Fort Collins developer sues state to get real estate license back

FORT COLLINS — Jay Stoner, a Fort Collins real estate developer, has sued the Colorado Real Estate Commission, which stripped him of his real estate brokers license in 2014 and has since declined to issue him a new one.

Stoner, whose Stoner and Co. firm filed for Chapter 11 bankruptcy protection in 2012, is asking a U.S. Bankruptcy Court for the District of Colorado judge to force the commission to issue a new license, which Stoner applied for last year and was denied.

It was 1972 when Stoner was issued his first real estate license, according to court documents filed with his March 7 legal complaint. Decades and thousands of transactions later, a dispute with home designer and builder Donald Richmond that began with a deal to partner on a spec-house — a home that is built before a buyer is identified — led the real estate commission to take away Stoner’s license.

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During the spring of 2009, Stoner began discussions about building a spec house in Fort Collins with Richmond, with whom he had done business in the past, court documents show. As part of the deal, the parties agreed to evenly split the profits when the spec house sold and Richmond agreed to advance Stoner an earnest-money payment of $30,000.

“Upon receipt of the $30,000.00 Earnest Money deposited under the Richmond Purchase Contract, Stoner and Company used these funds for business purposes and Plaintiff Stoner instructed a member of Stoner and Company’s staff to prepare a First Deed of Trust to serve as security for the obligation owed by Stoner and Company to Richmond,” according to Stoner’s legal complaint. “Although Plaintiff Stoner recalls executing a First Deed of Trust on behalf of Stoner and Company in favor of Richmond encumbering property in the Harmony Ridge subdivision, for reasons unknown this First Deed of Trust was never recorded.”

After agreeing to repay Richmond, “Stoner and Company’s financial circumstances became increasingly precarious” and the company eventually sought bankruptcy protection, according to court filings.

Stoner did not repay the $30,000 and in September 2010, Richmond wrote a complaint to the Colorado Division of Real Estate alleging violations of state statutes that govern the behavior of real estate brokers.

According to Richmond’s complaint, Stoner made repeated assurances in 2009 and 2010 that the sum would be repaid. When that payment failed to materialize, Richmond contacted the state.

Stoner responded to the complaint with a letter of his own sent to a Division of Real Estate investigator in January 2011.

He acknowledged owing Richmond the earnest-money advance and wrote that his “intention always has been and still is to pay [Richmond] back the $30,000 plus interest.”

“Times are incredibly difficult for small builder[s] and developers,” Stoner wrote in a Jan. 7, 2011, letter to the Division of Real Estate. “My goal is to survive this recession and to pay off all of the people I owe.”

Neither Stoner nor his Fort Collins-based attorney Daniel Alexander responded to requests for comment for this story.

The Colorado Real Estate Commission ruled on Richmond’s complaint and issued an order in February 2013 that placed Stoner’s license on probationary status and required Stoner to pay restitution in the amount of $37,875 to Richmond and a $3,850 fine to the state.

Neither the restitution nor the fine were paid by the April 2013 deadline, court documents show.

The commission issued a final order in June 2014 that revoked Stoner’s real estate broker license permanently. Should he apply for a new license, the commission reserved the right to review past complaints and consider whether Richmond had been repaid.

About a year after the commission’s order, Stoner filed for Chapter 7 bankruptcy protection. Debts, including the $37,850 restitution owed to Richmond, were discharged in October 2015.

In a step toward getting his broker license back, Stoner paid the state’s $3,850 fine in July 2018. He also submitted an online license application.

One of the sections of the application asks the applicant whether a previously held license had ever been suspended or revoked. The response on Stoner’s application form: No.

In Stoner’s complaint against the commission, he said the response to that portion of the application was keyed in erroneously by an assistant.

He was informed by letter in October 2018 that state had declined to issue a new real estate brokers license.

The Colorado Real Estate Commissioners “carefully consider all of the facts before them at the time, including documents pertaining to your disciplinary history and professional fitness, as well as your personal statement and explanation of the facts and circumstances,” the letter said. “The commissioners determined that you have failed to establish that you are truthful and honest and otherwise of good moral character and competent to transact the business of a real estate licensee in such a manner as to safeguard the public.”

Stoner, in his legal complaint, asks the court to require the commission to issue him a brokers license and prohibit the commission from using the failure to repay Richmond as the sole reason to deny any future license applications.

As of Monday afternoon, the state had yet to file a response to the complaint.