STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ARNOLD BELKIN, )

)

Petitioner, )

)

vs. ) Case No. 85-0828

)

)

DIVISION OF FLORIDA LAND )

SALES, CONDOMINIUMS AND )

MOBILE HOMES, et al., )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was conducted in this case on December 5, 1985, in Miami, Florida, before Michael M. Parrish, a duly designated Hearing Officer of the Division of Administrative Hearings. At the hearing the parties were represented as follows:

For Petitioner: Mr. Arnold Belkin, pro se

Apartment 912

210 174th Street Miami, Florida 33160

For Respondents: Thomas A. Bell, Esquire

Deputy General Counsel

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

For Intervenors: Joseph D. Bolton, Esquire

Stephen Gillman, Esquire SHUTTS & BOWEN

1500 Edward Ball Building Miami Center

100 Chopin Plaza Miami, Florida 33131

BACKGROUND AND ISSUES

On or about August 13, 1984, Mr. Arnold Belkin petitioned the Division of Florida Land Sales, Condominiums and Mobile Homes

for the issuance of a declaratory statement. Thereafter, on October 2, 1984, a Joint Motion to Intervene and Request for Public Hearing was filed with that agency by certain limited partnerships that own units in the condominium building that was the subject of Mr. Belkin's petition. The Joint Motion to Intervene was granted by order rendered by the Division Director on October 22, 1984. Thereafter, due to existence of possible factual disputes, the matter was referred to the Division of Administrative Hearings for a formal hearing.

The issues raised by Mr. Belkin's petition for a declaratory statement may be summarized as follows:

1. Whether the limited partnerships that ultimately became the Joint Intervenors in this case constitute a developer as defined by Section 718.103(14), Florida Statutes;

   
   

2. Whether the alleged use by Hall Management Company of a condominium unit as a rental office constitutes a violation of certain portions of the declaration of condominium; and

   
   

3. If the Joint Intervenors are determined to constitute a successor developer, whether they are entitled to control the board of administration of the condominium association pursuant to Section 718.301, Florida Statutes.

Subsequent to the formal hearing a transcript of the proceedings at the hearing was filed with the Hearing Officer and thereafter all parties filed post-hearing submissions containing proposed findings of fact, proposed conclusions of law, proposed recommended disposition of this matter, and legal arguments. In the formulation of this Recommended Order, I have given careful consideration to all of the post-hearing documents submitted by all of the parties. Specific rulings on all proposed findings of fact submitted by all parties are contained in the Appendix which is attached to and incorporated into this Recommended Order.

FINDINGS OF FACT

Based on the stipulations of the parties, on the exhibits received in evidence, and on the testimony of the witnesses at the hearing, I make the following findings of fact.

Facts stipulated to by the parties

1. Winston Towers 600 condominium was created by Winston Capital, Inc., which still owns units for sale in the condominium.

   
   

2. Control of the association has been relinquished by the creator/developer and turned over by it to the unit owners including joint intervenors.

   
   

3. In May of 1983, six Michigan limited partnerships each purchased a number of units in the condominium from Winston Capital, Inc. In March of 1984, four Texas limited partnerships each purchased a number of units in the condominium from Winston Capital, Inc.

   
   

4. The joint intervenors consist of the six Michigan limited partnerships and the four Texas limited partnerships.

   
   

5. The number of units so purchased gives the joint intervenors, as a block, a controlling interest in the condominium association.

   
   

6. The association is controlled by the joint intervenors, who elected two of the three directors of the association.

   
   

7. The association hired Hall Management Company, Kent Security Services, Inc., and an unnamed cleaning company.

   
   

8. Records of the Secretary of State reveal that among other officers of Hall Management Company are Craig Hall, President and Director, and Christine Erdody, Vice-President.

   
   

9. The records of the Secretary of State reveal no entity known as the Hall Real Estate Group.

   
   

10. The public records of Dade County, Florida, reveal no fictitious name affidavit for any entity trading as the Hall Real Estate Group.

    
    

11. The records of the Division of Florida Land Sales, Condominiums and Mobile Homes reflect that Winston Towers 600 is a residential condominium, located in Dade County, Florida.

    
    

12. The joint intervenors are not now offering and have not ever offered condominium units for sale.

    
    

13. The joint intervenors are not now offering and have not ever offered condominium units for lease for periods in excess of five years.

14. Winston Towers 600 Condominium Association, Inc., is the non-profit condominium association established to maintain and operate the condominium.

    
    

15. In July, 1984, a meeting of the condominium association was held upon instructions of the developer, Winston Capital, Inc.

    
    

16. Winston Capital, Inc., scheduled and held the condominium association meeting in July 1984, under the good faith impression and belief that the threshold requirements in Section 718.301 mandating turnover of control of the association board of directors had been met.

    
    

17. Joint intervenors, collectively, own more than 50 per cent of the units in the condominium.

    
    

18. Joint intervenors, as developers, did not turn over control of the condominium association in July 1984.

    
    

19. The declaration of condominium for the condominium and the Florida Statutes grant certain rights and privileges to the developers.

    
    

20. The joint intervenors have a substantial economic investment in the condominium. The joint intervenors desire to have the condominium operated and maintained by competent professional management so as to protect and enhance the condominium project.

    
    

21. The annual fee being paid to Hall Management Company for management of the condominium is the same fee as had been previously paid by the developer, Winston Capital, Inc., to the prior manager, Keyes Management Company.

    
    

22. The names of the board of directors elected to the board of administrators of the association on July 16, 1985, were Ms. Christine Erdody, Mr. James Sherry, and Mr. Joseph Pereira.

    
    

23. Ms. Christine Erdody and Mr. James Sherry are general partners in each of the ten limited partnerships. Mr.

    Craig Hall is President and Ms. Christine Erdody is Vice- President.

    
    

    Other findings based on evidence Adduced at hearing

    
    

24. At the turnover meeting in July of 1984, Ms. Erdody cast votes on behalf of each of the ten limited partnerships,

    voting once for each unit owned by all ten of the limited partnerships.

    
    

25. There has never been a meeting of the unit owners in which the limited partnerships turned over control of the association to unit owners other than the ten limited partnerships.

    
    

26. The ten limited partnerships have no business ventures or income producing activities other than attempting to offset expenses of operations by leasing the units owned by the limited partnerships and attempting to increase their equity in the condominium units. The units acquired by the joint intervenors were not acquired for their own occupancy.

    
    

27. The limited partnerships, while in control of the association, employed Hall Management Company, pursuant to contract, to manage the condominium and to lease the units owned by the limited partnerships. The rental office used by the management company consists of a unit owned by one of the limited partnerships.

    
    

28. The contract specifically requires that Hall Management Company attempt to lease those condominiums units owned by the limited partnerships.

    
    

29. The limited partnerships have no income producing mechanism other than the disposition of condominium units owned by the listed partnerships pursuant to the contract with the Hall Management Company.

    
    

30. A regular, normal, and common activity of each of the ten limited partnerships is to offer to lease and to enter into leases of the condominium units owned by the limited partnerships. They typically engage in this activity through their agent, the Hall Management Company.

    
    

31. None of the ten limited partnerships have ever offered any of their units for sale. None of the ten limited partnerships have ever offered any of their condominium units for leases in excess of five years. Ultimately, all of the ten limited partnerships intend to sell all of their condominium units.

    
    

32. There is no relationship or affiliation between the creator/developer, Winston Capital, Inc., and any of the joint intervenors.

    
    

33. Each of the joint intervenors is a separate limited partnership. However, due to the facts that each of the joint

    intervenors have a common purpose, each has at least several general partners in common, each has entered into a management contract with a closely related management company, and each has acted in concert with the others in prior matters concerning the condominium facility and the association, for all practical purposes relevant to this case, the joint intervenors may be regarded as a single entity. This is true even though there is no agreement or contract between the joint intervenors requiring them to act collectively in any matter involving or affecting their vote in condominium association matters at Winston Towers 600 Condominium.

    
    

34. In all the actions of the joint intervenors in voting their interests at association meetings, they have never thought or acted on the understanding that the joint intervenors were developers of the condominium.

    
    

35. The unit owners other than the joint intervenors have selected one-third of the Board of Directors of the Association.

    
    

36. The right to vote for a majority of the board of directors of the condominium association is a significant and valuable right which the joint intervenors believed they would be entitled to upon purchasing a majority of the units in the condominium.

    
    

37. A substantial number of the purchasers of Florida condominium units are non-residents of Florida. A substantial number of purchasers of condominium units intend to rent their condominiums under leases with a duration of two years or less.

    
    

    CONCLUSIONS OF LAW

    
    

    Based on the foregoing findings of fact and on the applicable legal principles, I make the following conclusions of law.

    
    

38. The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of this case.

    
    

39. The initial legal issue to be resolved is whether the joint intervenors, consisting of ten limited partnerships owning condominium units, constitute a developer or developers as defined by statute. The applicable statutory provision, Section 718.103(14), Florida Statutes, reads as follows in pertinent part:

    
    

    "Developer" means a person who creates a condominium or offers condominium parcels for

    sale or lease in the ordinary course of business, but does not include an owner or lessee of a condominium or cooperative unit who has acquired his unit for his own occupancy . . . .

    
    

40. Upon consideration of the statutory definition set above, it is evident that the Legislature statutorily contemplated the existence of two classes of persons which constitute a "developer": (1) a person who creates a condominium or a creating developer, and (2) a person who offers units for sale or lease in the ordinary course of business, or a successor developer. The originating or initial developer in this condominium has been previously identified as Winston Capital, Inc. Since no evidence suggests that the joint intervenors acted in concert with the original developer in the creation of the condominium pursuant to Section 718.104(2), then the joint intervenors, if "developers" within the definition, must occupy the second category of developer as defined to mean one who offers condominium parcels for sale or lease in the ordinary course of business. Moreover, because it was found that the joint intervenors are not offering parcels for sale, in order to come within the definition of developer, it must be shown that the joint intervenors are offering condominium parcels for lease and in the ordinary course of business.

41. Based upon the findings of fact that joint intervenors are offering condominium parcels for lease in the ordinary course of business, it is concluded that the joint intervenors constitute developers as defined by statute. In reaching this conclusion, I have not overlooked the argument of the joint intervenors that Section 718.103(14) must be read in pari materia with Section 718.502, Florida Statutes, and that such a reading of the two statutory provisions compels a conclusion that only a lease for more than five years is sufficient to bring an owner of condominium units within the scope of the statutory definition of "developer." Upon careful consideration of the two statutory provisions, I am persuaded that the interpretation urged by the joint intervenors is not warranted. The definition at Section 718.103(14) encompasses all leases in the ordinary course of business, regardless of the length of the lease period. The fact that Section 718.502 only applies to some leases does not modify the clear language of the earlier definition of "developer."

    
    

42. The second issue upon which Mr. Belkin requested a declaratory statement, to wit: whether the alleged use by Hall Management Company of a condominium unit as a rental office constitutes a violation of the declaration, is an improper subject for issuance of a declaratory statement. Section 120.565, Florida Statutes, provides that a declaratory statement

    shall set forth the agency's opinion as to the applicability of a specified statutory provision or rule or order of the agency.

    Since a declaration of condominium is not listed among the possible subjects of a declaratory statement, where, as here, any violation of the declaration is not tied directly to a statutory or rule violation, issuance of a statement on this issue would be inappropriate.

    
    

43. The third issue upon which Petitioner requests issuance of a statement is whether joint intervenors are entitled to control the board of administration of the condominium association pursuant to Section 718.301, Florida Statutes. This statute provides that unit owners other than the developer are entitled to elect not less than a majority of the members of the board of administration of a condominium association upon the occurrence of any of the following circumstances:

    
    

    1. Three years after 50 percent of the units that will be operated ultimately by the association have been conveyed to purchasers

       
       

    2. Three months after 90 percent of the units that will be operated ultimately by the association have been conveyed to purchasers;

       
       

    3. When all the units that will be operated ultimately by the association have been completed, some of them have been conveyed to purchasers, and none of the others are being offered for sale by the developer in the ordinary course of business or

       
       

    4. When some of the units have been conveyed to purchasers and none of the others are being constructed or offered for sale by the developer in the ordinary course of business.

       
       

44. Prior to the occurrence of any of the four events quoted above, the developer is entitled to elect a least two- thirds of the members of the board of administration of an association. (See the first sentence of Section 718.301(1), Florida Statutes.) The joint intervenors, both individually and collectively, constitute current and successor developers under Section 718.103(14), Florida Statutes, since they offer their condominium units for lease in the ordinary course of business. The joint intervenors acquired their status as developers upon their acquisition of their units and their commencement of leasing, which occurred prior to the date on which the creator/developer turned over control of the association. The

    joint intervenors, as developers, own a majority of the units in the condominium and in accordance with Section 718.301, Florida Statutes, are entitled to appoint two-thirds of the members of the board of administration of the association.

    
    

45. The joint intervenors have never turned over control of the association to the other unit owners. And the purported turnover of control of the association by the creator/developer in July of 1984 was without legal effect for the following reasons: (1) there was no turnover of control from the joint intervenors, who in fact were the controlling developers as of that date; (2) the joint developers acted as unit owners at the July 1984 meeting instead of as developers and (3) the July 1984 meeting was called and held upon the assumption that the joint intervenors were not developers, and that the threshold requirements for turnover of control were met, when in fact both of the aforesaid assumptions were incorrect.

    
    

46. None of the four alternative threshold requirements in Section 718.301(1), Florida Statutes, which mandate turnover of control of the association have been met. The developers (the joint intervenors and the creator/developer) still own more than fifty per cent of the units and the creator/developer still owns units for sale in the condominium. Therefore, there is no requirement that the joint intervenors, as developers, should turn over control of the association. In the instant case the joint intervenors appear to have acted at least in substantial compliance with the statutory requirements, since they have exercised their control to select two-thirds of the members of the board of administration of the association and have permitted the unit owners other than the joint intervenors to elect one- third of the board members, a result and procedure that is consistent with the statutory provisions.

RECOMMENDATION

On the basis of all of the foregoing, it is recommended that the Division of Florida Land Sales, Condominiums and Mobile Homes issue a declaratory statement to the following effect:

1. That the joint intervenors, individually and collectively, constitute concurrent and successor developers, and that as such concurrent and successor developers who collectively own more than fifty per cent but less than eighty-five per cent of the units, they are entitled to appoint two-thirds of the members of the board of administration of the condominium association. The statement should also note that the joint intervenors should comply with Section 718.3025(1)(e), Florida Statutes, by disclosing any financial or ownership interest which the joint intervenors have, if any, in Hall Management Company

2. That the issue of whether the joint intervenors may have violated the provisions of the declaration of condominium is not a proper subject for a declaratory statement.

DONE AND ORDERED this 9th day of April, 1986, at Tallahassee, Florida.

MICHAEL M. PARRISH, Hearing Officer Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

Filed with the Clerk of the Division of Administrative Hearings this 9th day of April, 1986.

COPIES FURNISHED:

Mr. Arnold Belkin Apartment 912

210 - 174 Street Miami, Florida 33160

Thomas A. Bell, Esquire Deputy General Counsel

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

Karl M. Scheuerman, Esquire Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 323301

Joseph D. Bolton, Esquire Stephen Gillman, Esquire SHUTTS & BOWEN

1500 Edward Ball Building Miami Center

100 Chopin Plaza Miami, Florida 33131

Linda McMullen, Esquire McFARLAIN, BOBO, STERNSTEIN,

WILEY & CASSEDY

P. O. Box 2174 Tallahassee, Florida 32301

James Kearney, Jr., Acting Director Division of Florida Land Sales, Condominiums and Mobile Homes Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301

James Kearney, Jr., Secretary Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301

APPENDIX

The Following are my specific rulings on each of the proposed findings of fact submitted by all of the parties.

Rulings on findings proposed by the Division

Paragraphs 1 through 23 of the Division's proposed findings are accepted and incorporated into the findings in this Recommended order.

Paragraph 24 is rejected as irrelevant and as not supported by persuasive competent substantial evidence.

Paragraph 25 is rejected as irrelevant in part and is redundant in part.

The substance of paragraph 26 is accepted with the deletion of certain redundant information.

The substance of paragraphs 27, 28, 29, 30, 31, 32, and 33 is accepted with some modifications in the interest of clarity and accuracy and with the deletion of certain redundant information.

Rulings on findings proposed by the Joint Intervenors

Paragraphs 1 through 12 of the Joint Intervenors' proposed findings are accepted and incorporated into the findings in this Recommended Order.

Paragraph 13 is rejected as irrelevant, subordinate, and not supported by competent substantial evidence.

Paragraphs 14 and 15 are accepted.

Paragraphs 16 and 17 are accepted with additional findings for the purpose of clarity and accuracy.

The substance of paragraphs 18, 19, 23, and 26 is accepted.

Paragraphs 20, 21, 22, 24, 25, and 27 are accepted.

Rulings on findings proposed by Petitioner

Paragraphs 1, 2, 3, and 4 of Petitioner's proposed findings are accepted in substance.

Paragraph 5 is rejected as irrelevant.

Paragraphs 6, 7, 8, 9, and 10 are accepted in substance with the deletion of the reference to the Hall Group of real estate limited partnerships.

Paragraph 11 is rejected in part because it is subordinate, in part because not supported by competent substantial evidence and in part because it is a conclusion of law.

Paragraphs 12, 13, 14, and 15 are accepted in substance.

Paragraph 16 is rejected because it is not supported by competent substantial evidence.

Paragraph 17 is rejected because it is irrelevant and subordinate.

Paragraphs 18, 19, and 20 are accepted in substance.

Paragraphs 21 and 22 are rejected because they constitute argument or conclusions of law and are not supported by competent substantial evidence.

Paragraph 23 is rejected because it is irrelevant to the issues to be decided in this case and because portions of it are not supported by competent substantial evidence.

Paragraph 24 is accepted.

Paragraph 25 is rejected because it is irrelevant to the issues to be decided in this case, because portions of it are not supported by competent substantial evidence, and because portions of it constitute argument or conclusions of law.

Paragraph 26 is rejected because it is not supported by competent substantial evidence.

Paragraph 27 is rejected because it constitutes argument.

Paragraph 28 is rejected because it is irrelevant and redundant.

Paragraphs 29 and 30 are rejected because they constitute argument or conclusions of law.

Paragraphs 31 and 32 are rejected because they are not supported by competent substantial evidence.

Paragraph 33 is rejected because it constitutes argument or conclusions of law.

Paragraphs 34 and 35 are rejected because they are irrelevant and because they constitute argument.

Docket for Case No: 85-000828

Orders for Case No: 85-000828