Opinion
January 10, 1983
Proceeding pursuant to CPLR article 78 to review a determination of the respondent Secretary of State, dated September 8, 1981, which, after a hearing, found that petitioner was guilty of untrustworthiness and suspended his real estate broker's license for one month, or in lieu thereof, imposed a fine of $500. Petition granted, determination annulled, on the law, without costs or disbursements, the charges against petitioner dismissed and matter remitted to the respondents for further proceedings, if any, as they may deem warranted. Petitioner was found to have demonstrated "untrustworthiness" within the meaning of section 441-c Real Prop. of the Real Property Law by virtue of his failure to obtain advance assurances from the lender on a Federal Housing Administration mortgage that only market points would be charged. As construed by respondents, market points mean the amount of points prevailing in the market at the time of closing and not whatever points might be charged by a particular lender. The essence of respondents' determination is that petitioner breached a duty to exercise reasonable care in choosing a lender. While denoted "untrustworthiness", what respondents actually refer to is negligence by petitioner. Although respondents are to be afforded a wide latitude in defining what conduct should be deemed untrustworthy ( Matter of Gold v Lomenzo, 29 N.Y.2d 468), untrustworthiness does not equate with purely negligent acts. "There is a great deal of difference between charges of fraudulent practices and demonstrating untrustworthiness, and a charge of demonstrating incompetence. The statute itself distinguishes them by separately mentioning each as grounds" ( Matter of Juba v Department of State, 35 A.D.2d 633; see Real Property Law, § 441-c). Untrustworthiness is akin to violation of a professional norm (see Matter of Gold v Lomenzo, supra, p 478) and contemplates such bad faith as would cast doubt on one's character and fitness to act as a broker (see, e.g., Matter of Gudinsky v Cuomo, 64 A.D.2d 899; Matter of Borenstein v Lomenzo, 41 A.D.2d 1007; Matter of Grant Realty v Cuomo, 58 A.D.2d 251). Insofar as respondents' determination absolved petitioner of bad faith but rested on his negligent failure to protect his client, the seller, respondents' determination of untrustworthiness is not supported by substantial evidence ( 300 Gramatan Ave. Assoc. v State Div. of Human Rights, 45 N.Y.2d 176, 180). In addition, the notice of charges against petitioner was deficient. "When proceedings involving a charge of untrustworthiness are brought, the charge should be definite so that the accused might know against what he has to defend" ( Matter of Chiaino v Lomenzo, 26 A.D.2d 469, 472; Real Property Law, § 441-e). Although the affidavit detailing the charges at bar concluded that petitioner had demonstrated untrustworthiness and incompetence, none of the allegations pertained to the breach of duty by petitioner ultimately found. Consequently, respondents' determination cannot stand (cf. Grimm v Department of State, 56 A.D.2d 591). Gibbons, J.P., Thompson, Weinstein and Niehoff, JJ., concur.