The Issue The issues in this case are whether Respondent violated the provisions of Section 475.624(2), (14) and (15), Florida Statutes (2006)1/, as alleged in the Administrative Complaint, and if so, what penalty should be imposed?
Findings Of Fact The Department of Business and Professional Regulation, Division of Real Estate, is the state agency charged with the licensing and regulation of property appraisers in the State of Florida, pursuant to Section 20.165 and Chapters 455 and 475, Florida Statutes. Respondent, James Lester, Jr., is a Florida state certified general appraiser, holding license number RZ2783. He has been licensed by the Florida Real Estate Appraisal Board since 1991, initially holding a certified residential appraisal license and then a general appraisal license. Kenneth Ardire and Bradley Scott Bozeman formerly worked in the office referred to as J. Lester Company. The business was owned by Respondent's father. Bozeman was a residential appraiser and Ardire was a registered trainee appraiser supervised by Bozeman. During the time material to this Amended Administrative Complaint, Respondent did not act in a supervisory capacity with respect to either Bozeman or Ardire. Neither man currently works for the firm, and Bozeman's appraiser's license has been revoked. In February 2006, Ardire and Bozeman prepared a vacant land appraisal report (Report 3) related to property located on Highway 71 in White City, Florida, for Vision Bank. Respondent was not involved in the preparation of the vacant land appraisal and did not sign the report. Vision Bank also requested a subdivision analysis of the property. Ardire and Bozeman were assigned the report regarding the subdivision analysis because they had prepared the prior report on the same property. They were assigned to this task by an employee in the office other than Respondent. Preparation of a subdivision analysis is considered a commercial appraisal, as opposed to a residential appraisal. Neither Ardire nor Bozeman is licensed to prepare commercial appraisals. For reasons that are unclear, Ardire provided a "draft" report to Vision Bank, which shall be referred to as Report 2. Report 2 is unsigned and contains only the names of Bozeman and Ardire. Report 2 was provided by Vision Bank to Donald Giles, another licensed appraiser. Based on his review of Report 2, Giles filed a complaint with the Department. The complaint was identified as DBPR Case No. 2007-3522. In response to a request from the Department, Bozeman supplied to DBPR a copy of what is now referred to as Report 1 and its supporting work papers. This report indicates that it was prepared by Respondent, Bozeman and Ardire. Based on this report and workfile, DBPR Case No. 2008-1566 (the current proceeding) was initiated against Respondent. Neither report has numbered pages. Reports 1 and 2 differ in the following ways: Report 1 lists all three appraisers, with purported signatures for each. Report 2 lists only Ardire and Bozeman and contains no signatures. However, both reports state on the second page of the cover letter that "the appraisals attached were written, valued, analyzed and concluded by Kenneth Ardire and Bradley Scott Bozeman." The cover letter for Report 1 is on company letterhead, and is addressed to Vision Bank. The cover letter for Report 2 is on plain paper, and is addressed to Capital City Bank, at the same address listed for Vision Bank. The first page of Report 2 lists Vision Bank as the intended user. On the page labeled "Extraordinary Assumptions," Report 2 contains a sixth assumption which states: "The appraiser completing this assignment has a small interest in the property. However, the appraiser was not biased in his final conclusion of value." This assumption is omitted in Report 1. The certification page in Report 2 also lists Bozeman as having a minor interest in the property, lists Ardire and Bozeman but contains no signatures. The certification page for Report 1 has no reference to Bozeman's interest and has three purported signatures (Ardire, Bozeman and Respondent). On the page entitled Certificate of Value, Report 1 has three signature blocks and three purported signatures (Ardire, Bozeman, and Respondent). Report 2 contains two signature blocks (for Ardire and Bozeman) but no signatures. The third paragraph of the section entitled "Approaches to Value Omitted" in Report 2 contains the following sentences: "The market approach is unique since not all properties are alike. In this case the appraiser compared an area in Lands Landing in Wewahitchka and Honey Hill Subdivision in Wewahitchka." These two sentences are omitted from this section of the report in Report 1. With respect to the Highest and Best Use Discussion, the first two pages in both reports are identical. Report 1 includes an additional two pages entitled "Introduction to the Appraisal Process," which appears to be general information related to the appraisal process as opposed to specific information related to the appraisal performed. The written information contained in the "Public and Private Restriction" section is identical. However, Report 1 also includes maps and pictures of the area. Both reports contain the Land Appraisal Report (Report 3) signed by Ardire and Bozeman. Report 1 contains additional information with respect to the vacant land report not included in Report 2. On the page labeled "Land Sales Comparison Chart," under the Section entitled "Reconciliation and Land Value Estimate," Report 2 contains the sentence, "All the sales are zoned for similar use and felt to have the same potential for use as the subject." This sentence is omitted from Report 1. On the page labeled "Income Approach," Report 2 contains the sentence, "Method 2 is the financing and development method." This sentence is omitted in Report 1. Report 1 contains a blank page entitled "Addendum" followed by pages from a book with a heading "Subdivision Analysis." While there are differences between Report 1 and Report 2, they do not make a significant difference in terms of the quality and usefulness of the reports. Section 475.628, Florida Statutes, requires that appraisers comply with the USPAP. Section 475.628 was last amended in 1998, and was enacted in 1991. USPAP is adopted by the Appraisal Foundation, which is authorized by Congress as the Source of Appraisal Standards and Appraiser Qualifications. Pursuant to Section 475.611(1)(q), Florida Statutes, "Uniform Standards of Professional Appraisal Practice" means the most recent standards approved and adopted by the Appraisal Standards Board of the Appraisal Foundation. Section 475.611 was also enacted in 1991, and the language of this subsection has been unchanged, although renumbered, since that time. To this end, the Department has submitted as Exhibit 5 the USPAP Standards that became effective January 1, 2005. The most recent amendments for each section of the Standards is reflected on page four of the exhibit. None of these amendments relevant to these proceedings occurred prior to 1998. The Department alleges that Report 1 and the workfile for the report do not conform to several components of the USPAP standards in effect in 2005. Specifically, the Conduct portion of the Ethics Rule provides in part that "[a]n appraiser must not communicate assignment results in a misleading or fraudulent manner. An appraiser must not use or communicate a misleading or fraudulent report or knowingly permit an employee or other person to communicate a misleading or fraudulent report." Report 1 violated this section of the Ethics Rule contained in USPAP in that it was difficult for a reader of the report to determine exactly what was being appraised. Moreover, the inclusion of the gross sell-out amount on the first page, described as "potential gross income" in bold type is also misleading, because non- appraisers would infer that the potential gross income was the concluded value of the property. The Recordkeeping portion of the Ethics Rule addresses the need for appraisers to keep a workfile for each appraisal. The rule provides in pertinent part: An appraiser must prepare a workfile for each appraisal, appraisal review, or appraisal consulting assignment. The workfile must contain: the name of the client and the identity, by name or type, of any other intended users; true copies of any written reports, documented on any type of media; summaries of any written reports or testimony, or a transcript of testimony, including the appraiser's signed and dated certification; and all other data, information, and documentation necessary to support the appraiser's opinions and conclusions and to show compliance with this Rule and all other applicable Standards, or references to the location(s) of such other documentation. With respect to Report 1, the workfile does not include documentation regarding marketing information for Gulf County, as listed in the report, and also lacks documentation to support any highest and best use analysis, including the four criteria necessary to establish the highest and best use for the property. It also lacks documentation to support the statements in Report 1 regarding the respective public and private restriction section, and lacks any plans or specifications to indicate the type of infrastructure proposed for the subdivision. The workfile also lacks documentation to support the income approach used, and contains no information to support the construction costs, closing costs, real estate taxes, expenses or other calculations used in the Calculations and Comments Section of Report 1. Also missing is any documentation from the identified engineers to support the data used for construction costs. Finally, there is also no documentation to support the data or calculations in the two-year discounted cash flow analysis in Report 1. With respect to Report 3, the workfile lacks documentation to support the single family price ranges in the neighborhood section of the report; lacks documentation to support the information in the Market Data Analysis Section; and lacks any multiple listing services (MLS) data or public records for the comparable sales used in the report. The Amended Administrative Complaint refers to the Scope of Work Rule. This rule is in actuality entitled Standard 1: Real Property Appraisal, Development and states: "In developing a real property appraisal, an appraiser must identify the problem to be solved and the scope of work necessary to solve the problem, and correctly complete research and analysis necessary to produce a credible appraisal." Report 1 identifies the problem as "estimating the value of the proposed subdivision and determines [sic] a value on a typical lot." However, the Report does not identify the scope of work and does not complete the research and analysis necessary to complete the appraisal properly. Standards 1-1(a), (b) and (c) require the following: In developing a real property appraisal, an appraiser must: be aware of, understand, and correctly employ those recognized methods and techniques that are necessary to produce a credible appraisal; not commit a substantial error of omission or commission that significantly affects an appraisal; and not render appraisal services in a careless or negligent manner, such as by making a series of errors that, although individually might not significantly affect the results of an appraisal, in the aggregate affects the credibility of those results. Report 1 violates these standards because, as discussed more fully below, the report contains several significant errors, including the failure to discuss the four criteria for analyzing highest and best use. Standards Rule 1-2(d) requires that in developing a real property appraisal, an appraiser must identify the effective date of the appraiser's opinions and conclusions. Report 1 stated that the value date of the report and the date of the report itself, were the same as the date of the inspection of the property, June 7, 2006. Mr. Grimes, the Department's expert, explained that this was a violation of the standard because in a situation where the appraiser is estimating a value for a project that is not now in existence, the hypothetical nature of the valuation must be adequately explained, and the effective date of the appraisal should reflect the date in the future when the subdivision is scheduled to be completed. Mr. Grimes' testimony is credited. Standards Rule 1-3 requires the following: When the value opinion to be developed is market value, and given the scope of work identified in accordance with Standards Rule 1-2(f), an appraiser must: identify and analyze the effect on use and value of existing land use regulations, reasonably probable modifications of such land use regulations, economic supply and demand, the physical adaptability of the real estate, and market area trends; and develop an opinion of the highest and best use of the real estate. Report 1 does not provide an analysis of the highest and best use of the property. While the factors related to such an analysis are defined, there is no discussion of these factors related to the actual property being appraised. Standards Rule 1-4(a),(c) and (g) provides: In developing a real property appraisal, an appraiser must collect, verify, and analyze all information applicable to the appraisal problem, given the scope of work identified in accordance with Standards Rule 1-2(f). (a) When a sales comparison approach is applicable, an appraiser must analyze such comparable sales data as are available to indicate a value conclusion. * * * When an income approach is applicable, an appraiser must: analyze such comparable rental data as are available and/or the potential earnings capacity of the property to estimate the gross income potential of the property; analyze such comparable operating expense data as are available to estimate the operating expenses of the property; analyze such comparable data as are available to estimate rates of capitalization and/or rates of discount; and base projections of future rent and/or income potential and expenses on reasonably clear and appropriate evidence. Comment: In developing income and expense statements and cash flow projections, an appraiser must weigh historical information and trends, current supply and demand factors affecting such trends, and anticipated events such as competition from developments under construction. * * * (g) An appraiser must analyze the effect on value of any personal property, trade fixtures, or intangible items that are not real property but are included in the appraisal. While the Amended Administrative Complaint refers to all three subparagraphs listed above, the evidence presented dealt solely with the deficiencies related to Standards Rule 1- 4(c). Mr. Grimes opined that with respect to Report 1, the income approach to the cash flow analysis did not support the conclusions, projections on income, and with respect to this project, the sale of lots over a period of time. The statements made in the report are conclusory in nature, with little or no explanation of the basis for forming the conclusions. Standards Rule 1-6(a) and (b) provides: In developing a real property appraisal, an appraiser must: reconcile the quality and quantity of data available and analyzed within the approaches used; and reconcile the applicability or suitability of the approaches used to arrive at the value conclusion(s). Report 1 indicates that there are three traditional approaches to value in the valuation process: the cost approach, the direct sales comparison approach, and the income capitalization approach. While the report states that all three approaches will be considered, the appraisal report omits any discussion of the cost approach and the direct sales comparison approach. By omitting these approaches from the analysis, the report omits an important "check and balance" process that would have caught what Mr. Grimes considered to be a substantial error in the discounted cash flow analysis. Standards Rule 2-1 provides: Each written or oral real property appraisal report must: clearly and accurately set forth the appraisal in a manner that will not be misleading; contain sufficient information to enable intended users of the appraisal to understand the report properly; and clearly and accurately disclose all assumptions, extraordinary assumptions, hypothetical conditions, and limiting conditions used in the assignment. Hypothetical conditions and extraordinary assumptions are considered to be two different things. As noted in Report 1, an extraordinary assumption is defined as an assumption that presumes certain information to be factual. If found to be false, the information could alter the appraiser's opinions or conclusions. A hypothetical condition is something that assumes conditions contrary to known facts about physical, legal or economic characteristics of the property being appraised, or about conditions external to the property, such as market conditions or trends, or about the integrity of data used in the analysis. Hypothetical conditions and extraordinary assumptions should be explained separately in an appraisal report, so that the intended user is in a better position to understand the true value of the appraisal. Report 1 lists 6 conditions and assumptions all together. They are that the proposed subdivision is based on 21 lots; that all plans and specs (unidentified) are to be approved and accepted by all governmental authorities; all work will be completed in a quality workmanship manner with quality materials; assumed the subject property can be developed as proposed; and information on the number of lots was made available by the engineer Bailey, Bishop and Lane. The report does not differentiate which are considered hypotheticals and which are considered extraordinary assumptions. The report does not contain sufficient information to enable the intended user of the appraisal to understand the report and to use it for its intended purpose, i.e., to determine whether the highest and best use for the land is subdivision development. Standards Rule 2-2(b) provides in pertinent part: Each written real property appraisal report must be prepared under one of the following three options and prominently state which option is used; Self-Contained Appraisal Report, Summary Appraisal Report, or Restricted Use Appraisal Report. * * * (b) The content of a Summary Appraisal Report must be consistent with the intended use of the appraisal and, at a minimum: * * * state the intended use of the appraisal; summarize information sufficient to identify the real estate involved in the appraisal, including the physical and economic property characteristics relevant to the assignment; * * * (vi) state the effective date of the appraisal and the date of the report; * * * summarize the information analyzed, the appraisal procedures followed, and the reasoning that supports the analyses, opinions, and conclusions; state the use of the real estate existing as of the date of value and the use of the real estate reflected in the appraisal; and, when reporting an opinion of market value, summarize the report and rationale for the appraiser's opinion of the highest and best use of the real estate; . . . Report 1 states that the intended use of the appraisal is to determine the fair market value of the property. It also provides sufficient information to identify the real estate involved. However, as noted at finding of fact 18, the effective date of the appraisal, the date of the property inspection and the date of the report are the same. Where, as here, the appraisal is determining value of a proposed subdivision as completed at some future time, the date of the report cannot be the effective date of the appraisal. The report fails to have any discussion or analysis with respect to the property's highest and best use, and has little or no reasoning or analysis to support the opinions and conclusions contained in the report. Report 1 contains what purports to be Respondent's signature. Clearly, by signing an appraisal report, a property appraiser takes responsibility for the contents of that report. When speaking with the investigator during the investigation of this case, Respondent stated that he had little recollection of the appraisal, but given that his signature was on it, he acknowledged responsibility for whatever errors it contained. However, at hearing, Respondent disputed that it was actually his signature. Respondent's testimony that the signatures contained in Report 1 are not his is credited. Included in the record of this proceeding are other documents, including past appraisals prepared by Respondent, that contain what he acknowledges to be his signature. After carefully reviewing all of the signatures in evidence, it cannot be said with any degree of certainty that the signatures included in Report 1 are indeed the signatures of Respondent.2/
Recommendation Upon consideration of the facts found and conclusions of law reached, it is RECOMMENDED that: The Florida Real Estate Appraisal Board enter a final order dismissing the Amended Administrative Complaint. DONE AND ENTERED this 24th day of November, 2009, in Tallahassee, Leon County, Florida. S LISA SHEARER NELSON 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 24th day of November, 2009.
The Issue Whether Respondent engaged in acts and/or conduct amounting to fraud, dishonest dealing by trick, scheme, or device, culpable negligence, or breach of trust in a business transaction for which his real estate license should be disciplined.
Findings Of Fact Petitioner is the state licensing and regulatory agency charged with the responsibility and duty to prosecute Administrative Complaints filed pursuant to, inter alia, Chapters 455 and 475, Florida Statutes and rules promulgated pursuant thereto. Respondent, John Wilson Claffey, is now and was at times material hereto, a licensed real estate salesperson in Florida, having been issued licensed number 0419730. The last license issued was as a salesperson, c/o Venice Properties and Investments, Inc., 628 Cypress Avenue, Venice, Florida. During 1985, Respondent and Mary Lou Retty (Retty), while Respondent was acting as the licensed general contractor in the employ of Venice Construction Management, Inc., entered into a verbal agreement to build five commercial structures (for Retty) in Venice, Florida. The agreement provided that Respondent would charge Retty actual costs plus a supervisory fee for each building. Respondent built the first two buildings as agreed in keeping with the projections he provided Retty. However, a dispute later arose between Respondent and Retty during construction of the third building about some of the billings and other accounting practices with the end result that Retty suspected that Respondent was overcharging by falsifying invoices and purchasing materials which were used for other projects, but were charged to the building he was erecting for Retty. During 1986, Retty filed a lawsuit in the Circuit Court of the Twelfth Judicial Circuit for Sarasota County, Florida. Retty's object was to recover monies that she suspected Respondent had misappropriated and wrongfully charged to her project. On April 25, 1990 and June 28, 1990, Retty obtained two final judgments. The first judgment ordered Respondent to pay Retty $40,263.47 and the second final judgment ordered him to pay her the sum of $10,263.47 for civil theft, attorney fees and court costs. The interest rate for both judgments was 12% per annum. (Petitioner's Exhibits 1-4.) During counsel's preparation and discovery for trial, it became evident that Respondent altered several billing invoices which he sought to collect from Retty. Respondent submitted falsified invoices and charged Retty for materials that he used on other projects. Respondent unsuccessfully appealed the final judgments. To date, Respondent has not paid any of the monies he was ordered to pay in the final judgments referenced herein.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that: Petitioner enter a Final Order finding that Respondent engaged in proscribed conduct as alleged and that his real estate license be suspended for seven (7) years. It is further RECOMMENDED that Respondent Claffey pay an administrative fine of $1,000.00 to Petitioner within thirty (30) days of the entry of its Final Order. DONE and ORDERED this 29th day of January, 1993, in Tallahassee, Leon County, Florida. JAMES E. BRADWELL 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 29th day of January, 1993. COPIES FURNISHED: Steven W. Johnson, Esquire Senior Attorney DPR- Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 John Wilson Claffey 312 Venice Avenue East #126 Venice, Florida 34292 Darlene F. Keller/Executive Director Florida Real Estate Commission Hurston Building-North Tower 400 West Robinson Street Orlando, Florida 32801 1772 Jack McRay, Esquire General Counsel Department of Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399 0792
The Issue In this disciplinary proceeding, the issues are, first, whether Respondent, a certified real estate appraiser, committed various disciplinable offenses in connection with three residential appraisals; and second, if Respondent is guilty of any charges, whether she should be punished therefor.
Findings Of Fact The Florida Real Estate Appraisal Board ("Board") is the state agency charged with regulating real estate appraisers who are, or want to become, licensed to render appraisal services in the State of Florida. The Department of Business and Professional Regulation ("Department") is the state agency responsible for investigating and prosecuting complaints against such appraisers. At all times relevant to this proceeding, Elsa Cartaya ("Cartaya") was a Florida-certified residential real estate appraiser. Her conduct as an appraiser in connection with the matters presently at issue falls squarely within the Board's regulatory jurisdiction. Case No. 04-1680 In the Administrative Complaint that initiated DOAH Case No. 04-1680, the Department charged Cartaya with numerous statutory violations relating to her appraisal of a residence located at 930 East Ninth Place, Hialeah, Florida (the "Hialeah Property"). Specifically, the Department made the following allegations against Cartaya:1 Respondent developed and communicated an appraisal report (Report) for the property commonly known as 930 E. 9 Place, Hialeah, Florida 33010. A copy of the report is attached hereto and incorporated herein as Administrative Complaint Exhibit 1. On the Report, Respondent represents that: she signed it on July 27, 2000, the Report is effective as of July 27, 2000. On or about October 26, 2001, Respondent provided a "Report History" to Petitioner's investigator. A copy of the report history is attached hereto and incorporated herein as Administrative Complaint Exhibit 2. On the Report History, Respondent admits that she completed the report on August 7, 2000. On Report, Respondent represents that there were no prior sales of subject property within one year of the appraisal. Respondent knew that a purchase and sale transaction on subject property closed on July 28, 2000. Respondent knew that the July 28, 2000, transaction had a contract sales price of $82,000. A copy of the closing statement is attached hereto as Administrative Complaint Exhibit 3. Respondent knowingly refused to disclose the July 28, 2000, sale on Report. On [the] Report, Respondent represented that the current owner of subject property was Hornedo Lopez. Hornedo Lopez did not become the title- owner until on or about July 28, 2000, but before August 7, 2000. On [the] Report, Respondent represents that quality of construction of subject property is "CBS/AVG." The public records reflect that subject property is of mixed construction, CBS and poured concrete. On [the] Report, Respondent represents: "The income approach was not derived due to lack of accurately verifiable data for the mostly owner occupied area." The multiple listing brochures indicate as follows: for comparable one: "Main House 3/2 one apartment 1/1 (Rents $425) and 2 efficiencies each at $325. Live rent free with great income or bring your big family." A copy of the brochure for comparable one is attached hereto and incorporated herein as Administrative Complaint Exhibit 4. for comparable three: "Great Rental . . . two 2/1 two 1/1 and one studio. Total rental income is $2,225/month if all rented." A copy of the brochure for comparable three is attached and incorporated as Administrative Complaint Exhibit 5. On or about October 23, 2001, Petitioner's investigator inspected Respondent's work file for Report. The investigation revealed that Respondent failed to maintain a true copy of Report in the work file. On [the] Report, Respondent failed to analyze the difference between comparable one's listing price, $145,000, and the sale price, $180.000. On [the] Report History, Respondent admits to having received a request for appraisal of subject property indicting a contract price of $195,000. On [the] Report History, Respondent admits that the multiple listing brochure for subject property listed the property for $119,900, as a FANNIE MAE foreclosure. On [the] Report History, Respondent also admits that she had a multiple listing brochure in the file, listing subject property for $92,000. On [the] Report History, Respondent admits that she did not report the listings in Report. On [the] Report History, Respondent admits knowledge that comparable three was "rebuilt as a 2/1 with two 1/1 & 1 studio receiving income although zoned residential." On [the] Report, Respondent failed or refused to explain or adjust for comparable three's zoning violations. On the foregoing allegations, the Department charged Cartaya under four counts, as follows: COUNT I Based upon the foregoing, Respondent is guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest conduct, culpable negligence, or breach of trust in any business transaction in violation of Section 475.624(2), Florida Statutes.[2] COUNT II Based upon the foregoing, Respondent is guilty of having failed to use 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 having accepted an appraisal assignment if the employment itself is contingent upon the appraiser reporting a predetermined result, analysis, or opinion, or if the fee to be paid for the performance of the appraisal assignment is contingent upon the opinion, conclusion, or valuation reached upon the consequent resulting from the appraisal assignment in violation of Section 475.624(17), Florida Statutes.[3] In her Answer and Affirmative Defenses, Cartaya admitted the allegations set forth in paragraphs 5-9, 11, 13-15, 17-19, and 23-25 of the Amended Complaint. Based on Cartaya's admissions, the undersigned finds these undisputed allegations to be true. Additional findings are necessary, however, to make sense of these particular admissions and to determine whether Cartaya committed the offenses of which she stands accused. In April 2000, Southeast Financial Corporation ("Southeast") asked Cartaya to prepare an appraisal of the Hialeah Property for Southeast's use in underwriting a mortgage loan, the proceeds of which would be applied by the prospective mortgagor(s) towards the $205,000 purchase price that he/she/they had agreed to pay Hornedo Lopez ("Hornedo") for the residence in question.4 In preparing the appraisal, Cartaya discovered that the putative seller, Hornedo, was actually not the record owner of the Hialeah Property. Rather, title was held in the name of the Federal National Mortgage Association ("Fannie Mae"). The Hialeah Property was "in foreclosure." Cartaya informed her contact at Southeast, Marianella Lopez ("Marianella"), about this problem. Marianella explained that Hornedo was in the process of closing a sale with Fannie Mae and would resell the Hialeah Property to a new buyer soon after acquiring the deed thereto. Cartaya told Marianella that, to complete the appraisal, she (Cartaya) would need to be provided a copy of the closing statement documenting the transfer of title from Fannie Mae to Hornedo. No further work was done on the appraisal for several months. Then, on July 25, 2000, Marianella ordered another appraisal of the Hialeah Property, this time for Southeast's use in evaluating a mortgage loan to Jose Granados ("Granados"), who was under contract to purchase the subject residence from Hornedo for $195,000. Once again, Cartaya quickly discovered that Fannie Mae, not Hornedo, was the record owner of the Hialeah Property. Once again, Cartaya immediately informed Marianella about the situation. Marianella responded on July 26, 2000, telling Cartaya that the Fannie Mae-Hornedo transaction was scheduled to close on July 28, 2000. On July 27, 2000, Marianella faxed to Cartaya a copy of the Settlement Statement that had been prepared for the Fannie Mae sale to Hornedo. The Settlement Statement, which confirmed that the intended closing date was indeed July 28, 2000, showed that Hornedo was under contract to pay $82,000 for the Hialeah Property——the property which he would then sell to Granados for $195,000, if all the pending transactions closed as planned. Upon receipt of this Settlement Statement, Cartaya proceeded to complete the appraisal. In the resulting Appraisal Report, which was finished on August 7, 2000,5 Cartaya estimated that the market value of the Hialeah Property, as of July 27, 2000, was $195,000. The Department failed to prove by clear and convincing evidence that the house at the Hialeah Property was, in fact, constructed from CBS and poured concrete, as alleged.6 At the time Cartaya gave the Department a copy of her workfile for this appraisal assignment, the workfile did not contain a copy of the competed Appraisal Report.7 (The workfile did, however, include a working draft of the Appraisal Report.) The allegation, set forth in paragraph 21 of the Administrative Complaint, that Cartaya "failed to analyze the difference between comparable one's listing price, $145,000, and the sale price, $180,000," was not proved by clear and convincing evidence. First, there is no nonhearsay evidence in the record that "comparable one" was, in fact, listed at $145,000 and subsequently sold for $180,000. Instead, the Department offered a printout of data from the Multiple Listing Service ("MLS"), which printout was included in Cartaya's workfile. The MLS document shows a listing price of $145,550 for "comparable one" and a sales price of $180,000 for the property——but it is clearly hearsay as proof of these matters,8 and no predicate was laid for the introduction of such hearsay pursuant to a recognized exception to the hearsay rule (including Section 475.28(2)). Further, the MLS data do not supplement or explain other nonhearsay evidence.9 At best, the MLS document, which is dated July 25, 2000, establishes that Cartaya was on notice that "comparable one" might have sold for more than the asking price, but Cartaya has not been charged with overlooking MLS data. Second, in any event, in her Report History, Cartaya stated that she had analyzed the putative asking price/sales price differential with respect to "comparable one" and concluded that there was no need to make adjustments for this because available data relating to other sales persuaded her that such differentials were typical in the relevant market. Cartaya's declaration in this regard was not persuasively rebutted. Since the evidence fails persuasively to establish that Cartaya's conclusion concerning the immateriality of the putative asking price/sales price differential as a factor bearing on the value of "comparable one" was wrong; and, further, because the record lacks clear and convincing evidence that an appraiser must, in her appraisal report, not only disclose such information, even when deemed irrelevant to the appraisal, but also expound upon the grounds for rejecting the data as irrelevant, Cartaya cannot be faulted for declining to explicate her analysis of the supposed price differential in the Appraisal Report. The evidence is insufficient to prove, clearly and convincingly, that Cartaya "failed or refused to explain or adjust for "comparable three"'s zoning violations." This allegation depends upon the validity of its embedded assumption that there were, in fact, "zoning violations."10 There is, however, no convincing evidence of such violations in the instant record. Specifically, no copy of any zoning code was offered as evidence, nor was any convincing nonhearsay proof regarding the factual condition of "comparable three" offered. Cartaya cannot be found guilty of failing or refusing to explain or adjust for an underlying condition (here, alleged "zoning violations") absent convincing proof of the underlying condition's existence-in-fact. Case No. 04-1148 In the Administrative Complaint that initiated DOAH Case No. 04-1148, the Department charged Cartaya with numerous statutory violations relating to her appraisals of residences located at 1729 Northwest 18th Street, Miami, Florida ("1729 NW 18th St") and 18032 Northwest 48th Place, Miami, Florida ("18032 NW 48th Place"). These appraisals will be examined in turn. With regard to 1729 NW 18th St, the Department alleged as follows: On or about April 29, 1999, Respondent developed and communicated a Uniform Residential Appraisal Report for the property commonly known as 1729 NW 18th Street, Miami, Florida. A copy of the report is attached hereto and incorporated herein as Administrative Complaint Exhibit 1. On or about March 18, 2001, David B. C. Yeomans, Jr., A.S.A., and Mark A. Cannon, A.S.A., performed a field review of the report. A copy of the review is attached hereto and incorporated herein as Administrative Complaint Exhibit 2. The review revealed that unlike it states in the Report, the subject property’s zoning was not "Legal," but "legal noncomforming (Grandfathered use)." The review further revealed that Respondent failed to report that if the improvements sustain extensive damage or demolishment or require renovation which exceeds 50% of the depreciated value, it is likely that a variance would be necessary to build a new dwelling. The review further revealed that Respondent failed to report that subject property has two underground gas meters. The review further revealed that unlike Respondent states in Report, subject property’s street has gutters and storm sewers along it. The review further revealed that subject property is a part of a "sub-market" within its own neighborhood due to its construction date of 1925. Respondent applied three comparables built in 1951, 1953, and 1948, respectively, all of which reflect a different market, without adjustment. Respondent applied comparables which have much larger lots than the subject, which is of a non-conforming, grandfathered use. Respondent failed to adjust for quality of construction even though subject is frame and all three comparables are of concrete block stucco construction. Respondent failed to note on the Report that comparables 1 and 2 had river frontage. Respondent failed to adjust comparables 1 and 2 for river frontage. The review revealed that at the time of the Report there were at least five sales more closely comparable to Subject than those which Respondent applied. On the foregoing allegations, the Department brought the following three counts against Cartaya: COUNT I Based upon the foregoing, Respondent is guilty of having failed to use reasonable diligence in developing an appraisal report in violation of Section 475.624(15), Florida Statutes. COUNT II 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 III Based upon the foregoing, Respondent is guilty of culpable negligence in a business transaction in violation of Section 475.624(2), Florida Statutes. Cartaya admitted the allegations set forth in paragraph 4 of the Administrative Complaint. Those undisputed allegations, accordingly, are accepted as true. The rest of the allegations about this property were based upon a Residential Appraisal Field Review Report (the "Yeomans Report") that David B.C. Yeomans, Jr. prepared in March 2001 for his client Fannie Mae. The Yeomans Report is in evidence as Petitioner's Exhibit 2, and Mr. Yeomans testified at hearing. Mr. Yeomans disagreed with Cartaya's opinion of value regarding 1729 NW 18th St, concluding that the property's market value as of April 29, 1999, had been at the low end of the $95,000-to-$115,000 range, and not $135,000 as Cartaya had opined. The fact-findings that follow are organized according to the numbered paragraphs of the Administrative Complaint. Paragraphs 6 and 7. The form that Cartaya used for her Appraisal Report regarding 1729 NW 18th St contains the following line: Zoning compliance Legal Legal nonconforming (Grandfathered use) Illegal No zoning Cartaya checked the "legal" box. Mr. Yeomans maintains that she should have checked the box for "legal nonconforming" use because, he argues, the property's frontage and lot size are smaller than the minimums for these values as prescribed in the City of Miami's zoning code. The Department failed, however, to prove that Cartaya checked the wrong zoning compliance box. There is no convincing nonhearsay evidence regarding either the frontage or the lot size of 1729 NW 18th St.11 Thus, there are no facts against which to apply the allegedly applicable zoning code provisions. Moreover, and more important, the Department failed to introduce into evidence any provisions of Miami's zoning code. Instead, the Department elicited testimony from Mr. Yeomans regarding his understanding of the contents of the zoning code. While Mr. Yeomans' testimony about the contents of the zoning code is technically not hearsay (because the out-of-court statements, namely the purported code provisions, consisted of non-assertive declarations12 that were not offered for the "truth" of the code's provisions13), such testimony is nevertheless not clear and convincing evidence of the zoning code's terms.14 And finally, in any event, Cartaya's alleged "mistake" (which allegation was not proved) was immaterial because, as Mr. Yeomans conceded at hearing, in testimony the undersigned credits as true, the alleged "fact" (again, not proved) that 1729 NW 18th St constituted a grandfathered use would have no effect on the property's market value. Paragraphs 8 and 9. The Yeomans Report asserts that "[b]ased on a physical inspection as of March 17, 2001[,] it appears that the site has two underground gas meters and there were gutters and storm sewers along the subject's street." It is undisputed that Cartaya's Appraisal Report made no mention of underground gas meters or storm water disposal systems. While the Department alleged that Cartaya's silence regarding these matters constituted disciplinable "failures," it offered no convincing proof that Cartaya defaulted on her obligations in any way respecting these items. There was no convincing evidence that these matters were material, affected the property's value, or should have been noted pursuant to some cognizable standard of care. Paragraphs 10 and 11. The contention here is that Cartaya chose as comparables several homes that, though relatively old (average age: 48 years), were not as old as the residence at 1729 NW 18th St (74 years). Mr. Yeomans asserted that older homes should have been used as comparables, and several such homes are identified in the Yeomans Report. The undersigned is persuaded that Mr. Yeomans' opinion of value with respect to 1729 NW 18th St is probably more accurate than Cartaya's. If this were a case where the value of 1729 NW 18th St were at issue, e.g. a taking under eminent domain, then Mr. Yeomans' opinion might well be credited as against Cartaya's opinion in making the ultimate factual determination. The issue in this case is not the value of 1729 NW 18th St, however, but whether Cartaya committed disciplinable offenses in appraising the property. The fact that two appraisers have different opinions regarding the market value of a property does not mean that one of them engaged in misconduct in forming his or her opinion. Based on the evidence presented, the undersigned is not convinced that Cartaya engaged in wrongdoing in connection with her appraisal of 1729 NW 18th St, even if her analysis appears to be somewhat less sophisticated than Mr. Yeomans'. Paragraphs 12 through 16. The allegations in these paragraphs constitute variations on the theme just addressed, namely that, for one reason or another, Cartaya chose inappropriate comparables. For the same reasons given in the preceding discussion, the undersigned is not convinced, based on the evidence presented, that Cartaya engaged in wrongdoing in connection with her appraisal of 1729 NW 18th St, even if he is inclined to agree that Mr. Yeomans' opinion of value is the better founded of the two. With regard to 18032 NW 48th Place, the Department alleged as follows: On or about August 9, 1999, Respondent prepared and communicated a Uniform Residential Appraisal Report for the Property commonly known as 18032 NW 48th Place, Miami, Florida, 33055. (Report) A copy of the Report is attached hereto and incorporated herein as Administrative Complaint Exhibit 3. On the Report, Respondent incorrectly stated that the property is in a FEMA Zone X flood area. In fact, the property is in an AE Zone. In Report, Respondent states: "Above sales were approximately adjusted per market derived value influencing dissimilarities as noted." Respondent failed to state in Report, that comparables 1 and 3 have in-law quarters. In [the] Report, Respondent represented comparable 1 had one bath, where in fact it has at least two. In [the] Report, Respondent failed to state that comparable 1 has two in-law quarters. In [the] Report, Respondent stated that comparable 3 is a two-bath house with an additional bath in the in-law quarters. On the foregoing allegations, the Department brought the following three counts against Cartaya: COUNT IV 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 V Based upon the foregoing, Respondent is guilty of having failed to use reasonable diligence in developing an appraisal report in violation of Section 475.624(15), Florida Statutes. COUNT VI Based upon the foregoing, Respondent is guilty of culpable negligence in a business transaction in violation of Section 475.624(2), Florida Statutes. Cartaya admitted the allegations set forth in paragraphs 18 and 20 of the Administrative Complaint. Those undisputed allegations, accordingly, are accepted as true. The rest of the allegations about this property were based upon a Residential Appraisal Field Review Report (the "Marmin Report") that Frank L. Marmin prepared in May 2001 for his client Fannie Mae. The Marmin Report is in evidence as Petitioner's Exhibit 5. Mr. Marmin did not testify at hearing, although his supervisor, Mark A. Cannon, did. Mr. Marmin disagreed with Cartaya's opinion of value regarding 18032 NW 48th Place, concluding that the property's market value as of August 9, 1999, had been $100,000, and not $128,000 as Cartaya had opined. The fact-findings that follow are organized according to the numbered paragraphs of the Administrative Complaint. Paragraph 19. Cartaya admitted that she erred in noting that the property is located in FEMA Flood Zone "X," when in fact (she agrees) the property is in FEMA Flood Zone "AE." She did, however, include a flood zone map with her appraisal that showed the correct flood zone designation. Cartaya's mistake was obviously unintentional——and no more blameworthy than a typographical error. Further, even the Department's expert witness conceded that this minor error had no effect on the appraiser's opinion of value. Paragraphs 20 through 24. The Department asserts that two of Cartaya's comparables were not comparable for one reason or another. The Department failed clearly and convincingly to prove that its allegations of fact concerning the two comparables in question are true. Thus, the Department failed to establish its allegations to the requisite degree of certainty. Ultimate Factual Determinations Having examined the entire record; weighed, interpreted, and judged the credibility of the evidence; drawn (or refused to draw) permissible factual inferences; resolved conflicting accounts of what occurred; and applied the applicable law to the facts, it is determined that: Applying the law governing violations arising under Section 475.624(2), Florida Statutes, to the historical facts established in the record by clear and convincing evidence, it is found as a matter of ultimate fact that Cartaya did not commit culpable negligence in connection with the appraisals at issue. Applying the law governing violations arising under Section 475.624(15), Florida Statutes, to the historical facts established in the record by clear and convincing evidence, it is found as a matter of ultimate fact that Cartaya did not fail to exercise reasonable diligence in developing the appraisals at issue. Applying the law governing violations arising under Section 475.624(14), Florida Statutes, to the historical facts established in the record by clear and convincing evidence, it is found as a matter of ultimate fact that, in connection with the Appraisal Report relating to the Hialeah Property, Cartaya did commit one unintentional violation of Standards Rule 2- 2(b)(vi) of Uniform Standards of Professional Appraisal Practice and two unintentional violations of Standards Rule 2-2(b)(ix).
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Board enter a final order finding that: As to Case No. 04-1148, Cartaya is not guilty on Counts I through VI, inclusive; As to Case No. 04-1680, Cartaya is not guilty on Counts I, II, and IV; she is, however, guilty, under Count III, of one unintentional violation of Standards Rule 2-2(b)(vi) and two unintentional violations of Standards Rule 2-2(b)(ix). As punishment for the violations established, Cartaya's certificate should be suspended for 30 calendar days, and she should be placed on probation for a period of one year, a condition of such probation being the successful completion of a continuing education course in USPAP. In addition, Cartaya should be ordered to pay an administrative fine of $500. DONE AND ENTERED this 10th day of November, 2004, in Tallahassee, Leon County, Florida. JOHN G. VAN LANINGHAM 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 10th day of November, 2004.
Findings Of Fact Petitioner and Respondent stipulated at formal hearing to Paragraphs 1- 6 of the Administrative Complaint, (TR-5-6) and it is accordingly found that: Petitioner seeks to suspend, revoke or take other disciplinary action against Respondent as licensee and against his license to practice the real estate brokerage business under the laws of the State of Florida. Respondent is now and was at all times alleged in the administrative complaint a licensed real estate broker having been issued license number 0191613. The last license issued was as a broker c/o Cluett Realty, Inc., 4720 Palm Beach Boulevard, Fort Myers, Florida 33905. On about July 14, 1983, Respondent received a check in the amount of $400.00 from Mary Snodgrass, a salesman, who at the time was associated with Respondent. Snodgrass had received the money from Robert James. James had submitted four contracts which were accepted for purchase of four duplexes listed with Respondent. The $400.00 represented a deposit of $100.00 on each of the four contracts. When the check was entrusted to Respondent, Snodgrass stated that the buyer had requested the check be held a couple of days before depositing into escrow to insure it would clear. Respondent indicated this was wrong and the check should be deposited immediately. 1/ The check was not deposited into Respondent's escrow account, but, was held by Respondent until September 15, 1983, two months after initial receipt of the check. The check presented by Mr. James (buyer) to Mrs. Snodgrass (saleswoman) was drawn on the Fort Myers Barnett Bank and on its face represents it is drawn on an account in the name "Clara A. James For: Caj-Raj-Casa De Chihuahua's." There is no indicator on the check itself that Robert A. James is an appropriate signatory on this account. At hearing, Mr. James represented that he was a proper signatory on the account because Clara A. James is his wife. Mrs. Snodgrass represented that she knew Mr. James had this authority but there was no predicate laid for this knowledge on her part and there is nothing about the check itself which would convey such knowledge to someone not intimate with the James' household, nor does the check itself reveal any relationship between Mr. James and "Caj-Raj-Casa De Chihuahua' s." At the time Snodgrass submitted the check to Respondent, she informed Respondent that it was possible that the check would not clear the bank due to insufficient funds. At the time of his conversation with Mrs. Snodgrass on July 14, Respondent was aware of previous problems arising from failure of an earlier check written by Mr. James for rent to one of Respondent's other clients to clear the bank. Respondent was also aware that Mr. James had refused to vacate the premises which James, James' wife, and approximately 80 Chihuahuas occupied by rental from this other client. Respondent perceived Mr. James resented Respondent due to Respondent's involvement in getting the James entourage out of the rental properties so that Respondent's other client as seller could close sale of that property to a third party buyer. Accordingly, Respondent retained the check when it was given him by Mrs. Snodgrass for a few minutes to think about the situation. He then returned it to her and explained it was an inappropriate deposit because it did not represent cash if they knew at the time it was tendered that it might be returned for insufficient funds. He told Mrs. Snodgrass to either secure a check which would clear or to inform both potential buyer and sellers that there was no deposit placed in escrow on the four contracts. Mrs. Snodgrass denied that the check was returned to her by Respondent or that this conversation ever took place; she assumed the check would be held by Respondent until evening and in the evening she went out and got the sellers to sign the 4 contracts previously signed by James. Mrs. Snodgrass placed the signed contracts in a file drawer in Respondent's office and never again initiated any title work or any conversation with Respondent about the transaction. The testimony of Mrs. Weise and Mrs. Cluett support the material particulars of Respondent's version of this second interchange between Mrs. Snodgrass and Respondent. Mr. James testified that he did, indeed, go the following day (July 15) to the bank to transfer funds if needed, but did not then notify Mrs. Snodgrass or Respondent because the money transfer was not necessary. Upon this evidence and due to the credibility problems recited in footnote 1, supra and in Findings of Fact Paragraph 8 infra, the Respondent's version of this interchange is accepted over that of Mrs. Snodgrass and provides additional, but not contradictory, information to Finding of Fact Paragraph 1-e as stipulated by the parties. In early September, Mrs. Snodgrass secured employment with Barbara Ware Realty, a competitor of Respondent. She then turned in all of her keys, gear, and papers to Cluett Realty. Shortly thereafter, Helen Weise, secretary to Respondent, discovered the July 14, 1983, check on what had been Mrs. Snodgrass's desk. This discovery is confirmed by both Respondent and Mrs. Weise. Respondent knew Mrs. Snodgrass and Mr. James were personal friends. He telephoned Mrs. Snodgrass about the status of the James' transaction when the check was discovered. Mrs. Snodgrass admitted she thereafter called Mr. James to verify the status of the transaction and then called Respondent to tell him she thought the sale would go through, but she now denies telling Respondent that the July 14, 1983, check was good or even that Respondent mentioned the check when he called her the first time. Respondent then deposited the check into his escrow account the next day, September 15, 1983. He immediately placed the request for title search and insurance. Thereafter, two duplexes out of the four involved in the four James contracts with Cluett Realty were sold by Mrs. Snodgrass through her new employer, Barbara Ware Realty, and two were sold by Mary Cluett, Respondent's wife, through Cluett Realty. During the period from July 14, 1983, until September 15, 1983, Mr. James was apparently aware that the check submitted to Cluett Realty had never been deposited by Cluett Realty because it did not show up in monthly bank statements. After September, Mr. James clearly was further aware of what was going on because he admits to trying to get Mary Snodgrass to pursue the transaction under her new employer's auspices, despite Cluett's retaining the exclusive listing for the sellers of the properties. It was not established whether or not the sellers were misled by Respondent's failure to immediately deposit the July 14, 1983, check, but Mr. James testified that when Respondent approached him about refunding his deposit or at least a portion thereof, he, (Mr. James), told the Respondent to keep it or give it to the sellers or at least not to give it back to him due to all the inconvenience. Mr. James and Mrs. Snodgrass were friends on July 14, 1983. They became friendlier thereafter. Apparently, in early September, Mrs. Snodgrass left Respondent's employ upon very unfriendly terms. The terms may be characterized as "unfriendly" even if one accepts Mrs. Snodgrass' version that her job hunt was successful before she was fired by Respondent and therefore she should be viewed as quitting upon being asked by Respondent to resign. Respondent has previously filed an unsuccessful complaint with the Department of Professional Regulation against Mrs. Snodgrass. It was she who initiated the complaint giving rise to these instant proceedings against Respondent. Mrs. Snodgrass' resentment of Respondent's filing a complaint against her was evident in her demeanor on the stand. An attempt at formal hearing to impeach Respondent's credibility upon the basis of a supposed prior admission to Petitioner's investigator that Respondent forgot to deposit the crucial check and upon the basis of Respondent's July 13, 1984, letter to the Department of Professional Regulation (P-7) left Respondent's credibility intact. When Investigator Potter's testimony as a whole is compared with Respondent's letter as a whole in light of Potter's investigation of three separate complaints over a period of many months 2/ there is no material variation of Respondent's representations. Also, what was "forgotten" and when it was forgotten is vague and immaterial in light of consistent information supplied to the investigator by Respondent that there was a request to hold the July 14, 1983, check for a couple of days due to insufficient funds.
Recommendation Upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That the Florida Real Estate Commission enter a Final Order dismissing all charges against Respondent. DONE and ORDERED this 14th day of August, 1985, in Tallahassee, Florida. ELLA JANE P. DAVIS 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 14th day of August, 1985.
The Issue Whether the Respondent committed the violations stated in the Amended Administrative Complaint filed September 30, 2009, 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 Florida Real Estate Appraisal Board ("Board") is the entity responsible for licensing, regulating, and imposing discipline upon real estate appraisers operating in Florida. See §§ 475.613(2) and .624, Fla. Stat. (2007). The Department is the state agency responsible for investigating complaints and, upon a finding of probable cause by the Board, issuing administrative complaints and prosecuting disciplinary actions involving real estate appraisers in Florida. See § 455.225(1)(a), (4), and (6), Fla. Stat. At all times pertinent to these proceedings, Mr. Facendo was a state-certified real estate appraiser, having been issued license number RD-2598, and his business office was located in Plantation, Florida. In August 2007, Mr. Facendo's office received a request from University Capital Funding, a mortgage broker, for an appraisal on property known as 901 Southwest Worchester Lane, Port St. Lucie, Florida 34953 ("Worchester Lane property"). After receiving the request, Mr. Facendo consulted the Multiple Listing Service with respect to the Worchester Lane property and the neighborhood. Mr. Facendo then went to the Worchester Lane property, measured the property, inspected the interior and exterior of the property, and looked at the homes that were comparable to the Worchester Lane property. Mr. Facendo returned to his office and analyzed the data he had collected during the site visit. He used print sources and online services available in his office to verify the flood zones, neighborhood composition, land sales, and other information necessary to complete the appraisal. Mr. Facendo prepared the Appraisal Report for the Worchester Lane property and provided it to University Capital Funding. Mr. Facendo also compiled a workfile containing documentation he used to develop the Appraisal Report. The Appraisal Report contained three errors:2 Mr. Facendo included the incorrect zoning classification for the Worchester Lane property, identifying it as RM-143, residential multi-family, rather than the correct RS-2, residential; he identified the wrong location for the Worchester Lane property on the map included with the Appraisal Report,3 and he failed to include the lot number in the legal description of the property. Mr. Facendo stated in the Appraisal Report that the property was not in a FEMA (Federal Emergency Management Association) special flood hazard area, and he referenced FEMA Map # 12111C0290F, dated August 19, 1991. He did not include a copy of the map in the workfile he compiled when preparing the Appraisal Report. Mr. Facendo included in the Appraisal Report information regarding neighborhood characteristics, one-unit housing trends, one-unit housing, and present land use percentage. He indicated that the neighborhood was over 75 percent built-up and stable; that one-unit housing trends showed that the supply and demand for housing in the neighborhood were in balance, with marketing conditions partially stable to declining, and time exposure typically between three-to-six months; that the one-unit housing prices ranged from a low of $188,000.00 for new housing to a high of $450,000.00 for housing six years old, with a median of $305,000.00 for housing three years old; and that the present land use consisted of 80 percent one-unit housing and 20 percent commercial. Mr. Facendo did not include in his workfile documentation to support this information. Mr. Facendo concluded that the value of the Worchester Lane property was $305,000.00 when calculated under the Sales Comparison Approach method. In the Appraisal Report, Mr. Facendo identified 88 comparable properties currently for sale in the neighborhood, ranging in price from $175,000.00 to $360,000.00, and 72 comparable sales in the neighborhood within the previous 12 months, ranging in price from $188,000.00 to $450,000.00. Mr. Facendo did not include in his workfile documentation to support the number of properties currently for sale or the number of properties sold within the past 12 months. Mr. Facendo concluded that the value of the Worchester Lane property was $296,990.00 when calculated under the Cost Approach to Value method. Mr. Facendo placed a value of $60,000.00 on the property's home site. He calculated the square footage replacement cost new using the cost estimator in his online copy of the Marshall & Swift Residential Cost Handbook and noted in the Appraisal Report that this was the source of his cost data. Mr. Facendo also noted as a comment on the cost approach that he used the Marshall & Swift Residential Cost Handbook "& local builders [estimates]" as the sources of the cost figures he used to estimate the value of the Worchester Lane property using the cost approach. Finally, Mr. Facendo also consulted the South Florida 2007 Blue Book Construction and the 2007 National Building Cost Manual for cost data, but he did not mention these sources in the Appraisal Report. Mr. Facendo did not include in the workfile he compiled for the Appraisal Report documentation to support his opinion of site value, copies of the Marshall & Swift online calculations of the replacement cost new, copies of the local and national builder's data he used in his calculations, or copies of the Marshall & Swift data to support the square footage prices he used to calculate the value of the Worchester Lane property. Mr. Facendo signed the Appraisal Report on August 22, 2007, and noted on the Appraisal Report that it was effective August 22, 2007. In October 2007, JP Morgan Chase Bank, N.A.,4 ordered a review of Mr. Facendo's August 22, 2007, Appraisal Report of the Worchester Lane property. The review appraiser, John Nickerson, prepared a One-Unit Residential Appraisal Field Review Report ("Review Appraisal"), which he signed and dated October 8, 2007. In the review report, Mr. Nickerson opined that there were a number of errors in Mr. Facendo's Appraisal Report, including the zoning classification, the legal description, and the location of the property. Mr. Nickerson also criticized the comparable properties used by Mr. Facendo in the Sales Comparison section of the Appraisal Report and the site value assigned by Mr. Facendo in the Cost Approach section of the Appraisal Report. At some point, Mr. Facendo was advised by Chase Home Lending of the results of Mr. Nickerson's Review Appraisal, and he was provided with a copy of the report.5 In a letter to Chase Home Lending dated August 25, 2008, Mr. Facendo responded to the concerns raised by Mr. Nickerson in the Review Appraisal about Mr. Facendo's Appraisal Report. Mr. Facendo explained the basis for his choice of comparable properties and for the value he placed on the building site, and he discussed his reasons for believing that the conclusions regarding comparable properties and site valuation reached by Mr. Nickerson were flawed. As directed by an employee of Chase Home Lending, Mr. Facendo modified his August 22, 2007, Appraisal Report to include the correct zoning classification of RS-2, residential. Mr. Facendo was expressly directed by the employee of Chase Home Lending not to change anything on the face of the original Appraisal Report except for the zoning classification. Mr. Facendo followed this direction, and he did not revisit the Worchester Lane property or change any other information in the original Appraisal Report. The corrected Appraisal Report was, therefore, not a new appraisal report based on new information gathered in August 2008 regarding the Worchester Lane property. The corrected Appraisal Report was not effective in August 2008, and did not supersede the original Appraisal Report of August 22, 2007, except for the zoning classification correction.6 Mr. Facendo submitted the corrected Appraisal Report on the Worchester Lane property to Chase Home Lending on or about August 25, 2008, but he did not alter the original signature date or effective date of August 22, 2007. Mr. Facendo did not, however, include a copy of the original Appraisal Report in the workfile that he transmitted to the Department during the course of its investigation; the workfile contained a copy of only the corrected Appraisal Report. In signing the Appraisal Report, Mr. Facendo certified and agreed that he had complied with the USPAP that were effective when the report was prepared in August 2007. The Ethics Rule of the USPAP (2006) provides in pertinent part as follows: Record Keeping An appraiser must prepare a workfile for each appraisal, appraisal review, or appraisal consulting assignment. The workfile must include: the name of the client and the identity, by name or type, or any other intended users; true copies of any written reports, documented on any type of media; summaries of any oral reports or testimony, or a transcript of testimony, including the appraiser's signed and dated certification; and all other data, information, and documentation necessary to support the appraiser's opinions and conclusions and to show compliance with this Rule and all other applicable Standards, or references to the location(s) of such other documentation. USPAP (2006) Standards Rule 1-1(c) provides: In developing a real property appraisal, an appraiser must: * * * (c) not render appraisal services in a careless or negligent manner, such as by making a series of errors that, although individually might not significantly affect the results of an appraisal, in the aggregate affects the credibility of those results. USPAP (2006) Standards Rule 1-4(a) and (b) provides: In developing a real property appraisal, an appraiser must collect, verify, and analyze all information necessary for credible assignment results. When a sales comparison approach is necessary for credible assignment results, an appraiser must analyze such comparable sales data as are available to indicate a value conclusion. When a cost approach is necessary for credible assignment results, an appraiser must: develop an opinion of site value by an appropriate appraisal method or technique; analyze such comparable cost data as are available to estimate the cost new of the improvements (if any); and analyze such comparable data as are available to estimate the difference between the cost new and the present worth of the improvements (accrued depreciation). USPAP (2006) Standards Rule 2-1(a) provides: Each written or oral real property appraisal report must: clearly and accurately set forth the appraisal in a manner that will not be misleading[.] USPAP (2006) Standards Rule 2-2(b)(viii) provides: Each written real property appraisal report must be prepared under one of the following three options and prominently state which option is used: Self-Contained Appraisal Report. Summary Appraisal Report, or Restricted Use Appraisal Report.[footnote omitted.] * * * The content of a Summary Appraisal Report must be consistent with the intended use of the appraisal and, at a minimum: * * * (viii) summarize the information analyzed, the appraisal methods and techniques employed, and the reasoning that supports the analyses, opinions, and conclusions; exclusion of the sales comparison approach, cost approach, or income approach must be explained.
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 all counts of the Amended Administrative Complaint dated September 30, 2009. DONE AND ENTERED this 4th day of March, 2010, in Tallahassee, Leon County, Florida. 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 4th day of March, 2010.
