STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS )

REGULATION, (Division of Florida ) Land Sales and Condominiums), )

)

Petitioner, )

)

vs. ) CASE NO. 83-182

) BARKWOOD SQUARE CONDOMINIUMS, )

)

Respondent. )

)

RECOMMENDED ORDER

This matter came on for hearing on June 2, 1983, in Clearwater, Florida, before the Division of Administrative Hearings and its duly appointed Hearing Officer, R. T. Carpenter. The parties were represented by:

APPEARANCES

For Petitioner: Helen C. Ellis, Esquire

Department of Business Regulation Division of Florida Land Sales

and Condominiums

725 South Bronough Street Tallahassee, Florida 32301

For Respondent: N. Staten Bitting, Jr., Esquire

3835 Central Avenue Post Office Box 15339

St. Petersburg, Florida 33733

This matter arose on Petitioner's Notice to Show Cause charging Respondent, as condominium developer, with failure to maintain proper records and accounts, failure to turn over complete records and funds at the time of transfer of control to the condominium association, failure to pay certain assessments and failure to provide the association with an audit review of financial records, in violation of Chapter 718, Florida Statutes (F.S.). The parties submitted proposed findings of fact and conclusions of law which are incorporated herein to the extent they are relevant and consistent with the evidence. Those proposed findings not adopted herein are considered to be either subordinate, cumulative, immaterial, unnecessary or not supported by the evidence.

FINDINGS OF FACT

1. Barkwood Square Condominium was developed by Mr. John Nell (Respondent). The declaration of condominium was filed on May 23, 1980, and transfer of control from Respondent to the condominium association took place at a meeting held on June 30, 1981.

2. At the time of turnover, Bieder Management Company was Respondent's agent for the operation, maintenance and management of Barkwood Square. Bieder was accepted as the association's agent at turnover and continued in this capacity until February, 1982. No documents were produced at the transfer meeting, and all records and accounts then in existence remained in the hands of Bieder.

   
   

3. In February, 1982, the condominium association became dissatisfied with Bieder and replaced it with Hotz Management Company. The records turned over to Hotz by Bieder at that time were incomplete, and the association then sought the assistance of Petitioner to obtain complete records and a financial accounting.

   
   

4. Through its investigation in 1982, Petitioner and the condominium association obtained all records available. The testimony of Petitioner's investigator and two of the unit owners (who are also condominium association directors) established that no review of the financial records of the association had ever been conducted by an independent certified public accountant (CPA).

   
   

5. The testimony of the unit owners-directors established that Respondent had not delivered any of the following items to the association within 60 days of turnover:

   
   

   1. Original or certified copy of the declaration of condominium.

   2. A certified copy of the articles of incorporation of the association.

   3. A copy of the bylaws.

   4. Minutes of association meetings.

   5. Resignation of officers and directors resulting from change of control.

      
      

6. The investigation revealed that Respondent owes $4,138.32 in contributions to the condominium association. Respondent concedes that he owes this amount, which is based on common expenses incurred in excess of assessments to unit owners between July and October, 1980.

   
   

7. Respondent paid certain association expenses with personal funds and was later reimbursed. Respondent concedes this procedure was not in keeping with good accounting practices. Respondent also failed to keep or turn over to the association the financial records pertaining to the period when he did not employ a management agent.

   
   

   CONCLUSIONS OF LAW

   
   

8. Subsection 718.301(4), F.S., requires that the developer, within 60 days after turnover of control to unit owners, provide the association with the original or certified copy of the declaration of condominium, a certified copy of the articles of incorporation, a copy of the bylaws, the minutes book of the association and resignations of officers. Respondent provided none of these items within the 60 days permitted and thus violated the above provision.

   
   

9. Subsection 718.111(7) requires maintenance of books and records according to good accounting practices. By failing to channel all association funds through an association account (rather than a personal account), Respondent violated this provision.

10. Subsection 718.116(8), F.S., requires the developer to pay the common expenses incurred during a specified period that exceed assessments. Petitioner introduced unrebutted evidence that Respondent has violated this provision and owes the association $4,138.32.

    
    

11. Subsection 718.301(4)(c), F.S., requires a review of the records of the association by an independent CPA within 60 days of turnover. Respondent has failed to provide such review in violation of this provision.

    
    

12. Petitioner's contention that all records were required to be present at the turnover meeting is without merit. However, Respondent is responsible for record and account deficiencies which existed, though undiscovered, at the time of control transfer. Respondent is not excused from responsibility for any of the violations discussed herein because of his reliance on a management company or by the association's retention of that company at the time of transfer.

    
    

13. Because of the above-described violations, Respondent should be assessed a fine of $1,500. Further, Respondent should be required to correct remaining deficiencies by conducting a further search for missing records, arranging for an audit by an independent CPA and by payment of the $4,135.32 which he owes the association.

RECOMMENDATION

Based on the foregoing, it is

RECOMMENDED that Petitioner enter a Final Order directing Respondent to take the corrective action discussed herein as authorized by Subsection 718.501(1)(d)(2), F.S., and assessing a civil fine in the amount of $1,500 as authorized by Subsection 718.501(1)(d)4, F.S.

DONE and ENTERED this 27th day of July, 1983, in Tallahassee, Florida.

R. T. CARPENTER, 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 27th day of July, 1983.

COPIES FURNISHED:

Helen C. Ellis, Esquire Department of Business

Regulation

725 South Bronough Street Tallahassee, Florida 32301

N. Staten Bitting, Jr., Esquire 3835 Central Avenue

Post Office Box 15339

St. Petersburg, Florida 33733

E. James Kearney, Director Division of Florida Land

Sales and Condominiums Department of Business

Regulation

725 South Bronough Street Tallahassee, Florida 32301

Gary R. Rutledge, Secretary Department of Business

Regulation

725 South Bronough Street Tallahassee, Florida 32301

Docket for Case No: 83-000182

Orders for Case No: 83-000182