STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

STATE OF FLORIDA, DEPARTMENT OF ) BUSINESS REGULATION, DIVISION ) OF FLORIDA LAND SALES AND )

CONDOMINIUMS, )

)

Petitioner, )

)

vs. ) CASE NO. 82-3451

)

1. G., INCORPORATED; BELLO RIO ) CONDOMINIUM, )

   )

   Respondent. )

   )

   
   

   RECOMMENDED ORDER

   
   

   The Division of Administrative Hearings, by its duly designated Hearing Officer, Arnold H. Pollock, conducted a formal hearing in Cocoa, Florida, on March 10, 1983.

   
   

   APPEARANCES

   
   

   For Petitioner: Helen C. Ellis, Esquire

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

   
   

   For Respondent: William C. Irvin, Esquire

   Post Office Box 606

   Cocoa Beach, Florida 32931 INTRODUCTION

   On October 28, 1982, E. James Kearney, Director, Division of Florida Land Sales and Condominiums (Division), issued a Notice to Show Cause to M. G., Incorporated, for Bello Rio Condominium (Developer), alleging that the recipient had violated various sections of the Florida Statutes (1981) by failing to deliver to the condominium association in question certain required documents within 60 days of the turnover.

   
   

   Respondent requested a formal hearing by letter of its attorney dated December 3, 1982, and the matter was referred to the Division of Administrative Hearings for hearing.

   
   

   Petitioner presented the testimony of Virginia Faye Shaffer and Petitioner's Exhibits 1 and 2. Respondent presented the testimony of James H. Guest and Respondent's Exhibit A.

   
   

   Based on the evidence presented, the following facts are found:

   FINDINGS OF FACT

   
   

   1. M. G., Incorporated, a real estate developer in Brevard County, Florida, caused to be constructed The Bello Rio Condominium complex at 255 South Tropical Trail, Merritt Island, Florida.

      
      

   2. On January 25, 1979, the Chief, Bureau of Condominiums, Department of Business Regulation, State of Florida, advised the attorney for the Developer that, pursuant to Rule 7D-17.05, Florida Administrative Code, the condominium documents submitted for approval for the project in question here had been reviewed and were considered proper for filing, and that the Developer could lawfully close sales contracts on units within the project.

      
      

   3. Units were sold; and on September 1, 1981, the project was "turned over" by the Developer to the association. At the meeting held for this purpose, several documents were delivered by the Developer to the association's Board of Administration (Board) in the person of Faye Shaffer, a resident of the development. These documents consisted of:

      
      

      1. Three (3) checks totaling $1,800;

      2. The association seal;

      3. The original recorded copy of the Declaration;

      4. The original copy of the Articles of Incorporation;

      5. A condominium insurance policy;

      6. A flood insurance renewal declaration; and

      7. Certificates of Occupancy for twelve (12) units.

         
         

         All plans and specifications in the hands of the Developer were released to the association's attorney sometime in that general time frame. Further, because there were no common areas covered by warranties, none were available to turn over.

         
         

   4. Either at the time of turnover or shortly thereafter, during the month of September, 1981, Mrs. Shaffer also received from the Developer five sheets of check ledger paper reflecting the following categories of entries:

      
      

      1. Date of check;

      2. Payee;

      3. Check number;

      4. Amount of check;

      5. Lawn maintenance;

      6. Utilities;

      7. Insurance;

      8. Garbage pickup;

      9. Bank service charge;

      10. Miscellaneous; and

      11. Management fee (10 percent).

          
          

          These ledger sheets were not certified as reviewed by a certified public accountant and constituted the only financial records turned over to the association by the Developer at any time.

   5. The accounting and bookkeeping functions for this project were accomplished initially in the offices of the Developer. Thereafter, the Developer retained Guest Realty, Inc., to manage the facility, including the collection of maintenance fees and making payments as required for utilities, etc. During the period of that company's stewardship, all accounting for funds and bank statement reconciliations were handled by Guest Realty, Inc. Any deficiencies resulting between fees collected and expenses paid during that period were made up by the Developer, and Guest Realty, Inc., received a fee of

      10 percent of the maintenance fees received for its services. Any bills, receipts, cancelled checks, or other records kept during the period are now in storage; and Mr. Guest, on behalf of Respondent, M. G., Incorporated, will not make the effort to retrieve them unless required to do so by some competent authority.

      
      

      CONCLUSIONS OF LAW

      
      

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

      
      

   7. Respondent is alleged to have violated Sections 718.301(4)(c), (f) , and (g), Florida Statutes (1981), which require that prior to, or not more than

      60 days after, the election of a majority of the members of a board of administration of an association by unit owners other than the developer, the developer shall relinquish control of the association to the owners. Simultaneously, the developer shall deliver:

      
      

      (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 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.

      * * *

      1. A copy of the plans and specifications utilized in the construction or remodeling

         of improvements and the supplying of equipment to the condominium and

         in the construction and installation of all mechanical components serving the improvements and the site,

         with a certificate in affidavit

         form of the developer, his agent,

         or an architect or engineer authorized to practice in this state that such plans and specifications represent,

         to the best of their knowledge and belief, the actual plans and specifications utilized in the construction and improvement of the condominium property and for the construction and installation of the mechanical components serving the improvements . . .

      2. Insurance policies.

      
      

   8. The explanation of Mr. Guest, for the Respondent, that because of the configuration of the development there were no warranties to give, uncontroverted by Petitioner, is sufficient to relieve Respondent of any culpability under Subsection (c) of Section 718.301(4), Florida Statutes (1981).

      
      

   9. Likewise, the Petitioner has failed to establish that Respondent failed to turn over the plans and specifications as required by Subsection (f) of the pertinent statute. Release to the attorney for the association is tantamount to release to the association itself, so long as the attorney is, at the time, representing it. There was no evidence to show the plans released were less than required except the testimony of Mrs. Shaffer, who indicated she knew little of the technical requirements for plans and specifications and, in fact, had not looked at what was received.

      
      

   10. The question of the adequacy of the financial records is another matter entirely. Respondent admits the records are not complete and were not accompanied by a report from an independent certified public accountant as required by the statute as it existed at the time of turnover. However, Respondent contends that the documents submitted were in compliance with the requirement of the statute at the time the condominium documents were filed with and accepted by the Division, in January, 1979, which required: "An accounting for all association funds including capital accounts and contributions."

       Section 718.301(4)(c), Florida Statutes (1977). Respondent further contends that to permit the Legislature to change the requirements making the new ones applicable to an operation begun under the old law would be tantamount to enacting an ex post facto law. He urges as well that the new statute imposes additional burdens on a developer which were not contemplated when he went into the venture and that it thereby impaired the terms of a preexisting contract.

       He cites in support of his position Wilensky v. Fields, 267 So.2d 1 (Fla. 1972); Higginbotham v. State, 88 Fla. 26, 101 So.233 (Fla. 1924); and Suntide Condominium Association, Inc. v. Division of Florida Land Sales and Condominiums, 409 So.2d 65 (1 DCA Fla. 1982).

       
       

   11. Petitioner contends that the law in effect at the time of the turnover governs, as it is a legitimate exercise of the Legislature's police power. It does not violate any contract right, nor a vested interest in the constitutional sense, and is not ex post facto. In support of its position, Petitioner cites Voorhees v. City of Miami, 145 Fla. 402, 199 So. 313 (Fla. 1940)

       
       

   12. A review of the situation here clearly shows that the statute in existence at the time of the turnover controls. Respondent was authorized by the Division to start closing on units in January, 1979. The law was changed after that, but before turnover, in September, 1981. At the time the Division

       originally approved Respondent's paperwork, it did not establish any contractual relationship between Respondent and its buyers or any vested interest of the Respondent.

       
       

   13. All that was changed was a requirement that a business entity doing business with the public provide that public with more information than was previously required and have that information verified. This is in no way an unreasonable or onerous requirement and would appear to be consistent with good business practice. As for the contention that an additional and uncontemplated burden was imposed, there is no guarantee that accounting or other legal requirements will remain constant throughout the life of any venture.

       
       

   14. In short, Respondent had the requirement to conform to the requirements of the statute as they existed at the time called for in the statute; i.e., at turnover. Its failure to do so constitutes a violation of Section 718.301(4)(c), Florida Statutes (1981).

       
       

   15. Parenthetically, even if this were not the case, review of the statute as it existed at the time the Respondent went into business shows that it failed to conform even to the modest requirements of that statute. In no way can five sheets of a check ledger which makes no reference to capital accounts and/or contributions constitute compliance with that provision.

       
       

   16. The Petitioner has submitted a proposed recommended order which includes proposed findings of fact and conclusions of law. The proposed findings and conclusions have been adopted only to the extent that they are expressly set out in the Findings of Fact and Conclusions of Law above. They have been otherwise rejected as contrary to the better weight of the evidence, not supported by the evidence, irrelevant to the issues, or legally erroneous.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED:

That Respondent be assessed a penalty of $500 under the provisions of Section 718.501(1)(d)4, Florida Statutes (1981)

RECOMMENDED this 13th of May, 1983, in Tallahassee, Florida.

ARNOLD H. POLLOCK, 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 13th day of May, 1983.

COPIES FURNISHED:

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

William C. Irvin, Esquire Post Office Box 606

Cocoa Beach, Florida 32931

Mr. Gary R. Rutledge Secretary

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

Mr. E. James Kearney Director

Division of Florida Land Sales and Condominiums

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

================================================================= AGENCY FINAL ORDER

=================================================================

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

STATE OF FLORIDA, DEPARTMENT OF BUSINESS REGULATION, DIVISION OF FLORIDA LAND SALES AND CONDOMINIUMS,

Petitioner,

vs. CASE NO. 82-3451

1. G., INCORPORATED; BELLO RIO CONDOMINIUM,

   
   

   Respondent.

   /

   FINAL ORDER

   
   

   This Order is entered by the Director of the Division of Florida Land Sales and Condominiums, Department of Business Regulation, pursuant to Section 120.59, Florida Statutes, following a Recommended Order entered in this cause by Hearing Officer Arnold H. Pollock, Division of Administrative Hearings, on May 13, 1983.

   
   

   The Recommended Order is hereby adopted with the exception of the amount of the civil penalty imposed and the addition of a requirement of compliance with the provisions of Section 718.301(4)(c), Florida Statutes.

   
   

   IT IS THEREFORE ORDERED that, within twenty (20) days of the receipt of this Final Order, Respondent shall:

   
   

   1. Comply with Section 718.301(4)(c), Florida Statutes, by turning over to the association the financial records required by this section and have engaged a certified public accountant to review them in accordance with this section of the statutes.

      
      

   2. Respondent shall remit to the Division the civil penalty in the amount of $5,000. Said civil penalty shall be tendered in the form of a certified check, made payable to the Florida Condominium Trust Fund.

DONE AND ORDERED in Tallahassee, Florida, this 20th day of May, 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 has been furnished by Cert.

Mail to William C. Irvin, Esquire, Post Office Box 606, Cocoa Beach, Florida 32931, and Frederick W. Richards, Esquire, Post Office Box 757, Cocoa Beach, Florida 32931, this 20th day of May, 1983.

Connie B. Campbell

Docket for Case No: 82-003451

Orders for Case No: 82-003451