STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DIVISION OF FLORIDA LAND SALES, ) CONDOMINIUMS AND MOBILE HOMES, )

)

Petitioner, )

)

vs. ) Case No. 85-4221

) A & M MANAGEMENT, INC., d/b/a ) SWISS VILLAGE MOBILE HOME PARK, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice the Division of Administrative Hearings, by its duly designated Hearing Officer, K. N. Ayers, held an administrative hearing in the above-styled cause on April 23, 1986, at Lakeland, Florida.

APPEARANCES

For Petitioner: John C. Courtney, Esquire

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

For Respondent: Ronald L. Clark, Esquire

P. O. Box 5955

Lakeland, Florida 33807-5955

By Notice to Show Cause dated October 21, 1986, Division of Florida Land Sales, Condominiums and Mobile Homes, Petitioner, seeks to enter an order to cease and desist and/or impose civil penalties on A & M Management, Inc., d/b/a Swiss Village Mobile Home-Park, Respondent. As grounds therefore, it is alleged Respondent failed to give a written notice to each homeowner 90 days prior to a rental increase effective January 1, 1986.

At the hearing Petitioner called two witnesses, Respondent called two witnesses (one of whom was the same witness called by the Petitioner) and 6 exhibits were admitted into evidence.

There is no basic dispute as to the operative facts in this case.

Proposed findings submitted by the parties which are not included herein below were deemed immaterial to the results reached.

FINDINGS OF FACT

1. Respondent owns and operates a mobile home park in Winter Haven, Florida, known as Swiss Village Mobile Home Park, in which lots are leased to mobile home owners on an annual lease. There are 383 lots in this park and this park has held a permit issued by the Department of Health and Rehabilitative Services since 1980 (Exhibit 1).

   
   

2. Edward G. Ackerman and his wife entered into a lease with Respondent for the use of a mobile home lot for the period January 15, 1981 until December 31, 1981, at a monthly rental of

   $75.07 (Exhibit 2).

   
   

3. That lease provides for year-to-year renewal with rent for future years based on the Cost of Living Index as determined by the U.S. Government at the nearest reporting period to the end of each calendar year (Exhibit 2). A Guaranteed Lifetime Rent Agreement (Exhibit 3) was executed by the lessor concurrently with the lease in Exhibit 2, which guarantees the rental on the lot leased to Ackerman shall not be increased more than the U. S. Cost of Living Index as long as Ackerman resides in a mobile home located on the leased lot. Using the annual change and CPI to recompute Ackerman's monthly rental has resulted in the rent increasing from $75.00 per month in 1981 to

   $89.50 per month in 1985 (Exhibit 4). Prior to the time of this hearing Ackerman had purchased a condominium to which he had moved and he was no longer a tenant at the Swiss Village Mobile Home Park.

   
   

4. All leases negotiated in years subsequent to 1981, have a similar escalation clause in the rent with the additional proviso that the monthly rent would be increased each year a minimum of $5.00 per month, with the maximum increase not exceeding the CPI.

   
   

5. Respondent has used the October All Items Consumer Priced Index For All Urban Consumers (CPI-U) in determining the annual rent increase since operations commenced. This report is received in November and by promptly advising tenants the amount their rent will change, because of changes in the CPI-U, each. tenant receives approximately 30-days notice prior to the January

   1 effective date. If the terms of the lease agreement are literally complied with and the December CPI is used, Respondent would have to calculate the rent due January 1 on the CPI which it receives in January. By the time tenants are notified of the effects of the CPI on their rent for the coming calendar year, they would already have paid an inadequate sum for the January rental, and perhaps for the month of February also, and would be billed for the deficiency.

6. There is an active Home Owners Association at Swiss Village Mobile Home Park. This association has not complained of the failure of Respondent to provide 90 days notice prior to the automatic rent change which comes every January, nor have they requested arbitration.

   
   

7. In order to insure tenants receive 90 days notice of the rental change, due to changes in the CPI, Respondent would have to use the July Consumer Price Index, which it receives in August.

   
   

8. Had Respondent used the July CPI report and given tenants 90 days notice of the annual rental increases since 1981, these increases would have exceeded the increase computed using the October CPI (Exhibit 6). Exhibit 6 indicates the actual adjustments of rentals since 1981, has been $5.00 per month or the CPI, whichever is less.

   
   

   CONCLUSIONS OF LAW

   
   

9. The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, these proceedings.

   
   

10. The statutory provision Respondent is charged with violation is Section 723.037 Florida Statutes (1985), which provides in pertinent part:

    
    

    1. A park owner shall give written notice to each mobile home owner at least 90 days prior to any lot rental increase . . . .

       
       

11. This statute became effective October 1, 1985, exactly ninety days prior to the end of that calendar year. In order to comply with the statutory provisions, Respondent would have had to send out its notice of the annual rental, according to the contract between the lessor and lessee, in time for the tenant to receive the notice of the 1985 rent, as computed from the CPI-U before October 1, 1985, the effective date of the statute.

    
    

12. The contract (lease) between Respondent and lessees of lots in this mobile home park actually requires Respondent to use the last CPI for the year in concluding the rent to be charged in the forthcoming year. Due to the practicalities of the situation, the October CPI has been used in order to provide tenants with reasonable notice of the exact amount their rent will be in the forthcoming year. The contract (lease) provides that the increased rent per month cannot exceed the existing rent adjusted for the latest CPI or $5.00 per month, whichever is

    greater. Thus, the rent increases for the forthcoming year are fixed by an index over which the park owner and the tenant have no control.

    
    

13. By the terms of their lease the tenants are advised how their maximum rent for each year that they remain at the mobile home park will be determined. They know this when they move into the mobile home park. Although not apprised of the exact amount their rent will be, all tenants are fully advised of the maximum amount their rent can be increased each year and the basis therefor.

    
    

14. Although there is no section of Chapter 723 expressing the legislative intent other than to preempt to the state all regulation of mobile home parks, several provisions of this Chapter shed light on this intent.

    
    

15. Section 723.012(9) Florida Statutes, relating to the contents of the prospectus or offering circular, requires an explanation of the manner in which rents and other charges will be raised including, but not limited to, notification to the homeowner at least 90 days in advance of the increase.

    
    

16. S.723.021 Florida Statutes, provides every rental agreement within this chapter imposes an obligation of good faith and fair dealings in its performance or enforcement.

    
    

17. S.723.031(2) Florida Statutes, provides whether or not a tenancy is covered by a valid written rental agreement, the required statutory provision shall be deemed to be a part of the rental agreement.

    
    

18. S.723.031(5) Florida Statutes, provides that for a tenancy in existence on the effective date of this act, and until the term of the existing rental agreement expires, this provision shall not be construed to prevent the mobile home park owner from passing on to the mobile home owner any costs, including any increased cost for utilities, which are incurred due to the actions of any state or local government.

    
    

19. When the leases here involved are considered in the light of the above-cited statutory provisions it is obvious that the leases and the manner in which the annual increases are implemented complies with the intent of Chapter 723 Florida Statutes. Specifically, the lease provides a full explanation of how each year's rent will be computed; the leases clearly evince a good faith effort at fairness and fair dealing and these leases were in effect when this Chapter 723 was enacted and became effective. Although the rental agreement does not fully comply with Chapter 723, it can readily be brought into compliance by

using an earlier month in the year to compute the next annual rent increase so notification of the exact rent for the coming year can be provided at least 90 days prior to the beginning of the lease year. From the foregoing it is concluded that the leases herein issued comply with the spirit of Chapter 723 in being fair and providing full notification to all tenants of the maximum rental increase that Can be assessed for each year and the manner in which this maximum increase is to be computed. It is further concluded that the 90 days notice of the exact rental to be assessed before the effective date of this rental was not given and that this is a technical violation of Section S.

723.037 Florida Statutes, for which a monetary penalty is not warranted. It is

RECOMMENDED that Respondent be required to commence using the CPI in the last month of the year which will enable Respondent to advise the tenants 90 days before the effective date of the rental for each forthcoming year hereafter and that no further action be taken at this time.

DONE AND ENTERED this 5th day of June, 1986, at Tallahassee, Florida.

K. N. AYERS, Hearing Officer Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 5th day of June, 1986.

COPIES FURNISHED:

Richard Coates, Director ,

Division Land Sales, Condominiums and Mobile Homes

Department of Business Regulation The Johns Building

725 S. Bronough Street Tallahassee, Florida 32301

James E. Kearney, Secretary Department of Business Regulation The Johns Building

725 South Bronough Street Tallahassee, Florida 32301(continued)

Thomas A. Bell, Esquire Daniel J. Bosanko, Esquire

Department of Business Regulation The Johns Building

725 South Bronough Street Tallahassee, Florida 32301

John C. Courtney, Esquire Staff Attorney

Department of Business Regulation The Johns Building

725 South Bronough Street Tallahassee, Florida 32301

Ronald L. Clark, Esquire

P. O. Box 5955

Lakeland, Florida 33807-5955

Faye Mayberry, Chief Bureau of Mobile Homes

Department of Business Regulation The Johns Building

725 South Bronough Street Tallahassee, Florida 32301

Mr. David Reich, Librarian Lakeland Public Library

100 Lake Morton Drive Lakeland, Florida 32801

Docket for Case No: 85-004221

Orders for Case No: 85-004221