Judges: D. R. ALEXANDER
Agency: Department of Business and Professional Regulation
Latest Update: Mar. 14, 1983
Summary: Developer failed to timely turn over records to condominium association.
82-1404STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
DIVISION OF FLORIDA LAND SALES ) AND CONDOMINIUMS, )
)
Petitioner, )
)
vs. ) CASE NO. 82-1404
) WILLIAM H. TIRKOT AND COCOA ) BEACH FLORIDA PROPERTIES, INC., )
)
Respondent. )
)
RECOMMENDED ORDER
Pursuant to notice, a formal hearing was held in the above case before the Division of Administrative Hearings, by its duly designated Hearing Officer, DONALD R. ALEXANDER, on September 10, 1982, in Cocoa, Florida.
APPEARANCES
For Petitioner: Helen C. Ellis, Esquire
Division of Florida Land Sales and Condominiums
725 Bronough Street
Tallahassee, Florida 32301
For Respondent: William H. Tirkot, pro se
Post Office Box 1059
Cocoa Beach, Florida 32931 BACKGROUND
By notice to show cause issued on August 21, 1981, Petitioner, Department of Business Regulation, Division of Florida Land Sales and Condominiums (Division) has charged that Respondents, William H. Tirkot and Cocoa Beach Florida Properties, Inc., have violated Subsections 718.111(7)(a) and (b) and Subsection 718.301(4)(c), Florida Statutes. Specifically, the Division has alleged that while Respondents controlled the Board of Administration of the Village Green Condominium Association of Melbourne, Inc. they "failed to maintain (certain) accounting records" required by the Division, and "failed to provide the association with financial statements of the association from the date the declaration was filed through the-date of turnover" as required by law.
Respondents disputed these allegations and requested a formal hearing pursuant to Subsection 120.57(1), Florida Statutes, to contest the charges. The matter was forwarded by Petitioner to the Division of Administrative Hearings on May 17, 1982, with a request that a Hearing Officer be assigned to conduct a hearing. By Notice of Hearing dated August 5, 1982, the final hearing was scheduled for September 10, 1982, in Cocoa, Florida.
At the final hearing Petitioner presented the testimony of Rudi E. Heide and Richard E. Coates and offered Petitioner's Exhibits 1 and 2; both were received in evidence. Respondent Tirkot testified in his own behalf and offered Respondent Tirkot's Exhibit 1 which was received in evidence. Alfred R. Williams testified as a witness on behalf of Respondent Cocoa Beach Florida Properties, Inc.
The transcript of hearing was filed on September 29, 1982. Thereafter, the undersigned was advised on October 4, 1982 to hold the matter in abeyance because the parties were in the process of negotiating a settlement. On January 3, 1983 Petitioner advised the undersigned that no settlement had been reached and requested that a recommended order be entered. At the conclusion of the hearing on September 10, 1982 the parties were given the opportunity to file proposed findings of fact and conclusions of law. Petitioner filed proposed findings of fact and conclusions of law on January 5, 1983, and the same have been considered in the preparation of this order. Findings of fact not included in this order were considered irrelevant, immaterial to the results reached, or were not supported by competent and substantial evidence.
The issue herein is whether the allegations set forth in the notice to show cause are correct.
Based upon all the evidence, the following findings of fact are determined: FINDINGS OF FACT
Respondents, William H. Tirkot and Cocoa Beach Florida Properties, Inc., were the developers of record of a condominium project now known as Village Green Condominium Association of Melbourne, Inc. The address of the Association was not disclosed. The date of declaration of the project was on or about November, 1979. On August 5, 1981 the developers turned the project over to the Village Green Condominium Association.
Subsections 718.111(7)(a) and (b), Florida Statutes, require generally that a developer maintain (a) a record of all receipts and expenditures, and (b) an account for each unit including the name and current mailing address of each owner, and information concerning assessments due and owed. On or about August 10, 1981 Tirkot furnished a representative of the Association a list of each unit sold, the amount of assessment paid by each, and any assessment owed. The balance owed by owners at that time was approximately $1,600. However the list did not identify the owner by name or give his current mailing address. Whether Respondent maintained those records as required by law prior to the turnover was not disclosed.
Section 718.301(4)(c), Florida Statutes, requires generally that no later than sixty days after the turnover, the developer shall deliver to the association the financial records and financial statements, including source documents, since the incorporation. It further provides that the records be reviewed by a certified public accountant (CPA) and that the CPA make an examination of the records "to determine that the developer was charged and paid the proper amount of assessments."
Respondents engaged the services of a noncertified accountant to prepare an unaudited balance sheet and statement of income for the twenty-one month period ending August 31, 1981. The statements were dated October 26, 1981 and were prepared based upon a review of checkstuds, cancelled checks and bank statements provided by Tirkot. The statements were later given to the
Association at an undisclosed time. After being advised by Petitioner that an audit by a CPA was required, Respondents' accountant contacted several accounting firms who declined the engagement because of a lack of documentation to prepare the statements. Moreover, the cost to prepare such statements would have exceeded $5,000. Because of this, Respondents did not prepare financial statements in accordance with the law.
In mitigation, Respondents pointed out that they had recently subsidized the Association with more than $25,000 in operating capital just prior to the turnover, and did not wish to incur further costs. They also contended that all expenditures for the Association were valid and correct, and were willing to review all pertinent records with the Division and Association members to confirm this fact. Further, they asserted that no member of the Association had shown any financial or other harm, and they were willing to cooperate in any fashion to resolve this dispute.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction of the subject matter and the parties thereto pursuant to Subsection 120.57(1), Florida Statutes.
Subsections 718.111(7)(a) and (b), Florida Statutes, require a condominium developer to keep the following records:
A record of all receipts and expenditures.
An account for each unit, designating the name and current mailing address of the
unit owner, the amount of each assessment,
the dates and amounts in which the assessments come due, the amount paid upon the account, and the balance due.
Petitioner contends that such records were not maintained while Respondents owned the project, and accordingly they are guilty of violating the foregoing statute. However, there was no evidence that such records were not actually maintained by Respondents between July, 1979 and August, 1981. 1/ This being so, Count I of the notice to show cause should be dismissed.
Subsection 718.301(4)(c), Florida Statutes, provides that no later than sixty days after the control of the association is relinquished by the developer, he must furnish the following information to the association:
(c) The financial records, including financial statements of the association, and source documents since the incorporation of the association through the date of turnover.
The records shall be reviewed by an independent certified public accountant. The minimum report required shall be a review in accordance with generally accepted accounting standards as defined by rule by the Board of Accountancy. The accountant performing the review shall examine to the extent necessary supporting documents and records, including the case disbursements and
related paid invoices to determine if expenditures were for association purposes and the billings,
cash receipts, and related records to determine that the developer was charged and paid the proper amounts of assessments.
The evidence discloses that the financial records and statements prescribed above were not provided to the Association as required by law. Although Respondents contend the cost to comply with the statutory requirements were too high, and they are willing to permit the Association and Division to now review their records, the Division has no authority to waive the law. Accordingly, it is concluded that a violation of Subsection 718.301(4)(c), supra has occurred.
Subsections 718.501(1)(d)2 and 4, Florida Statutes, authorize the Division to issue a cease and desist order against a party, and to impose a civil penalty not to exceed $5,000. Since control of the Association has already been relinquished by Respondents, the time for issuing a cease and desist order has long expired.
Petitioner has not suggested a specific penalty to be imposed against Respondents. However, under the circumstances herein, a $500 civil penalty is appropriate.
RECOMMENDATION
Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Respondents be found guilty of violating Subsection
718.301(4)(c) , Florida Statutes, and that a $500 civil penalty be imposed; the remaining charge should be DISMISSED.
DONE and ENTERED this 12th day of January, 1983 in Tallahassee, Florida.
DONALD R. ALEXANDER
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 12th day of January, 1983.
ENDNOTE
1/ Petitioner apparently contends that because the records required by Subsections 718.111(7)(a) and (b) were not furnished the Association after the turnover was completed, they were never kept to begin with. But this is insufficient to establish evidence of guilt of the charge.
COPIES FURNISHED:
Helen C. Ellis, Esquire Department of Business
Regulation
725 South Bronough Street Tallahassee, Florida 32301
William H. Tirkot
P.O. Box 1059
Cocoa Beach, Florida 32931
Alfred R. Williams
36 Willett Drive
Longmeadow, Massachusetts 01106
================================================================= AGENCY FINAL ORDER
=================================================================
STATE OF FLORIDA DEPARTMENT OF BUSINESS REGULATION
DIVISION OF FLORIDA LAND SALES AND CONDOMINIUMS 725 SOUTH BRONOUGH STREET
TALLAHASSEE, FLORIDA 32301
DIVISION OF FLORIDA LAND SALES AND CONDOMINIUMS,
Petitioner,
vs. DOAH CASE NO. 82-1404
DOCKET NO. 81089MVC
WILLIAM H. TIRKOT AND COCOA BEACH FLORIDA PROPERTIES, INC.,
Respondent.
/
FINAL ORDER
This Order is entered by the Director of the Division of Florida Land Sales and Condominiums pursuant to section 120.59, Florida Statutes, following a Recommended Order entered in this cause by Hearing Officer Donald R. Alexander, Division of Administrative Hearings, on January 12, 1983.
After a review of the Record in this cause, the factual findings of the Hearing Officer are adopted. However, the Findings of Fact are hereby supplemented by the addition of the following findings:
As to the so-called "subsidy" of $.25,000, the record shows that this
$25,000 was paid to satisfy a legal obligation freely incurred by the developers. Section 718.116(8)(b), Florida Statutes, provides that:
(b) A developer or other person owning condominium units or having an obligation to pay condominium expenses may he excused from the payment of his share of the common expense which would have been assessed against those units during the period of time that he shall have guaranteed to each purchaser in the purchase contract, declara-
tion, or prospectus, or by agreement between the developer and a majority of the unit owners other than the developer, that the assessment for common expenses off the condo- minium imposed upon the unit owners would
not increase over a stated dollar amount and shall have obligated himself to pay any amount of common expenses incurred during that period and not produced by the assess- ments at the guaranteed level receivable from other unit owners.
The testimony for Respondent demonstrated unequivocally that the developer did adopt this guarantee provision and that the deficits paid were mandated by their adoption of the guarantee as an alternative to the developers' obligation under the Condominium Act to pay assessments for each unsold unit they held.
In this instance adoption of the guarantee did not work to the advantage of the developers because, as one of the Respondents explained,
The real problem here from the beginning was the adverse real estate market and
the fact because of the market the project was losing money during the whole process.
It was also established by admissible testimony that the Division had given the developers from August, 1981 through April, 1982 to correct their deficiencies but they made no effort to do so. At one time Respondent Tirkot told a representative of the Division that he was, in fact, suit-proof, and would see him in court. The filing of the Notice to Show Cause then occurred.
The Conclusions of Law reached by the Hearing Officer are accepted in part and rejected in part, such rejection being predicated on the following reasons:
In Conclusions of Law, paragraph 4., the Hearing Officer states that while subsections 718.501(1)(d)2 and 4, Florida Statutes, authorize the Division to issue a cease and desist order against a party, and to impose a civil penalty not to exceed $5,000, no cease and desist order can be issued here since control of the Association has already been relinquished by Respondents. The acceptance of this conclusion by the Division would be to abrogate the right and duty given it by the Legislature in section 718.501(1)(2), Florida Statutes, to enforce against a developer by issuance of "an order requiring the Developer. . . or its assignees or agents, to cease and desist from the unlawful practice and take such affirmative action as in the judgment of the Division will carry out the purposes of this chapter." whenever turnover had already occurred.
The whole of section 718.301(4), Florida Statutes, with its nineteen requirements of items to be turned over by the developer within sixty days after turnover would thus be unenforceable.
Therefore, the following Order is hereby entered:
Respondents, William H. Tirkot and Cocoa Beach Properties of Florida, Inc., and their assignee, are hereby ordered to cease and desist the continuing violation of Chapter 718, Florida Statutes, and in particular section 718.301(4)(c) as amended by Ch. 81-185, section 4, Laws of Florida, and to furnish the Association of Village Green Condominium of Melbourne, Inc. all
the financial records, including financial statements of the association, and source documents since the incorporation of the association through the date of turnover. The records shall be reviewed by an inde- pendent certified public accountant. The minimum report required shall be a review in accordance with generally accepted ac- counting standards as defined by rule by the Board of Accountancy. The accountant performing the review shall examine to the extent necessary supporting documents and records, including the cash disbursements and related paid invoices to determine if expenditures were for association purposes
and the billings, cash receipts, and related records to determine that the developer was charged and paid the proper amounts of assessments.
It is also Ordered that the sum of $5,000 shall be paid to the Division of Florida Land Sales and Condominiums as a civil penalty for violation of the Condominium Act, Chapter 718, Florida Statutes.
DONE AND ORDERED in Tallahassee, Florida this 4th day of March, 1983.
E. James Kearney, Director Division of Florida Land Sales
and Condominiums
Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a copy of the foregoing FINAL ORDER has been furnished by U.S. Mail to William H. Tirkot, Post Office Box 1059, Cocoa Beach, Florida, 32931; Alfred R. Williams, 36 Willett Drive, Longmeadow, Massachusetts, 01106, and Tonya L. Baccus, Esquire, 1926 South Patrick Drive, Indian Harbour Beach, Florida, 32937 this 4th day of March, 1983.
Docket for Case No: 82-001404
Orders for Case No: 82-001404
