafter referred to as the “Subject Property”). At the time the Appraisal was made, Ms. Rodriguez was a Florida-certified residential real estate appraiser. The Subject Property, however, was zoned BU-1, a commercial district. The Administrative Complaint entered against Ms. Rodriguez, however, does not allege that Ms. Rodriguez committed any violation by performing an appraisal on commercially zoned property. Errors and Omissions in the Appraisal. Ms. Rodriguez on her sketch of the Subject Property contained in the Appraisal indicates that the total square footage of the Subject Property is 2,105 square feet. On the sketch, she breaks down the property into a 34.0 x 55.6 area of 1890.4 square feet, and a 5.0 x 43.0 area of 215 square feet. In her documentation for the Appraisal, Ms. Rodriguez notes that the adjusted square footage of the Subject Property is 1,890 square feet and that the property appraiser reported the square footage at 1,709 square feet. Ms. Rodriguez failed to verify that the reported 2,105 square feet contained in the Appraisal was accurate. Ms. Rodriguez admitted in her Answer and Response to Administrative Complaint, Respondent’s Exhibit 1, that she failed to verify that a rear addition to the Subject Property, most likely the 5.0 x. 43.0 additional area she measured, had not been permitted through Miami-Dade County. This unpermitted addition would account for the discrepancy in the square footage of the Subject Property noted in Ms. Rodriguez’s notes. Had she investigated the discrepancy in square footage, it is possible she would have discovered the unpermitted addition and reported it in the Appraisal. Ms. Rodriguez indicates in the Appraisal that the Subject Property has a “porch.” The “porch” she was referring to is a rather small area in the front of the Subject Property which has an overhang. The evidence failed to prove that this area, which is depicted in photos accepted in evidence, does not constitute a “porch.” Ms. Rodriguez incorrectly indicated in the Appraisal that the Subject Property had a “patio.” Her suggestion that a “grass area” constituted a patio is rejected as unreasonable. While the Subject Property has a small “yard,” it does not have a patio. Ms. Rodriguez failed to indicate in the Appraisal that the Subject Property did not have any “appliances.” The fact that appliances were to be installed after closing fails to excuse this omission. Ms. Rodriguez did not make any adjustment for, or any explanation of, the 13-year age difference between the Subject Property and comparable sale 3. The Supplemental Addendum section of the Appraisal incorrectly reports that the Subject Property had wood floors and that it had a new pool deck. Ms. Rodriguez has admitted these errors, indicating that they are “[t]ypographical error[s] but did not effect value since no monetary adjustment was made.” Failure to Document. Ms. Rodriguez’s documentation for the Appraisal lacked a number of items, all of which Ms. Rodriguez admits were not maintained. The missing documentation included the following items which were not contained in her work file: Support for a $40 per square foot adjustment for comparable sale 1 and comparable sale 3 in the Sales Comparison Approach section of the Appraisal; Support for a site size adjustment made to comparable sale 1 and comparable sale 2 in the Sales Comparison Approach section of the Appraisal; Support for a $1,500.00 “bathroom” adjustment to comparable sale 1, comparable sale 2, and comparable sale 3 in the Sales Comparison Approach section of the Appraisal; Support for a $5,000.00 “good” location adjustment made to comparable sale 1 and comparable sale 2 in the Sales Comparison Approach section of the Appraisal; Support for the $4,000.00 garage adjustment made to comparable sale 2 in the Sales Comparison Approach section of the Appraisal; Support for the $15,000.00 pool adjustment made to comparable sale 2 in the Sales Comparison Approach section of the Appraisal; Support for the $350,000.00 Opinion of Site Value in the Cost Approach section of the Appraisal; Support for the $10,000.00 adjustment for the “As Is” Value of Site Improvements in the Cost Approach section of the Appraisal; Support for the $20,000.00 adjustment for Appliances/Porches/Patios/Etc. in the Cost Approach section of the Appraisal; and Marshall and Swift pages for the time frame that the Appraisal was completed to justify the dwelling square footage price in the Cost Approach section lf the Appraisal.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Commission: Finding that Ms. Rodriguez is guilty of the violations alleged in Counts One through Seven of the Administrative Complaint as found in this Recommended Order; Placing Ms. Rodriguez’s appraiser license on probation for a period of two years, conditioned on her successful completion of the 15-hour USPAP course; Requiring that she pay an administrative fine of $2,000.00; and Requiring that she pay the investigative costs incurred in this matter by the Division. DONE AND ENTERED this 23rd of February, 2009, in Tallahassee, Leon County, Florida. LARRY J. SARTIN 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 23rd day of February, 2009. COPIES FURNISHED: Ainslee R. Ferdie, Esquire Ferdie & Lones, Chartered 717 Ponce de Leon Boulevard Suite 223 Coral Gables, Florida 33134 Jessalyn Rodriguez 9972 Southwest 125th Terrace Miami, Florida 33176 Robert Minarcin, Esquire Department of Business & Professional Regulation 400 West Robinson Street, N801 Orlando, Florida 32801-1757 Thomas W. O’Bryant, Jr., Director Division of Real Estate Department of Business and Professional Regulation 400 West Robinson Street Hurston Building-North Tower, Suite N802 Orlando, Florida 32801 Ned Luczynski, General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-0792
The Issue Should the Florida Real Estate Appraisal Board (the Board) take action against Respondent, a certified residential appraiser (appraiser) for violations under Chapter 475, Part II, Florida Statutes (2005).
Findings Of Fact Respondent holds certificate no. RD-3933, as a certified residential appraiser issued by the Department of Business and Professional Regulation in accordance with Chapter 475, Part II, Florida Statutes (2005). Respondent's certificate is in an active status. His business address is 2302 Mitchell Place, Jacksonville, Florida, according to Petitioner's records. Kadrina E. Jackson owned property at 4409 Moncrief Road, Jacksonville, Florida, in Washington Heights Estates. A town home was located on the property. James F. Love attempted to purchase the property from Ms. Jackson. As part of the transaction Respondent performed a residential appraisal in relation to the property and rendered a Uniform Residential Appraisal Report (report) for which he charged $300. On July 19, 2005, the report was signed. The sales price for the property was $27,000. The appraised value was $27,000. Mr. Love believed that the appraisal was incorrect and filed a complaint with Petitioner. James Pierce is Petitioner's investigator assigned to the case. He has worked with the agency for over 12 years. His background includes several instructional courses sponsored by the Division of Real Estate. He has taken the approved AB-1 appraisal course and successfully completed the program. The AB-1 appraisal course is for persons who wish to become licensed trainee appraisers. He has conducted approximately 50 appraisal investigations. As part of the investigation of the complaint by Mr. Love, Investigator Pierce interviewed Respondent and others. Mr. Pierce conducted a physical inspection of the property in question from the outside and did research concerning the underlying information within the report. Investigator Pierce requested Respondent to provide a true and complete copy of the report under consideration, in addition to a complete copy of the work file of the work done in completing that report. Mr. Pierce also requested Respondent to provide the investigator a complete copy of previous reports that have been conducted by River City Appraiser Services, Inc. (River City) where Respondent worked. As requested, Respondent provided information for the Moncrief property associated with the July 9, 2005 report but not previous reports as completed by River City. In relation to the section of the report dealing with the cost approach, it was commented: Due to the age of the subject improvements, development of reproduction costs (an exact replica) or replacement costs (new construction) could be misleading because the building codes have changed and building labor and material costs fluctuate. This section was used to determine land value only. Estimated remaining economic life: 40 years. The cost approach did not lead to a determination of the appraised value as $27,000. It referred to site value at $5,000 and the "as is" value of site improvements as $5,000. When Mr. Pierce reviewed materials submitted by Respondent, he did not find separate calculations that would support the land value and site improvement estimates listed in the cost approach section found in the report. Three comparable sales are listed in the report. Comparable sale one dates from February 2005. Comparable sale two dates from January 2005. Comparable sale three dates from May 2005. All comparable properties in the report were in the same subdivision where the Subject Property is found. The sale prices ranged from $23,000 to $27,000, with the median sales price being $24,500. Investigator Pierce did not find documentation designed to support a $500 negative adjustment for the screen porch in comparable sale three within the sales comparison section to the report. The report indicates that predominate occupancy in the neighborhood is owner-occupancy with 0 to 5% vacancy. Respondent told Mr. Price that no research had been done in relation to that determination and no supporting documentation was found in the work file that would indicate the predominant occupancy as being owner occupancy. The report indicates information about single-family housing sales and a price range from $12,000 to $216,000, whereas Respondent's work file provided information on several properties that were available and had been sold recently as being a range between $12,000 and $69,000, excluding the $216,000 reference. The report under general description indicated that the house is attached. From his most recent observation Mr. Pierce considered the townhouse to be detached. Investigator Pierce's prior knowledge of the neighborhood is that individual housing units have exterior walls, which when originally built were approximately one inch in separation from the next unit. He is not sure whether that condition (one inch separation) exists today. He cannot attest to it with certainty. The report refers to four window a/c units in the townhouse. Mr. Pierce in his physical inspection of the property from the outside of the property and based upon photos of the property found within the report, believes that there are only three window air-conditioning units. The neighborhood where the subject home is found has several types of property: two-story town home properties with two to four bedrooms; single-story units that have two bedrooms and one bath; and properties that are designed as duplexes with common walls. With the exception of the duplexes, the lots are zero lot line properties. The reference to zero lot line in this case refers to the lot line beginning and ending at the exterior walls of an individual unit. Respondent's reason for describing the property as an attached unit is based upon his observation that the unit exterior wall touches the next door property wall. He observed that when you stand in front of the property you cannot see between those two buildings. In deciding that the property was a townhouse, Respondent used the Marshall and Swift Residential Cost Handbook. The definition within that reference source considers townhouses to be single-family attached residences. Respondent determined that the predominant occupancy in the neighborhood was owner-occupancy based upon by driving through the neighborhood. The determination of predominant occupancy involved looking at some public records and the Multiple Listing Service (MLS). When someone let Respondent in the home that is at issue, he asked the question "Hey are there a lot of renters in here or people own." That person believed that most people in the neighborhood owned the homes. He arrived at an occupancy rate by that same process of driving around the neighborhood. Following the inspection of the Subject Property, Respondent looked into comparables through information pulled from the MLS. The Subject Property had not been renovated. It had not be updated. It had no central heating or air. In trying to locate comparables, Respondent looked for properties that were similar in their condition. The first comparable was half a mile from the Subject Property. In comparing comparable two with the Subject Property, Respondent recognized that each had two bedrooms and a single bath. The reference to the minus $500 within the report for comparable three and the screen porch, was to reflect the fact that the Subject Property did not have a screen porch. It is inferred that Respondent was attempting to reflect similarities for comparison purposes by deleting a feature that is found in the comparable, not found in the Subject Property. The value of the screen porch was determined on the basis of Respondent's experience and use of the Marshall and Swift Handbook. Concerning the lack of documentation in Respondent's work file, Respondent did not believe that it was necessary to do anything other than utilize the reference book to arrive at his determination. As he explained, Respondent determined the $12,000 to $216,000 range of prices in his report by resort to the MLS. The reference source reflected a $216,000 amount at the extreme. The range of prices for sales in neighborhoods like the Washington Heights subdivision were from $12,500 through the $216,000 according to the MLS. The next highest was $69,000. The reference to $216,000 for a sale in the MLS seemed "odd" to Respondent. He did not double check to verify that the sale of the home was $216,000 through a review of public records, not believing that this was necessary in the conduct of his business. The basis for indicating that four a/c units were located at the townhouse, was Respondent's observation that there were two in the front and two in the back. Whether three or four units were found at the home would not affect the appraisal from Respondent's perspective. The a/c units were not part of his determination of $27,000 appraised value. In preparing the report Respondent did not utilize the cost approach. The only reason for referring to the cost approach in the report was that the lender had requested an opinion of the land value for insurance purposes. There was an earlier version of the report on the Subject Property that did not reflect the site value or land value which had been requested to be included later on. The earlier version without the indication of the site value with improvements was not provided to Investigator Pierce. With the change requested by the lender, to include the site value with improvements, Respondent did not maintain the earlier report that did not reflect the site value. The determination of the appraised value did not utilize the income approach either. The basis for determination was the sales comparison approach. Given that there was no determination utilizing the cost approach or income approach, Respondent had no documentation available to explain those approaches. In the addendum to the report under the final reconciliation Respondent did comment, "Investors are active in the area with possible unrecorded sales."
Recommendation Based upon the facts found and the conclusions of law reached, it is RECOMMENDED: That a final order be entered dismissing the Administrative Complaint against Respondent. DONE AND ENTERED this 3rd day of May, 2007, in Tallahassee, Leon County, Florida. S CHARLES C. ADAMS 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 3rd day of May, 2007.
