97-004938 Division Of Real Estate vs. Maria E. Vaca, T/A Vaca Realty Status: Closed Recommended Order on Tuesday, June 30, 1998.

Summary: Broker failed to place deposit in escrow account and failed to follow dispute procedures when contract fell through.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, DIVISION )

OF REAL ESTATE, )

)

Petitioner, )

)

vs. ) Case No. 97-4938

)

MARIA E. VACA, t/a VACA REALTY, )

)

Respondent. )

__________________________________)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held by video

teleconference with the parties appearing in Fort Lauderdale on

May 6, 1998, before J. D. Parrish, a designated Administrative

Law Judge of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Laura McCarthy, Esquire

Department of Business and

Professional Regulation

Division of Real Estate

400 West Robinson Street

Orlando, Florida 32802

For Respondent: Lloyd H. Falk, Esquire

600 Southwest 4th Avenue

Fort Lauderdale, Florida 33315

STATEMENT OF THE ISSUES

Whether the Respondent committed the violations alleged in

the Administrative Complaint and, if so, what penalty should be

imposed.

PRELIMINARY STATEMENT

This case began on May 22, 1997, when the Department of

Business and Professional Regulation, Division of Real Estate

(Department) issued an Administrative Complaint against the

Respondent, Maria E. Vaca. Such complaint alleged, in part, that

the Respondent had failed to place a deposit submitted with a

contract into an escrow account and had failed to comply with

rules regulating escrow disputes. The Respondent denied the

allegations and requested a formal hearing.

The matter was forwarded to the Division of Administrative

Hearings for formal proceedings on October 20, 1997. Thereafter,

the case was scheduled for hearing by video teleconference.

At the hearing, the Department presented testimony from

Donald Wilker and John C. Lee. Its E xhibits numbered 1 through 9

were admitted in to evidence.

Respondent testified in her own behalf. Respondent's

Exhibit 1 was also been received into evidence.

The transcript of the proceeding was filed on June 3, 1998.

A corrected transcript was filed on June 23, 1998. Both parties

filed P roposed R ecommended O rders which have been considered in

the preparation of this order.

FINDINGS OF FACT

1. The Petitioner is the state agency charged with the

responsibility of regulating real estate licensees in the State

of Florida.

2. At all times material to the allegations of this case,

Respondent was licensed as a real estate broker, license number

0333239, doing business at 120 East Oakland Park Boulevard,

Suite 105, Fort Lauderdale, Florida, as Vaca Realty.

3. On or about February 12, 1996, Respondent obtained a

contract for sale and purchase on a property owned by

Daryl Cohen. The purchasers, Donald H. Wilker and Patricia C.

Wilker, executed the contract and tendered an initial deposit of

$100.

4. Respondent held the listing on the Cohen home and upon

receipt of the signed contract, placed the initial deposit as

well as a second deposit in the amount of $1,900 into the Vaca

Realty operating account.

5. The $2,000 deposit was never placed into a real estate

escrow account or other proper depository.

6. The contract between the Wilkers and Cohen was scheduled

to close April 1, 1996.

7. Prior to closing, the Wilkers notified Respondent that

they were canceling the contract due to the condition of the

roof. The parties were unable to agree as to the condition of

the roof and the buyers announced their intention to not accept

the home with the defects depicted in the roof inspection they

had received.

8. On April 2, 1996, Respondent sent a release of deposit

form to the Wilkers, which they refused to execute. Such release

would have authorized Respondent to release the deposit with

$1,000 going to the Seller, Mr. Cohen, and $1,000 going to Vaca

Realty.

9. Thereafter, the Respondent was aware that the parties

retained legal counsel with regard to the contract dispute.

10. Despite her knowledge of the ongoing disagreement,

Respondent did not notify the Florida Real Estate Commission

regarding the deposit issue.

11. On or about August 23, 1996, the Seller executed a

Release and Cancellation of Contract form that directed

Respondent to disburse $1,500 to the Wilkers and $500 to Daryl

Cohen. This agreement had been signed by the Wilkers on

August 13, 1996.

12. Notwithstanding the terms of the foregoing agreement,

on September 18, 1996, Respondent issued two checks from her

operating account: one to the Wilkers in the amount of $1,500

and the other to Cohen in the amount of $250.

13. Respondent is currently on a suspension as a result of

a Final Order entered in DBPR Case No. 94-82411, which was

affirmed by the Fourth District Court of Appeals, Case

No. 97-1069, on December 17, 1997, mandate issued January 5,

1998.

CONCLUSIONS OF LAW

14. The Division of Administrative Hearings has

jurisdiction over the parties to, and the subject matter of,

these proceedings.

15. Section 475.25(1), Florida Statutes, provides, in

pertinent part:

475.25 Discipline.–

(1) The commission may deny an application

for licensure, registration, or permit, or

renewal thereof; may place a licensee,

registrant, or permittee on probation; may

suspend a license, registration, or permit

for a period not exceeding 10 years; may

revoke a license, registration, or permit;

may impose an administrative fine not to

exceed $1,000 for each count or separate

offense; and may issue a reprimand, and any

or all of the foregoing, if it finds that the

licensee, registrant, permittee, or

applicant:

* * *

(d)1. Has failed to account or deliver to

any person, including a licensee under this

chapter, at the time which has been agreed

upon or is required by law or, in the absence

of a fixed time, upon demand of the person

entitled to such accounting and delivery, any

personal property such as money, fund,

deposit, check, draft, abstract of title,

mortgage, conveyance, lease, or other

document or thing of value, including a share

of a real estate commission if a civil

judgment relating to the practice of the

licensee's profession has been obtained

against the licensee and said judgment has

not been satisfied in accordance with the

terms of the judgment within a reasonable

time, or any secret or illegal profit, or any

divisible share or portion thereof, which has

come into the licensee's hands and which is

not the licensee's property or which the

licensee is not in law or equity entitled to

retain under the circumstances. However, if

the licensee, in good faith, entertains doubt

as to what person is entitled to the

accounting and delivery of the escrowed

property, or if conflicting demands have been

made upon the licensee for the escrowed

property, which property she or he still

maintains in her or his escrow or trust

account, the licensee shall promptly notify

the commission of such doubts or conflicting

demands and shall promptly:

a. Request that the commission issue an

escrow disbursement order determining who is

entitled to the escrowed property;

b. With the consent of all parties, submit

the matter to arbitration;

c. By interpleader or otherwise, seek

adjudication of the matter by a court; or

d. With the written consent of all parties,

submit the matter to mediation. The

department may conduct mediation or may

contract with public or private entities for

mediation services. However, the mediation

process must be successfully completed within

90 days following the last demand or the

licensee shall promptly employ one of the

other escape procedures contained in this

section. Payment for mediation will be as

agreed to in writing by the parties. The

department may adopt rules to implement this

section.

If the licensee promptly employs one of the

escape procedures contained herein, and if

she or he abides by the order or judgment

resulting therefrom, no administrative

complaint may be filed against the licensee

for failure to account for, deliver, or

maintain the escrowed property.

2. Has failed to deposit money in an escrow

account when the licensee is the purchaser of

real estate under a contract where the

contract requires the purchaser to place

deposit money in an escrow account to be

applied to the purchase price if the sale is

consummated.

* * *

(k) Has failed, if a broker, to immediately

place, upon receipt, any money, fund,

deposit, check, or draft entrusted to her or

him by any person dealing with her or him as

a broker in escrow with a title company,

banking institution, credit union, or savings

and loan association located and doing

business in this state, or to deposit such

funds in a trust or escrow account maintained

by her or him with some bank, credit union,

or savings and loan association located and

doing business in this state, wherein the

funds shall be kept until disbursement

thereof is properly authorized; or has

failed, if a salesperson, to immediately

place with her or his registered employer any

money, fund, deposit, check, or draft

entrusted to her or him by any person dealing

with her or him as agent of the registered

employer. The commission shall establish

rules to provide for records to be maintained

by the broker and the manner in which such

deposits shall be made.

16. Rule 61J2-10.032(1), Florida Administrative Code,

provides:

Notice Requirements.

(1)(a) A real estate broker, upon receiving

conflicting demands for any trust funds being

maintained in the broker's escrow account,

must provide written notification to the

Commission within 15 business days of the

last party's demand, and the broker must

institute one of the settlement procedures as

set forth in s. 475.25(1)(d)1., Florida

Statutes, within 30 business days after the

last demand.

(b) A broker, who has a good faith doubt as

to whom is entitled to any trust funds held

in the broker's escrow account, must provide

written notification to the Commission within

15 business days after having such doubt and

must institute one of the settlement

procedures as set forth in s. 475.25(1)(d)1.,

Florida Statutes, within 30 business days

after having such doubt. The determination

of good faith doubt is based upon the facts

of each case brought before the Commission.

Based upon prior decisions of the Commission,

good faith doubt shall be deemed to exist in

the following situations:

1. the closing or consummation date of the

sale, lease, or other real estate transaction

has passed, and the broker has not received

conflicting or identical instructions from

all of the parties concerning the

disbursement of the escrowed funds;

2. the closing or consummation date of the

sale, lease, or other transaction has not

passed, but one or more of the parties has

expressed its intention not to close or

consummate the transaction and the broker has

not received conflicting or identical

instructions from all of the parties

concerning disbursement of the escrowed

funds; and

(c) If one of the parties to a failed real

estate sales transaction does not respond to

the broker's inquiry as to whether that party

is placing a demand on the trust funds or is

willing to release them to the other party,

the broker may send a certified notice

letter, return receipt requested, to the non-

responding party. This notice should include

the information that a demand has been placed

by the other party, that a response must be

received by a certain date, and that failure

to respond will be construed as authorization

for the broker to release the funds to the

other party. Before releasing said trust

funds, the broker must have the return

receipt as proof the notice was delivered.

17. The Petitioner bears the burden of proof in this case

to establish by clear and convincing evidence the allegations

against this Respondent. It has met that burden.

18. Respondent did not deposit the funds tendered by the

Wilkers into an escrow account or other appropriate depository

pending closing on the contract. This is a basic requirement of

real estate law. Had Respondent reconciled her escrow account at

the end of the month, this oversight (as she claims) would have

been readily discovered. In general terms Respondent was not

required to maintain an escrow account; however, as the listing

agent and recipient of the deposit, it was her duty to assure

that the deposit was placed in an appropriate escrow or trust

account. She did not do so.

19. Secondly, when the contract did not close, there was a

dispute as to the rightful owner of the deposit. Respondent was

required by law to alert the Florida Real Estate Commission of

this dispute. Further, she was required to hold the funds in an

escrow account until their disbursement would be authorized.

20. When she finally released the funds (almost a month

after the parties had signed the form), she had no authority to

retain $250 since Mr. Cohen had not authorized that withholding.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that the Florida Real Estate Commission

enter a Final Order suspending Respondent's license for six

months, require Respondent to complete additional courses in

escrow management, and direct that Respondent's escrow account be

audited, at Respondent's expense, for at least one year after the

reinstatement of her license.

DONE AND ENTERED this 30th day of June, 1998, in

Tallahassee, Leon County, Florida.

___________________________________

J. D. Parrish

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone] SUNCOM 278-9675

Fax Filing [phone]

Filed with the Clerk of the

Division of Administrative Hearings

this 30th day of June, 1998.

COPIES FURNISHED:

Henry M. Solares

Division Director

Division of Real Estate

Department of Business and

Professional Regulation

Post Office Box 1900

Orlando, Florida 32802-1900

Lynda L. Goodgame

General Counsel

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399-0792

Laura McCarthy, Esquire

Department of Business and

Professional Regulation

Division of Real Estate

400 West Robinson Street

Orlando, Florida 32801-1772

Lloyd H. Falk, Esquire

600 Southwest 4th Avenue

Fort Lauderdale, Florida 33315

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within 15

days from the date of this Recommended Order. Any exceptions to

this Recommended Order should be filed with the agency that will

issue the Final Order in this case.