State Appeals Court To Florida Real Estate Brokers' Ripoff Reimbursement Fund: Quit Stiffing The Victims & Cough Up $325K+ To Seven Prospective Homebuyers Who Got Screwed Out Of Their Downpayments By Builders' Sales Agents

The following facts have been lifted from a recent ruling by a Florida appeals court:

• Appellants [ie. seven prospective new home buyers] appeal the final orders of the Florida Real Estate Commission (the "FREC") denying their claims against the Florida Real Estate Recovery Fund (the "Recovery Fund").(1) Appellants argue the FREC incorrectly determined that they did not meet the statutory requirements for awards from the Recovery Fund. We agree and reverse with instructions for the FREC to pay Appellants' respective claims.
  
  Between April 2004 and May 2008, Appellants entered into purchase agreements with Superior Homes and Investments ("Superior") for the construction of single-family residences on lots in an undeveloped subdivision. The purchase agreements stated that Superior contracted with Tousa Homes, Inc. ("Tousa"), to construct the residences. Appellants entered into the purchase agreements upon alleged fraudulent misrepresentations and omissions by Myrna Ambroise, Steve Ambroise, Mark Goldberg, and Tracy Penny, who are all licensed Florida real-estate brokers employed by Superior or its affiliates (the "Licensees").
  
  In January 2008, before construction began, Tousa filed for bankruptcy. When construction still had not commenced by June 2008, Appellants began demanding that Superior return their deposits. Superior universally refused to refund any of the deposits. In response, Appellants joined one of two civil actions against the Licensees, Superior, and Superior's affiliates. Appellants brought claims against the Licensees for fraudulent inducement and negligent misrepresentation.
  
  After the Licensees failed to defend the two civil cases, the trial court entered default final judgments for Appellants, finding that the Licensees committed fraud in the underlying transactions. Appellants timely notified the FREC of their judgments, and the FREC held a hearing on Appellants' claims against the Recovery Fund. After the hearing, the FREC entered final orders denying Appellants' claims. The FREC's sole reason for denying Appellants' claims was that Appellants failed to prove the Licensees acted solely in their capacities as real estate licensees, as required by the Recovery Fund statute.
  
  The Recovery Fund "provides for the reimbursement of persons who suffer monetary losses because of the unscrupulous acts of licensed brokers or salespersons." Moyant v. Beattie, 561 So. 2d 1319, 1320 (Fla. 4th DCA 1990).
  
  Section 475.482(1), Florida Statutes (2014), allows a claim against the Recovery Fund by any person "adjudged by a court of competent civil jurisdiction in this state to have suffered monetary damages by reason of any act committed, as a part of any real estate brokerage transaction involving real property in this state by any broker or sales associate," if that act "was a violation proscribed in s. 475.25 or s. 475.42."
  
  Section 475.25(1)(b), Florida Statutes (2014), includes "fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme, or device, [and] culpable negligence," among other prohibited acts. In addition, the broker must have acted "solely in the capacity of a real estate licensee in the transaction." Id. § 475.482(1)(c).
  
  
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After an analysis of the relevant case law, and its application to the facts of the case, the court ruled:

• Because the FREC erred by denying Appellants' claims against the Recovery Fund, we reverse and remand with instructions for the FREC to pay Appellants' claims as follows: (1) $50,000 for the Bottoms; (2) $50,000 for the Sheppards; (3) $50,000 for the Tilleys; (4) $50,000 for the Watkinses; (5) $50,000 for Steele and Sellwood; (6) $50,000 for Brown; and (7) $28,299 for Hendricks.
  
  REVERSED and REMANDED with INSTRUCTIONS.

For the ruling, see Hendricks v. Dep’t of Bus. & Prof’l Regulation, Nos. 5D14-4051, 5D14-4052, 5D14-4053, 5D14-4054, 5D14-4055, 5D14-4057, 5D14-4058 (Fla. 5th DCA, Jan. 8, 2016).

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(1) The Florida Real Estate Recovery Fund has been established to reimburse any person or business that has suffered monetary damages following a fraudulent act committed by a licensee. Claims from the Fund must be made within 2 years of the alleged violation. Reimbursement for a single transaction is limited to a maximum amount of $50,000. If multiple judgments are awarded against one broker or sales associate the maximum reimbursement is $150,000. The Fund is financed by fees and fines paid by licensees; $3.50 per year for brokers and $1.50 per year for sales associates.