STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

SINGER DEVELOPMENT CORPORATION, )

Developer of Cypress Tree, )

)

Petitioner, )

)

vs. ) CASE NO. 81-078RX

)

DEPARTMENT OF BUSINESS ) REGULATION, DIVISION OF LAND ) SALES AND CONDOMINIUM, )

)

Respondent. )

)

FINAL ORDER

A hearing was held in the above captioned matter, after due notice, at Tallahassee, Florida, on February 20, 1981, before the undersigned Hearing Officer.

APPEARANCES

For Petitioner: Cynthia Tunnicliff, Esquire

Barnett Bank Building, Suite 550 Post Office Box 82

Tallahassee, Florida 32302

and

Samuel Spector, Esquire

Barnett Bank Building, Suite 550 Post Office Box 82

Tallahassee, Florida 32302

For Respondent: Helen C. Ellis, Esquire

Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301

ISSUE PRESENTED

Administrative determination of the validity of Rule 7D-17.01(3), Florida Administrative code, pursuant to Section 120.56, Florida Statutes.

On January 15, 1981, Petitioner filed its petition with this division seeking a determination of the invalidity of Rule 7D-17.01(3), Florida Administrative Code. Petitioner also filed a motion for consolidation of this case with three other cases involving the same parties, DOAH Cases Nos 81-013, 81-014, 81-015. Those cases deal with Notices to Show Cause issued against Petitioner by Respondent for alleged violation of Chapter 718, Florida Statutes, and Rule 7D-17.01(3), F.A.C. The motion as to consolidation of Cases Nos. 81- 013, 014, and 015 was granted, but the motion was denied as to consolidation of

Case No. 81-078RX due to the 30 day time limitation involved in the hearing of cases filed under Section 120.56, F.S.

The parties stipulated that the factual allegations contained in paragraphs

1 through 4 of the Petition are true and correct, and agreed that only legal issues remained for determination. The stipulated facts are as follows:

FINDINGS OF FACT

1. This is a proceeding pursuant to section 120.56, Florida Statutes, for the determination of the invalidity of a rule being enforced by the Division of Land Sales and Condominium.

   
   

2. The Petitioner is a developer of condominium in the State of Florida subject to the provisions of chapter 718 Florida Statutes. Petitioner has been served with a Notice to Show Cause in a separate docket for closing on the sale of several condominiumminium units in violation of Rule 7D-17.01(3), Florida Administrative Code, and is thereby substantially affected by the workings and enforcement of such rule.

   
   

3. Respondent is an agency of the State of Florida empowered by the provisions of Section 718.501, Florida Statutes, to enforce and insure compliance with the provisions of Chapter 718, Florida Statutes, and the rules promulgated thereunder.

   
   

4. Petitioner filed a proposed prospectus with the Respondent pertaining to the sale of condominiumminium units located within the Cypress Tree Condominiumminium, Nos. 6 and 7, located at 4141 Northwest 21st Street, Lauderhill, Florida. Respondent thereafter notified Petitioner of several alleged deficiencies in its filing and issued Notices to Show Cause to Petitioner, relative to Cypress Tree Condominiumminium building Nos. 6 and 7, which allege that Petitioner has failed to correct certain alleged deficiencies and has closed on the sale of units in the subject condominium in violation of Rule 7D-17.01(3), Florida Administrative Code.

   
   

   CONCLUSIONS OF LAW

   
   

5. Petitioner seeks a determination pursuant to Section 120.56, F.S., that Respondent's Rule 7D-17.01(3), Florida Administrative code, is invalid because it exceeds the Respondent's statutory authority to adopt administrative rules insofar as the rule in question purports to bar Respondent or other similarly situated parties from closing on the sale of condominiumminium units subsequent to the filing of documents and items specified by Sections 718.503, Florida Statutes.

   
   

6. Respondent's rule making authority is contained in several provisions of Chapter 718, F.S., which read pertinently as follows:

   718.501 Regulation by Division of Florida Land Sales and Condominium.

   (1) The Division of Florida Land Sales and Condominium of the Department of Business Regulation, referred to as the division in this part, in addition to other powers and duties prescribed by Chapter 478, has the power to enforce and insure compliance with the provisions of this chapter and rules promulgated pursuant hereto relating to the development, construction, sale, lease, ownership, operation, and management of residential condominiumminium units . . .

   (d) The division is authorized to promulgate rules and regulations, pursuant to chapter 120, necessary to implement, enforce, and interpret this chapter.

   
   

   Section 718.501, F.S., provides Respondent with authority to investigate complaints concerning violations of chapter 718 and rules promulgate thereunder, including the issuance of cease and desist orders, judicial actions for declaratory or injunctive relief, or restitutions, and the imposition of civil penalties against developers.

   
   

7. Sections 718.503 and 504 set forth detailed information to be disclosed to prospective purchasers or lessors of condominium units. Section 718.504 also requires that developers of certain residential condominium must file a prospectus or offering circular with Respondent prior to entering into an enforceable contract of purchase and sale of any unit or lease of a unit for more than five years. Section 718.502(1) states the following:

   
   

   1. A developer of a residential condominiumminium shall file with the division one copy of each

      of the documents and items required to be furnished to a buyer or lessee by ss. 718.503 and 718.504, if applicable. Until the developer has so filed, a contract for sale or lease of

      a unit for more than 5 years shall be voidable by the purchaser or lessee prior to the closing of his purchase or lease of a unit.

      
      

      Subsection 718.502(2) provides that prior to "filing," a developer shall not offer a contract for purchase or lease of a unit for more than five years, but may accept deposits for reservations upon filing with Respondent an escrow agreement and reservation agreement form containing various items of information concerning the rights of purchasers and obligations of the developer.

      
      

8. Section 718.506 provides remedies against developers for false and misleading information published in advertising and promotional materials, including the prospectus and items required as exhibits thereto, by purchasers prior and subsequent to closing of the transaction.

9. The challenged rule reads as follows:

   
   

   7D-17.01 Developer filing.--

   (3) Upon receipt of a developer's filing, the Division will take action pursuant to these rules. During the examination period, offerings to the public may be made pursuant to the statute and these rules. Until a developer prepares and delivers to a purchaser and to the Division documents that comply with

   the Condominium Act and these rules and the Division notifies the developer that the filing is proper

   or is presumed proper pursuant to Rule 7D-17.05, Florida Administrative Code, the developer shall not close on any contract for sale or contract for more than five years.

   
   

   Specific Authority 7188.501(1)(d), F.S., law implemented 718.103(13), 718.502(1)(2), F.S.,

   History-New 11-15-77, Amended 7-22-80.

   
   

   Rule 7D-17.05 provides that when a filing is found to be in proper form, Respondent will examine it to determine its sufficiency under the condominium Act and its rules and, within 45 days from its receipt in proper form, will notify the developer of any deficiencies. If notice is not given within the 45 day period, the filing is presumed to be properly filed. If deficiencies are noted, Respondent notifies the developer within 20 days of receipt of the corrected documents of the acceptabilities of the corrections and, if not so given, the documents are considered satisfactory for filing purposes.

   
   

10. Petitioner contends that Chapter 718 simply does not provide any authority for Respondent to prevent closings on condominium sales or leases for over five years until it has signified its approval of filing submissions by the developer. Petitioner claims that such a requirement would amount to licensing of developers of condominium without any statutory authority to do so. Its basic position is that Respondent's power to enact rules must either be specifically conferred or reasonably implied from the express terms of the statute in order to be valid and, that here, all that is required prior to closing of transactions in the filing of certain documents required by statute with an appropriate remedy to the purchaser if such filing has not been accomplished prior to the closing of a purchase or lease of a unit.

    
    

11. Respondent argues that it is authorized to promulgate rules necessary to implement, enforce and interpret Chapter 718 and that, unless it has ensured that the documents filed by the buyer meet the statutory requirement, closing of transactions should not be permitted because at that point the buyer's right to rescind the contract is terminated. It claims that until deficiencies in the filing are corrected, the purchaser would not be receiving the documents which the legislature has directed that he must receive before there may be a closing, and that the developer has not complied with the filing requirement.

12. The scope and extent of agency rule-making powers has been stated generally as follows:

    
    

    The rule-making power which the legislature may validly delegate to administrative agencies must be and is limited by the statute conferring the power. Administrative agencies, when empowered to do so, may make and enforce regulations to carry out power definitely conferred on them, but they are not permitted to do more. The legislature cannot clothe them with more, and may they assume to do more. While an administrative agency may regulate, it may legislate unless so authorized by the constitution. Its power to adopt rules and regulations is limited to the yardstick laid down by the legislature. Moreover, the rules and regulations enacted by administrative agencies must be reasonable.

    
    

    Where lawful rule-making authority is clearly conferred or fairly implied, and it is consistent with the general statutory duties of the agency, a wide discretion is accorded it in the exercise of such authority.

    Statutory authority to make reasonable and just rules and regulations to carry into effect a legislative purpose necessarily includes the power to make all rules and regulations needed or expedient to accomplish the general statutory purpose. (Emphasis added) 1 Fla. Jur. 2d s48

    
    

13. In Florida Beverage Corporation, Inc. et al v. Wynne, 306 So.2d 200 (Fla. 1st DCA 1975), the First District Court of Appeal stated as follows:

    
    

    It is well established in Florida that the Legislature, having enacted a Statute complete in itself which declares a legislative policy or standard and operates to limit the power delegated, may authorize an administrative agency to prescribe rules and regulations for its administration. It is equally well settled that the Legislature may expressly authorize designated public officials to provide rules and regulations for the complete operation and enforcement of the law or laws within their express general purposes . . .

    Where the empowering provision of a statute states simply that an agency may "make such rules and regulations as may be necessary to carry out the provisions of this Act", the validity of regulations promulgated there under will be sustained so long as they are reasonably related to the purpose of the enabling legislation, and are not arbitrary or

    capricious. (Citations omitted) (Emphasis added)

14. Section 718.501 invests Respondent with broad rule-making powers relating to the "development, construction, sale, lease, ownership, operation, and management of residential condominium units." It is empowered to promulgate rules "necessary to implement, enforce, and interpret this chapter." The extensive disclosure requirements imposed upon developers by Sections 718.503 and 504 show the emphasis that has been placed by the legislature upon the protection of purchasers or lessees for condominium units. However, the legislature has not defined the word "filing" nor has it specifically authorized Respondent to condition the closing of sales and lease transactions upon approval of "filings" by Respondent's Division of Florida Land Sales and Condominium. IN view of this vacuum in Chapter 718, a determination must be made as to whether Respondent's authority to issue the disputed rule can be "fairly implied" from the express terms of the statutory provision. It is clear that Chapter 718 provides comprehensive enforcement authority against developers for violations of the Chapter and its rules. Further there are also provisions for the protection of purchasers under Section 718.502, 504, and 506. However, if Petitioner's contentions are adopted the mere submission by the developer to Respondent of an incomplete set of documents or a set which contains false and misleading information would operate to foreclose a purchaser from acquiring the true facts concerning the offering, and leave him to seek judicial remedies under Section 718.506. On the other hand, if a purchaser can be assured that the documents filed with Respondent meet the statutory requirements, the public interest is served in the possible avoidance of future litigation between the parties. It is true, as pointed out by Petitioner, that under Rule 7D-- 17.01(3), offerings to the public may be made during the "examination period" of the filing. However, this does not bind the agency to a determination that "filing" under Chapter 718 has been accomplished when the developer merely makes a submission. It is significant that the rule restricts the developer from closing until it has been notified by Respondent that the filing is "proper or is presumed proper." It is thus apparent that Respondent by its rule has distinguished between what might be termed a "preliminary" filing and a "proper" filing. Certainly, in view of the important public interest to be served, the term "filing" as used throughout Chapter 718 must be construed to reflect the legislative intent that any submission of documents required under the statute must be complete and in conformity therewith. This interpretation is in keeping with the statutory mandate of subsection 718.501(1)(b) that Respondent's division may promulgate rules "necessary to implement, enforce, and interpret this chapter."

    
    

15. It is therefore considered that the rule is a logical interpretation of the statute and there has been no claim that it was not properly promulgated through the rule-making procedures of the agency. Eli Witt v. Department of Business Regulation, 388 So.2d 1340 (Fla. 1st DCA 1980). Petitioner has not shown that the challenged rule is without "rational relationship" to the statute in question. Jax Liquors Inc. v. Division of Alcoholic Beverages and Tobacco, et al., 388 So.2d 1306 (Fla. 1st DCA 1980). It is therefore concluded that Petitioner has failed to establish that Rule 7D-17.01(3), Florida Administrative Code, is an invalid exercise of delegated legislative authority.

    
    

16. The proposed final orders submitted by the parties have been fully considered and those portions not adopted herein are considered either to be unnecessary, irrelevant, or unwarranted in law or fact, and are specifically rejected.

DONE and ORDERED this 24th day of March 1981, in Tallahassee, Florida.

THOMAS C. OLDHAM, Hearing Officer Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 24th day of March 1981.

COPIES FURNISHED:

Guyte P. McCord, III and Cynthia Tunnicliff, Esquires Barnet Bank Building, Suite 500 PO Box 82

Tallahassee, Fl 32302

Helen C. Ellis, Esquire Department of Business Regulation 725 South Bronough Street Tallahassee, Fl 32301

Liz Cloud, Chief

Bureau of Administrative Code 1802 Capitol

Tallahassee, Fl 32301

Carroll Webb, Executive Director Administrative Procedures Committee

120 Holland Building Tallahassee, Fl 32301

Docket for Case No: 81-000078RX

Orders for Case No: 81-000078RX