Broke and Broker

Failing to disclose adverse legal judgments can cost a real estate broker his license--unless he happens to be governor

Despite his bankruptcy troubles, Governor J. Fife Symington III still has friends he can rely on. Friends who owe him their jobs, for example, such as the people at the Arizona Department of Real Estate.

When Symington applied to renew his real estate broker's license last month, his application should have sent up a number of red flags.

The application was late.
It sought an exemption to the continuing education requirement.
And it contained a copy of the $11 million judgment the governor suffered as a result of the failed Mercado partnership--a project that Symington had personally guaranteed.

On this last item, the governor was simply hedging a bet. He'd included the judgment as proof that the deal that went sour and eventually forced him into bankruptcy was unrelated to his activities as a real estate broker.

Ed Ricketts, the department's deputy commissioner, agreed.
But the rubber-stamping of Symington's broker's license required a narrow reading of administrative codes and real estate laws that doesn't seem to extend to brokers in low places.

Just ask the Phoenix resident who had his broker's license revoked two years ago and was assessed a $10,000 fine.

"The application process is totally inconsistent," says the broker, who says he's suffered undue harassment from the Department of Real Estate after more than 20 years in the industry. He still fears reprisals, and spoke on condition of anonymity.

Applying for a broker's license in Arizona is a little like buying a handgun. Before you can take home either item, you need to answer "no" to a few simple questions. The state doesn't want convicted felons selling houses any more than it wants them carrying lethal weapons.

The state also doesn't want to renew the licenses of brokers who defraud their customers. So applicants are supposed to answer "yes" if they've lost a civil suit involving real estate within the past two years--no matter whether the suit involves misrepresentations by the broker--and attach documents explaining the circumstances.

In fact, brokers who receive judgments against them in cases that involve real estate are supposed to report their setbacks long before they apply for a license renewal. Within ten days of an adverse judgment, brokers are required to notify the commissioner's office.

The suspended broker didn't do this, and it cost him dearly.
Symington also didn't do this, but it didn't cost him a thing.
Administrative code states that real estate licensees should notify the commissioner when they've lost a civil suit "in which the matter involved a real estate transaction to which he/she was a party."

The code is written in such broad language for a reason, says Department of Real Estate spokesperson Charlie Downs. "We want to know within ten days of anything that affects the licensee," he says.

In the case of the suspended broker, three civil suits involving real estate transactions resulted in judgments against him totaling $50,000 in 1988 and 1989. But none of the rulings resulted from wrongdoing on the part of the broker as a real estate agent. "In each of the three lawsuits," reads Administrative Law Judge Mary E. Hughes' 1993 opinion, "the judgment against [the broker] was based on breach of contract, not misrepresentation."

One case, for example, involved an alarm system that turned up missing when a building changed hands in a complex transaction. The broker didn't have a key to the place at the time, but he was named in the lawsuit, and his share of the judgment was paid by another party.

In real estate, brokers will tell you, such suits over breach of contract are as common as dry rot.

Still, Hughes ruled, the broker should have reported these judgments within ten days tothe Department of Real Estate simply because they involved real estate transactions. Basing his decision on Hughes' opinion, RealEstate Commissioner Jerry Holt, a Symington appointee, revoked the broker's license in 1993.

The effect has been devastating, the suspended broker says. It's taken away the only livelihood he's ever known, hurt his reputation in an industry where reputation is crucial, and depleted his savings.

Most distressing of all, he says, is the enmity that the governor's appointees seem to feel for him. He says he's being made an example of, but he's not sure why.

He recalls that, in 1991, after Symington appointed Holt to be his real estate commissioner, the governor promised to streamline the department. "Very few people are going in and asking tough questions about the validity of those regulations," Symington said at the time. "Any time an organization has grown to the size of the state Real Estate Department over ten years, it's a good thing to go back and analyze. ... We need to ask some very direct questions about the effectiveness of regulation."

Four years later, the governor's appointees seem to be doing the exact opposite, the suspended broker says: needlessly applying regulations in the strictest of interpretations.

Except, of course, when the broker in question is the governor himself.
Symington's file shows no indication that he notified Holt within ten days after the $11million judgment in the Mercado case was handed down July 24.

On November 3, Symington applied to renew his broker's license, indicating that the renewal was late. He asked for, and won, a waiver on the continuing education requirement, which mandates that Arizona real estate agents attend 45 hours of schooling in the two years between renewals.

1
 
2
 
All
 
Next Page »
 
My Voice Nation Help
0 comments
 
Loading...