The Issue The issues to be determined are whether Respondent committed the violations alleged in the Amended Administrative Complaints and if so, what penalty should be imposed?
Findings Of Fact Petitioner is the state agency charged with the licensing and regulation of real estate appraisers in the State of Florida pursuant to section 20.165 and chapters 455 and 475, part II, Florida Statutes. At all times material to the allegations in the Amended Administrative Complaints, Respondent has been a certified residential real estate appraiser, and has been issued license number RD 1226. Respondent has been licensed since 1991 and has no history of disciplinary action taken against his license. He trades as Rhea Appraisals, Inc., located in Gainesville, Florida. For the period from October 23, 2009, through May 12, 2010, Respondent was the supervising appraiser for registered trainee appraiser Leslie Corey Bullard. From October 8, 2009, through at least July 2011, he also supervised registered trainee appraiser Beverly Sanders Archer. Respondent was Mr. Bullard's first supervising appraiser. The Program Alachua County elected to participate in the federally- funded Neighborhood Stabilization Program ("NSP"), which is administered on the state level by the Department of Community Affairs. To that end, Alachua County contracted with Meridian Community Services Group ("Meridian") to assist in the implementation of the program. In a nutshell, the NSP is a program by which the Department of Housing and Urban Development provides funding for local governments to acquire properties in order to rehabilitate them and re-sell them to low-to-moderate-income households, or to rent them to very low-income households. As explained at hearing, properties that are acquired through the program cannot be sold for more than the costs of acquisition, rehabilitation, and "soft costs." As a result, the local government can only purchase the property at one percent or below the appraised value. In 2010, Alachua County solicited bids for appraisers to appraise properties that it considered buying through the NSP. Rhea Appraisals, Inc., obtained a contract to appraise 20 of the properties for the program. Corey Bullard was involved in the procurement of the contract to perform the appraisals. The listing price for the properties was generally the price listed in the multiple listing service ("MLS"). Alachua County had instructed that the offer for the properties considered for purchase was to be at the listing price. Once the appraisal was performed, if it appraisal did not come in at within one percent of the listing price, then the offer is amended to reflect one percent below the appraisal. If the seller does not agree to the change, that property is not purchased. Rhea Appraisals, Inc., was to be paid $225.00 for each property appraised. Payment for the appraisal was not dependant on the results of the appraisal. At issue in these cases are the appraisals for three properties. For each of these properties, two appraisals were actually performed. The Initial Appraisals An appraisal was communicated by Rhea Appraisals, Inc., for a property located at 3009 NE 11th Terrace, Gainesville, Florida (Property 1, related to Case No. 11-3007), on April 8, 2010 (Petitioner's Exhibit 13). The appraisal report is signed by Cory Bullard and by Respondent as his supervisor, and the front summary sheet lists Corey Bullard as the appraiser. The appraisal indicates that the inspection of the property and of the comparable sales took place on April 2, 2010, which is listed as the effective date of the report, and the appraisal is signed by both Mr. Bullard and Respondent on April 8, 2010. The appraisal report provides an opinion of value of $52,000. The list price for the property, and thus the offer made by the County, was $65,000. The Comments on Appraisal and Report Identification state that "Corey Bullard provided assistance in the gathering of data, photographing and entering data into this report." Included in the appraisal's certification are the following statements: My employment and/or compensation for performing this appraisal or any future or anticipated appraisals was not conditioned on any agreement or understanding, written or otherwise, that I would report or present analysis supporting a predetermined specific value, a predetermined minimum value, a range or direction in value, a value that favors the cause of any party, or the attainment of a specific result or occurrence of a specific subsequent event (such as approval of a pending mortgage loan application). I personally prepared all conclusions and opinions about the real estate that were set forth in this appraisal report. If I relied on significant real property appraisal assistance from any individuals in the performance of this appraisal or the preparation of this appraisal report, I have named such individual(s) and disclosed the specific tasks performed in this appraisal report. I certify that any individual so named is qualified to perform the tasks. I have not authorized anyone to make a change to any item in this appraisal report; therefore any change made to this appraisal is unauthorized and I will take no responsibility for it. An appraisal report for a property located at 12017 NW 164th Terrace, Alachua, Florida (Property 2) was communicated on April 6, 2010 (Petitioner's Exhibit 5, related to Case No. 11- 3008). The appraisal report is signed by Corey Bullard and by Respondent as his supervisor, and the front summary sheet lists Mr. Bullard as the appraiser. The appraisal indicates that the inspection of the property and of the comparable sales took place on April 2, 2010, which is listed as the effective date of the appraisal, and the appraisal is signed by both Respondent and Mr. Bullard on April 6, 2010. This appraisal report provides an opinion of value of $75,000. The list price for the property, and thus the offer made by the County, was $105,000. The Comments on Appraisal and Report Identification state that "Corey Bullard provided assistance in the gathering of data, photographing and entering date into this report. Appraiser won the bid for 20 properties from Meridian Community Services for $225 each." Like the report for Property 1, the appraisal certification contained the statements identified in finding of fact 15. Rhea Appraisals, Inc., also issued an appraisal report for property located at 2923 NE 11th Terrace, Gainesville, Florida (Property 3, related to Case No. 11-3009), signed by Respondent on April 8, 2010 (Petitioner's Exhibit 10). The report indicates that the date of the inspection of the property and of the comparable sales, and effective date of the report, is April 5, 2010. This appraisal report provides an opinion of value of $54,000. The list price for the property, and thus the offer made by the County, was $69,900. The Comments on Appraisal and Report Identification state that "Beverly Archer, state registered trainee appraiser #RT2255 provided assistance in the gathering of data, measuring and photographing the subject dwelling, and drafting information into the URAR." Like the report for Properties 1 and 2, the appraisal certification contained the statements identified in finding of fact 15. The Second Appraisals Subsequently, a second appraisal was developed by Rhea Appraisals, Inc., for each of these properties. Property 1 (11-3007) A second report developed for Property 1 (Petitioner's Exhibit 14), has an invoice attached to the front, and the summary sheet lists Hugh Rhea as the appraiser. The appraisal gives an opinion of value of $66,000, compared to the County's offer of $65,000. The second appraisal lists the effective date of the appraisal as April 2, 2010, and the date of the signature and report as April 8, 2010. These dates are the same as those listed on the appraisal with value of $52,000. There are no notations in the Comments on Appraisal and Report Identification section of the report, and while the appraiser's certification includes the same statement quoted as paragraph 19 in finding of fact 15, the first statement, although similar, states: 6. I was not required to report a predetermined value or direction in value that favors the cause of the client or any related party, the amount of the value estimate, the attainment of a specific result, or the occurrence of a subsequent event in order to receive my compensation and/or employment for performing the appraisal. I did not base the appraisal report on a requested minimum valuation, a specific valuation, or the need to approve a specific mortgage loan. No explanation is given as to why the second report was generated. However, the second report contains the following additional differences: On page one of the report, in response to the question, "[a]re there any physical deficiencies or adverse conditions that affect the livability, soundness, or structural integrity of the property?", the statement "[s]ubject is not functional in the current state as of inspection date" has been deleted in the second appraisal. In the first report, the condition of comparable sale 1 is listed as "superior." In the second report, it is listed as "inferior." In the first report, the condition for comparable sale 2 is listed as "average." In the second report, it is listed as "inferior." In the first report, the condition of comparable sale 4 is listed as "superior." In the second report, it is listed as "average." In the first report, the condition of what was described as comparable sale 6 is listed as "average." In the second report, the original comparable sale 5 is deleted and comparable sale 6 is listed as comparable 5. Its condition is described as "inferior." Respondent's work papers to not provide an explanation for the changes made from the first report to the second report for this property. Property 2 (No. 11-3008) The second appraisal for Property 2 has an invoice for $225 attached to the front, and the summary sheet lists Hugh Rhea as the appraiser, as opposed to Corey Bullard. The opinion of value is $105,000, which matches the initial offer by the County. The report contains two different effective dates: on page 2 the report states that the effective date is April 2, 2010, while the signature block on page 6 indicates that the effective date is April 6, 2010. The date of the signature and report is April 14, 2010. The Comments on Appraisal and Report Identification are the same as those listed in the initial report, and the appraiser's certification includes the same statements quoted in paragraph 15. No explanation is given as to why the second report was generated. However, the second report contains the following differences: In the first report, the estimated cost to cure the stated deficiencies was listed as $20,000.00. In the second report, this amount is reduced to $15,000.00. In the first report, the condition adjustment for comparable sale 1 is -$27,389.00, for a gross adjustment of 41 percent. In the second report, the condition adjustment was -$6,389, for a gross adjustment of 23.2 percent. The location adjustment for comparable sale 1 is changed from -$10,000 in the first report to no adjustment at all in the second report. The condition adjustment in the first report for comparable sale 2 is -$40,000.00. In the second report, it is listed as -$25,000.00. The location description for comparable sale 2 is listed in the first report as "urban/sup." In the second report, it is listed as "suburban/sup." The location adjustment for comparable sale 2 is listed in the first report, as -$20,000.00. In the second report, it is listed as -$10,000.00. The condition for comparable sale 3 is changed from "superior" in the first report to "average" in the second report. The condition adjustment for comparable sale 3 is listed in the first report as -$20,000.00. It is changed in the second report to no adjustment. The room adjustment for comparable sale 3 is listed in the first report as -$4,000.00. It is changed in the second report to -$2,000. The location description for comparable sale 4 is listed in the first report as "suburban/sup" and changed in the second report to "suburban." The location adjustment for comparable sale 4 is listed as -$10,000.00. It is changed in the second report to no adjustment. The room adjustment for comparable sale 4 is listed in the first report as +$4,000.00. It is changed in the second report to +$2,000.00. The basement adjustment for comparable sale 4 is listed as -$10,000.00 in the first report, and as -$5,000.00 in the second report. The condition adjustment for comparable sale 5 is listed in the first report as -$20,000.00. It is changed in the second report to -$15,000.00. The location adjustment for comparable sale 5 is listed in the first report as -$20,000.00. It is changed in the second report to -$10,000.00. The condition of comparable sale 6 is listed in the first report as "superior." It is changed in the second report to "average." The condition adjustment for comparable sale 6 is listed in the first report as -$20,000.00. It is changed in the second report to no adjustment. Respondent's work papers for Property 2 do not provide any explanation for the changes noted above. The second report for Property 3 (Petitioner's Exhibit 11) also has an invoice attached, which states "summary complete." The summary sheet lists Hugh Rhea as the appraiser. The appraisal gives an opinion of value of $71,000, compared to the County's offer of $69,900. The second appraisal lists the effective date of the appraisal as April 5, 2010, and the date of the signature and report as April 8, 2010. These dates are the same as those listed on the appraisal with value of $54,000. The Comments on Appraisal and Report Identification are the same as those listed in the initial report, and the appraiser's certification includes the same statements quoted in paragraph 15. No explanation is given as to why the second report was generated. However, the second report contains the following differences: The first report contains six comparable sales. The second contains only four, and of those four, only two (those with the highest value) from the first report were included in the second report. The property located at 2610 NE 12th Street was listed as comparable sale 4 in the first report and as comparable sale in the second report. The gross living adjustment for this property was listed as -$2,025.00, while in the second report it is listed as -$1,620.00. With respect to this same property, the carport adjustment listed in the first report is +$1,500.00, and is listed as +$2,000.00 in the second report. The property located at 2703 NE 11th Street was listed as comparable sale 6 in the first report and as comparable sale in the second report. The condition adjustment for this property is changed from no adjustment in the first report to +$10,900.00 in the second report. With respect to this comparable sale, the gross living adjustment listed in the first report is -$7,125.00 while it is listed as -$2,340.00 in the second report. In the first report, as part of the cost approach to estimating value, the remaining estimated life for Property 3 is listed as 17 years, while in the second report it is listed as 32 years. Similarly, the depreciation figure listed in the first report is $94,524.00, while in the second report it is listed as $76,797.00. Respondent's work papers for Property 3 provide no explanations for the changes listed above. The Explanations All three of the initial appraisals, as well as all three of the second appraisals, state that the price of the property was to be determined by the appraisals, and that the appraiser had requested a copy of the contract and was told they would be forwarded at a later time. After submission of the first appraisals, Corey Bullard testified that he received a telephone call from Esrone McDaniels from Meridian regarding the opinions of value, indicating that the opinions were too low. Mr. McDaniels does not recall such a conversation. What is clear, however, is that at some point Mr. McDaniels spoke to Mr. Rhea regarding the program to explain the mechanics of the process for the NSP. On April 13, 2010, Mr. McDaniels sent an e-mail to Mr. Rhea with the title "Alachua County Properties." The e-mail contained a table listing nine properties, including Properties 1-3. The table contained columns listing the property addresses; the initial offer amount; the final acquisition amount (if the sale was completed); and the appraised value. The appraised values listed in the chart for Properties 1-3 were the opinions of value listed in the first reports described, i.e., the lower values. Along with the chart was the following message: Mr. Rhea - - per our conversation, please find the information requested. Should you have any questions, please give me a call. As stated, per the program requirements, our properties must be purchased at or below 99% of the appraised value. For example, since HUD won't adjust the purchase price, the initial offer should be a minimum 99% of the appraised value. Therefore, the appraisal should represent 1% above the initial offer price above. Let me know if you have any questions. Thanks. Mr. Bullard was aware of the preparation of the second reports and was not comfortable with them being developed. He made excuses not to return to work, pass protected his electronic signature and filed a complaint against Respondent with the Department. Mr. Bullard also testified that Respondent's electronic signature was not pass-protected, and that all of the office staff had access to it. No evidence was presented to refute this statement. However, there is also no evidence that Mr. Bullard ever used Respondent's electronic signature without his consent, or that he failed to supervise Bullard's work. To the contrary, Mr. Bullard testified that for the two appraisals with which he was involved, Respondent provided supervision and approved the appraisals before they were communicated to the client. While the second appraisal reports for two of the three properties indicate that the date of the signature predated the e-mail from Esrone McDaniels, the only appraisal values listed in the e-mail are for the original, lower values. From the totality of the evidence, it is found that the only plausible explanation is that the appraisals were backdated to reflect an earlier effective date. Mr. McDaniel vehemently denied that he ever told Respondent to "hit a certain value with an appraisal, saying "Absolutely not. I don't have the authority to do that and I would never do that." He believed that the underlined sentence in his e-mail was part of his attempt to "explain the program, period," and was one example to drive across the one-percent federal requirement. Mr. Rhea, on the other hand, in his response to the Department's complaint, stated the following: Let's start with the orders or bids, Alachua County was allotted 3 to 4 million dollars to buy property across all of Alachua County but they had to be foreclosed, bank owned or short sales. . . . The properties in questioned [sic] are HUD or Fannie Mae owned properties. When Fannie Mae has a property listed before it goes on the market, they have 3 BPO's done plus an appraisal, then they set an asking price. Our assignment was to inspect the properties, check the repairs needed and then value the property "as is" knowing the property is contracted at the asking price. With 3 BPO's and appraisal to back it up the Realtor's contracted the house knowing this plus they also knew the county was mandated to purchase at that price. What Mr. Bullard did not understand and still doesn't, the assignment for the 20 appraisals scope of work was to concur with the work and valuation that already had been done. The first appraisal done did not come in at $50,000 and then I change the value. Mr. Bullard said the property is $50,000 and I told him he was wrong and that did not set well with him. . . . * * * About the conversation with Mr. Esrone McDaniel's, [sic] we talk about what the Alachua County Board of County Commissioners was mandated to do with the money. The properties have been contracted and he asked me whether I could come within 1% of the value. I told him I have a range of value of 5% so I said I thought I could. This is when I knew that Mr. Bullard did not get a handle on what the assignment was all about. The e-mail that Mr. Bullard was referring to, stated the program requirements, which is what Esrone and I talked about and Mr. Bullard took it out of context stating that I would help him out. Mr. Bullard told me at the start that he knew what the county wanted and come to find out, he did not have a clue. Although Respondent indicated in his letter that the scope of the project was "to concur with the work and valuation" that had already been performed, this scope is not reflected in the description contained in any of the six appraisals. To the contrary, the appraisals on their face indicate that no predetermined value is at issue. From the totality of the evidence, it is found that Respondent issued the second appraisals in each case for the purpose of confirming a predetermined value, i.e., the list price for each of the properties, as communicated to him in Esrone McDaniels' e-mail of April 13, 2010. The Applicable Standards Property appraisers are required to adhere to the Uniform Standards of Professional Appraisal Practice (USPAP), which are developed by the Appraisal Standards Board of the Appraisal Foundation. The USPAP Ethics Rule is divided into four sections: conduct, management, confidentiality, and recordkeeping. The conduct section provides in pertinent part: Conduct: An appraiser must perform assignments with impartiality, objectivity, and independence, and without accommodation of personal interests. An appraiser: must not perform an assignment with bias; must not advocate the cause or interest of any party or issue; must not accept an assignment that includes the reporting of predetermined opinions and conclusions; . . . The management section of USPAP provides in pertinent part: Management: An appraiser must not accept an assignment, or have a compensation arrangement for an assignment, that is contingent on any of the following: the reporting of a predetermined result (e.g., opinion of value); a direction in assignment results that favors the cause of the client; the amount of a value opinion; the attainment of a stipulated result (e.g., that the loan closes, or taxes are reduced); or the occurrence of a subsequent event directly related to the appraiser's opinions and specific to the assignment's purpose. According to Michael Adnot, the Department's expert witness, these USPAP standards require an appraiser to be independent, impartial, and objective, and an appraiser cannot advocate the cause of a client or pre-determine a value. Moreover, concurrence with a prior appraisal cannot be a condition of an assignment. If an appraiser feels pressure to reach a certain result, he or she should not take the assignment. Mr. Adnot's testimony is credited. Based upon the evidence presented, it is found that Respondent developed and communicated the second reports for all three properties with the intent of providing appraisal reports that came within one percent of the selling price, i.e., a predetermined value. The investigative costs for these three cases were as follows: for Case No. 11-3007, costs are $1,303.50; for Case No. 11-3008, costs of investigation are $1,501.50 and for Case No. 11-3009, costs total $1,336.50.
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 finding that Respondent violated section 475.624(2) and (15) as alleged in Case Nos. 11-3007, 11-3008, and 11-3009; suspending his license to practice as a certified residential real estate appraiser for a period of 3 years, followed by 5 years of probation; imposing a $6,000 fine and imposing costs in the amounts identified in finding of fact number 49, for a total of $4,141.50 in costs. DONE AND ENTERED this 17th day of February, 2012, in Tallahassee, Leon County, Florida. S 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 17th day of February, 2012.
The Issue The issue in this case is stated in three counts set forth the Administrative Complaint1/: Count I, whether Respondent, Ronald C. Hormes ("Hormes"), is guilty of violating section 475.624(15), Florida Statutes (2008),2/ by failing to exercise reasonable diligence when preparing or developing an appraisal report; Count IV, whether Hormes is guilty of obstructing an investigation in violation of section 475.626(1)(f); and Count V, whether Hormes is guilty of failing to properly and adequately supervise a registered trainee appraiser in violation of section 475.624(4); and Florida Administrative Code Rule 61J1-4.010.
Findings Of Fact The Division is responsible for monitoring all licensed and certified real estate appraisers in the state. It is the Division's duty to ensure that all appraisers comply with the standards set forth in relevant statutes and rules. Hormes has been a certified residential real estate appraiser for approximately 30 years. He operates a family-owned real estate appraisal business. At all times material hereto, Mariano M. Alvarez II ("Alvarez"), a state-registered trainee real estate appraiser, was performing appraisal duties under Hormes' supervision. Alvarez is one of approximately 55 trainees who have worked under Hormes' supervision since 1993. Alvarez first became a trainee in Hormes' office in May 1997. He left the office early in 2004, but returned as a trainee in July 2004. Alvarez remained a trainee in Hormes' office until April 2011. At issue in this case are three appraisals which will be referred to collectively herein as the "Townsend" appraisal. In May 2008, Alvarez was technically working as a trainee with Hormes. However, Hormes had not given Alvarez any assignments since some time in 2007. Alvarez had become engaged in the operation of a business outside the area of real estate appraising and was not actively seeking work from Hormes in the appraisal field. In the Spring of 2008, Alvarez received a request to engage in some appraisal work. He received an assignment letter for appraisal work from Karen Maller, an attorney representing some members of the Townsend family who were in a dispute concerning land and property left in an estate. The assignment letter dated May 30, 2008, asked Alvarez to prepare an appraisal and also to be an expert witness in an upcoming trial. It appears the assignment letter was emailed to Alvarez, i.e., there is no physical address for Alvarez on the letter. Most assignments are commenced by way of a letter setting forth the scope of the intended work to be performed. Sometimes the assignments are made by way of email, but hard copy letters are most common. The assignment letter was sent directly to Alvarez; Hormes was not an addressee on the letter, and it was not copied to him. A real estate appraisal trainee is generally not authorized to accept appraisal assignments directly. Alvarez apparently accepted the assignment from Maller and began working on the Townsend appraisal. The correspondence listed below followed the initial assignment letter: A June 30, 2008, letter from Maller concerning the upcoming trial dates in January 2009. The letter contained no physical address, but had email addresses for both Alvarez and Hormes. The email address for Hormes was his personal address, not his work address. A September 8, 2008, email from Maller to Alvarez, copied to Hormes, indicating receipt of Alvarez's draft appraisal. A September 14, 2008, email from Maller to Alvarez, copied to Hormes, seeking a draft for the residential portion of the appraisal. A September 15, 2008, email from Maller addressed to both Alvarez and Hormes, providing comments on the appraisal that had been submitted. A November 7, 2008, letter addressed to Alvarez (only) at Hormes' business address. Hormes does not admit any knowledge of the assignment accepted by Alvarez prior to receiving Maller's emails in September. At that time, Hormes became concerned and called Maller to inform her that she was not a client of his office. Hormes left messages with Maller concerning this fact, but it is unclear whether he ever talked directly to Maller. Hormes also attempted to call Alvarez about the purported assignment. Hormes testified that, "I put in, you know, phone calls to him. He is difficult to contact." Again, it is unclear at what point in time Hormes initially talked directly to Alvarez about this matter. After Hormes contacted Maller to inform her that she was not his client, Maller then sent Alvarez a letter in which Hormes was not copied. That letter dated November 7, 2008, basically reiterates the facts concerning the upcoming trial in January 2009, one of the two purposes set forth in the original assignment letter to Alvarez. The computer-generated footer at the bottom of the letter states: T:\Carrie\Geiger,William\ Townsendv.Morton\Correspondence\Witness 002-Alvarez.doc, as compared to the footer on the original (June 30, 2008) letter which says: F:\Carrie]Geiger,William\Townsendv.Morton\ correspondence\Alvarez-Hormes 001.wpd. Clearly the November correspondence was meant for Alvarez only. The reason for that change cannot be determined from the evidence presented at final hearing in this matter. It may reasonably be inferred that as of November, Maller no longer considered both Hormes and Alvarez her expert appraisers. Instead, the November 7, 2008, letter is addressed solely to Alvarez as "Expert-Appraiser." Alvarez was using Hormes' office during the time he was acting as a trainee. Hormes expected each of his trainees to do their work at his office, rather than operating remotely. Trainees had access to the office computers, fax machines, copiers, and a library of information. That being the case, it is difficult to ascertain why Hormes had difficulty contacting Alvarez once he found out about the Maller assignment. That is, if Alvarez was using Hormes' office to prepare the appraisal, he would seem to be accessible to Hormes. During his interview with the Division's investigator in December 2009, Hormes acknowledged some supervisory involvement with the Townsend appraisal. Hormes could not remember making any statement to that effect to the investigator at the final hearing in this matter. However, the investigator received confirmation from both Hormes and Alvarez that the appraisals provided to Maller were only in draft form. The investigator's testimony in this regard is credible. Hormes' attorney wrote a letter to the Division dated December 9, 2009, in which Hormes was described as the "Supervising Appraiser" for the Townsend appraisal. The attorney who wrote the letter was eventually released by Hormes based upon issues relating to competency. The attorney's law firm did not require Hormes to pay for that attorney's work. Hormes seemed to insinuate at final hearing that the release of his attorney indicates that the statements made in the December 9, 2009, letter were inaccurate. However, there was no competent or persuasive evidence to support that insinuation.3/ During the investigation undertaken by the Division concerning the propriety of the Townsend appraisal, Hormes and Alvarez were questioned by an investigator at a single interview. During that interview, Alvarez did most of the talking and responded to most of the questions about the appraisal. It is clear that Alvarez had the greatest amount of knowledge and information concerning the Townsend appraisal, but it is unclear how much knowledge Hormes had. Hormes was at least aware of the work that Hormes had done on the appraisal. The Townsend appraisal was, by everyone's admission, not an acceptable work product. It was flawed in many areas and failed to meet the minimum standards for a real estate appraisal. Hormes simply says that Alvarez had "gone rogue" and that he had done the appraisal on his own. At final hearing, Hormes disavowed any direct work on the appraisal or that he supervised Alvarez's work on the appraisal. In fact, Alvarez admitted to the investigator that he had forged Hormes' signature on the reports and that Hormes was not aware of that fact. During the course of the investigation by the Division, Hormes was asked to provide copies of the Townsend appraisal, along with the two other draft appraisals that Alvarez had been working on for Maller. Hormes advised the investigator that he would provide copies of the report, but he did not provide them. Portions of the work file from Hormes' office were provided to the investigator, but copies of the reports were never provided to the Division. Hormes contends he never knew about the Townsend appraisal and, therefore, did not have a work file concerning the report. However, if Alvarez was working on the reports using Hormes' office and equipment and Alvarez was still under Hormes' supervision at the time of the investigation, it is difficult to reconcile Hormes' stated inability to have the appraisal reports and Alvarez's work file made available. Further, as Alvarez's supervising appraiser, it seems that Hormes would be able to direct Alvarez to provide the reports. Alvarez was retained as a real estate appraisal trainee in Hormes' office throughout the investigation and during the preparation for final hearing in this matter. At some point just prior to the final hearing, Alvarez was released by Hormes.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by Petitioner, Department of Business and Professional Regulation, Division of Real Estate, finding Respondent, Ronald C. Hormes, guilty of Count V of the Administrative Complaint. A fine of $1,000.00 and a two-year period of probation should be imposed. DONE AND ENTERED this 10th day of June, 2011, in Tallahassee, Leon County, Florida. S R. BRUCE MCKIBBEN 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 10th day of June, 2011.
The Issue Whether Respondent, an appraiser, committed the offenses alleged in Counts I, II, and IV of the Amended Administrative Complaint1 and, if so, the penalties that should be imposed.
Findings Of Fact Petitioner is the agency of the State of Florida charged with regulating and enforcing the statutory provisions pertaining to persons holding licenses as real estate appraisers. Petitioner is charged with the duty to prosecute administrative complaints pursuant to Chapters 20, 120, 455, and 475, Florida Statutes, and the rules promulgated pursuant thereto. The Report was dated November 30, 1998. At that time, Respondent was a registered appraiser who could only perform appraisals under the supervision of a certified appraiser. As of November 30, 1998, Mr. Mesa served as the certified appraiser who supervised Respondent. Respondent’s expert witness described Respondent’s status while he worked for Mr. Mesa as being a “trainee,” “apprentice,” or “journeyman.” Both Respondent and Mr. Mesa signed the Report. Above Respondent’s signature is the designation “Appraiser.” Under Respondent’s signature is his state license number and a designation indicating his status as a registered real estate appraiser. Above Mr. Mesa’s signature is the designation “Supervisory Appraiser.” Under Mr. Mesa’s signature is his state license number and a designation indicating his status as a certified real estate appraiser. At the top of the Report were the words “Mesa Appraisals.” On the bottom of the Report were the words “Mesa Appraisals, Inc.” Petitioner failed to prove the factual predicate set forth in paragraph 5(a) of the Amended Administrative Complaint. The testimony of Ms. DeFonzo established that there was adequate documentation contained within the Report to support the negative adjustment to comparable sale 1 because that comparable had a swimming pool and the subject property did not. Petitioner failed to prove the factual predicate set forth in paragraph 5(b) of the Amended Administrative Complaint. The testimony of Ms. DeFonzo established that there was adequate documentation contained within the Report to support the negative adjustments to comparable sales 1, 2, and 3 because those comparable sales were sited on larger lots than the subject property. Petitioner failed to prove the factual predicate set forth in paragraph 5(c) of the Amended Administrative Complaint. The testimony of Ms. DeFonzo established that there was adequate documentation contained within the Report to support the values reached under the cost approach methodology. Petitioner failed to prove the factual predicate set forth in paragraph 5(d) of the Amended Administrative Complaint. The testimony of Ms. DeFonzo established that the Report reflected the intended use of the Report and the intended users of the Report. The Report reflects that it was for lending purposes and identifies the lender/client. As to paragraph 5(e), the testimony of Ms. DeFonzo established that industry practice was for the certified appraiser to maintain the original appraisal file and for the registered appraiser not to keep a copy of the original file because of the confidential and proprietary information that may be contained in appraisal file. There was no competent evidence that Respondent acted inconsistently with that industry practice.3
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that Petitioner enter a Final Order finding Respondent not guilty of each of the counts set forth in the Amended Administrative Complaint. DONE AND ENTERED this 14th day of November, 2006, in Tallahassee, Leon County, Florida. S CLAUDE B. ARRINGTON 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 14th day of November, 2006.
Findings Of Fact Petitioner is the state licensing and regulatory agency charged with the responsibility and duty to prosecute administrative complaints pursuant to Section 20.30, Florida Statutes and Chapters 120, 455 and 475, Florida Statutes and rules promulgated pursuant thereto. Respondent, David J. Zachem, is now, and was at all times material hereto, a licensed real estate broker in Florida, having been issued license number 0194936. The last license issued was as a broker c/o Sunstate Tax Consultants, Inc., 220 East Madison Street #512, Tampa, Florida, Respondent, during times material, was licensed as a broker/salesperson with Gary Levone Hall, t/a Gary L. Hall & Associates, 243 Timberland Avenue, Longwood, Florida. On or about July 24, 1991, the Resolution Management Associates, Inc. of Atlanta, Georgia, engaged Henry Mazas, the principal of H.R. Mazas & Associates, an accounting firm to perform an appraisal of real property located in Seminole, Florida (called Seminole Landing) which was owned or controlled by the Federal Resolution Trust Corporation, the federally affiliated agency which is selling off failed savings and loan associations financed or mortgaged properties. While Respondent was licensed as a broker/salesperson with Hall, Mazas engaged Respondent to assist in the appraisal of the Seminole Landing property. Respondent assisted Mazas by doing what is commonly referred to in the trade as the "leg work" such as visually inspecting the property, reviewing public records, compiling comparables and other raw data which was utilized by Mazas in completing his appraisal. Respondent signed on the appraisal letter evidencing his assistance as a consultant who assisted Mazas in completing his appraisal. C.W. Marlow, contracts manager of Resolution Management Associates, received a bill from Mazas for the appraisal service in the amount of $4,830.00, which amount was paid to Mazas on or about October 29, 1991. Mazas deposited the check into his account and thereafter paid Respondent $2,321.11 via a check dated November 5, 1991. On November 8, 1991, Respondent and his wife, Patricia Zachem, endorsed the check for payment. At the time that Respondent assisted Mazas in compiling the raw data to complete his appraisal, Mazas was unaware of Respondent's affiliation with Gary Hall. Respondent signed off on the appraisal to fully disclose to everyone concerned that he consulted with Mazas in compiling the raw data for the appraisal. Gary L. Hall, is a licensed real estate broker since approximately 1982. Hall has known Respondent since 1988. They are friends who assist and consult with each other primarily about political activities. Respondent placed his license with Hall as a matter of convenience and was never active in either buying, leasing or selling real property to the public. Respondent and Hall had no agreement respecting the splitting of fees that Respondent would earn for commissions that he received. According to Hall, Respondent "would have been able to keep the entire commissions that he receive for any work that he performed." Hall knew that Respondent was active in preparing appraisals when he became affiliated with his agency. Respondent is the holder of a real estate salesman's license since 1978 and a broker since 1979. Respondent while licensed as a broker, joined the Pinellas County Property Appraiser's Office. Respondent has been employed in two county property appraiser's offices (Broward and Pinellas counties). Respondent was a senior deputy in Broward County with his employment commencing sometime in 1981. He was so employed until January 1989 when he was employed by Pinellas County. In Pinellas County, Respondent was the chief deputy and the chief appraiser. Since 1980, Respondent has principally been a "mass appraiser" while working in Broward and Pinellas counties. Respondent is the qualifier for Sunstate Tax Consultants, which he is the president. Respondent is a Certified Florida Evaluator (CFE). To be qualified as a CFE, one must have worked in a property appraiser's office in the mass appraisal element for a period in excess of two years and have successfully passed four appraisal courses which are designated courses. Specifically, these courses are income to evaluation, the mechanical application of appraisals, appraisal assessment jurisdiction and vacant land. After successfully completing these courses, the property appraiser for whom the applicant is employed writes a letter of recommendation to the certification committee of the Department of Revenue. That committee reviews the applicant's qualifications and either grant or deny the CFE certificate. Respondent primarily placed his real estate license with Hall such that he could qualify as an expert in the numerous petitions filed with the Value Adjustment Board where the evaluation of properties are subject to litigation. Those appraisers who have an active broker license is an indication that they are fully qualified in the appraisal and real estate business. Respondent, as stated, never engaged in the typical brokerage business of buying, selling, leasing or renting property to the public. Specifically, Respondent's understanding with Hall was that if he engaged in any business that was governed by Petitioner, Hall would be notified. Respondent was never engaged to conduct an appraisal or to act as an appraiser for Mazas or the Resolution Management Associates. Respondent would have so advised Hall had he been involved in such a relationship or any activity that was governed by Chapter 475, Florida Statutes. Eugene Davidson, an ad valorem tax consultant. was tendered and received as an expert appraiser. Davidson was one of three founders that founded the National Society of Fee Appraisers more than 35 years ago. Davidson holds a senior designation as an ASA member. Davidson is a member of the Institute of Real Estate Management and hold the designation as a certified property manager (CPM). Davidson is certified with Florida as a general real estate appraiser. Davidson was a professor at the University of Miami, the University of Florida and in the Bahamas (Nassau and Freeport). Davidson knows Respondent as a person on high morals and integrity and who is knowledgeable in real e stte and appraisinng. Davidson has known Respondent more than twelve years. An appraisal is the act or process of estimating value, or an opinion of value. Consulting is the act or process of providing information, analysis of real estate data and recommendations or conclusions on diversified problems in real estate other than estimating value. Respondent's engagement, to compile raw data, was as a consultant. He was not engaged, nor did he offer an opinion of value or an estimate of value. It is normal industry practice for consultants to sign appraisals when they provide or otherwise furnish significant information to the appraiser and, in doing so, complies with standard 2-3 of Chapter 475, Part II. See Sections 475.611 and 475.624, Florida Statutes.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that: Petitioner enter a Final Order dismissing Counts I-IV of the Administrative Complaint filed herein. 1/ DONE and ORDERED this 31st day of March, 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 31st day of March, 1993.
