98-000696 Division Of Real Estate vs. Lynda J. Lobsitz And Jaclo, Inc. Status: Closed Recommended Order on Tuesday, July 14, 1998.

Summary: Respondents failed to properly prepare monthly reconciliation reports for escrow account.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, )

DIVISION OF REAL ESTATE, )

)

Petitioner, )

)

vs. ) Case No. 98-0696

)

LYNDA J. LOBSITZ and JACLO, INC., )

)

Respondents. )

__________________________________)

RECOMMENDED ORDER

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

on May 29, 1998, at Vero Beach, Florida, before Susan B.

Kirkland, a duly designated Administrative Law Judge of the

Division of Administrative Hearings.

APPEARANCES

For Petitioner: Geoffrey T. Kirk

Senior Attorney

Department of Business and

Professional Regulation,

Division of Real Estate

400 West Robinson Street

Orlando, Florida 32802

For Respondent: Lynda J. Lobsitz, pro se

2945 Cardinal Drive

Vero Beach, Florida 32963

STATEMENT OF THE ISSUES

Whether Respondents violated Sections 475.25(1)(e), (k),

Florida Statutes, and Chapter 61J2-14, Florida Administrative

Code.

PRELIMINARY STATEMENT

On December 17, 1997, Petitioner, Department of Business and

Professional Regulation, Division of Real Estate (Division),

filed a four-count administrative complaint, against Respondents,

Lynda J. Lobsitz and Jaclo, Inc., charging each with one count of

failing to maintain funds in escrow and one count of failing to

properly prepare the required monthly statement escrow

reconciliations as required under Chapter 61J2-14, Florida

Administrative Code.

Respondents requested an administrative hearing, and the

case was forwarded to the Division of Administrative Hearings for

assignment to an administrative law judge.

At the final hearing, Petitioner called Dawn Luchek as its

witness. Petitioner's Exhibits 1-11 were admitted in evidence.

Lynda J. Lobsitz testified in her own behalf. Respondents'

Exhibits 2-10 were admitted in evidence.

The parties agreed to file P roposed R ecommended O rders

within ten days of the filing of the transcript. The transcript

was filed on June 15, 1998. The parties timely filed their

P roposed R ecommended O rders. The parties' P roposed R ecommended

O rders have been considered by the administrative law judge in

rendering this recommended order.

FINDINGS OF FACT

1. Petitioner, Department of Business and Professional

Regulation, Division of Real Estate (Division), is a state

licensing and regulatory agency charged with the responsibility

and duty to prosecute administrative complaints pursuant to

Chapters 455 and 475, Florida Statutes.

2. Respondent, Lynda J. Lobsitz (Lobsitz), is and was at

all material times to this proceeding licensed as a real estate

broker in accordance with Chapter 475, Florida Statutes, having

been issued license number 0377747.

3. Respondent, Jaclo, Inc. (Jaclo), is and was at all times

material to this proceeding, a licensed real estate brokerage

corporation, having been issued license number 0275422.

4. During May 1997, the Division conducted an office

inspection and escrow audit of Respondents' real estate office.

5. On the day of the audit, Respondents maintained an

escrow account for rental security deposits, which account had an

adjusted trust liability of $85,300.89. 1 The adjusted bank

balance was $85,185.22, resulting in a shortage of $115.67.

6. Respondents prepared bank reconciliation reports for

January, February, March, and April 1997 for the rental security

deposit account and for the rental escrow account. Attached to

each of the reports was the monthly bank statement for the

account and period covered in the bank reconciliation report.

The bank statements identified the name of the bank, the name of

the account, the account number, the account balances and dates.

A list of outstanding checks, identifying the outstanding checks

by date and number, was attached to each report. The dates used

to reconcile the balances were not included in the bank

reconciliation reports.

7. For the January 1997 bank reconciliation report for the

rental rents deposits account, there was a difference of

$7,616.25. Respondents stated on the report that $7,630.00 was

for a check which was returned for endorsement. The report

further stated that $13.75 had not been located.

8. For the February 1997 bank reconciliation report for the

rental rents deposits account, there was a difference of

$1,756.75. The report contained an explanation for the

difference and the corrective action taken.

9. For the March 1997 bank reconciliation report for the

rental rents deposits account, there was a difference of $500

which was explained with the corrective action noted.

10. For the bank reconciliation report for January 1997 for

the rental security deposit and account, there was an overage of

$531.33. The report stated that the amount had not been located.

11. For the bank reconciliation for the rental security

deposit and account for February, 1997, there was an overage of

$2,234.33. The report explained that $1,700 was a bank error

deposit; $3.00 was sales tax which was to be transferred to rents

account; and the remaining $531.33 could not be located.

12. For the bank reconciliation for the rental security

deposit and account for March 1997, there was an overage of

$31.33. The explanation and corrective action stated on the

report was "Bank wire to incorrect account Mushlin will transfer

from rents accounts. $531.33 have not located."

13. For the bank reconciliation report dated April 1997 for

the rental security account, there was an overage of $531.33 with

the explanation of "Have not located difference."

CONCLUSIONS OF LAW

14. The Division of Administrative Hearings has

jurisdiction over the subject matter of and the parties to this

proceeding. Section 120.57(1), Florida Statutes.

15. Respondents are alleged to have failed to properly

prepare the monthly escrow reconciliation statements. Rule 61J2-

14.012, Florida Administrative Code provides:

(1) [T]he broker shall keep an accurate

account of each deposit transaction and each

separate bank account wherein such funds have

been deposited. All such books and accounts

shall be subject to inspection by DPR or its

authorized representative at all reasonable

times during regular business hours.

(2) Once monthly, a broker shall cause to be

made a written statement comparing the

broker's total liability with the reconciled

bank balance(s) of all trust accounts. The

broker's trust liability is defined as the

sum total of all deposits received, pending

and being held by the broker at any point in

time. The minimum information to be included

in the monthly statement-reconciliation shall

be the date the reconciliation was

undertaken, the date used to reconcile the

balances, the names of the bank(s), the

name(s) of the account(s), the account

number(s), the account balance(s) and

date(s), deposits in transit, outstanding

checks identified by date and check number,

an itemized list of the broker's trust

liability, and any other items necessary to

reconcile the bank account balance(s) with

the balance per the broker's checkbook(s) and

other trust account books and records

disclosing the date of receipt and the source

of the funds. The broker shall review, sign,

and date the monthly statement-

reconciliation.

(3) Whenever the trust liability and the

bank balances do not agree, the

reconciliation shall contain a description or

explanation for the difference(s) and any

corrective action taken in reference to

shortages or overages of funds in the

account(s). . . .

16. Respondents have violated Rule 61J-14.012, Florida

Administrative Code, by failing to properly maintain the monthly-

statement reconciliation reports. For the reconciliation reports

for the rental security deposits for January through March 1997,

there was a reported overage of $531.33 with no explanation for

the difference other than it could not be located. No corrective

action was taken concerning the overage. For April 1997, the

report indicated an overage of $31.33 and indicated the $531.33

still had not been located. On the day of the audit, there was a

shortage of $115.67 in the rental security deposit account when

compared to the trust liability balance, in violation of

Rule 61J2-14.012, Florida Administrative Code. Respondents are

subject to disciplinary action pursuant to Section 475.23(1)(e),

Florida Statutes.

17 Respondents have alleged to have violated Section

475.25(1)(k), Florida Statutes, which provides that a licensee

may be subject to discipline if he:

(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 . . . .

18. Petitioners have failed to establish that Respondents

violated Section 475.25(1)(k), Florida Statutes. There is no

evidence that the Respondents did not deposits all the rental

security deposits which they received in the escrow account. The

Respondents did disburse $61.05 for cleaning for a client when

there were insufficient funds in the account to pay for the

cleaning. When the error was discovered, the Respondents

requested the client to immediately reimburse the money spent for

the cleaning. The funds were reimbursed by the client. There is

no evidence to show that there was an intentional misuse of the

funds. Respondents have not established a violation of Section

475.25(1)(k), Florida Statutes.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that a Final Order be entered finding that

Respondents violated Sections 475.25(1)(e), Florida Statutes,

issuing a reprimand for the Respondents, requiring that

Respondent Jaclo, Inc., pay an administrative fine of $100, and

requiring that Respondent Lynda J. Lobsitz take a seven-hour

broker management course.

DONE AND ENTERED this 14th day of July, 1998, in

Tallahassee, Leon County, Florida.

___________________________________

SUSAN B. KIRKLAND

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 14th day of July, 1998.

ENDNOTE

1 / The adjusted trust liability is derived by adding the amounts

in the column titled "Year to Date" on Petitioner's Exhibit 5,

Respondents' Security Report for All Properties dated May 23,

1997, which totaled $63,643.55 and included $61.05 which had been

paid for cleaning when the client's account did not contain

sufficient funds to pay that amount. To the $63,643.55 is added

the amount of outstanding checks, $21,657.34, for a total trust

liability of $85,300.88.

COPIES FURNISHED:

Henry M. Solares

Division Director

Division of Real Estate

Department of Business and

Professional Regulation

400 West Robinson Street

Orlando, Florida 32802-1900

Lynda L. Goodgame

General Counsel

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399-0792

Geoffrey T. Kirk, Esquire

Department of Business

and Professional Regulation

Division of Real Estate

400 West Robinson Street

Orlando, Florida 32802-1900

Lynda J. Lobsitz, pro se

c/o Jaclo, Inc.

2945 Cardinal Drive

Vero Beach, Florida 32963

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.