“If you are sitting in the audience today you are probably here for one of the four following reasons…” First- You may be an attorney, friend, or relative, speaking on the behalf of a RESPONDENT… Second - You may be here as part of a DISCIPLINARY requirement. You must abide by all rules and conditions set forth in Rule 61J … Third - You may be a Prospective Real Estate Sales Associate or Broker and the FDLE or FBI report has revealed some illegal or unethical behavior in your past… Lastly - You may be here to gain a better understanding of Florida’s Real Estate Profession and to contribute to this process. Thank you for your efforts…

The Administrative Process Recovery Fund Claims and Legislative Update Josh Kendrick This presentation is designed to provide a general overview of the administrative process. Legal advice is not being provided. If you have any legal questions or concerns, please consult your own attorney The images presented are not the presenter’s own.

Office of General Counsel Division of Real Estate Josh Kendrick Chief Attorney, Division of Real Estate Regulate over 300,000 licensees 11 Attorneys in Division of Real Estate FREC, FREAB, ULA Administrative Prosecutions Escrow Disbursement Orders Recovery Fund Claims

Agenda 1) Complaints and Investigative Reports 2) Confidentiality 3) Legal Review and Discretion 4) Probable Cause 5) Election of Rights 6) Hearings 7) Final Orders 8) Recovery Fund Claims 9) Legislative Update

Pre-Probable Cause Chapter 455

Sample Complaint

Complaints and Investigative Reports Requirements: Section (1), Florida Statutes 1) Must be in writing and signed 2) Complaint must be legally sufficient a)Contains the ultimate facts b)That show a violation of 475, 455, or 61J1 or 61J2, Florida Administrative Code

Privilege against Civil Liability Preventing a Chilling Effect Section (11), Florida Statutes A privilege against civil liability is hereby granted to any complainant or any witness with regard to information furnished with respect to any investigation or proceeding pursuant to this section, unless the complainant or witness acted in bad faith or with malice in providing such information.

Complaints and Investigative Reports Investigations (2), Florida Statutes Subject is provided a copy of the complaint Subject is provided with an opportunity to provide a response within 20 days Investigator interviews witnesses, obtains documents, and drafts an investigative report

Sample Investigative Report

Pre-Probable Cause Confidentiality – (10) The complaint and all information obtained pursuant to the investigation by the department are confidential and exempt from s (1) until 10 days after probable cause has been found to exist by the probable cause panel or by the department, or until the regulated professional or subject of the investigation waives his or her privilege of confidentiality, whichever occurs first. However, this exemption does not apply to actions against unlicensed persons pursuant to s or the applicable practice act.

Pre-Probable Cause Confidentiality Disclosure is a Crime (1) No officer, employee, or person under contract with the department, or any board therein, or any subject of an investigation shall convey knowledge or information to any person who is not lawfully entitled to such knowledge or information about any public meeting or public record, which at the time such knowledge or information is conveyed is exempt from the provisions of s , s (1), or s (2) Any person who willfully violates any provision of this section is guilty of a misdemeanor of the first degree, punishable as provided in s or s , and may be subject to discipline pursuant to s , and, if applicable, shall be removed from office, employment, or the contractual relationship.

Confidentiality - Policy Why do complaints and investigations remain confidential and exempt from Chapter 119, public record requests, absent a finding of probable cause? Opportunity for competitive abuse Loss of reputation without due process

Legal Review “A probable cause panel shall determine if probable cause exists…” 61J ) Administrative Complaint (possible ESO) 2) Closing Order 3) Closing Order with Letter of Guidance (4)

Closing Orders & Letters of Guidance

Prosecutorial Discretion Violations and Considerations 1) Stolen or missing escrow funds 2) Failing to place funds into an escrow account including property management 3) Convicted of crime of moral turpitude mortgage fraud, money laundering, drug trafficking 4) Sales associate operating as broker 5) Property management disputes smoke, animals, repairs 6) Failure to timely report misdemeanor convictions DUI (first offense), marijuana (personal use) 7) Personal Disputes divorce, competition, etc.

Administrative Complaints

Probable Cause Standard [The panel] must have a solid though not necessarily correct basis in fact and law for [probable cause]. To sustain a probable cause determination there must be some evidence considered by the panel that would reasonably indicate that the violation had indeed occurred. The evidence, however, need not be as compelling as that which must be presented at the formal administrative hearing on the charges… Fish v Department of Health Bd of Dentistry

After Probable Cause Chapter 120

State’s Burden Clear and Convincing Evidence Clear and convincing evidence “requires more proof than a ‘preponderance of the evidence’ but less than ‘beyond and to the exclusion of a reasonable doubt.’” In re Graziano, 696 So. 2d 744 Clear and convincing evidence requires that the evidence must be found to be credible; the facts to which the witnesses testify must be distinctly remembered; the testimony must be precise and explicit and the witnesses must be lacking in confusion as to the facts in issue. The evidence must be of such weight that it produces in the mind of the trier of fact a firm belief or conviction, without hesitancy, as to the truth of the allegations sought to be established. Slomowitz v. Walker, 429 So. 2d 797

Election of Rights

Address of Record (1) Each licensee of the department is solely responsible for notifying the department in writing of the licensee’s current mailing address, address, and place of practice, as defined by rule of the board or the department when there is no board. A licensee’s failure to notify the department of a change of address constitutes a violation of this section, and the licensee may be disciplined by the board or the department when there is no board. (2) Notwithstanding any other provision of law, service by regular mail or to a licensee’s last known mailing address or address of record with the department constitutes adequate and sufficient notice to the licensee for any official communication to the licensee by the board or the department except when other service is required pursuant to s (3)(a) Notwithstanding any provision of law, when an administrative complaint is served on a licensee of the department, the department shall provide service by regular mail to the licensee’s last known address of record, by certified mail to the last known address of record, and, if possible, by . (b) If service, as provided in paragraph (a), does not provide the department with proof of service, the department shall call the last known telephone number of record and cause a short, plain notice to the licensee to be posted on the front page of the department’s website and shall send notice via to all newspapers of general circulation and all news departments of broadcast network affiliates in the county of the licensee’s last known address of record.

Waiver Hearing , F.A.C. (DOAH Rule) (4) Any person who receives written notice of an agency decision and who fails to file a written request for a hearing within 21 days waives the right to request a hearing on such matters. This provision does not eliminate the availability of equitable tolling as a defense.

Informal Hearing No Issues of Material Fact Mitigation hearing when there are no disputed issues of material fact. Allows a Respondent to explain his side of the story. Occurs when the Administrative Complaint is not, or cannot, be disputed. Pros: Efficient, Inexpensive, Informal (not a trial) Cons: No dispute of fact, Informal(not a trial)

“When the Administrative Complaint cannot be disputed” Example: Criminal conviction for mortgage fraud (1)(f) Convicted of crime of moral turpitude or fraud “When a party seeks a formal hearing in accordance with section (1), an agency may conclude that no dispute of material fact has been demonstrated, refuse to refer the matter to DOAH, andproceed informally. If the agency's decision regarding the need for formal proceedings was incorrect, the error can be corrected on appeal from final order” Nicolitz v. Board of Opticianry 609 So.2d 92

Formal Hearings Resolve disputed issues of material fact 1) Discovery (Admissions, Production, Deposition, etc.) 2) Prehearing Stipulation 3) Evidentiary hearing (Trial) Direct and Cross Examination, Hearsay, Evidence, Rules of Civil Procedure 4) Proposed Recommended Order (PRO) 5) ALJ’s Recommended Order 6) Exceptions 7) Agency Final Order

Final Order Generally: Reduces final disposition to writing - win or lose Generally effective 30 days upon filing May be appealed to District Court of Appeal Failure to timely comply with Final Order will result in a new violation – restarting the disciplinary process (New AC, EOR, hearing)

Overview Florida Real Estate Recovery Fund Claims

Recovery Fund Claims , Florida Statutes Licensee: 1) Was holder of a current, valid real estate license 2) Was neither a buyer, seller, landlord, tenant, or officer in transaction 3) Was acting solely in the capacity of a real estate licensee 4) Violated or

Recovery Fund Claims , Florida Statutes Claimant: 1) Received civil judgment in Florida against licensee (not brokerage) 2) Cause of action based on real estate transaction (proximate cause) 3) At time civil action was commenced, written notice provided to Commission by certified mail 4) Claim for recovery is made within 2 years of act giving rise to claim or 2 years from the time act should have been discovered 5) Has received a writ of execution upon judgment 6) Has been unable to satisfy judgment after diligent search

Recovery Fund Claims , Florida Statutes Maximum payment: $50,000 Compensatory: Does not include attorney’s fees, treble damages, costs. Damages must be liquidated – defined in judgment or clearly ascertainable by the pleadings Payments against any licensee may not exceed, in the aggregate, $150,000 Licensee is suspended upon payment and unsuspended upon repayment

Recovery Fund Claim Case Study Claimant has obtained: $20,383 default judgment against licensee Judgment includes: $5,000 escrow deposit (liquidated damages) $15,383 punitive damages, attorney’s fees, and costs Maximum recovery? $5,000

Legislative Update Senate Bill 608 (2015) Florida Real Estate Commission

Legislative Update Senate Bill 608 (2015) Qualifications for practice (6) The postlicensure education requirements of this section, and the education course requirements for one to become initially licensed, do not apply to any applicant or licensee who has received a 4-year degree, or higher, in real estate from an accredited institution of higher education.

Legislative Update Senate Bill 608 (2015) Inactive status (4) The commission may reinstate the license of an individual whose license has become void if the commission determines that the individual failed to comply because of illness or economic hardship, as defined by rule. The individual must apply to the commission for reinstatement within 6 months after the date that the license becomes void. Such individual must meet all continuing education requirements prescribed by law, pay appropriate licensing fees, and otherwise be eligible or renewal of licensure under this section.

Legislative Update Senate Bill 608 (2015) Registration and Licensing …The commission shall adopt rules that allow a brokerage to register a broker on a temporary, emergency basis if a sole broker of a brokerage dies or is unexpectedly unable to remain a broker.

Legislative Update Senate Bill 608 (2015) Florida Real Estate Appraisal Board

Legislative Update Senate Bill 608 (2015) Retention of records. An appraiser registered, licensed, or certified under this part or an appraisal management company registered under this part shall prepare and retain a work file for each appraisal, appraisal review, appraisal consulting assignment.

Legislative Update Senate Bill 608 (2015) Retention of records (Work File Documents) The work file must contain: 1) Original or true copies of any contracts engaging the appraiser’s or appraisal management company’s services 2)Appraisal reports 3) Supporting data assembled and formulated by the appraiser or company in preparing appraisal reports or engaging in appraisal management services 4) All other data, information, and documentation as established by rule of the board

Legislative Update Senate Bill 608 (2015) Retention of records (Order File) An appraisal management company registered under this part shall prepare and retain an order file for each appraisal, appraisal review, or appraisal consulting assignment. The work file and the order file shall be retained, for 5 years or the period specified in the Uniform Standards of Professional Appraisal Practice, whichever is greater.

Legislative Update Senate Bill 608 (2015) Retention of records (Order File Documents) The order file must contain: 1) Original or true copies of any contracts engaging the appraiser’s services, 2) The appraisal reports 3) Any engagement materials or instructions from the client 4) All other documents required by the standards for the development or communication of a real estate appraisal as established by rule of the board

Legislative Update Senate Bill 608 (2015) Authority to inspect Duly authorized agents and employees of the department shall have the power to inspect in a lawful manner at all reasonable hours any appraisal management company, appraiser or appraisal office certified, registered, or licensed under this chapter, for the purpose of determining if any of the provisions of this chapter, chapter 455, or any rule promulgated under authority of either chapter is being violated.

Final Note for Applicants and Applications 61J Informal Hearings When an applicant for licensure as a real estate sales associate or broker requests a Section (2), F.S., informal hearing before the Commission, in addition to other requirements of law, before the applicant shall be considered for approval to sit for the real estate examination, the applicant must submit at least 3 letters of reference from persons who know of the applicant’s honesty, truthfulness, trustworthiness, good character and good reputation for fair dealing as required in Section (1)(a), F.S. At least 2 of the letters must be from individuals not related to the applicant.

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