FREC Case Study: Unauthorized tenants
Friday, June 14, 2013
By Christina Arzillo
Florida Department of Business and Professional Regulation
A complaint was filed with the Florida Department of Business and Professional Regulation against a licensed real estate broker. In late 2011, the broker represented an out-of-state couple in renting their property, which was located in Florida. The broker did not enter into a written property management agreement with the owners.
After receiving several thousand dollars from the owners, which the broker alleged was for repairs to the property, the broker leased the property to a tenant without notifying the owners. The broker began to receive rental payments from the tenant. The owners did not know that their property was being rented until they came down to Florida almost four months later and visited the property.
Subsequently, the owners demanded the documentation involved in the lease of their property and the rental proceeds collected by the broker. However, the broker failed to deliver said documents and funds. Consequently, the owners requested all of the documents related to the lease from the tenant, and realized that the broker had leased their property to the tenant for several months and collected more $1,000 per month in rent.
An administrative complaint against the broker was filed by the DBPR for violation of Section 475.25(1)(b), Florida Statutes for acting dishonestly or with culpable negligence in representing the owners of the property and Section 475.25(1)(d)1, Florida Statutes for failing to account for or deliver rental money that the broker collected monthly.
The broker disputed material issues of fact, and the department referred the case to the DBPR Division of Administrative Hearings. A judge found that the respondent violated Section 475.25(1)(b), Florida Statutes and Section 475.25(1)(d)1, Florida Statutes, and recommended that the broker’s license be revoked. Finding mitigation, the Florida Real Estate Commission entered a Final Order suspending the broker’s license for five years and ordered the broker to pay a $5,000 fine plus complete a 28-hour broker reactivation course.
Christina Arzillo is a senior attorney Florida Department of Business and Professional Regulation.