10-010914PL Department Of Business And Professional Regulation, Division Of Real Estate vs. Ronald C. Hormes Status: Closed Recommended Order on Thursday, May 19, 2011.

Summary: Appraiser failed to use the correct designation when signing an appraisal and incompetently prepared an appraisal.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, )

DIVISION OF REAL ESTATE , )

)

Petitioner , )

)

vs. ) Case No. 10 - 10914PL

)

RONALD C. HORMES , )

)

Respondent . )

)

RECOMMENDED ORDER

Pursuant to notice, a final hearing was held in this case

on March 7, 2011, by video teleconference with sites in

St. Petersburg and Tallahassee, Florida, before Susan B.

Harrell, an Administrative Law Judge of the Division of

Administrative Hearings.

APPEARANCES

For Petitioner: Donna Christine Lindamood, Esquire

Department of Business and

Professional Regulation

400 West Robinson Street, Suite N801

Orlando, Florida 32801 - 1757

For Respondent: Daniel Villazon, Esquire

Daniel Villazon, P.A.

1420 Celebration Boulevard, Suite 200

Celebration, Florida 34747

STATEMENT OF THE ISSUES

The issues in this case are whether Respondent violated

sections 475.622(1), 475.622(2), 475.624(2), and 475.624(15),

Florida Stat utes (2007), 1 / and Florida Administrative Code Rule

61J1 - 7.001(2), and, if so, what discipline should be imposed.

PRELIMINARY STATEMENT

On July 20, 2010, Petitioner, Department of Business and

Professional Regulation, Division of Real Estate (Department),

filed a three - count Administrative Complaint against Respondent,

Ronald C. Hormes (Mr. Hormes), alleging that he violated

sections 475.624(15), 475.624(2), 475.622(1), and 475.622(2) and

rule 61J1 - 7.001(2). Mr. Hormes requested an administrative

hearing, and the case was forwarded to the Division of

Administrative Hearings on December 27, 2010, for assignment to

an A dministrative L aw J udge to conduct the final hearing.

At the final hearing, the Department called Michael

McKinley and Dennis Black as its wi tnesses. Petitioner's

Exhibits 1 through 5, 8, and 9 were admitted in evidence.

Mr. Hormes testified on his own behalf. Respondent's Exhibits 1

and 2 were admitted in evidence.

Official recognition was taken of sections 475.624(15),

475.624(2) and 475.62 2 and r ule 61J1 - 8.002.

The two - volume Transcript was filed on March 31, 2011. The

parties agreed to file their proposed recommended orders within

30 days of the filing of the Transcript. The parties' Proposed

Recommended Orders have been given considerat ion in the

preparation of this Recommended Order.

FINDINGS OF FACT

1. Mr. Hormes has been a state - certified general real

estate appraiser since March 30, 1992. He was disciplined by

the Department in 1995.

2. On or about September 4, 2007, Mr. Hormes pr epared an

appraisal report (Original Appraisal) 2 / for real property located

at 754 West 4th Street, Cape Coral, Florida (Subject Property).

The file number assigned by Mr. Hormes was 0708 - 248. Mr. Hormes

signed the Original Appraisal on September 7, 2007 . On the

morning of September 7, 2007, he communicated the Original

Appraisal to Cirrus Mortgage, which was the intended user of the

appraisal. The Original Appraisal appraised the value of the

Subject Property at $240,000, using a sales comparison appro ach.

3. On the signature page of the Original Appraisal,

Mr. Hormes stated that his state certification was "State Cert.

Gen. Res. REA 1337. " On the cover letter transmitting the

Original Appraisal, Mr. Hormes put the following designation

underneath his name: "State Cert. Gen. REA RZ #1337."

4 . The Original Appraisal had numerous errors. Mr. Hormes

stated that the Subject Property was zoned as residential, but

the Subject P roperty was zoned corridor district. The Original

Appraisal stated the Subject Property was a two - story ranch,

when it was a one - story ranch.

5 . The actual age of the Subject Property as of

September 4, 2007, the effective date of the Original Appraisal,

was 26 years. Mr. Hormes used three comparable sales to compare

to the Subjec t Property. Two of the three comparable sales were

listed as four years old. Mr. Hormes listed the age of the

third comparable sale as nine years, but the house was built in

2003, making it four years old at the time of the appraisal.

6 . The Original Ap praisal states that there were

comparable sales in the Subject Property neighborhood that

ranged from $180,000 to $265,000. There was nothing in the work

file to support Mr. Hormes' s statement that there had been a

$265,000 sale.

7 . The Original Appraisa l states that there were listings

available for $175,000 to $260,000 in the Subject Property

neighborhood, meaning that potential buyers could chose a less

expensive alternative to the Subject Property. There was no

explanation in the Original Appraisal w hy a potential buyer

would cho o se the higher priced Subject Property over the less

expensive listing. Mr. Hormes testified that the listing for

$175,000 was undesirable because of impact fees, but there is no

mention in the work file to support this asser tion.

8 . Mr. Hormes incorrectly listed the view of the Subject

Property as residential. The Subject Property was located

across the street from a Carrabas restaurant and a strip mall.

Although Mr. Hormes did note in the Original Appraisal that

there wer e some external inadequacies due to the Subject

Property being located directly behind a restaurant, strip mall,

and commercial stores, he did not adjust or analyze for external

obsolescence of the Subject Property.

9 . Mr. Hormes stated in the Original Ap praisal that the

cost of the three comparables was weighted equally in

determining the $240,000 value of the Subject Property.

However, Mr. Hormes determined that the adjusted sale prices of

the three comparables were $241,500 ; $239,200 ; and $249,000.

Ba sed on these adjusted sale prices, the value of the Subject

Property would have been $243,233.

10 . Mr. Hormes made a positive adjustment to Comparable

Sale 1 of $21,500 for location, but no adjustments were made for

Comparable Sales 2 and 3 for location. The Original Appraisal

did not state why the positive adjustment was made for

Comparable Sale 1 , why no positive adjustment s were made for

Comparable Sales 2 and 3 , and why a positive rather negative

adjustment was made . At the final hearing, Mr. Hormes stated

that he used a paired sales analysis for his loc a tional

adjustments; however, there was nothing in the work file to

indicate that he used a paired sales analysis.

1 1 . Mr. Hormes stated in the Original Appraisal that

property values in the neighborh ood of the Subject Property were

stable. However, based on documentation in Mr. Hormes' s work

file, the property values were declining.

1 2 . There were also inconsistencies within the Original

Appraisal. On page 1 of the Original Appraisal, Mr. Hormes

st ated that the marketing time for one - unit housing was over six

months. In the addendum to the Original Appraisal, Mr. Hormes

stated that the marketing time was typically from three to six

months.

1 3 . Cirrus Mortgage is a correspondent lender; thus, it

wa s no surprise to Mr. Hormes that he received a letter from

Chase Home Lending (Chase) dated January 29, 2009, concerning

the Original Appraisal. Chase advised Mr. Hormes that a field

review of the Original Appraisal had been done and that , based

on the re view, Mr. Hormes' s "appraiser status has been changed

to Ineligible for Chase Home Lending and we will not accept

appraisal reports performed in whole or in part by you effective

immediately." A copy of the appraisal field review report was

enclosed with the letter. Chase advised Mr. Hormes that it

would consider a written response to the appraisal field review

report.

1 4 . By letter dated January 7, 2009, Mr. Hormes responded

to Chase concerning the appraisal field review report. He

pointed out errors that he felt were in the appraisal field

review report. Mr. Hormes stated that , at the time the

appraisal was done , the appraisal was $234,000.

1 5 . By letter dated January 29, 2009, Chase filed a

complaint with the Department concerning the Original Appraisal.

Martin Straw (Mr. Straw) , an investigator with the Department,

notified Mr. Hormes by letter dated March 3, 2009, that a

complaint had been filed against him concerning the Original

Appraisal. By a separate letter dated March 3, 2009, Mr. Stra w

requested that Mr. Hormes provide "a true and accurate copy of

the appraisal as delivered to the client" and "a complete copy

of your entire working file and supporting data for this

appraisal."

1 6 . By March 19, 2009, the investigation had been

reassign ed to Mike McKinley (Mr. McKinley) , an investigator for

the Department, and Mr. McKinley wrote Mr. Hormes , advising of

the transfer. By June 5, 2009, Mr. McKinley had not received a

copy of the appraisal sent to the client and a copy of

Mr. Hormes' s entir e working file, and Mr. McKinley wrote

Mr. Hormes and again requested that the documentation be

provided to the Department.

1 7 . By letter dated March 10, 2009, Mr. James R. Mitchell

of Baker & Hostetler LLP wrote Mr. Straw, advising that the law

firm woul d be representing Mr. Hormes. By letter dated June 26,

2009, Mr. Jacob R. Stump of Baker & Hostetler LLP sent a

response to the Department concerning the complaint filed by

Chase and enclosed what purported to be Mr. Hormes' s work file

and "a copy of the Original Appraisal as sent to Mr. Hormes'

client."

1 8 . Mr. Hormes claims that he signed and sent the Original

Appraisal to the client on the morning of September 7, 2007. He

testified that he was looking over the Original Appraisal in the

afternoon and d iscovered some errors that his computer software

review program did not catch. He further testified that on the

afternoon of September 7, 2007, he corrected the errors,

prepared an Amended Appraisal, signed the Amended Appraisal, and

sent the Amended Appr aisal to the client. Mr. Hormes' s

testimony concerning the preparation of an Amended Appraisal on

September 7, 2007, is not credible for many reasons.

1 9 . In the Amended Appraisal, Mr. Hormes added three

additional comparable sales and a short sale. He states that

the source of the data for Comparable Sales 5 and 6 came from

public records and that the effective date of the sources is

September 17, 2007, which is ten days after he claims that he

prepared, signed, and communicated the Amended Appraisal.

2 0 . The work file of Mr. Hormes contains a list of

properties that he looked at to determine comparables for the

Original and Amended Appraisals. Some of the sales are dated a

week to two weeks after the Amended Appraisal supposedly was

signed and communi cated. The work file contains supporting data

for the comparable sales that are dated January 7, 2009, which

is the date that Mr. Hormes responded to Chase's letter

declaring him ineligible to prepare appraisals for Chase.

Mr. Hormes claims that he just c onsulted the public records and

multiple listing s for the information at the time that he

prepared the Original and Amended Appraisals and did not place

them in the work file. There is supporting data for the

information concerning the Subject Property da ted September 4,

2007; therefore, it is not logical that Mr. Hormes did not place

in the work file data concerning the comparable sales used in

the Original and Amended Appraisals that was obtained

contemporaneously with the preparations of the two apprais als on

September 4 and 7, 2007.

2 1. There were numerous corrections to the Original

Appraisal in the Amended Appraisal, including zoning, ages of

the comparable sales, additional comparable sales, the correct

average of the comparable sales, adjustments m ade to the

comparable sales, and changing the view to residential/busy . It

is difficult to understand how Mr. Hormes could have sent out

the Original Appraisal with so many errors which he did not

recognize while preparing the Original Appraisal, particul arly

with his many years of experience as an appraiser. The error

concerning the zoning is an error that even an inexperienced

appraiser likely would not make. Mr. Hormes' s explanation is

that the computer software that he used to check his appraisals

wa s not working properly. His explanation is not credited.

2 2 . It is just as difficult to understand how Mr. Hormes

could go through the Original Appraisal in the short span of an

afternoon, make all the corrections, and communicate the Amended

Appraisal t o his client. The inevitable conclusion is that

Mr. Hormes did not prepare an Amended Appraisal on the afternoon

of September 7, 2007, and that the Amended Appraisal was

prepared sometime after Chase notified Mr. Hormes that Chase

would no longer consider Mr. Hormes eligible to do appraisals

for Chase.

2 3 . Mr. Hormes did not provide the Department with a copy

of the Amended Appraisal when the Department requested the

entire working file concerning the appraisal at issue. When

Mr. Hormes' s attorney responded to the Department, he did not

mention the Amended Appraisal and did no t send the Amended

Appraisal to the Department .

2 4 . Mr. Hormes testified that he gave the work file to his

assistant and asked the assistant to copy the work file an d send

it to the Department. He testified that his assistant must have

failed to send the Amended Appraisal. Mr. Hormes' s testimony is

not credited.

2 5 . When Chase made its complaint to the Department, no

mention was made of an Amended Appraisal , and no Amended

Appraisal was sent to the Department. It is inferred that Chase

did not have a copy of the Amended Appraisal.

2 6 . There is a letter dated October 6, 2008, from

Mr. Hormes to Mr. Straw concerning the appraisal at issue in the

work file, which was provided to the Department by Mr. Hormes's

attorney. The letter was not in the Department's files prior to

its receipt from Mr. Hormes's attorney . The letter predates the

complaint filed by Chase against Mr. Hormes and predates the

assignment of the cas e to Mr. Straw. Assuming , arguendo, that

the date was incorrect and the year should have been 2009, the

letter rings false because Mr. Straw was no longer investigating

the case and Mr. McKinley had been in contact with Mr. Hormes

concerning the complaint . It is concluded that Mr. Hormes was

doctoring his file to make it appear that he had notified the

Department early on that an Amended Appraisal had been prepared.

2 7 . In the Original Appraisal, Mr. Hormes stated that the

neighborhood boundary that he u sed was Nicholas Parkway to the

east, Chiquita Boulevard to the west, Embers Parkway to the

north, and S outhwest 10th Street to the south. The Department

claimed that one of the properties used as a comparable sale,

636 S outhwest 10th Street, was not loca ted within the

neighborhood boundary. The evidence establishes that the

property is on the boundary line and is considered to be within

the neighborhood boundary lines.

2 8 . Mr. Hormes stated in the Original Appraisal:

This appraisal report complies with the

Uniform Standards of Professional Appraisal

Practice that were adopted and promulgated

by the Appraisal Standards Board of The

Appraisal Foundation and that were in place

at the time this appraisal report was

prepared.

2 9 . The Uniform Standards of Professional Appraisal

Practice ( USPAP ) contains the governing standards for appraisers

throughout the United States. The following portions of the

2006 USPAP are applicable to the instant case:

Ethics Rule - Conduct

An appraiser must perform assignments

e thically and competently, in accordance

with USPAP and any supplemental standards

agreed to by the appraiser in accepting the

assignment. An appraiser must not engage in

criminal conduct. An appraiser must perform

assignments with impartiality, objectivi ty,

and independence, and without accommodation

of personal interests.

* * *

An appraiser must not communicate assignment

results in a misleading or fraudulent

manner. An appraiser must no t use or

communicate a misleading or fraudulent

report or knowingly permit an employee or

other person to communicate a misleading or

fraudulent report.

Ethics Rule - Recordkeeping

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, of 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,

inclu ding 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 reference s to the

location(s) of such documentation. [3 / ]

An appraiser must retain the workfile for a

period of a least five (5) years after

preparation or at least two (2) years after

final disposition of any judicial proceeding

in which the appraiser provided tes timony

related to the assignment, whichever period

expires last.

An appraiser must have custody of his or her

workfile, or make appropriate workfile

retention, access, and retrieval

arrangements with the party having custody

of the workfile.

Standards Ru le 1 - 1

In developing a real property appraisal, an

appraiser must:

(a) be aware of, understand, and correctly

employ those recognized methods and

techniques that are necessary to produce a

credible report.

(b) not commit a substantial error or

omissio n or commission that significantly

affects an appraisal; and

(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.

Standards Rule 1 - 4(a)

In developing a real property appraisal, an

appraiser must collect, verify, and analyze

all information necessary for credible

assignment results.

(a) 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.

Standards Rule 2 - 1

Each written or oral property appraisal

report must:

(a) clearly and accurately set forth the

appraisal in a manner that will not be

misleading;

(b) contain sufficient information to

enable the intended users of the appraisal

to understand the report properly;

Standards Rule 2 - 4(b)(viii)

(b) The content of a Summ ary 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 conclu sions;

exclusion of the sales comparison approach,

cost approach, or income approach must be

explained.

30 . The appraisal attached to the Administrative Complaint

is designated as 0708 - 248 org. Dennis Black, who testified as

the Department's expert, rev iewed Mr. Hormes' s appraisal which

has a designation of 0708 - 248. Both appraisals are identical

except for the designation and both appraisals constitute the

Original Appraisal , which is at issue .

CONCLUSIONS OF LAW

31 . The Division of Administrative Hea rings has

jurisdiction over the parties to and the subject matter of this

proceeding. §§ 120.569 and 120.57, Fla. Stat. (2010).

3 2 . The Department has the burden to establish the

allegations in the Administrative Complaint by clear and

convincing evidenc e. Dep't of Banking & Fin. v. Osborne Stern

and Co. , 670 So. 2d 932 (Fla. 1996).

3 3 . The Department has alleged that Mr. Hormes violated

sections 475.622(1) and 475.622(2), which provide:

(1) Each appraiser registered, licensed, or

certified under this part shall place her or

his registration, license, or certification

number adjacent to or immediately beneath

the designation "state - registered trainee

real estate appraiser," "state - licensed real

estate appraiser," "state - certified

residential real estate appraiser," or

"state - certified general real estate

appraiser," or their appropriate

abbreviations as defined by rule, as

applicable, when such term is used in an

appraisal report or in a contract or other

instrument used by the appraiser in

conducting re al property appraisal

activities. The applicable designation

shall be included in any newspaper,

telephone directory, or other advertising

medium, as defined by rule, used by the

appraiser.

(2) A registered trainee appraiser or

licensed or certified app raiser may not sign

any appraisal report or certification or

communicate same without disclosing in

writing that she or he is a state - registered

trainee appraiser or state - licensed, state -

certified residential, or state - certified

general appraiser, as appl icable, even if

the appraisal performed is outside of the

scope of the appraiser's registration,

licensure, or certification as an appraiser.

3 4 . The Department has alleged that Mr. Hormes used an

incorrect designation in the Original Appraisal, violating

rule 61J1 - 7.001(2), which provides the following designations,

as appropriate, may be used in writing appraisals:

( 2) The following designations or

abbreviations shall be used:

(a) " State - registered trainee real estate

appraiser, " " registered trainee " or

" trainee. "

(b) " State - licensed real estate appraiser, "

" state - licensed r.e. appraiser, " " state - lic.

r.e. appraiser, " " state - lic. r.e. appr. " or

" St.Lic.REA "

(c) " State - certified residential real

estate appraiser, " " state - certified

residenti al r.e. appraiser, " " state -

certified residential appraiser, " " state -

certified res. appraiser, " " state - cert. res.

appraiser, " " state - cert. res. appr. " or

" St.Cert.Res.REA "

(d) " State - certified general real estate

appraiser, " " state - certified general r.e.

appraiser, " " state - certified general

appraiser, " " state - certified gen.

appraiser, " " state - cert. gen. appr. " or

" St.Cert.Gen.REA "

3 5 . The Department has established by clear and convincing

evidence that Mr. Hormes did not use the appropriate designation

f or a state - certified general real estate appraiser as set forth

in rule 61J1 - 7.001(2) when he signed the transmittal letter for

the Original Appraisal and when he signed the Original

Appraisal. Thus, the Department has established that Mr. Hormes

violated section 475.622(1) for failing to use the correct

designation, but the Department failed to establish that

Mr. Hormes failed to identify himself as state - certified general

real estate agent in violation of section 475.622(2) .

3 6 . The Department has alleg ed that Mr. Hormes violated

sections 475.624(2) and 475.624(15), which provide:

The board may deny an application for

registration or certification; may

investigate the actions of any appraiser

registered, licensed, or certified under

this part; may reprim and or impose an

administrative fine not to exceed $5,000 for

each count or separate offense against any

such appraiser; and may revoke or suspend,

for a period not to exceed 10 years, the

registration, license, or certification of

any such appraiser, or p lace any such

appraiser on probation, if it finds that the

registered trainee, licensee, or

certificateholder:

* * *

(2) Has been guilty of fraud,

misrepresentation, concealment, false

promises, false pretenses, dishonest

conduct, culpable negl igence, or breach of

trust in any business transaction in this

state or any other state, nation, or

territory; has violated a duty imposed upon

her or him by law or by the terms of a

contract, whether written, oral, express, or

implied, in an appraisal ass ignment; has

aided, assisted, or conspired with any other

person engaged in any such misconduct and in

furtherance thereof; or has formed an

intent, design, or scheme to engage in such

misconduct and committed an overt act in

furtherance of such intent, de sign, or

scheme. It is immaterial to the guilt of

the registered trainee, licensee, or

certificateholder that the victim or

intended victim of the misconduct has

sustained no damage or loss; that the damage

or loss has been settled and paid after

discover y of the misconduct; or that such

victim or intended victim was a customer or

a person in confidential relation with the

registered trainee, licensee, or

certificateholder, or was an identified

member of the general public.

* * *

(15) Has faile d or refused to exercise

reasonable diligence in developing an

appraisal or preparing an appraisal report.

3 7 . The Department alleges in the Administrative Complaint

that Mr. Hormes made the following errors or omissions in the

preparation of the apprai sal of the subject property:

a) Respondent misstated the neighborhood

one unit housing trends as being stable

property values and in demand/supply being

in balance, when property values were

declining and there was an oversupply of

similar housing;

b) Respondent was inconsistent in stating

on page 1 of the Report that marketing time

was over 6 months, yet stating in the

addendum under Neighborhood Market

Conditions " . . . marketing time at

typically three to six months . . . ";

c) Respondent misstated the Subject

Property zoning as R - 1, when in 2004, it

became Corridor District;

d) Respondent disclosed, but failed to

analyze or adjust for external obsolescence

in that the Subject Property lay directly

across a busy roadway and faced two

restaurants wh ose ingress/egress was

opposite the Subject Property's driveway;

e) Respondent misstated that the Subject

Property had 2 stores when it was one story;

f) The Subject Property was 26 years old

yet Respondent used 4 years old Comparable

sales;

g) Respo ndent misstated that Comparable

Sale 3 was 9 years old, when it was actually

4 years old;

h) Respondent computed an effective age of

8 years for the Subject Property based on it

having been "extensively updated with a new

kitchen, bathrooms, roof, interi or exterior

paint, flooring, new A/C and duct system,

along with extensive landscaping," other key

features such as the electrical wiring,

plumbing and windows were presumably 26

years old;

i) Respondent identified three listings of

properties comparable to the Subject

Property, one of which was offered at

$175,000, but failed to reconcile or explain

why the Subject Property was valued at

$240,000 when potential buyers had the

choice of selecting a lesser priced

alternative purchase;

j) Respondent delin eated neighborhood

boundaries for the Subject Property

neighborhood, yet used Comparable Sale 3

which was outside those boundaries;

k) Respondent stated in the Report that

there were 4 Comparable Sales in the subject

neighborhood within the previous twel ve

months ranging in sale price for $180,000 to

$265,000, yet a printout maintained in

Respondent's work file identified 5

additional sales;

l) None of the sales identified in

Respondent's work file as having occurred

within the twelve months prior to th e

effective date of the Report sold for

$265,000;

m) Respondent misstated that "equal weight

was given to each [Comparable Sale] in

arriving at the estimated value of the

subject," in that the average of the three

Comparable Sales was $243,232, not $240, 000;

n) Respondent certified incorrectly that "I

performed this appraisal in accordance with

the requirements of the Uniform Standards of

Professional Appraisal Practice [USPAP] that

were adopted and promulgated by the

Appraisal Standards Board of The Ap praisal

Foundation and that were in place at the

time this appraisal report was prepared"

when the Comment to the Record Keeping

Section of the USPAP Ethics Rule required a

work file, containing documentation

necessary to support the appraiser's

opinions a nd conclusions be in existence

prior to and contemporaneous with the

issuance of the Report. Respondent's

documentation for the available pool of

Comparable Sales showed three potential

Comparable Sales which closed after the

effective date of the report;

o) Respondent failed to appropriately

adjust the Comparable Sales for time of sale

in a declining market;

p) Respondent failed to use other

available, similar Comparable Sales with

lower sales prices that were more recent

than those selected and hence more

reflective of a realistic valuation for the

Subject Property.

3 8 . The Department has established by clear and convincing

evidence that Mr. Hormes failed to exercise due diligence in

developing and preparing the Original Appraisal. Mr. Hormes

stated in the Original Appraisal that he performed the appraisal

in conformance to the requirements of USPAP. He failed to meet

the USPAP requirements in several ways. By not following the

requirements of USPAP, Mr. Hormes did not exercise due diligence

and violated section 475.624(15).

3 9 . Mr. Hormes violated USPAP Standards Rule 1 - 1(a) by

failing to state the proper zoning for the Subject Property.

Establishing the correct zoning is a fundamental element of

developing an appraisal. He also failed cal culate the value of

the Subject Property by giving equal weighting to the three

comparable sales in the Original Appraisal. Mr. Hormes violated

USPAP Standards Rule 1 - 1(b) by failing to identify and report

the correct zoning and by stating that the view w as residential.

These are substantial errors which would significantly affect an

appraisal. Additionally, Mr. Hormes violated USPAP Standards

Rule 1 - 1(c) by committing numerous errors in the report, which

in the aggregate affects the credibility of the a ppraisal.

Mr. Hormes made inconsistent statements concerning the marketing

time in the neighborhood of the Subject Property; incorrectly

identified the Subject Property as being a two - story ranch; used

the wrong age for Comparable Sale 3; and used four - yea r - old

houses as comparable sales when the Subject Property was

26 years old. When considered as a whole, these errors

demonstrate that the Original Appraisal lacks credibility.

40 . Mr. Hormes violated USPAP Standards Rule 1 - 4(a) by

failing to do an adequ ate analysis of the available sales data.

He did not explain the impact on the value of the Subject

Property of the external inadequacies due to the Subject

Property's location behind a restaurant and a strip mall. There

was a contemporaneous listing for comparable property for

$175,000, but Mr. Hormes gave no explanation in the Original

Appraisal why a potential buyer would chose the more expensive

Subject Property over a less expensive comparable property.

There was no documentation in the work file to support

Mr. Hormes 's assertion at the final hearing that the property

listed for $175,000 had impact fees owing. Mr. Hormes stated in

the Original Appraisal that there was a property that had sold

for $265,000 in the Subject Property neighborhood, but th ere was

no documentation in the file to support this amount.

41 . Mr. Hormes violated USPAP Standards Rule 2 - 1(a) by

internal contradictions in the Original Appraisal concerning the

marketing times ; by misstatements concerning the zoning, the

number of sto ries of the property, and the age of Comparable 3;

and by characterizing the view of the Subject Property as

residential.

4 2 . Mr. Hormes violated USPAP Standards Rule 2 - 1(b) by not

providing information why there was a location adjustment to

Comparable Sa le 1 or how the external inadequacies of the

location behind a restaurant and strip mall affected the value

of the Subject Property.

4 3 . Mr. Hormes violated USPAP Standards Rule 2 - 2(b)(viii)

by failing to summarize the information that was analyzed and to

explain the reasoning that supports his analyses, opinions , and

conclusions. He did not provide explanations for the use of

comparables that were four years old; the reason that a

potential buyer would purchase the more expensive Subject

Property when a less expensive comparable listing was available;

and the adjustment for location for Comparable Sale 1 and not

for the other two comparables.

4 4 . Mr. Hormes failed to abide by the record keeping

provisions of the USPAP, which require that the work file

co ntain all data, information, and documentation necessary to

support his opinions and conclusions or contain references to

the locations of such documentation. The work file is required

to be in existence at the time the appraisal is done.

Mr. Hormes did n ot include documentation in the work file to

support his conclusions concerning the information on the

comparable sales nor did he include references to the

documentation other than to state "public records." Mr. Hormes

attempted to create a work file aft er Chase made its complaint

to him, but that work file was not in existence at the time the

Original Appraisal was developed and communicated.

4 5 . The USPAP provides that an appraiser must perform

assignments competently and must not communicate an assign ment

that is misleading. For the reasons stated above, Mr. Hormes

did not competently develop and prepare the Original Appraisal

in a competent manner. His errors and misstatements were

misleading.

4 6 . The Department has failed to establish that Mr. Hor mes

violated section 475.624(2). Mr. Hormes was incompetent , but

his incompetence does not rise to the level of a violation of

section 475.624(2).

4 7 . Rule 61J1 - 8.002 sets forth the disciplinary guidelines

to be followed in assessing a penalty. The rang e of penalty for

a violation of section 475.622(1) i s up to a 90 - day suspension.

The range of penalty for a violation of section 475.624(15) is

from a five - year suspension to revocation and an administrative

fine of $1,000. A n aggravati ng factor to be co nsidered in

assessing a penalty is Mr. Hormes's disciplinary history.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that a f inal o rder be entered finding

that Mr. Hormes violated section s 475.622(1) and 475.624(15) and

rule 61J1 - 7.001(2) ; finding that Mr. Hormes did not violate

sections 475.622(2) and 475.624(2); suspending his license for

six years followed by two years of probation; and imposing an

administrative fine of $5,000.

DONE AN D ENTERED this 19th day of May , 2011 , in

Tallahassee, Leon County, Florida.

S

SUSAN B. HARRELL

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 19th day of May , 2011 .

ENDNOTES

1/ Unless otherwise indicated, all references to the Florida

Statutes are to the 2007 version.

2/ There is an issue concerning whether Mr. Hormes prepared an

amended appraisal; thus, the first appraisal that was prepared

and delivered to the client is des ignated as the Original

Appraisal.

3/ The comment to the record keeping section in USPAP states:

"A workfile must be in existence prior to and contemporaneous

with the issuance of a written or oral report."

COPIES FURNISHED :

Donna Christine Lindamood , Esquire

Department of Business and

Professional Regulation

400 West Robinson Street, Suite N801

Orlando, Florida 32801 - 1757

Daniel Villazon, Esquire

Daniel Villazon, P.A.

1420 Celebration Boulevard, Suite 200

Celebration, Florida 34747

Layne Smith , General Counsel

Department of Business and

Professional Regulation

Northwood Centre

1940 North Monroe Street

Tallahassee, Florida 32399 - 0792

Thomas W. O'Bryant, Jr., Director

Division of Real Estate

Department of Business and

Professional Regulatio n

400 West Robinson Street, Suite N 80 1

Orlando, Florida 32801

Joni Herndon, Chair

Real Estate Appraisal Board

Division of Real Estate

Department of Business and

Professional Regulation

400 West Robinson Street, Suite N 80 1

Orlando, Florida 32801

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.