vs. ) CASE NO. 82-1762
Respondent. )
Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, K. N. Ayers, held a public hearing in the above- styled case on 14 January 1983 at Orlando, Florida.
Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301
For Respondent: Walter R. Moon, Esquire
By Notice to Show Cause dated 30 April 1982 the Florida Division of Land Sales and Condominiums, Petitioner, seeks to issue a Cease and Desist order and/or impose civil penalties against Winter Springs Mobile Home Corporation, Respondent, and/or to require other affirmative action by the Respondent to carry out the purposes of Chapter 498, Florida Statutes. As grounds therefor it is alleged that Respondent disposed of interests in subdivided land without being registered to do so or exempt from such registration; that Respondent failed to deliver to each purchaser a current offering statement disclosing the information required by Chapter 498, Florida Statutes; and that Respondent defaulted under the terms of a Cease and Desist and Consent Order entered into with Petitioner on April 17, 1981. Specifically, it is alleged this Consent Order was violated when Respondent ceased to deposit all funds received from lessees in escrow, failed to satisfy Petitioner that all instruments and documents used in the leasing of mobile home sites come within a statutory exemption, offered and disposed of lots contrary to the provisions of that order, and failed to make full refunds to purchasers for whom Respondent was unable to place a mobile home on their lots as required by that order.
At the hearing Petitioner called six witnesses, Respondent called one witness, and 14 exhibits were admitted into evidence.
Proposed findings submitted by the parties and not included herein were not supported by the evidence or were deemed to be unnecessary to the results reached.
The land encompassed within the mobile home park known as Mohawk Village was purchased by Winter Springs Mobile Home Corporation, a corporation owned and controlled by the Tanner family. The majority of the stock in Respondent is owned by the oldest son; another son is president of Respondent; and the father, L. William Tanner, served as "consultant" to the corporation. This tract was initially divided into some 700-odd lots which were being sold to the public in 1980 as mobile home sites. The land was purchased from North Orlando Sewer and Water Company, which agreed to provide sewer and water services to the subdivision and to have these facilities in place by January 1, 1981.
Respondent never registered with the Petitioner in accordance with Chapter 498, Florida Statutes.
North Orlando Sewer and Water Company failed to provide sewer service to this development and none of the home sites were available for occupancy January 1, 1981, as promised to buyers by Respondent. Without sewer service it became necessary to go to septic tanks and this required larger lots per mobile home site. The tract was replatted to provide 300-odd lots despite the previous sale of smaller lots to buyers. These buyers were advised their lots would have to be swapped and when some objected and demanded their money back, without success, Petitioner was made aware of the development and investigated.
The investigation led to the entering of a Cease and Desist and Consent Order (Exhibit 1). Therein Petitioner essentially agreed to forego action against Respondent for prior violations of Chapter 498, which Respondent contended it was subject to; and Respondent agreed to cease all leasing until the site was ready for occupancy, to provide Petitioner with copies of all leases in effect, as well as copies of all future leases executed, to deposit funds received from buyers in escrow until after receipt of a certificate of occupancy, and to take necessary steps to ensure all future leases fall within the statutory exemptions set forth in Section 498.025(1)(g), Florida Statutes.
L. William Tanner was paid a consulting fee by Respondent "in the ballpark of $100,000." In addition, he was to own the companies that provided utilities to the park (after default by North Orlando Sewer and Water Company), and furnished porches, decks, built walkways, roads, etc. Following the Consent Order funds were received payable to Tanner-controlled companies that were not deposited in the escrow account. These funds were not lease payments but came from the lessees for sewer and water hookups, porches, decks, etc.
Mohawk Village received its first certificate of occupancy on 14 January 1982. Between 17 April 1981, when the Consent Order was entered, and 14 January 1982, lot leases were sold to Gould on 30 November 1981; to Herring on
12 September 1981; and to Roberts on 14 January 1982 (Exhibit 6). The sales to Gould and Herring were clearly during the period Respondent had consented not to sell leases.
Exhibit 1 authorized Respondent to renegotiate and relocate current lessees to new mobile home sites under a plan to use alternate utility services from those initially to be provided by North Orlando Sewer and Water Company "if such plan is implemented at no additional cost to the individual lessees."
Those who had bought leases under the original scheme agreed to pay $29 per month to lessor. Leases sold after the decision to use septic tanks where the number of lots was reduced from 700-odd to 300-odd, provided the lessees would pay the lessor $59 per month. Respondent advised the earlier lessees that they would have to pay $59 per month in lieu of $29. When they objected and demanded refunds of what they had paid, some of them were promised refunds but to date very few have received any refunds. Changing their rental fee from $29 to $59 violated the Consent Order. The only change in the lease before and after the execution of the Consent Order was the change of this monthly rental payment.
Since the original lease did not qualify for exemption under Section 498.025(1)(g), Florida Statutes, the amended lease, which merely changed the monthly rental fee, did not qualify for exemption. Leases on these lots were sold at prices ranging from $1,000 to $7,000.
At no time relevant hereto did Respondent hold a dealer's license to deal in or sell mobile homes (Exhibit 3)
There was no valid reservation program established by Respondent pursuant to Section 498.024, Florida Statutes, nor did Respondent apply for or receive approval of a public offering statement for Mohawk Village (Exhibit 2).
All leases sold provided, in addition to a habitable lot, that the seller would provide recreational facilities. Those leases sold in 1980 promised a lot on which the buyer could move his mobile-home by January 1, 1981. Not only was the deadline missed but also Respondent has provided no recreational facilities. One witness who sold her home and bought a mobile home could not move it to the site in accordance with the contract because of lack of utilities and was forced to acquire another residence. Although proper demand was made she has been refunded none of her purchase money.
According to his testimony, L. William Tanner has developed about one hundred subdivisions throughout the United States since 1946. Some 20 such subdivisions have been developed by him in Florida. He is aware of the Florida statutes regulating the subdivision and sale of lands, and contends that the Mohawk Village subdivision is exempt because Petitioner does not have jurisdiction over 99-year leases. He further contends that the monthly rental payments of $29 or $59 for 99 years brings the price paid for the lots to more than $50,000, thereby exempting them from the provisions of Chapter 498.
Prior to the commencement of this hearing, Mohawk Village was transferred to Gould, who had been involved in supplying mobile homes to lot purchasers in the park. According to Tanner's testimony "it was not much of a sale" with him insisting Gould and Mohician Valley (apparently the new name for the mobile home subdivision) acknowledging existing mortgage, the Consent Agreement with Petitioner, and the obligation to refund the monies. No documentary evidence was presented to show that Tanner or his immediate family does not continue to own controlling interest in this mobile home park.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, these proceedings.
Section 498.023, Florida Statutes, provides that unless the subdivided lands or the transactions involving subdivided lands are exempt pursuant to Section 498.025:
No person may offer or dispose of or participate in an offer or dis- position of any interest in subdivided lands located in this state . . . .
unless such person has a valid order of registration therefor.
No person may dispose of, or participate in the disposition of,
any interest in subdivided lands unless a current public offering statement is delivered to the purchaser prior to the disposition, the purchaser is offered a reasonable opportunity to examine
the public offering statement prior to the disposition, and the contract and public offering statement used contain a provision which authorizes the pur- chasers to cancel the agreement without cause until midnight of the seventh day after execution by the purchaser.
Section 498.005, Florida Statutes, contains various definitions, including:
(5) "Disposition" means any trans- action involving any interest in sub- divided lands which is entered into for profit, including any sale, resale, lease for more than 5 years, assignment or award by lottery of any interest in sub- divided lands.
"Subdivision" or "subdivided lands" means:
Any contiguous land which is divided or is proposed to be divided for the purpose of disposition into
50 or more lots, parcels, units, or interests; or
Any land, whether contiguous or not, which is divided or proposed to be divided into 50 or more lots, parcels, units, or interests which are offered as a part of a common promotional plan.
Section 498.025, Florida Statutes, provides in pertinent part:
Unless the method of offer, dis- position or transfer is adopted for the purpose of evasion of this chapter, the provisions of this chapter do not apply to:
Any offer or disposition con- stituting a single sale or offer to a person when the sale and purchase price is $50,000 or more.
The sale or lease of land to any person engaged in the business of
construction of residential or commercial buildings. In addition, this exemption shall apply to any person who acquires such land for the purpose of resale or lease to a person engaged in any such business unless such person who acquires land for the purposes stated herein sells such land to individuals as unimproved lots with no legal obligation on the part of the seller to construct a building on said lot within 2 years from the date
of disposition.
An offer or disposition of an interest in land on which there is a residential, commercial, or industrial building or as to which there is a legal obligation on the part of the seller to construct such a building within 2 years from date of disposition.
Here the land was subdivided initially into more than 700 lots and subsequently resubdivided into more than 300 lots. In either case, the land was subdivided into more than 50 units or lots.
Respondent sold more than 300 leases prior to the Consent Order and each of these leases was for 99 years. A 99-year lease clearly constitutes an interest in land as above defined. The sales price of these leases ranged from
$1,000 to $7,000. Accordingly, none of these qualified for the $50,000 exemption above quoted. Furthermore, none of these leases included a structure on the lot and none required the seller to erect a structure on the lot within two years from the purchase. Nor did Respondent sell any mobile homes.
Accordingly, Respondent did not qualify for any exemption and was engaged in the business of selling subdivided lands without the benefit of registration as required by Chapter 498 and without complying with other provisions of Chapter 498.
Section II of the Consent Order (Exhibit 1) provides:
This order is deemed by the parties to be final agency action and this is directly enforceable by petition to the circuit court as provided in Section 120.69, Florida Statutes (1979). The parties recognize that there are no administrative remedies under Section
120, Florida Statutes (1979), available in enforcement proceedings of this final order.
This order, as noted in Findings of Fact No. 4, in effect, terminated any cause of action Petitioner had against Respondent for acts of Respondent antedating the order. Accordingly, those violations pertaining to disposing of
interest in subdivided land without being registered which occurred before the Consent Order issued, and failing to deliver to those purchasers a current offering statement, must be dismissed.
On the other hand, the evidence was clear and convincing that Respondent disposed of interests in subdivided land after the date of the Consent Order and before Mohawk Village received its certificate of occupancy in violation of its agreement under this Consent Order. Furthermore, these sales consisted of interests in subdivided land without benefit of registration and without a current offering statement. This constitutes a violation of Section 498.023(1) and (2) above quoted.
By accepting funds for utility connections, after the entry of the Consent Order, and without depositing these funds in the escrow account provided, Respondent violated the terms of the Consent Order requiring such funds to be placed in the escrow account.
None of the leases sold between April 17, 1981, and January 14, 1982, complied with the Consent Order in that these documents were not qualified for exemption pursuant to Section 498.025(1)(g)
Respondent failed to make refunds to purchasers who demanded such refunds after the land was resubdivided to provide lots of adequate size for a septic tank. The Consent Order required Respondent to make full refund to lessees within 90 days in the event lessee orders installation of a mobile home on his mobile home site and Respondent is unable to perform this obligation. No evidence was presented that any lessee requested a mobile home be placed on his lot subsequent to the entry of the Consent Order and Respondent was unable to comply. Accordingly, this charge must be dismissed.
Section 498.049(4), Florida Statutes, provides:
The division may, by order, impose civil penalties against any person for violation of this chapter or rules relating thereto. Such imposi- tion of a civil penalty shall not preclude the division from invoking
any other appropriate remedy authorized by this chapter. Each person who materially participates in any offer
or disposition of any interest in subdivided lands in violation of this chapter or rules relating hereto, which violation involves fraud, deception, false pretenses, misrepresentation,
or false advertising or involves the disposition, concealment, or diversion of any funds or assets of any person
so as to adversely affect the interests of a purchaser of any interest in sub- divided lands, and who directly or indirectly controls a subdivider or
is a general partner, officer, direc- tor, agent, or employee of a subdivider shall also be liable under this sub- section jointly or severally with and
to the same extent as the subdivider, unless such person did not know, and
in the exercise of reasonable care could not have known, of the existence of the facts by which such liability is alleged to exist, and among such persons there is a right of contribution as in cases of contracts among persons so liable, except that a creditor of a subdivider so liable shall not be jointly and severally liable unless the creditor
has assumed managerial or fiduciary responsibility in a manner which is pertinent to the basis for the liability of the subdivider under this subsection. No civil penalty so imposed shall exceed
$10,000 for each offense, and all amounts collected shall be deposited with the Treasurer to the credit of the Florida Land Sales Trust Fund. No order requir- ing the payment of a civil penalty shall become effective until 20 days after
the date of such order, unless otherwise agreed in writing by the person on whom the penalty is imposed.
From the foregoing it is concluded that Respondent violated the Consent Order as alleged, with the exception of failing to refund money by reason of being unable to locate a mobile home on lessee's site when so requested by lessee after the entry of the Consent Order. All of these transgressions by Respondent prior to the entry of the Consent Order were merged into the Consent Order and cannot be reinstated. It is further concluded that Respondent sold interests in land without the benefit of registration or public offering statement after the entry of the Consent Order and that the documents used did not qualify Respondent for exemption. This violated both the Consent Order and the provisions of Chapter 498.
This was not inadvertent conduct by one unfamiliar with the laws relating to subdivided lands, but acts committed by one with a great deal of experience in developing mobile home sites. In this instance the violations were willful and known to be violations when committed. It is therefore
RECOMMENDED that Winter Springs Mobile Home Corporation and L. William Tanner be jointly assessed a civil penalty of $10,000 for each of the three offenses of:
ENTERED this 2nd day of February, 1983, at Tallahassee, Florida.
K. N. AYERS, Hearing Officer Division of Administrative Hearings The Oakland Building
Filed with the Clerk of the Division of Administrative Hearings this 2nd day of February, 1983.
Harry F.X. Purnell, Esquire Department of Business
Walter R. Moon, Esquire 1218 East Robinson Street Orlando, Florida 32804
Gary R. Rutledge, Secretary Department of Business
