ALJDEC decisions subject to certification as final

17F-DI-020-REL · Department of Real Estate · 2016-11-16

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

In the matter of the real estate activities of:

Randall Johnson, holder of Salesperson license number SA516901000 (Expired),

and

Valley Vistas Management Company, an unlicensed real estate business,

Respondents.

No. 17F-DI-020-REL

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: November 4, 2016

APPEARANCES: Randall Johnson, Respondent; Ryan Krench, Attorney for the Department of Real Estate; Jim Ledwith, witness

ADMINISTRATIVE LAW JUDGE: Dorinda M. Lang

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Having heard the evidence and testimony and having considered the record in this matter, the undersigned Administrative Law Judge hereby makes the following Findings of Fact and Conclusions of Law and issues the following Recommended Decision to the Commissioner of the Arizona Department of Real Estate.

FINDINGS OF FACT

The Arizona Department of Real Estate (“Department”) issued Real Estate Broker’s License No. SA516901000 to Randall Johnson (“Respondent”). That license expired on May 31, 2016. Respondent is the sole member and statutory agent for Valley Vistas Management Company (“Valley Vistas”). Therefore, all violations found against it in this matter are the responsibility of Respondent.

Valley Vistas is not licensed with the Department and it was not being operated through a licensed designated broker. Its employees collected rent, signed contracts and advertised. The money earned by Valley Vistas did not go to Respondent through a licensed broker.

Upon receiving a complaint regarding Respondent’s activities, the Department began an investigation and requested that Respondent submit a signed statement of the facts. The Department’s investigator, Jim Ledwith, confirmed the above facts. The Department issued Respondent and Valley Vistas and Respondent a Cease and Desist Order and Notice of Right to Appeal on August 12, 2016. Respondent appealed and the matter was set for hearing with the Arizona Office of Administrative Hearings, an independent State hearings agency.

Respondent appeared at the hearing and testified on his own behalf. He did not dispute the alleged violations. However, he wanted it to be heard that he did not intend to violate the licensing statutes. Rather, he was under the impression that his activities were being done under the license of a designated broker. He had been operating in this manner for years without realizing his error.

CONCLUSIONS OF LAW

The Commissioner has jurisdiction in this case.

Pursuant to A.R.S. § 41-1092.07(G)(2) and A.A.C. R2-19-119(B), the Department has the burden of proof in this matter. The standard of proof is by a preponderance of the evidence. See A.A.C. R2-19-119(A).

Pursuant to A.R.S. § 32-2122, anyone acting in the capacity of a real estate broker or real estate salesperson in Arizona must be licensed by the Department to do so.

Valley Vistas collected rents, entered into contracts to manage properties, advertised properties for sale or rent, and was engaged in the activity of having renters sign leases, which are all activities of a real estate broker pursuant to A.R.S. § 32-2101(48). Yet Valley Vistas did not hold a real estate license. Doing so was a violation of A.R.S. § 32-2122.

Respondent, as the owner of Valley Vistas, is responsible for its unlicensed activities. Because Respondent did not have a broker’s license, he could not even conduct real estate business in Arizona unless he did so through a licensed broker. Respondent admitted that, due to an oversight on his part, he was not working under a licensed broker.

A.R.S. § 32-2153 provides as follows:

32-2153. Grounds for denial, suspension or revocation of licenses; letters of concern; provisional license; retention of jurisdiction by commissioner; definitions

A. The commissioner may suspend or revoke a license, deny the issuance of a license, issue a letter of concern to a licensee, issue a provisional license or deny the renewal or the right of renewal of a license issued under this chapter if it appears that the holder or applicant, within five years immediately preceding, in the performance of or attempt to perform any acts authorized by the license or by this chapter, has:

* * *

3. Disregarded or violated any of the provisions of this chapter or any rules adopted by the commissioner.

* * *

7. Accepted compensation as a licensee for the performance of any of the acts specified in this chapter from any person other than the licensed broker to whom the licensee is licensed, the licensed professional corporation of which the licensee is an officer and shareholder or the licensed professional limited liability company of which the licensee is a member or manager.

8. Represented or attempted to represent a broker other than the broker to whom the salesperson or associate broker is licensed.

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22. Demonstrated negligence in performing any act for which a license is required.

The evidence of record established that Valley Vistas violated A.R.S. § 32-2122 by conducting real estate business without a license. As its owner, Respondent violated A.R.S. § 32-2153(A)(7) because he accepted compensation that was earned by Valley Vistas’ real estate business activities and that compensation did not come through a broker. Respondent also violated A.R.S. § 32-2153(A)(8) because he mistakenly held out that he was working under a broker’s license when he was not. Respondent also demonstrated at hearing that he was in violation of A.R.S. § 32-2153(A)(22) because he did not obtain a license for the legal entity that he was doing real estate business through and it was his duty to know that he needed to do this, and he did not ensure that he was really working under the broker he thought he was working under, and this demonstrated incompetence. However, because Respondent was not given notice that this was one of the allegations against him, the Administrative Law Judge will not consider that violation as part of this recommendation and includes it here for information only.

Pursuant to A.R.S. § 32-2153(B)(6), the Department is authorized to issue a letter of concern to those engaged in the business of real estate without a license. The Department’s Cease and Desist Order was effectively one such letter and was issued appropriately because the evidence established that Valley Vista was conducting real estate business without a license.

The evidence has also established that License No. SA516901000 should be revoked because he was directly responsible for Valley Vista conducting real estate business without a license or the oversight of a licensed broker, because he held himself out as working under a licensed broker when this was not the case, and because Respondent was actually not working under any licensed broker.

RECOMMENDED ORDER

It is ordered that License No. SA516901000 shall be revoked on the effective date of the Order in this matter. It is further ordered that the Cease and Desist Order is affirmed.

In the event of certification of the Administrative Law Judge Decision by the Director of the Office of Administrative Hearings, the effective date of the Order shall be five days from the date of the certification.

Done this day, November 16, 2016.

/s/ Dorinda M. Lang

Administrative Law Judge

Transmitted electronically to:

Judy Lowe, Commissioner

Arizona Department of Real Estate