DEPARTMENT OF BUSINESS REGULATION, ) DIVISION OF FLORIDA LAND SALES, ) CONDOMINIUMS AND MOBILE HOMES, )
Petitioner, ) CASE NO. 86-1765
vs. )
Respondent. )
Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, W. Matthew Stevenson, held a formal hearing in this cause on February 12, 1987 in Miami, Florida. The following appearances were entered.
Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32399-1007
FOR RESPONDENT: John A. Ritter, Esquire
The issue is whether the Respondent violated certain provisions of the "Florida Real Estate Time-Sharing Act," Chapter 721, Florida Statutes, as alleged in the Amended Notice to Show Cause, and if so, what penalty or other relief would be appropriate.
This cause came on for final hearing on February 12, 1987. The Petitioner called three (3) witnesses. In addition, Petitioner's Exhibits 1 through 5 were duly offered and admitted into evidence. The Respondent called one (1) witness. In addition, Respondent's Exhibits 1 through 3 were duly offered and admitted into evidence. Neither party ordered a written transcript of the formal hearing. The parties have submitted posthearing Proposed Findings of Fact. A ruling has been made on each Proposed Finding of Fact in the Appendix to this Recommended Order.
Based upon my observation of the witnesses and their demeanor while testifying, the documentary evidence received and the entire record compiled herein, I hereby make the following Findings of Fact:
The Respondent, Holiday Interval Ownership, Inc., is the developer and seller of Ocean 80 Resort, a condominium and time-share plan.
Ocean 80 Resort is located in the Florida Keys on U.S. Highway 1, mile marker 80, Islamorada, Florida.
Mr. and Mrs. William Seibert II received an advertisement concerning Ocean 80 Resort which promised prospective buyers a free trip to Mexico simply for visiting the condominium and listening to a sales presentation.
On May 28, 1983, Mr. and Mrs. Seibert went to Islamorada and visited Ocean 80 Resort. The Seiberts were given a sales presentation by Bonnie Seide, a sales agent for Respondent.
Ocean 80 Resort consists of 79 separate units located in one building. There are 8 different types of units, ranging from the Mako units which are efficiencies consisting of approximately 520 square feet, to the Tarpon units which are 2 bedroom, 2 bath units consisting of approximately 1,056 square feet.
The Seiberts first listened to a description of the program and facilities of Ocean 80 Resort and then were taken by Bonnie Seide to see a model on the fourth floor. The Seiberts told Ms. Seide that they were only interested in the large Marlin units, which are 2 bedroom, 2 bath units consisting of approximately 944 square feet.
The Seiberts were taken to Model Unit 404, a Marlin unit located on the fourth floor. Ms. Seide told the Seiberts that there was a similar unit available on the third floor below.
The exact words used by Ms. Seide to describe the third floor unit were not established by the witnesses at the hearing with any degree of persuasiveness. Neither party presented the testimony of Ms. Seide. The Seiberts believed that the "similiar" third floor unit would be located directly beneath the model unit with an identical view of the pool as was enjoyed by the model unit. The model unit was situated in the middle of the corridor, with its balcony directly overlooking the pool.
The Seiberts and Ms. Seide went down to the third floor, but were unable to walk down the hall and visit the unit that the Seiberts were to purchase because of construction. The Seiberts and Ms. Seide looked down the corridor towards the unit. There were no numbers on the doors at that time. Even though they were unable to inspect the unit, the Seiberts decided that they would purchase it anyway.
The Seiberts then went to the sales office where they entered into a purchase agreement with Respondent for Unit 300, week 52 in Ocean 80 Resort. Although the Seiberts believed that their unit would be located directly beneath the model unit which they were shown, they were apparently unconcerned that the model unit's number was 404 and their unit was numbered 300.
The purchase agreement provided that the price of the unit would be
$9,270 and that the Seiberts would be entitled to occupancy of the unit during the appropriate week of 1983. The purchase agreement specifically advised the Seiberts of their right to cancel the contract without penalty or obligation within 10 days from the date of signing the agreement.
The purchase agreement contained an exclusionary clause in bold print which stated as follows:
Oral representations cannot be relied upon as correctly stating the representa- tions of the developer. The developer makes no representations other than
those contained in this contract, the offering statement and the condominium documents.
Upon entering into the purchase agreement on May 28, 1983, the Seiberts received several condominium documents, including a prospectus text, declaration of condominium, articles of incorporation and a floor plan.
Because 1983 was a leap year, week 52 entitled the Seiberts to two weeks occupancy. The Seiberts decided that they would rent out one of the weeks and "spacebank" the other with Resort Condominiums International, Inc., (RCI). RCI is an organization which trades and transfers time share units. The Seiberts were interested in exchanging their unit week for a unit week in another facility in Paris.
The Seiberts submitted a form to Ocean 80 Resort indicating that they desired that one of their weeks in 1983 be placed in a rental pool. At some point, the Seiberts were advised by Ocean 80 Resort that their unit would not be ready for occupancy in 1983. Nevertheless, the Respondent mailed the Seiberts a check for $371.02 reflecting a rental fee for the unit.
In January of 1984, the Seiberts were advised by RCI that their request to "spacebank" and exchange their unit was
denied because the unit was not yet ready for occupancy. A few weeks later, Ocean 80 Resort spacebanked a substitute unit with RCI on the Seiberts' behalf.
Because their unit was not completed and ready for occupancy in 1983 and because their initial request to space-bank with RCI had been denied, the Seiberts became increasingly irritated and dissatisfied with Ocean 80 Resort.
On March 17, 1984, the Seiberts went to Ocean 80 Resort and visited their unit for the first time. Much to their dismay, the Seiberts discovered, apparently for the first time, that unit 300 was not in the middle of the corridor, directly opposite the pool. Unit 300 afforded a view of the pool, but the unit was located at the end of the corridor directly opposite the roof of a common area. The pool was visible from unit 300 when looking at an angle from the balcony.
Although some attempts were made by Ocean 80 Resort to resolve the matter by substituting a different unit, the Seiberts decided that they wanted nothing further to do with Ocean 80 Resort and desired a cancellation of the agreement. The Seiberts have never used their unit at Ocean 80 Resort.
Stan Zabetakis received an advertisement for Ocean 80 Resort Condominium in 1983 and went to a sales presentation primarily because he was interested in receiving a promised free trip to Mexico. After listening to the sales presentation, Mr. Zabetakis purchased unit #202, week 2 for a total cost of $5400.
On December 29, 1984, Mr. Zabetakis visited Ocean 80 Resort to "take a look around" and spoke with a sales representative. After this discussion Mr. Zabetakis decided to enter into a purchase agreement with Respondent whereby he would trade his current unit in on a larger, more expensive unit.
The purchase agreement, signed by both parties on December 29, 1984, reflects that Zabetakis purchased unit 414, week 5 at a total purchase price of
$8,500. Zabetakis was credited with $5,400 as equity in his previous unit (202) and the balance of $3,100 was financed with Respondent at 14 percent interest for 5 years, with monthly payments of $72.14.
The Purchase Agreement specifically provided that the buyer had the right to cancel the contract without any penalty or obligation within 10 days from the date the contract was signed and executed.
On January 6, 1985, Mr. Zabetakis wrote Respondent a letter indicating his desire to cancel the purchase agreement for unit 414, week 5.
The Respondent received Mr. Zabetakis' letter of cancellation on January 8, 1985. Initially, Respondent refused to honor Mr. Zabetakis' cancellation and claimed that the letter was not received within the statutory
10 day period.
On August 17, 1985, the Respondent changed its position and wrote Zabetakis a letter acknowledging the timely receipt of his letter of cancellation and enclosing a Quit-claim Deed for unit 414, week 5, which Zabetakis was asked to sign and return. However, by this time, Respondent had resold Mr. Zabetakis' original unit week.
Further complicating Mr. Zabetakis' dilemma, by the time Respondent agreed to cancel the purchase agreement, the Respondent had sold the note and mortgage to a third-party financial institution. Mr. Zabetakis made his first payment of $72.14 in March 1985 and has made a timely payment of $72.14 each month, up to the date of the final hearing.
Because Mr. Zabetakis' original unit and his mortgage note had been sold, he was leery of signing the Quit-claim Deed and did not return it to Respondent.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of these proceedings. Chapter 120, Florida Statutes.
The Petitioner, Division of Florida Land Sales, Condominiums and Mobiles Homes, is charged with the responsibility of regulating the sale and operation of time-share plans in Florida pursuant to the provisions of the Florida Real Estate Time Sharing Act. See Chapter 721, Florida Statutes.
The Respondent, Holiday Interval Ownership, Inc. is the developer and seller of Ocean 80 Resort, a condominium, as defined in Section 721.05, Florida Statutes.
In paragraph I of the Amended Notice to Show Cause, Petitioner charges that Respondent misrepresented the amount or period of time during which the unit would be available to a purchaser, in violation of Section 721.11(2)(g), Florida Statutes (1981). The Amended Notice to Show Cause alleges that the purchase contract entered into by the Seiberts and the Respondent provided that occupancy of the subject unit would commence at the beginning of week 52 (December 24, 1983) when in fact, the unit was not available for use during 1983. The factual allegations of paragraph I of the Notice are correct in that the Seibert's unit was not completed until sometime in 1984. However, there was no evidence or indication that the Respondent entered into the contract with no intention of having the unit completed and ready for occupancy in 1983 or with the positive intention of not having the unit ready. Likewise, there was no evidence or indication that the Respondent knew or should have known that the unit would not be completed and ready for occupancy on the date promised in the contract. In order to provide the basis for misrepresentation, a promise to perform a future act must be made either without any intention of performing it or with the positive intention not to perform it. See, Perry v. Cosgrove, 464 So.2d 664 (Fla. App. 2 Dist. 1985); First Interstate Development Corporation v. Ablanedo, 476 So.2d 692 (Fla. App. 5 Dist. 1985). The Respondent is not guilty of misrepresentation as alleged in paragraph I of the Amended Notice to Show Cause.
In paragraph II of the Amended Notice to Show Cause, Petitioner charges that Respondent misrepresented the nature, qualities or characteristics of the time share unit in violation of Section 721.11(2)(f), Florida Statutes (1981). The Amended Notice to Show Cause alleges that prior to signing the purchase agreement the Seiberts "were told by Bonnie Seide that unit #300, which was then uncompleted and unnumbered, would be located on the third floor overlooking the pool, when in fact the completed unit #300 was a unit overlooking the kitchen roof, and not the unit that had been indicated to Mr. and Mrs. Seibert."
The evidence presented by Petitioner did not establish that Bonnie Seide told the Seiberts that unit #300 would be located in the middle of the corridor, directly opposite to and overlooking the pool. The evidence established that Ms. Seide told the Seiberts that there was a unit available on the floor below which was "similar" to the model unit on the fourth floor. The model unit and unit 300 are "similar" in that they share many characteristics in common. In fact, both units are Marlin units and the balconies of both units afford a view of the pool.
Assuming arguendo that Ms. Seide had stated that unit 300 "overlooked" the pool, such would not establish a case of misrepresentation in the context of this arms length sales transaction. "Overlook" is defined as "to rise above or afford a view of, "to look down upon from above" and "a place from which one may look down on a scene below." See Webster's Ninth New Collegiate Dictionary. According to each of those definitions, unit 300 overlooks the pool at Ocean 80 Resort.
The Petitioner failed to show that the Respondent misrepresented the nature, quality or characteristics of the Seibert's unit as alleged in paragraph II of the Amended Notice to Show Cause. The Respondent is not guilty of violation of Section 721.11(2)(f), Florida Statutes.
In paragraph III of the Amended Notice to Show Cause, the Petitioner alleges that the Respondent failed to honor the right of a time-share purchaser to cancel a purchase contract in violation of Section 721.10(3), Florida Statutes. The Amended Notice to Show Cause charges that "Stan G. Zabetakis entered into a purchase agreement with the Respondent on December 29, 1984 and mailed a letter of cancellation which was postmarked on January 8, 1985 and received by the Respondent, but not honored." As previously discussed in the findings of fact, the Respondent received Mr. Zabetakis letter of cancellation on January 8, 1985. Zabetakis' letter of cancellation was clearly received by Respondent within the 10 day window provided in the contract and by statutory law. The Respondent is guilty of a violation of Section 721.10(3), Florida Statutes as alleged in the Amended Notice to Show Cause.
In its Proposed Recommended Order, the Petitioner's proposed recommendations include rescission of the contract between the Seiberts and Respondent and Respondent making restitution to Mr. Zabetakis in the form of satisfaction of the note and mortgage signed by Zabetakis on December 29, 1984 and a cash payment of $5,400 plus $72.14 per month from March, 1985 through the present.
Because the Respondent is not guilty of misrepresentation in connection with the Seiberts' contract, rescission of the contract and return of the purchase price would be inappropriate. Moreover, rescission of the Seiberts' contract and/or restitution to Mr. Zabetakis through these proceedings would be inappropriate for other reasons.
Section 721.26(5)(b), Florida Statutes provides that the Division of Florida Land Sales, Mobile Homes and Condominiums may:
"issue an order requiring a developer... seller...or other person to cease
and desist from an unlawful practice under this chapter and take such affirmative action as will carry out the purposes
of this chapter. (Emphasis added)
The underlined portion of the preceding statute does not confer upon the division plenary jurisdiction or authority to resolve and adjudicate contractual disputes arising between sellers and purchasers, even where the seller has been found in violation of certain provisions of the Florida Real Estate Time-Sharing Act. Jurisdiction for the resolution of contractual disputes in the State of Florida is vested in the courts of law. Chapter 721, Florida Statutes does not convey to the division the authority or responsibility to adjudicate disputes such as that which exists between Respondent and the Seiberts which are primarily contractual in nature.
The division does have authority to require the Respondent to honor the right of Zabetakis to cancel his purchase agreement. The right of a purchaser to cancel the purchase agreement within a specified time period, and the obligation of the seller to honor that cancellation is specifically provided for in Section 721.10, Florida Statutes. The division may require the developer to take affirmative action which clearly "follow the guidelines" and "traces the steps of" Chapter 721, Florida Statutes. See Smith v. Department of Business Regulation, Division of Florida Land Sales, Condominiums and Mobile Homes, 12 FLW 98 (Fla. App. 1 Dist. 1986).
Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore,
DONE and ORDERED this 31st day of March, 1987 in Tallahassee, Leon County, Florida.
W. MATTHEW STEVENSON Hearing Officer
Filed with the Clerk of the Division of Administrative Hearings this 31st day of March, 1987.
APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-1765
The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case.
Thomas Presnell, Jr., Esquire Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32399-1007
John A. Ritter, Esquire
Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32399-1000
Thomas A. Bell, Esquire Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32399-1000
Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32399-1000
