STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

vs. ) CASE NO. 86-1320

) ALLISON ON THE OCEAN, INC., d/b/a ) ALLISON ON THE OCEAN CONDOMINIUM, )

)

Respondent. )

)

RECOMMENDED ORDER

For Petitioner: Robin H. Conner, Esquire

Department of Business Regulation

For Respondent: Chantal Fianson,

as representative of Allison on the Ocean, Inc.

This matter was heard by William R. Dorsey, Jr., on August 11, 1986 in Coral Gables, Florida. Ms. Chantal Fianson appeared on behalf of Allison on the Ocean, Inc., having received notice of the hearing as the registered agent for the corporation. Testimony also revealed that Ms. Fianson is the owner of all the stock of this corporation, and consequently she qualified to represent the corporation. At the hearing four exhibits were received on behalf of the petitioner and one witnesses testified, Ms. Debra Herter.

No exhibits were received on behalf of the respondent, and Ms. Fianson testified on behalf of the respondent.

Respondent waived its right to file a proposed recommended order. Rulings on the proposed finding of fact submitted in the proposed recommended order of the Department are made in the appendix to this order.

ISSUE

The issue framed by the Notice to Show Cause is whether Allison on the Ocean, Inc., violated Section 718.502(2)(a), Florida Statutes (1984 Supp.) by accepting a deposit of $85,000 and executing a "Memorandum of Agreement" with Hildagard Waltraud Bitton when that Memorandum of Agreement had not been approved for use as a reservation agreement form by the Division of Land Sales Condominium and Mobile Homes?

FINDINGS OF FACT

1. Allison on the Ocean, Inc., is an active, for profit Florida Corporation (PX 4). 1/

   
   

2. Ms. Chantal Fianson is the owner of all five hundred shares of authorized stock in Respondent (PX 4; testimony of Ms. Fianson).

   
   

3. The Allison Hotel in Miami Beach, consisting of studio apartments, was leased by Ms. Fianson. She intended to convert it to condominium ownership. Apparently the lease was held in the name of Allison on the ocean, Inc. An attorney was retained by Ms. Fianson to prepare the necessary papers for the condominium conversion.

   
   

4. In connection with that conversion application, a reservation deposit agreement had been submitted to the Department of Business Regulation, copy of which was entered into evidence as PX 2.

   
   

5. After those conversion papers were submitted to the Division in Tallahassee, Ms. Fianson was informed in April 1954 that the condominium conversion would not be approved because although she had a long-term lease, a condominium project required ownership of the land on which the building stood (testimony of Ms. Fianson).

   
   

6. Before the Department of Business Regulation declined to approve the condominium project as originally proposed by Ms. Fianson, on March 2, 1984, an agreement entitled "Memorandum of Agreement" was executed between Allison on the ocean, Inc., and Hildagard Waltraud Bitton by their respective representatives stating Ms. Bitton's intent to purchase or sublease three units in the property (PX 1). That memorandum shows by its terms that it was not intended to be the contract for the purchase and sale of the units. It provided for the cancellation of the agreement within ninety days, at the buyer's option, and stated that the validity and the interpretation of the agreement would be governed by Florida law (PX 1 paragraph 7). Ms. Bitton paid $85,000 to Allison on the Ocean, Inc., in connection with this Memorandum of Agreement, which money was then used for expenses related to the conversion of the building to a condominium (testimony of Ms. Fianson).

   
   

7. Significantly, the prefatory "whereas" clauses in the agreement stated that "Developer is in the process of converting the Allison Hotel, located at 6261 Collins Avenue, Miami Beach, Florida to a Condominium . . ." after which by hand interlineation was written "or SUB LEASE" and the initials of the representatives of both parties appear.

   
   

8. The memorandum expressed the intention of the parties that if the proposed condominium conversion were not approved, Ms. Bitten would receive not a fee ownership in condominium units, but a sublease of an unspecified term from the lessee-developer, under the long-term lease which the Respondent did have on the Allison Hotel.

   
   

9. The attorney for the purchaser/lessee Ms. Bitten drew up the Memorandum of Agreement (PX 1), and it was not submitted to the Division for review before it was executed.

   
   

10. After learning in April 1984 that the condominium project would not be approved, Ms. Fianson did arrange to purchase the land from its owner, and another lawyer was obtained to file condominium documents reflecting the fee

    ownership by the developer. In the interim, the condominium market became very bad, and ultimately the bank which had provided the Respondent the purchase money mortgage for the property foreclosed on the Allison Hotel.

    
    

11. The evidence does not show whether the $85,000 which was used in the conversion process was ever returned to Ms. Bitton.

    
    

    CONCLUSIONS OF LAW

    
    

12. Ms. Fianson as owner of all stock of the Respondent corporation has the authority to represent the Respondent in this matter. Magnolias Nursing and Convalescent Center v. Department of Health and Rehabilitative Services, 428 So.2d 256 (Fla. 1st DCA 1982).

13. Section 718.502(2)(a), Florida Statutes (1984 Supp.), provides "Prior to filing as required by subsection

    1. , a developer shall not offer a contract for purchase of a unit or lease of a unit for more than 5 years but may accept deposits for reservations upon the approval of a fully executed escrow agreement and reservation agreement form properly filed with the Division of Florida Land Sales, Condominiums, and Mobile Homes. Reservations shall not be taken on a proposed condominium unless the developer has an ownership, leasehold, or contractual interest in the land upon which the condominium is to be developed. The division shall notify the developer within

       20 days of receipt of the reservation filing of any deficiencies contained therein. Such notification shall not preclude the determina- tion of reservation filing deficiencies at a later date, nor shall it relieve the developer of any responsibility under the law. The escrow agreement and the reservation agreement form shall include a statement of the right of the prospective purchaser to an immediate unqualified refund of the reservation deposit moneys upon written request to the escrow agent by the prospective purchaser or the developer."

       
       

14. It is undisputed that the Memorandum of Agreement used in this matter was not filed with the Department by the developer.

    
    

15. The evidence does not clearly explain why the condominium documents were not approved initially. Section 718.401, Florida Statutes, would appear to permit development of a condominium if the developer has a lease on the land with an unexpired term of at least fifty years. Section 718.401 and Section 718.104(1), Florida Statutes (1984 Supp.). It is therefore assumed that the terms of the lease was for less than fifty years or that there was a problem of compliance with one or more of the conditions which Section 718.401, Florida Statutes, imposes for the creation of a condominium on a leasehold which prohibited approval of the condominium conversion as originally planned.

16. The Memorandum of Agreement shows that both parties understood that the property had not yet been subjected to condominium ownership. The memorandum was nothing more than an agreement to agree in the future to one of two alternative transactions, either to the purchase and sale of condominium units or to sublease apartment units for a term to be established later. Both parties to the transaction understood that there were, as of that time, no condominium units which could be sold.

    
    

17. The Memorandum of Agreement is neither a contract for the purchase of condominium units or a lease for more than five years. If the Memorandum of Agreement had been used only as a reservation agreement for three condominium units, Respondent would not have complied with Section 718.502(2)(a), Florida Statutes, because it was not filed with the Division of Florida Land Sales Condominiums and Mobile Homes. The intention of the parties as expressed by the hand interlineation was that if the property was not converted to a condominium, Ms. Bitton would receive a sublease on the three units. No evidence in the record indicates that a sublease transaction would have been subject to regulation by the Division of Florida Land Sales, Condominiums and Mobile Homes.

    
    

18. The fact that a reservation deposit agreement had been drawn up and submitted to the Department for review, which review had not been completed at the time the Memorandum of Agreement was entered into, is evidence that the Respondent was attempting to comply with Florida Law, not to avoid it. The evidence that the Memorandum of Agreement was drawn up by the attorney for the potential buyer/sublessee, Ms. Bitton, and the absence of evidence that the agreement had been proposed by the Respondent is further indication that there was no intent on the part of the Respondent to violate Florida law.

    
    

19. There is no evidence in the record concerning what, if anything, Ms. Bitton actually received for the $85,000 which the memorandum shows was deposited with the Respondent. If Ms. Bitton did not receive what she bargained for, her remedy is in the circuit courts. The facts in this case do not establish a violation of the Condominium Act, however.

RECOMMENDATION

It is recommended that the notice to show case issued in this case be dismissed.

DONE AND ORDERED this 5th day of September 1986 in Tallahassee, Leon County, Florida.

WILLIAM R. DORSEY

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

FILED with the Clerk of the Division of Administrative Hearings this 5th day of September 1986.

ENDNOTE

1/ References to the exhibits will be shown as PX .

APPENDIX TO RECOMMENDED ORDER IN CASE NO. 86-1320

The following constitute my specific rulings on the Proposed Findings of Fact made by the parties:

Petitioners Proposed Findings of Fact

1.a Covered in Finding of Fact 6.

1. Sentence 1 covered in Finding of Fact 9. Sentence 2 and 3 are not adopt is communicative.

2. Covered in Finding of Fact 1 and 2, to the extent relative.

3. Covered in Finding of Fact 4 with the following exceptions, the reservation deposit agreement was petitioner's exhibit 2, not exhibit 3 and the proposed finding that it was "accepted" by the bureau is taken to mean that it was filed, not that it was approved.

4. Rejected for the reasons stated in paragraphs 5 and 6 of the Conclusions of Law.

5. The evidence did not show whether the property is now closed, but this is a reasonable inference from the testimony that the property was the subject of a foreclosure the statement that Ms. Bitton "has not been able to fully use and enjoy her units" implies that she had an ownership interest in the units, which is an incorrect interruption of the Memorandum of Agreement. See paragraph 5 and 6 of the Conclusions of Law.

COPIES FURNISHED:

Robin H. Conner, Esquire Staff Attorney

Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301-1927

Ms. Chantal Fianson Allison on the Ocean, Inc. 6261 Collins Avenue

Miami Beach, Florida 33140

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

AGENCY FINAL ORDER

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

STATE OF FLORIDA DEPARTMENT OF BUSINESS REGULATION

DIVISION OF FLORIDA LAND SALES, CONDOMINIUMS AND MOBILE HOMES

DEPARTMENT OF BUSINESS REGULATION, DIVISION OF FLORIDA LAND SALES, CONDOMINIUMS AND MOBILE HOMES,

Petitioner,

v. DOAH CASE NO. 86-1320

DOCKET NO. 86042MVC

ALLISON ON THE OCEAN, INC., d/b/a ALLISON ON THE OCEAN CONDOMINIUM,

Respondent.

/

FINAL ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, William R. Dorsey, Jr., held a public hearing in the above-referenced case on August 11, 1986, in Coral Gables, Florida. Petitioner, the Department of Business Regulation, Division of Florida Land Sales, Condominiums and Mobile Homes, (hereinafter the Division), was represented at the hearing by Robin H. Conner, Staff Attorney. Ms. Chantel Fianson appeared on behalf of Allison on the Ocean, Inc. (hereinafter Respondent), having received notice of the hearing as the registered agent for the corporation. Testimony also revealed that Ms. Fianson is the owner of all the stock of this corporation, and consequently she was qualified by the Hearing Officer to represent the corporation. At the hearing four exhibits were received on behalf of the petitioner and one witness, Ms. Debra Herter, testified for the Division.

No exhibits were received on behalf of the respondent, and Ms. Fianson testified on behalf of the respondent.

A proposed recommended order was submitted by the Division on August 21, 1986. A recommended order was issued by the Hearing Officer on September 5, 1986, and no exceptions to the recommended order were filed. Respondent waived its right to file a proposed recommended order.

This agency hereby adopts all findings of fact submitted by the Hearing Officer, but modifies or rejects the conclusions of law made by the Hearing Officer to the extent that these conclusions are not recited below.

ISSUE

The issue framed by the Notice to Show Cause is whether Allison on the Ocean, Inc., violated Section 718.502(2)(a), Fla. Stat. (Supp. 1984) by accepting a deposit of $85,000 and executing a "Memorandum of Agreement" with

Hildagard Waltraud Bitton when that Memorandum of Agreement had not been approved for use as a reservation agreement form by the Division of Land Sales, Condominiums and Mobile Homes.

FINDINGS OF FACT

1. Allison on the Ocean, Inc. is an active, for profit Florida Corporation (PX 4). 1/

   
   

2. Ms. Chantal Fianson is the owner of all five hundred shares of authorized stock in Respondent (PX 4; testimony of Ms. Fianson).

   
   

3. The Allison Hotel in Miami Beach, consisting of studio apartments, was leased by Ms. Fianson. She intended to convert it to condominium ownership. Apparently the lease was held in the name of Allison on the Ocean, Inc. An attorney was retained by Ms. Fianson to prepare the necessary papers for the condominium conversion.

   
   

4. In connection with that conversion application, a reservation deposit agreement had been submitted to the Department of Business Regulation, a copy of which was entered into evidence as PX 2.

   
   

5. After those conversion papers were submitted to the Division in Tallahassee, Ms. Fianson was informed in April, 1984 that the condominium conversion would not be approved because although she had a long term lease, a condominium project required ownership of the land on which the building stood (testimony of Ms. Fianson).

   
   

6. Before the Department of Business Regulation declined to approve the condominium project as originally proposed by Ms. Fianson, on March 2, 1984 an agreement entitled "Memorandum of Agreement" was executed between Allison on the Ocean, Inc., and Hildagard Waltraud Bitton by their respective representatives stating Ms. Bitton's intent to purchase or sublease three units in the property (PX 1). That memorandum shows by its terms that it was not intended to be the contract for the purchase and sale of the units. It provided for the cancellation of the agreement within ninety days, at the buyer's option, and stated that the validity and the interpretation of the agreement would be governed by Florida law (PX 1 paragraph 7). Ms. Bitton paid $85,000 to Allison on the Ocean, Inc. in connection with this Memorandum of Agreement, which money was then used for expenses related to the conversion of the building to a condominium (testimony of Ms. Fianson).

   
   

7. Significantly, the prefatory "whereas" clauses in the agreement stated that "Developer is in the process of converting the Allison Hotel, located at 6261 Collins Avenue, Miami Beach, Florida to a Condominium..." after which by hand interlineation was written "or SUB LEASE" and the initials of the representatives of both parties appear.

   
   

8. The memorandum expressed the intention of the parties that if the proposed condominium conversion were not approved, Ms. Bitton would receive not a fee ownership in condominium units, but a sublease of an unspecified term from the lessee-developer, under the long term lease which the Respondent did have on the Allison Hotel.

   
   

9. The attorney for the purchaser/lessee Ms. Bitton drew up the Memorandum of Agreement (PX 1), and it was not submitted to the Division for review before it was executed.

10. After learning in April, 1984 that the condominium project would not be approved, Ms. Fianson did arrange to purchase the land from its owner, and another lawyer was obtained to file condominium documents reflecting the fee ownership by the developer. In the interim, the condominium market became very bad, and ultimately the bank which had provided the Respondent the purchase money mortgage for the property foreclosed on the Allison Hotel.

    
    

11. The evidence does not show whether the $85,000 which was used in the conversion process was ever returned to Ms. Bitton.

CONCLUSIONS OF LAW

1. The Division has jurisdiction over these proceedings pursuant to Chapters 120 and 718 of the Florida Statutes.

   
   

2. Ms. Fianson as owner of all stock of the Respondent corporation has the authority to represent the Respondent in this matter. Magnolias Nursing and Convalescent Center v. Department of Health and Rehabilitative Services, 428 So.2d 256 (Fla. 1st DCA 1982).

3. Section 718.502(2)(a), Fla. Stat. (Supp. 1984) provides: "Prior to filing as required by subsection

   1. , a developer shall not offer a contract

      for purchase of a unit or lease of a unit for more than 5 years but may accept deposits for reservations upon the approval of a fully ex- ecuted escrow agreement and reservation agree- ment form properly filed with the Division of Florida Land Sales and Condominiums. Reser- vations shall not be taken on a proposed condo- minium unless the developer has an ownership, leasehold, or contractual interest in the land upon which the condominium is to be developed. The division shall notify the developer within

      20 days of receipt of the reservation filing of any deficiencies contained therein. Such notification shall not preclude the determina- tion of reservation filing deficiencies at a later date, nor shall it relieve the developer of any responsibility under the law. The es- crow agreement and the reservation agreement form shall include a statement of the right of the prospective purchaser to an immediate un- qualified refund of the reservation deposit moneys upon written request to the escrow agent by the prospective purchaser of the developer.

      
      

4. The Memorandum of Agreement entered into between Ms. Bitton and the Respondent constituted a reservation agreement. By its terms, the memorandum gave Ms. Bitton a reservation or option to purchase certain condominium units at the Allison Hotel and further provided that, if the proposed condominium conversion was not approved, Ms. Bitton was entitled to sublease these units from the Respondent. This was clearly the intention of the parties. The fact

   that the memorandum also provided a contingent sublease agreement does not alter the conclusion that it was a reservation agreement as contemplated under Section 718.502, Fla. Stat. (Supp. 1984), and should have been filed with and approved by the Division before Respondent collected deposits thereunder.

   
   

5. Respondent's acceptance of deposit monies from Ms. Bitton pursuant to the Memorandum of Agreement violated Section 718.502(2), Fla. Stat. (Supp. 1984). Although Respondent had previously filed a reservation agreement with the Division, the memorandum executed with Ms. Bitton was never filed with nor approved by the Division and differed from the filed reservation agreement. Pursuant to this unfiled reservation agreement however, Respondent accepted a deposit of Eighty-five Thousand Dollars ($85,000) from Ms. Bitton and, rather than escrowing these funds as required by law, subsequently used these funds to cover expenses incurred in converting the hotel to a condominium. Respondent's acceptance of these deposit monies without having used an approved reservation agreement is a violation of Section 718.502, Fla. Stat. (Supp. 1984).

   
   

6. Section 718.501(1)(d)2, Fla. Stat. (Supp. 1984) provides that the Division may issue an order requiring a developer to take such affirmative action as in the judgment of the Division will carry out the purposes of the Condominium Act. Further, Section 718.501(1)(d)4, Fla. Stat. (Supp. 1984) provides that the Division may impose a civil penalty against a developer for any violation of the Condominium Act.

RELIEF, ORDER AND REMEDY

1. Because the Division has determined that the memorandum of agreement was not approved by the Division, the Division concludes that Respondents violated Section 718.502(2)(a), Fla. Stat. (Supp. 1984). Accordingly, the Division hereby rejects the Hearing Officer's recommendation that the charges be dismissed.

Upon consideration of the Findings of Fact, Conclusions of Law, and review of the record, it is

ORDERED:

1. Respondent shall remit to the Division, within 30 days of issuance of this order, a civil penalty payable by certified check to the Division in the amount of Five Hundred Dollars ($500.00).

   
   

2. Respondent shall, within thirty days of issuance of this Order, provide to this Division an accounting of all funds collected by Respondent from Ms. Bitton in connection to the monies collected by Respondent pursuant to the terms of the above mentioned memorandum of agreement. No later than thirty days subsequent to that accounting, Respondent shall refund to Ms. Bitton any and all portions of the deposit received which has not already been returned to Ms. Bitton. Respondent shall further, within thirty days of such refund, provide proof by affidavit to the Division of the refund.

This Final Order may be appealed pursuant to Section 120.68, Florida Statutes and Rule 9.110, Florida Rules of Appellate Procedure by filing a Notice of Appeal conforming to the requirements of Rule 9.110(d), Fla. R. App. P. both with the appropriate District Court of Appeal accompanied by the appropriate filing fee and with this Agency, within thirty days of rendition of this Order.

RICHARD E. COATES, DIRECTOR

Division of Florida Land Sales, Condominiums and Mobile Homes

Department of Business Regulation State of Florida

ENDNOTE

1/ References to the exhibits will be shown as PX.

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true and correct copy of the above foregoing has been furnished by CERTIFIED MAIL to CHANTEL FIANSON, 6061 Collins Avenue, #19-A, Miami Beach, Florida 33140 and WILLIAM R. DORSEY, JR., Hearing Officer, Division of Administrative Hearings, 2009 Apalachee Pkwy., The Oakland Building, Tallahassee, Florida 32301 this 8th day of December, 1986.

SARAH SMITH, CLERK

Docket for Case No: 86-001320

Orders for Case No: 86-001320