STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

vs. ) CASE NO. 86-3007

) CAMINO REAL VILLAGE AND B & S ) VENTURES, INC., )

)

Respondents. )

)

RECOMMENDED ORDER

Pursuant to notice, the above matter was heard before the Division of Administrative Hearings by its duly designated Hearing Officer, Donald R. Alexander, on January 12, 1988 in West Palm Beach, Florida.

APPEARANCES

For Petitioner: Debra Roberts, Esquire

725 South Bronough Street Tallahasse, Florida 32399-1007

For Respondent: Henry B. Handler, Esquire

Interstate Plaza, Suite 320 1499 West Palmetto Park Road Boca Raton, Florida 33432

BACKGROUND

By notice to show cause dated July 17, 1986, petitioner, Department of Business Regulation, Division of Land Sales, Condominiums and Mobile Homes, has charged that respondents, Camino Real Village and B&S Ventures, Inc., had violated certain provisions within Chapter 718, Florida Statutes (1985).

Generally, petitioner has alleged that respondents failed to pay their share of the assessments for common expenses on developer-owned units in a Boca Raton condominium project for the period beginning January 31, 1985 until October 1, 1985 in violation of Subsections 718.116(1)(a) and (8)(a), Florida Statutes (1985). The Notice also alleges that respondents' liability, including interest, as of October 11, 1985, was $33,799.96. 1/

Respondents disputed the above allegations and requested a formal hearing pursuant to Subsection 120.57(1), Florida statutes (1987). The matter was referred to the Division of Administrative Hearings by petitioner on August 16, 1986 with a request that a hearing officer be assigned to conduct a formal hearing. By notice of hearing dated October 30, 1986, the final hearing was scheduled for December 11, 1986 in West Palm Beach, Florida. At the request of

petitioner, the matter was rescheduled to March 11, 1987. It was again rescheduled at petitioner's request to April 1, 1987. By joint request of the parties, the matter was continued to July 29, 1987. Petitioner's request to continue the matter was granted and the final hearing was later set on December 14, 1987. At respondents' request, the matter was again rescheduled to December 21, 1987 and finally to January 12, 1988 at West Palm Beach, Florida.

At final hearing, petitioner presented the testimony of Candy McKinney- Coates, a Division examination supervisor, and John G. Benton, a Division financial analyst. It also offered petitioner's exhibits 1-7 which were received in evidence. Respondents presented the testimony of Brian J. Scherr, an attorney specializing in real estate and condominium law, Richard J. Block, president of B&S Ventures, Inc., and Ellen Boulette, the project's bookkeeper. They also offered respondents' exhibits 1 and 2. Both exhibits were received in evidence. Respondents' exhibit 1 is the deposition of Janice S. Smith, a Division real estate development specialist.

The transcript of hearing was filed on February 16, 1988. Proposed findings of fact and conclusions of law were filed by petitioner and respondents on February 29 and March 15, 1988, respectively. 2/ Petitioner was authorized to file supplemental conclusions of law on March 24, 1988. A ruling on each proposed finding of fact has been made in the Appendix attached to this Recommended Order.

At issue is whether respondents should be disciplined for the alleged violations set forth in the notice to show cause.

Based upon all of the evidence, the following findings of fact are determined:

FINDINGS OF FACT

1. Respondent, Camino Real Village, is the joint venture and developer of a sixty-four unit condominium project known as Camino Real Village V (project) in Boca Raton, Florida. The project consists of two buildings (5751 and 5801) with thirty-two units each. Respondent, B&S Ventures, Inc. (B&S), a Florida corporation, is a partner in the joint venture. The other partner, Middlesex Development Corporation, a California corporation, was not named a respondent in this cause. Although the development consists of at least four separate condominium projects known as Camino Real Villages II, III, IV and V, only Camino Real Village V is in issue in this proceeding. Respondents, as the developer and partner of the joint venture, are subject to the regulatory requirements of petitioner, Department of Business Regulation, Division of Florida Land Sales, Condominiums and Mobile Homes (Division). They are charged with violating various provisions of Chapter 718, Florida Statutes (1985), as set forth in greater detail in the Division's notice to show cause issued on July 17, 1986.

   
   

2. The Camino Real project is considered to be a multi-condominium project. This means the development includes more than one condominium project but that all are operated by a common association. The parties agree that the project is not a phase condominium project. Under Division rules and applicable statutes, the developer of a multi-condominium project is required to file with the Division a set of "creating" documents at the inception of the project. The creating documents include, among other things, a prospectus, declaration of condominium, plans and survey, legal description, percentages of common ownership, surplus and expenses, articles of incorporation, by- laws, site plan,

   restrictions (if any), and the estimated operating budget for the first year. Such documents must be submitted for each condominium within the project.

   However, where the documents are identical to those submitted for another condominium, the developer may file a "certificate of identical documents" wherein the developer certifies that all disclosure items are identical with items for another condominium within the project which has been previously filed with the Division. After the creating documents are filed, the developer must thereafter file additional documents as new condominiums are constructed and completed. This is generally accomplished by filing an amendment to the original declaration for condominium. The amendment includes a surveyor's certificate attesting that the construction on the project has been completed.

   The purpose of the later filing is to inform the Division that construction on the new condominium has been substantially completed.

   
   

3. On an undisclosed date in 1979, respondents filed their creating documents for certain condominiums in Camino Real Village. On November 19, 1980, they submitted their filing for the creation of Camino Real Village V. These documents were accepted as to "form" on December 11, 1980. They included a certificate of identical document signed by B&S' president which certified certain documents were identical to those previously submitted for Camino Real Village IV, a legal description of the property on which the condominium sits, sketches of the types of units to be built, a typical floor plan for Buildings 5751 and 5801, an estimated operating budget based on sixty-four units and common ownership percentages for each unit in the two buildings. Under Division requirements and state law, the documents should have contained a statement reflecting that the condominium was not substantially completed. 3/ However, they did not, and this omission was not detected by the Division when it reviewed and approved the initial filing.

   
   

4. On October 23, 1984 respondents filed the declaration of condominium for Camino Real Village V in the local public records. The documents have been received in evidence as petitioner's composite exhibit 1. They reflected that the percentage of ownership in the common elements for both buildings equaled one hundred percent. Section 3(b) of the declaration provided for the creation of a condominium consisting of two buildings (5751 and 5801) containing thirty- two units each. The documents included a surveyor's certification that Building 5751 was substantially completed. However, as to Building 5801, which was not completed at that time, no statement reflecting its state of completion was filed. It is also noted that the declaration was not filed with the Division as required by law, and the Division did not learn of its existence until sometime later. Since the filing of the declaration, respondents have operated Camino Real Village V as a condominium.

   
   

5. On October 23, 1984, respondents executed the closing documents on the sale of the first unit (Unit No. 106 in Building 5751) in Camino Real Village V. The warranty deed was later recorded in the local public records on November 1, 1984, and it is found this is the appropriate date on which the sale of the first unit occurred. This is consistent with the standard practice of parties executing documents prior to closing but not considering a unit sold until the money is actually transferred from the buyer to the seller. This date is significant since it may bear directly upon the date when the developer must begin paying common expenses on developer-owned units.

   
   

6. On or about October 24, 1985 a "First Amendment to the Declaration of Camino Real Village V" was recorded by respondents in the local public records. It amended the declaration previously executed on October 23, 1984 and included, among other things, a surveyor's certificate reflecting that Building 5801 had

   been substantially completed. It also attempted to submit Building 5801 to condominium ownership. Although the amendment and attached documents should have been filed with the Division, respondents neglected to do so. The Division first learned that the documents existed during the course of this proceeding.

   
   

7. According to paragraph 15 of the declaration, common expenses can only be assessed by the Association against "each condominium parcel." A condominium parcel is defined in paragraph 4(c) as "the condominium unit, together with an undivided share in the common elements appurtenant thereto." A condominium unit in turn is defined in paragraph 4(a) as "the unit being a unit of space, designated 'condominium unit' on the sketch of survey and plans attached hereto and marked as Exhibit B." The latter exhibit, which is attached to the declaration, contains the plans and survey of the project, the surveyor's certification of substantial completion, and a graphic description of each finished unit within the project. Therefore, the above definitions evidenced an intent that common expenses could be assessed only against completed units.

   
   

8. Pursuant to Subsections 718.116(1) and (8), Florida Statutes (1985), a developer is responsible for paying his pro- rata share of common expenses on all developer-owned units. The same law permits the declaration to provide that the developer is relieved of this per-unit obligation until the expiration of a ninety-day period after the first unit is sold. In this case, the declaration had such a provision in paragraph 14. It provided in part as follows:

   
   

   . . . for such time as the Developer continues to be a Unit Owner, but not exceeding ninety (90) days subsequent to the closing of the first condominium unit, the Developer shall only be required to contribute such sums to the common expenses of the Condominium, in addition to the total monthly common expense assessments paid by all other Unit Owners, as may be required for the Condominium Association to maintain the condominium as provided in said Declaration of Exhibits . . . Developer hereby reserves the option to guarantee the level of assessments to unit owners for a specified time interval and thereby limit its obligations to contribute to condominium maintenance in accordance with the provisions of Chapter 718.116(8), Florida Statutes.

   
   

9. The parties agree that the monthly assessments for common expenses during the period relevant to this proceeding were as follows:

   
   

   Type A Units	$135.20
   Type B Units	138.64
   Type C Units	163.96

   
   

   The declaration also provides that ten percent interest must be added to any liability owed.

10. The record reflects, and respondents concede, that such assessments were not paid on any units in Building 5801 until the following dates:

    
    

    Units 100-107 ----------- August 28, 1985

    Units 200-207 ----------- September 5, 1985

    Units 300-307 ----------- September 10, 1985

    Units 400-407 ----------- September 18, 1985

    
    

    The above dates are exactly ninety days after certificates of occupancy were issued for each of the four floors of Building 5801. Even though assessments were not paid by respondents until those dates, beginning on January 31, 1985 and continuing until such assessments were paid, other unit owners were charged and paid assessments based upon a budget for sixty-four units. As it turned out, the difference between the budget and annual common expenses actually incurred by the project was approximately $32,100, or the amount the Division contends respondents owe.

    
    

11. In 1982-84, petitioner conducted an investigation of Camino Real Villages II, III and IV based upon complaints received from a certain unit owner. The complaint concerned allegations that access to association books was denied, that the declaration contained a developer guarantee, that maintenance expenses were not properly paid, and that improper assessments were levied on unit owners. The file was closed in November, 1984 after the Division's enforcement supervisor concluded that the allegations were either "unfounded" or could be resolved through voluntary compliance by the Association. As to the fourth issue, which was an allegation that the developer- controlled Association had improperly assessed unit owners from November, 1980 to January, 1982, the investigative report noted that the developer was "allocating them based on the completed units versus the total units filed for the entire community." The enforcement supervisor concluded that this was "the method chosen by the Association," and "absent specifics in the documents, we lack jurisdiction . . . to question this practice." There is no mention of the term "certificate of occupancy" in the report. However, uncontradicted testimony by respondents reflects that its use of the date of issuance of the certificate of occupancy to determine when assessments became due was the focus of the investigation, and that respondents relied upon those statements in continuing their practice of not paying assessments until ninety days after a certificate of occupancy was issued on a unit. They did so, at least in part, on the theory that the Association did not assume responsibility for expenses until that time.

    
    

12. Respondents point out that the filing documents submitted to the Division in November, 1980 were defective in that the surveyor's certificate was incorrect. They go on to suggest that, because of this deficiency, the filing might be invalidated by a court and therefore the statutory assessment provision would not apply. However, no person has ever challenged the validity of the filing, and the general law contains a curative provision for any initial filing errors. They also assert that, if any liability is in fact owed, they are entitled to set-offs for expenses incurred by the developer while the project was being constructed. These include payments for real estate taxes, utility bills, Boca Del Mar Improvement Association, Inc. fees, trash removal, insurance, security service, assessments and maintenance and are itemized in attachments to respondents' exhibit 1. However, there is no rule or statutory provision which authorizes this type of set-off to be applied against common expenses. Therefore, the expenses itemized in respondents' exhibit 1 are deemed to be irrelevant.

    CONCLUSIONS OF LAW

    
    

13. The Division of Administrative Hearings has jurisdiction of the subject matter and the parties thereto pursuant to Subsection 120.57(1), Florida Statutes (1987).

    
    

14. The Notice to Show Cause alleges that the developer "failed to pay its share of the assessments for common expenses on developer owned units for the period beginning on January 31, 1985, the expiration of the guarantee period set forth in the Declaration of Condominium, until October 1, 1985" in violation of Subsections 718.116(1)(a) and (8)(a), Florida Statutes (1985). Since the agency does not intend to revoke or suspend a license, or to otherwise impair respondents' livelihood, it need prove its allegations only by a preponderance of evidence. Cf. Ferris v. Turlington, 510 So.2d 292 (Fla. 1987) (agency must prove allegations by clear and convincing evidence where revocation or suspension of one's license is sought).

    
    

15. Subsections 718.116(1)(a) and (8)(a), Florida Statutes (1985), are relevant to this controversy and provide as follows:

    
    

    718.116 Assessments; liability; lien and priority; interest; collection.--

    (1)(a) A unit owner, regardless of how his title has been acquired, including a purchaser at a judicial sale, is liable for all assessments which come due while he is the unit owner. Except as provided for in subsection (6), the grantee is jointly and severally liable with the grantor for all unpaid assessments against the grantor for his share of the common expenses up to the time of transfer of title, without prejudice to any right the grantee may have to recover from the grantor the amounts paid by the grantee.

    * * *

    (8)(a) No unit owner may be excused from the payment of his share of the common expense of a condominium unless all unit owners are likewise proportionately excused from payment, except as provided in subsection (6) and in the following cases:

    
    

    1. If the declaration so provides, a developer or other person who owns condominium units offered for sale may be excused from the payment of the share of the common expenses and assessments related to those units for a stated period of time subsequent to the recording of the declaration of condominium. The period must terminate no later than the first day of the fourth calendar month following the month in which the closing of the purchase and sale of the first condominium unit occurs. However, the developer must pay the portion of common

       expenses incurred during that period which exceed the amount assessed against other unit owners.

       
       

    2. A developer or other person who owns condominium units or who has an obligation to pay condominium expenses may be 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 has guaranteed to each purchaser in the purchase contract, declaration, 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 of the condominium imposed upon the unit owners would not increase over a stated dollar amount and has obligated himself to pay any amount of common expenses incurred during that period and not produced by the assessments at the guaranteed level receivable from other unite owners. (Emphasis added)

    
    

    * * *

    
    

    Also relevant to this proceeding is Subsection 718.103(23), Florida Statutes (1987), which defines a "unit" as follows:

    
    

    (23) "Unit" means a part of the condominium property which is subject to exclusive ownership. A unit may be in improvements, land, or land and improvements together, as specified in the declaration. (Emphasis added)

    
    

    A developer may accordingly define a unit in the declaration as simply being unimproved land, or as a completed residential unit ready for occupancy. In this case, respondents chose the latter.

    
    

16. The issue in this case can be framed in the following manner: are respondents responsible for making payments for common expenses on developer- owned units during the time period stated in the notice to show cause? 4/ Petitioner generally argues that, according to the clear and unambiguous language in Subsection 718.116(8)(a)1., Florida Statutes (1987), and the pertinent declaration itself, respondents' liability began to accrue ninety days after the first unit in Building 5751 was sold, or on and after January 31, 1985. Therefore, it argues that respondents owe $31,830.48 plus interest on that amount. Respondents counter that, under the rationale of Welleby Condominium Association One, Inc. v. The William Lyon Company, 13 FLW 81 (Fla. 4th DCA, December 30, 1987) (reh. pndg.), their liability for common expenses did not begin until ninety days after the certificates of occupancy were issued on the four floors in Building 5801, or August 28, September 5, 10 and 18, 1985, respectively. Alternatively, they contend that, even if a liability is owed, they are entitled to set-offs for developer- incurred expenses which eliminate the entire liability. They assert further that the Division is estopped from taking this action by virtue of representations made by the Division when it

    concluded a prior investigation of common expenses in November, 1984. Finally, they contend the initial filing was deficient and therefore invalid, and that the statutory assessments cannot apply.

    
    

17. Taking the last contentions first, respondents suggest that the filing on October 23, 1984 was deficient in that it failed to contain a statement of noncompletion as required by Subsection 718.104(4)(e), Florida Statutes (1987). They reason that, because of this, no valid condominium was created, and therefore no past assessments are due. However, the filing has never been challenged in court and must be presumed to be valid. Further, Section 718.110, Florida Statutes (1987), provides a procedure for correcting any error or omission that might affect the valid existence of a condominium. Respondents next contend that, assuming some liability is owed, they are nonetheless entitled to set-off such liability with those developer-incurred expenditures itemized in respondents' exhibit 1. However, there is no rule or statute which authorizes the use of this type of set-off. Indeed, Section 718.116, Florida Statutes (1985), provides that "(n)o unit owner may be excused from the payment of his share of the common expense of a condominium" unless certain conditions are met. The set-offs incurred by respondents are not a statutory exception. Respondents have raised further the affirmative defense of estoppel against the Division and contend that, by virtue of past representations of a Division supervisor, the agency is now estopped from requiring respondents to pay the assessments. Estoppel is, of course, a doctrine that may be applied to state agencies only under exceptional circumstances. See, for example, Kuge v. State, Department of Administration, Division of Retirement, 449 So.2d 389 (Fla. 3rd DCA 1984). To create estoppel, the following elements must be present: (a) a representation as to a material fact that is contrary to a later asserted position, (b) reliance upon that representation, and (c) a change in position detrimental to the party claiming estoppel caused by the representation and reliance thereon. In the case at bar, petitioner, through a positive act of its enforcement supervisor, terminated an investigation and sanctioned respondents' method of paying assessments on developer-owned units. Relying upon that representation, respondents continued to utilize that method of paying assessments on Camino Real Village V. To respondents' detriment, the Division now takes a different position and says that the previously sanctioned methodology is wrong. Collectively, the foregoing scenario satisfies the three essential elements of estoppel, and ordinarily the Division would be estopped from denying that respondents' methodology is correct. However, if the statements or actions in 1984 were incorrect as a matter of law, estoppel will not lie since employees of the state cannot estop the state through mistaken statements of the law. Austin v. Austin, 350 So.2d 102, 105 (Fla. 1st DCA 1977). To determine if a correct assessment of the law was given, a resolution of respondents' final argument is required.

    
    

18. Respondents' final contention is that assessments are not due on developer-owned units until ninety days after the certificate of occupancy is issued on a unit. As noted earlier, they rely principally upon the Welleby decision still pending on rehearing before the Fourth District Court of Appeal. In Welleby, the plaintiff (a condominium association) sought to levy and collect unpaid assessments against certain lands owned by defendant (the developer) which were described as being eleven units within the condominium project. By answer and affirmative defense, defendant contended that, since the described lands were then vacant and had no construction upon them, assessments could not be made. This was, according to the defendant, because the declaration of condominium authorized assessments only against "condominium parcels" rather than "units," that condominium parcels were defined therein as apartments, that apartments were defined as "individual private dwellings," and that raw,

    unimproved property was therefore exempt from assessment. In granting summary judgment for the defendant, the lower court agreed and concluded that since, by the terms of the declaration, assessments could be levied only against individual private dwellings (apartments), and not raw land, the proposed assessments were illegal. This ruling was affirmed by the appellate court. In the case sub judice, respondents attempt to analogize the factual situation herein to that in Welleby by pointing out that the Camino Real Village V declaration likewise authorizes the imposition of assessments only upon a "condominium parcel," that a parcel is defined as "the condominium unit," and that a condominium unit in turn is defined as a "unit of space, designated single 'the condominium unit' on the sketch of survey and plans attached hereto as Exhibit B." Exhibit B reflects the location and graphic description of each residential unit. Therefore, they argue that a condominium unit is actually a finished unit as described in the plans attached to the declaration and that no assessment can be legally imposed on a developer-owned unit until after a certificate of occupancy is issued evidencing the completion of the unit. They also suggest that ninety days must be added to the occupancy date because of the provision in the declaration but have cited no legal support or rationale for this additional time period.

    
    

19. In its supplemental conclusions of law filed on March 24, 1988, petitioner contends that Welleby does not apply because (a) it is not a final decision, (b) the facts in Welleby differ from those in the instant case, and

    (c) the court in Welleby has misconstrued the law. As to the first contention, petitioner points out that there are four petitions for rehearing now pending before the court and, until they are ruled on, the decision is not final. While this proposition is true, the decision nonetheless has persuasive value since it deals with the same statutes involved in the case sub judice and arose in the same district where Camino Real Village V lies. Petitioner also suggests the facts in the two cases differ substantially and therefore Welleby may be distinguished. It points out that in Welleby the condominium parcel, which was the only object subject to assessments, was specifically defined as an "apartment" and "an individual private dwelling." In contrast, the developer here did not use the word "apartment" but instead defined a "condominium parcel" as a "condominium unit" which in turn was defined as "a unit in space designated 'condominium unit' on the sketch of the survey and plans." According to petitioner, had respondents intended to limit common assessments to apartments or dwellings as was the case in Welleby, they could have easily drafted the declaration in this manner. While the definitions used by respondents admittedly lack the clarity found in Welleby, respondents' testimony, as do their actions, indicate that they intended to levy assessments only upon finished units. Further, the definition of a condominium unit in the declaration can arguably be construed to mean an apartment. Therefore, even though the word "apartment" was not used by respondents, the evidence reflects that they intended for assessments to apply only to completed units. Finally, petitioner contends the court in Welleby misconstrued and misapplied the law and that its result is inconsistent with Chapter 718. This contention is deemed to be meritorious for the following reasons. Petitioner correctly asserts that, once a multiple building declaration is recorded, and property is submitted to the condominium form of ownership, the real property is transformed and divided into condominium parcels. From that point on, the developer is liable for assessments on developer-owned units, even if they are not yet built, unless the developer opts to use one of the two exceptions in Subsection 718.116(8)(a), Florida Statutes (1987). In this case, the developer chose to draft its declaration so as to excuse respondents from paying assessments until ninety days after the sale of the first unit. As such, petitioner correctly contends this relieved respondents of their statutory obligation only until January 31,

    1985 and not until after a certificate of occupancy was issued. Petitioner also fears that, if the rationale in Welleby is accepted, only those units that are sold or completed would be submitted to the condominium form of ownership when the declaration is filed. Such a result would be inconsistent with the general law and established precedent that hold that all, and not just part of, the property is submitted to the condominium form of ownership when the declaration is filed. Section 718.104, F.S. (1987); In re: Petition for Declaration Statement by Tahitian Gardens Condominium, Inc., Div. Land Sales and Condominiums, July 2, 1982 (and cases cited therein). Petitioner cites further the concern that Welleby would permit an unscrupulous developer to delay the issuance of a certificate of occupancy until just prior to the unit being sold and thereby avoid indefinitely or even permanently his obligation for paying common assessments. This result is undisputed. Finally, petitioner suggests that the decision creates a heretofore unrecognized distinction in condominium property. This occurs because an undeveloped parcel would now be considered a "unit" for purposes of being sold by the developer prior to being improved but would not be considered a "unit" for purposes of being subject to common assessments. This concern has legitimacy and lends further support to the agency's position.

    
    

20. In addition to the above well-founded fears of the agency, it is noted that, although a developer can define a "unit" in any manner authorized under Subsection 718.103(23), the definition cannot be inconsistent with other provisions of Chapter 718. See Subsection 718.104(4)(1), F.S. (1987). By limiting common assessments to only those units which are defined as being completed, respondents have contravened the provisions of Subsection 718.116(8)(a) by creating an unauthorized manner of paying assessments and a method inconsistent with the general law. In other words, by strictly following the pertinent provisions of the declaration, respondents would have no obligation to pay common assessments until a unit is completed (as evidenced by the issuance of a certificate of occupancy) even though Subsection 718.116(8)(a) imposes a different requirement. For this reason, and those discussed in the preceding paragraph, it is concluded that, notwithstanding the provisions of the declaration, respondents are subject to paying common assessments on developer- owned units in Building 5801 on and after January 31, 1985 and continuing until they were sold as alleged in the notice to show cause. To this liability must be added ten percent interest to and including the date of payment. In view of this, it is concluded further that any contrary representations made by the Division in 1984 were mistaken statements of the law, and therefore the claim of estoppel is unavailing.

    
    

21. Petitioner having proven the allegations in the notice to show cause by a preponderance of evidence, it is concluded that respondents must pay past due assessments plus interest to the Association as their share of common expenses.

    
    

22. Finally, petitioner suggests in its proposed order that a $5,000 civil penalty be assessed against respondents for violating Chapter 718, Florida Statutes (1985). The gravity of this penalty is apparently premised, at least in part, upon violations not cited in the notice to show cause. Further, because respondents did not intentionally violate the law, but instead relied upon erroneous advice rendered by agency representatives, no civil fine should be imposed.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the respondents be found guilty of violating Section

718.116, Florida Statutes (1985), as charged in the notice to show cause, and that they be required to pay the Association for past due common expenses on developer-owned units in Building 5801 as set forth in paragraph 8 of the conclusions of law plus ten percent interest to and including the date of payment.

DONE AND ORDERED this 30th day of March, 1988, in Tallahassee, Leon County, Florida.

DONALD R. ALEXANDER

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 30th day of March, 1988.

ENDNOTES

1/ At hearing, petitioner revised this figure upward to $39,407.15.

2/ Proposed orders were due on or before March 2, 1988. On March 2, or after petitioner had made its filing, respondents filed a motion requesting that they be given to and including March 14, 1988 in which to file their proposed order. wPetitioner opposed the request. The proposed order was later filed by respondents on March 15 and has been considered by the undersigned in the preparation of this Recommended Order. Because respondents relied principally upon a newly-rendered appellate decision to support their position, petitioner was given to and including March 24, 1988 in which to file a response to that portion of respondents' proposed order.

3/ Item 17 of the "condominium filing statement" did indicate that the anticipated completion date of the project was December 1, 1982. Nonetheless, the Division specialist testified this did not satisfy the requirement.

4/ Although the notice to show cause recites only the one issue, additional argument has been devoted by petitioner to such matters as whether respondents failed to file required documents with the Division, or failed to initially file complete or accurate documents. Because these issues were not noticed, petitioner's request that the undersigned find respondents in violation of Subsection 718.104(4)(e), Florida Statutes (1985), must be denied.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-3007

Petitioner:

1. Covered in findings of fact 1 and 2.

2. Covered in findings of fact 1 and 2.

3. Covered in finding of fact 1.

4. Covered in finding of fact 3 except that the date of December 11, 1980 has been used rather than December 21, 1980.

5. Covered in finding of fact 3.

6. Covered in finding of fact 4.

7. Covered in finding of fact 4.

8. Covered in finding of fact 4.

9. Covered in finding of fact 4.

10. Covered in finding of fact 4.

11. Covered in finding of fact 6.

12. Covered in finding of fact 6.

Respondents:

Respondents:

COPIES FURNISHED:

Debra Roberts, Esquire 725 South Bronough Street

Tallahassee, Florida 32399-1007

Henry B. Handler, Esquire Interstate Plaza, Suite 320 1499 West Palmetto Park Road Boca Raton, Florida 33432

E. James Kearney, Director Division of Florida Land Sales,

Mobile Homes and Condominiums The Johns Building

725 South Bronough Street Tallahassee, Florida 32399-1007

Joseph A. Sole, Esquire General Counsel

The Johns Building

725 South Bronough Street Tallahassee, Florida 32399-1007

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

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,

vs. DOAH CASE NO. 86-3007

(DBR DOCKET NO. 86151MVC)

CAMINO REAL VILLAGE, a Joint

Venture between B & S VENTURES, INC., a Florida Corporation and

MIDDLESEX DEVELOPMENT CORPORATION,

a California Corporation,

Respondents.

/

FINAL ORDER

THIS ORDER is entered by the Director of the Division of Florida Land Sales, Condominiums and Mobile Homes, Department of Business Regulation, State of Florida, pursuant to Section 120.59, Florida Statutes, following a review of the record in this case and of the Recommended Order entered by Donald R. Alexander, Hearing Officer, Division of Administrative Hearings, on March 30, 1988.

The Findings of Fact as determined by the Hearing Officer in the Recommended Order are hereby adopted in this Final Order, except for those facts, which after review of the entire record are found not to be supported by competent and substantial evidence. The Conclusions of Law contained in the Recommended Order, to the extent of any consistency with the Conclusions of Law set forth herein are accepted, and the Hearing Officer's recommended penalty is adopted into this Final Order.

The Final Hearing was held in this case in West Palm Beach on January 12, 1988. Petitioner, Department of Business Regulation, Division of Florida Land Sales, Condominiums and Mobile Homes (hereinafter the Division), charged Respondents Camino Real Village, a joint venture between Middlesex Development Corporation, a California Corporation, and B & S Venture, Inc., a Florida Corporation, in a Notice to Show Cause dated July 17, 1986, why Camino Real should not be held guilty of violation of Section 718.116(1)(a) and (8)(a), Florida Statutes (1985).

Generally, Petitioner has alleged that Respondents failed to pay their share of the assessments for common expenses on developer-owned units in a Boca Raton condominium project for the period beginning January 31, 1985, until October 1, 1985, in violation of subsections 718.116(1)(a) and (8)(a), Florida Statutes (1985). The Notice also alleged that Respondents' liability, including interest, as of October 11, 1985, was $33,799.96. 1/

Respondents disputed the above allegations and requested a formal hearing pursuant to subsection 120.57(1), Florida Statutes (1987). The matter was referred to the Division of Administrative Hearings by Petitioner on August 16, 1986, with a request that a hearing officer be assigned to conduct a formal hearing. By notice of hearing dated October 30, 1986, the final hearing was scheduled for December 11, 1986, in West Palm Beach, Florida. At the request of Petitioner, the matter was rescheduled to March 11, 1987. By a Joint Motion for Continuance it was rescheduled to April 1, 1987. By joint request of the parties, the matter was continued to July 29, 1987. Petitioner's request to continue the matter was granted and the final hearing was later set on December 14, 1987. At Respondents' request, the matter was again rescheduled to December 21, 1987, and finally set to be held on January 12, 1988, in West Palm Beach, Florida.

At final hearing, Petitioner presented the testimony of Candy McKinney- Coates, a Bureau of Condominium Examination Supervisor, and John G. Benton, a Division Financial Analyst. Petitioner's exhibits 1-7 were received in evidence. Respondents presented the testimony of Brian J. Scherr, an attorney specializing in real estate and condominium law, Richard H. Block, President of B & S Ventures, Inc. and Ellen Boulette, the master association's bookkeeper.

They also offered Respondents' exhibits 1 and 2. Both exhibits were received in evidence. Respondents' exhibit 1 is the deposition of Janice S. Smith, a Division real estate development specialist.

The transcript of hearing was filed on February 16, 1988. Proposed Findings of Fact and Conclusions of Law were filed by Petitioner and Respondents on February 29, and March 15, 1988, respectively. 2/ Petitioner was authorized to file supplemental conclusions of law on March 24, 1988. A ruling on each proposed finding of fact was made and attached as an Appendix to the Recommended Order.

At issue is whether Respondents should be disciplined for the alleged violations set forth in the notice to show cause.

Based upon all of the evidence, including a review of the complete record the following findings of fact are determined:

FINDINGS OF FACT

1. Respondent, Camino Real Village, is the joint venture and developer of a sixty-four unit condominium project known as Camino Real Village V (project) in Boca Raton, Florida. The project consists of two buildings (5751 and 5801) with thirty-two units each. Respondent, B & S Ventures, Inc. (B&S), a Florida corporation, is a partner in the joint venture. The other Respondent is Middlesex Development Corporation, a California Corporation. 3/ Although the development consists of at least four separate condominium projects known as Camino Real Villages II, III, IV and V, only Camino Real Village V is in issue in this proceeding. Respondents, as the developer and partners of the joint

   venture, are subject to the regulatory requirements of the Division. They were charged with violating various provisions of Chapter 718, Florida Statutes (1985), as set forth in greater detail in the Division's Notice to Show Cause issued on July 17, 1986.

   
   

2. The Camino Real project is considered to be a multi-condominium project. This means the development includes more than one condominium project but that all are operated by a common association. The parties agree that the project is not a phase condominium project. Under Division rules and statutes, the developer of a multi-condominium project is required to file with the Division a set of "creating" documents at the inception of the project. The creating documents include, among other things, a prospectus, declaration of condominium, plans and survey, legal description, percentages of common ownership, surplus and expenses, articles of incorporation, bylaws, site plan, restrictions (if any), and the estimated operating budget for the first year. Such documents must be submitted for each condominium within the project. However, where the documents are identical to those submitted, for another condominium, the developer may file a "certificate of identical documents" wherein the developer certifies that all disclosure items are identical with items for another condominium within the project which has been previously filed with the Division. After the creating documents are filed, the developer must thereafter file additional documents as new condominiums are constructed and completed. Filing for a new condominium in a multi-condominium project is generally accomplished by submitting a filing under Rule 70-17.007, Florida Administrative Code. 4/

   
   

3. On an undisclosed date in 1979, Respondents filed their creating documents for certain condominiums in Camino Real Village. On November 19, 1980, they submitted their filing for the creation of Camino Real Village V. These documents were accepted as to "form" on December 11, 1980. They included a certificate of identical document signed by B & S's president which certified certain documents were identical to those previously submitted for Camino Real Village IV, a legal description of the property on which the condominium sits, sketches of the types of units to be built, a typical floor plan for Buildings 5751 and 5801, an estimated operating budget based on sixty-four units and common ownership percentages for each unit in the two buildings. Under Division requirements and state law, the documents should have contained a statement reflecting that the condominium was not substantially completed. 5/ However, they did not, and this omission was not detected by the Division when it reviewed and approved the initial filing.

   
   

4. On October 23, 1984, Respondents filed the declaration of condominium for Camino Real Village V in the local public records. The documents have been received in evidence as Petitioner's composite exhibit 1. The documents reflected that the percentage of ownership in the common elements for both buildings equaled one hundred percent. Section 3(b) of the declaration provided for the creation of a condominium consisting of two buildings (5751 and 5801) containing thirty-two units each. The documents included a surveyor's certification that Building 5751 was substantially completed. However, as to Building 5801, which was not completed at that time, no statement reflecting its state of completion was filed. It is also noted that the amendment to the declaration for Camino Real V was not filed with the Division as required by law, and the Division did not learn of its existence until sometime later. 6/ Since the filing of the declaration, Respondents have operated Camino Real Village V as a condominium.

5. On October 23, 1984, Respondents executed the closing documents on the sale of the first unit (Unit No. 106 in Building 5751) in Camino Real Village V. The warranty deed was later recorded in the local public records on November 1, 1984, and it is found this is the appropriate date on which the sale of the first unit occurred. This is consistent with the standard practice of parties executing documents prior to closing but not considering a unit sold until the money is actually transferred from the buyer to the seller. This date is significant since it may bear directly upon the date when the developer must begin paying common expenses on developer-owned units.

   
   

6. On or about October 24, 1985, a "First Amendment to the Declaration of Camino Real Village V" was recorded by Respondent in the local public records. It amended the declaration previously executed on October 23, 1984, and included, among other things, a surveyor's certificate reflecting that Building 5801 had been substantially completed. It also attempted to submit Building 5801 to condominium ownership. Although the amendment and attached documents should have been filed with the Division, Respondents neglected to do so. The Division first learned that the documents existed during the course of this proceeding.

   
   

7. According to paragraph 15 of the declaration, common expenses can only be assessed by the Association against "each condominium parcel." A condominium parcel is defined in paragraph 4(c) as "the condominium unit, together with an undivided share in the common elements appurtenant thereto." A condominium unit in turn is defined in paragraph 4(a) as "the unit being a unit of space, designated "condominium unit" on the sketch of survey and plans attached hereto and marked as Exhibit "B" to the Declaration. The latter exhibit, which is attached to the declaration, contains the plans and survey of the project, the surveyor's certification of substantial completion, and a graphic description of each finished unit within the project. 7/

   
   

8. Pursuant to Subsections 718.116(1) and (8), Florida Statutes (1985), a developer is responsible for paying his pro rata share of common expenses on all developer-owned units. The same law permits the declaration to provide that the developer is relieved of this per-unit obligation until the expiration of a ninety-day period after the first unit is sold. In this the declaration had such a provision in paragraph 14. It provided in part as follows:

   
   

   . . . for such time as the Developer continues to be a Unit Owner, but not exceeding ninety (90) days subsequent to the closing of the first condominium unit, the Developer shall only be required to contribute such sums to the common expenses of the Condominium, in addition to the total monthly common expense assessments paid by all other Unit Owners, as may be required for the Condominium Association to maintain the condominium as provided in said Declaration of Exhibits.

   Developer hereby reserves the option

   to guarantee the level of assessments to unit owners for a specified time interval and thereby limit its obligations to contribute to condominium maintenance in accordance with the provisions of Chapter 718.116(8), Florida Statutes.

9. The parties agree that the monthly assessment for common expenses during the period relevant to this proceeding were as follows:

   
   

   Type A Units $135.20 Type B Units $138.64 Type C Units $163.96

   
   

   The declaration also provides that ten percent interest must be added to any liability owed.

   
   

10. The record reflects, and Respondents concede, that such assessments were not paid on any units in Building 5801 until the following dates:

    
    

    Units 100-107 August 28, 1985

    Units 200-207 September 5, 1985

    Units 300-307 September 10, 1985

    Units 400-407 September 18, 1985

    
    

    The above dates are exactly ninety days after certificates of occupancy were issued for each of the four floors of Building 5801. Even though assessments were not paid by until those dates, beginning on January 31, 1985, and continuing until such assessments were paid, other unit owners were charged and paid assessments based upon a budget for sixty-four units. As it turned out, the difference between the budget and annual common expenses actually incurred by the project was approximately $32,100.00 or the amount the Division contends Respondents owe.

    
    

11. In 1982-84, Petitioner conducted an investigation of Camino Real Villages II, III and IV based upon complaints received from a certain unit owner. The complaint concerned allegations that access to association books was denied, that the declaration contained a developer guarantee, that maintenance expenses were not properly paid, and that improper assessments were levied on unit owners. The file was closed in November, 1984, after the Division's enforcement supervisor concluded that the allegations were either "unfounded" or could be resolved through voluntary compliance by the Association. As to the fourth issue, the Investigative File 21103-CC-3282 and 20909-CC-3228 alleged that the Association had assessed unit owners not in accord with Section 718.115(2), Florida Statutes, from November, 1980 to January, 1982. The investigative report noted:

    
    

    1. We have not been able to establish that the Association is improperly assessing the association as stated in Chapter 718.115(2), Florida Statutes.

    2. To the best of our understanding, unit owners are paying direct common expense assessments according to that percentage as shown in the declaration.

    3. On expenses common to all of the condominiums in the association, the Developer is allocating them apparently based on the completed units versus the total units filed for the entire community. The association is currently paying 52% of these charges of common expenses. This is the method chosen by the Association

       to allocate common expenses common to all condominiums and absent specifics in the documents

       we lack jurisdiction under Chapter 718, Florida Statutes, to question this practice.

    4. We do not believe that this issue has merit and will consider it unfounded. 8/

       
       

       There is no mention of the term "certificate of occupancy" in the report.

       
       

12. Respondents point out that the filing documents submitted to the Division in November, 1980, were defective in that the surveyor's certificate was incorrect. They go on to suggest that, because of this deficiency, the filing might be invalidated by a court and therefore the statutory assessment provision would not apply. However, no person has ever challenged the validity of the filing, and the general law contains a curative provision for any initial filing errors. They also assert that if any liability is in fact owed, they are entitled to set-offs for expenses incurred by the developer while the project was being constructed. These include payments for real estate taxes, utility bills, Boca Del Mar Improvement Association, Inc. fees, trash removal, insurance, security service, assessments and maintenance and are itemized in attachments to Respondents' exhibit 1. However, there is no rule or statutory provision which authorizes this type of set-off to be applied against common expenses. Therefore, the expenses itemized in Respondents' exhibit 1 are deemed to irrelevant.

    
    

    CONCLUSIONS OF LAW

    
    

13. The Division of Administrative Hearings has jurisdiction of the subject matter and the parties thereto pursuant to Subsection 120.57(1), Florida Statutes (1987).

    
    

14. The Notice to Show Cause alleges that the developer "failed to pay its share of the assessments for common expenses on developer owned units for the period beginning on January 1985, the expiration of the guarantee period set forth in the Declaration of Condominium, until October 1, 1985" in violation of Subsections 718.116(1)(a) and (8)(a), Florida Statutes (1985). Since the agency does not intend to revoke or suspend a license, or to otherwise impair Respondents' livelihood, it need prove its allegations only by a preponderance of evidence. Cf. Ferris v. Turlington, 510 So.2d 292 (Fla. 1987) (agency must prove allegations by clear and convincing evidence where revocation or suspension of one's license is sought).

    
    

15. The Petitioner is the state agency charged with the duty to enforce and ensure compliance with the provision of Chapter 718 and rules promulgated thereto. (Section 718.501, Florida Statutes.) Every condominium created and existing in this state shall be subject to the provision of Chapter 718. (See Section 718.102, Florida Statutes.)

    
    

16. A condominium is strictly a creature of statute. Suntide Condominium Association, Inc. v. Division of Florida Land Sales Condominiums and Mobile Homes, 468 So.2d 314 (Fla. 1 DCA 1984) pet. for rev. den. (Fla. 1985). A condominium being a creature of statute, each and every aspect of its creation, administration, and termination is controlled and governed by the Condominium Act.

    
    

17. Being exclusively a creature of statute, the parties creating or administering a condominium are not free to fashion a method of ownership of real property which conflicts with the act.

18. Section 718.104 provides in pertinent part:

    
    

    Every condominium created in this state shall be created pursuant to this chapter.

    
    

19. Once real property is submitted to a condominium ownership by the recording of a declaration of condominium, the property is divided into condominium parcels, each of which consists of a unit and an appurtenant undivided share in the common elements. Brooks v. Palm Bay Towers Condominium Association, Inc., 375 So.2d 348 (Fla. 3 DCA 1979); Palm Bay Towers Corporation

    v. Brooks, 466 So.2d 1071 on motion for reh. en banc. (Fla. 3 DCA 1985). The developer as the unit owner of the unsold units is liable for assessments that come due while the developer holds title to those units. It is of no consequence that units might not yet be built. A developer is the unit owner of "paper units" as those units are given existence by the Declaration of Condominium that creates the condominium parcels of which the units are a part. As the owner of "paper units" the developer is liable for assessments coming due as long as title to those units is held by the Developer. See: Tahitian Gardens Declaratory Statement, issued July 2, 1982, Final Summary Judgment, Edgevest, Inc. v. Edgewater Village Condominium Association, Inc., Case No. 78-341, Circuit Court for the Twentieth Judicial Circuit in and for Charlotte County, affirmed per curiam without opinion. Edgevest, Inc. v. Edgewater Village Condominium Association, Inc., 384 So.2d 1379 (Fla. 2 DCA 1980). See also Hide Park Condominium Association v. Estero Island Real Estate, Inc., 486 So.2d (Fla.

    2 DCA 1986), where the court held that Appellee's unimproved lots were units within the meaning of Section 711.03, Florida Statutes (1969).

    
    

20. Subsections 718.116(1)(a) and (8)(a), Florida Statutes (1985), are relevant to this controversy and provide as follows:

    
    

    718.116 Assessments; liability; lien and priority; interest; collection. --

    (1)(a) A unit owner, regardless of how his title has been acquired, including a purchaser at a judicial sale, is liable for *all assessments which come due while he is the unit owner.* Except as provided for in subsection (6), the grantee is jointly and severally liable

    with the grantor for all unpaid assessments against the grantor for his share of the common expenses up to the time of transfer of title, without prejudice to any right the grantee may have to recover from the grantor the amounts paid by the grantee.

    (8)(a) No unit owner may be excused from the payment of his share of the common expense of a condominium unless all unit owners are likewise proportionately excused from payment, except as provided in subsection (6) and in the following cases:

    1. *If the declaration so provides, a developer or other person who owns condominium units offered for sale may be excused from the payment of the share

       of the common expenses and assessments related to those units for a stated period of time subsequent to the recording of the declaration of condominium. The period must terminate no later than the first dab of the fourth calendar month following the month in which the closing of the purchase and sale of the first condominium unit occurs.* However, the developer must pay the portion of common expenses incurred during that period which exceed the amount assessed against other unit owners.

    2. A developer or other person who owns condominium units or who has an

    obligation to pay condominium expenses may be 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 has guaranteed to each purchaser in the purchase contract, declaration, 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 of the condominium imposed upon the unit owners would not increase over a stated dollar amount and has obligated himself to pay any amount of common expenses incurred during that period and not produced by the assessments at the guaranteed level receivable from other unit owners. (Emphasis added between *)

    
    

    Also relevant to this proceeding is Subsection 718.103(23), Florida Statutes (1987), which defines a "unit" as follows:

    
    

    (23) "Unit" means *a part of the condominium property which is subject to* exclusive ownership. A unit may be in improvements, land, or land and improvements together, as specified in the declaration. (Emphasis added)

    
    

21. The issue in this case can be framed in the manner: are Respondents responsible for making payments for common expenses on developer-owned units during the time period stated in the notice to show cause? Petitioner generally argues that, according to the clear and unambiguous language in Subsection 718.116(8)(a)1., Florida Statutes (1987), and the pertinent declaration itself, Respondents' liability began to accrue ninety days after the first unit in Building 5751 was sold, or on and after January 31, 1985. Therefore, it argues that Respondents owe $31,830.48 plus interest on that amount. Respondents argue that their liability for common expenses did not begin until ninety days after the certificates of occupancy were issued on the four floors in Building 5801, or August 28, September 5, 10 and 18, 1985, respectively. Alternatively, they

    contend that even if a liability is owed, they are entitled to set-offs for developer-incurred expenses which eliminate the entire liability. They assert further that the Division is estopped from taking this action by virtue of representations made by the Division when it concluded a prior investigation of common expenses in November, 1984. Finally, they contend the initial filing was deficient and therefore invalid, and that the statutory assessments cannot apply.

    
    

22. Taking the last contentions first, Respondents suggest that the filing on October 23, 1984, was deficient in that it failed to contain a statement of noncompletion as required by Subsection 718.104(4)(e), Florida Statutes (1987). They reason that, because of this, no valid condominium was created, and therefore no past assessments are due. However, the filing has never been challenged in court and must be presumed to be valid. Further, Section 718.110, Florida Statutes (1987), provides a procedure for correcting any error or omission that might affect the valid existence of a condominium. Respondents next contend that, assuming some liability is owed, they are nonetheless entitled to set-off such liability with those developer-incurred expenditures itemized in Respondents' exhibit 1. However, there is no rule or statute which authorizes the use of this type of set-off. Indeed, Section 718.116, Florida Statutes (1985), provides that "(n)o unit owner may be excused from the payment of his share of the common expense of condominium" unless certain conditions are met. The set-offs incurred by Respondents are expenses unrelated to common elements or association expenses and thus are not allowed. Respondents have raised further the affirmative defense of estoppel against the Division. Estoppel is, of course, a doctrine that may be applied to state agencies only under exceptional circumstances. See, for example, Kuge v. State, Department of Administration, Division of Retirement, 449 So.2d 389 (Fla. 3rd DCA 1984). Even assuming the existence of any special circumstance, estoppel will not lie since employees of the state cannot estop the state through mistaken statements of the law. Austin v. Austin, 350 So.2d 102, 105 (Fla. 1st DCA 1977).

    
    

23. Respondents' final contention is that assessments are not due on developer-owned units until ninety days after the certificate of occupancy is issued on a unit. They rely principally upon the Welleby Condominium Association One, Inc. v, The William Lyon Company, 13 FLW 81, Fla. 4th DCA, December 30, 1987 decision. In Welleby, the plaintiff (a condominium association) sought to levy and collect unpaid assessments against certain lands owned by defendant (the developer) which were described as being eleven units within the condominium project. By answer and affirmative defense, defendant contended that, since the described lands were then vacant and had no construction upon them, assessment could not be made. This was, according to the defendant, because declaration of condominiums authorized assessment only against "condominium parcels" rather than "units," that condominium parcels were defined therein as apartments, that apartments were defined as "individual private dwellings," and that raw, unimproved property was therefore exempt from assessment. In granting summary judgment for the defendant, the lower court agreed and concluded that since, by the terms of the declaration, assessments could be levied only against individual private dwellings (apartments), and not raw land, the proposed assessments were illegal. This ruling was affirmed by the appellate court. In the case sub judice, Respondents attempt to analogize the factual situation herein to that in Welleby by pointing out that the Camino Real Village V declaration likewise authorizes the imposition of assessments only upon a "condominium parcel," that parcel is defined as "the condominium unit," and that a condominium unit in turn is defined as a "unit of space, designated single 'condominium unit' on the sketch of survey and plans attached hereto as Exhibit 'B.'" Exhibit B reflects the location and graphic description

    of each residential unit. Therefore, they argue that a condominium unit is actually a finished unit as described in the plans attached to the declaration, and that no assessment can be legally imposed on a developer-owned unit until after a certificate of occupancy is issued evidencing the completion of the unit. They also suggest that ninety days must be added to the occupancy date because of the provision in the declaration but have cited no legal support or rationale for this additional time period. The facts in the two cases differ substantially and therefore Welleby may be distinguished. In Welleby the condominium parcel, which was the only object subject to assessments, was specifically defined as an "apartment" and "an individual private dwelling." In contrast, the developer here did not use the word "apartment" but instead defined a "condominium parcel" as a "condominium unit" which in turn was defined as "a unit in space designated `condominium unit' on the sketch of the survey and plans." Once a multiple building declaration is recorded, and property is submitted to the condominium form of ownership, the real property is transformed and divided into condominium parcels. From that point on, the developer is liable for assessments on developer-owned units, even if they are not yet built, unless the developer opts to use one of the two exceptions in Subsection 718.116(8)(a), Florida Statutes (1987). In this case, the developer chose to draft its declaration so as to excuse Respondents from paying assessments until ninety days after the sale of the first unit. As such, this relieved Respondents of their statutory obligation until January 31, 1985, and not until after a certificate of occupancy was issued. If the rationale in Welleby is accepted, only those units that are sold or completed would be submitted to the condominium form of ownership when the declaration is filed. Such a result would be inconsistent with the general law and established precedent that hold that all, and not just part of, the property is submitted to the condominium form of ownership when the declaration is filed. Section 718.104, F.S. (1987); In Re: Petition for Declaration Statement by Tahitian Gardens Condominium, Inc., July 2, 1982 (and cases cited therein). Welleby would permit an unscrupulous developer to delay the issuance of a certificate of occupancy until just prior to the unit being sold and thereby avoid indefinitely or even permanently his obligation for paying common assessments. This result is undisputed. Finally, the Welleby decision creates a heretofore unrecognized distinction in condominium property. This occurs because an undeveloped parcel would now be considered a "unit" for purposes of being sold by the developer prior to being improved but would not be considered a "unit" for purposes of being subject to common assessments. This concern has legitimacy and lends further support to this agency's position.

    
    

24. In addition to the above well-founded fears of the agency, it is noted that, although a developer can define a unit" in any manner authorized under Subsection 718.103(23), Florida Statutes, the definition cannot be inconsistent with other provisions of Chapter 718. See Subsection 718.104(4)(1), Florida Statutes, (1987). By limiting assessments for common expenses to only those units which are defined as being completed, Respondents have contravened the provision of Subsection 718.116(8)(a), Florida Statutes, by creating an unauthorized manner of paying assessments and a method inconsistent with the general law. For this reason, and those discussed in the preceding paragraph, it is concluded that, notwithstanding any provisions of the declaration to the contrary, Respondents are subject to paying assessments for common expenses on developer-owned units in Building 5801 on and after January 31, 1985, and continuing until they were sold as alleged in the Notice to Show Cause. To this liability must be, added ten percent (10%) interest to and including the date of payment.

25. Petitioner having proven the allegations in the Notice to Show Cause by a preponderance of evidence, it is concluded that Respondents must pay past due assessments plus

interest to the Association as their share of common expenses.

ORDER

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

(1) Respondents are guilty of violating Section 718.116, Florida Statutes (1985), as charged in the Notice to Show Cause, and shall within thirty (30) days of the date of this Order pay to the Association past due common expenses on developer-owned units in Building 5801, plus ten percent (10%) interest to and including the date of payment.

DONE AND ORDERED this 28th day of June, 1988.

R. JAMES KEARNEY, DIRECTOR Division of Florida Land Sales,

Condominium and Mobile Homes Department of Business Regulation State of Florida

ENDNOTES

1/ At hearing, Petitioner presented evidence which would revise this figure upward to $39,407.15 to reflect liability up to the date of hearing.

2/ Proposed Orders were due on or before March 2, 1988. On March 2, or after Petitioner had made its filing, Respondents filed a motion requesting that they be given to including March 14, 1988 in which to file their Proposed Order.

Petitioner opposed the request. The proposed order was later filed by Respondents on March 15 and was considered by the hearing officer in the preparation of the Recommended Order. Petitioner was given to and including March 24, 1988, in which to file a response to Respondents' proposed order.

3/ Upon review of the complete record, it is determined that the finding of the hearing officer that partner Middlesex Development Corporation, a California Corporation, was not named as Respondent in the case is not based upon competent substantial evidence in that the Notice to Show Cause, Docket No. 86151MVC dated July 17, 1986, names Camino Real Village, a joint venture between Middlesex Development Corporation, a California Corporation and B & S Ventures, Inc., a Florida Corporation. Service of process was effectuated upon the registered agent for each corporation. There is no evidence of record showing that Middlesex Development Corporation was dismissed from this action.

4/ Upon review of the complete record, it is determined that the finding of the Hearing Officer that the certificate identical documents filing is generally accomplished by filing an amendment to the original declaration of condominium is not based upon competent substantial evidence. Filing for a new condominium in a multi-condominium project is generally accomplished by either a complete new filing or by submitting a filing in accordance with Rule 70-17.007 F.A.C.

An amendment to a declaration indicates a change in the filing for the original condominium.

5/ Item 17 of the "condominium filing statement" did indicate that the anticipated completion date of the project was December 1, 1982. Nonetheless, the Division specialist testified this did not satisfy the requirement.

6/ Upon review of the complete record, it is determined that the finding of the Hearing Officer that the declaration was not filed with the Division as required by law is not based upon competent substantial evidence. However, competent and substantial evidence support a finding that the amendment to the declaration of condominium for Camino Real V was not filed with the Division as required by law.

7/ The Hearing Officer's Finding of Fact concluding that the documents should be interpreted as evincing an intent to excuse the developer from payment of assessments for common expenses on developer owned unbuilt units is rejected. This Finding of Fact is more in the nature of a conclusion of law and is rejected by the agency.

8/ The hearing officer in paragraph 11 of the Recommended Order made a finding: "As to the fourth issue, which was an allegation that the developer-controlled association had improperly assessed unit owners from November, 1980 to January, 1982, the investigative report noted that the developer was `allocating them based on the completed units versus the total units filed for the entire community.' The enforcement supervisor concluded that this was `the method chosen by the Association', and `absent specifies in the documents, we lack jurisdiction . . . to question this practice.'" Based on review of the complete record, this finding of fact is supplemented to include the complete conclusions of the investigative report relative to allegation four. The investigative report was introduced into evidence as part of Respondent's Exhibit 1. Based upon the complete conclusion of the investigative report and after reviewing the complete record, the hearing officers finding of fact that "uncontradicted testimony by Respondents reflects that its use of the date of issuance of the certificate of occupancy to determine when assessments became due was the focus of the investigation and that Respondents relied upon those statements in continuing their practice of not paying assessments until ninety (90) days after a certificate of occupancy was issued on a unit, and that they did so, at least in part, on the theory that the association did not assume responsibility for expenses until that time" is rejected as not supported by competent and substantial evidence.

RIGHT OF APPEAL

THIS FINAL ORDER CONSTITUTES FINAL AGENCY ACTION AND MAY BE APPEALED BY RESPONDENT PURSUANT TO THE FLORIDA RULES OF APPELLATE PROCEDURE AND SECTION 120.68, FLORIDA STATUTES, BY FILING A NOTICE OF APPEAL CONFORMING TO THE REQUIREMENTS OF RULE 9.110(a), FLORIDA RULES OF APPELLATE PROCEDURE, BOTH WITH THE APPROPRIATE DISTRICT COURT OF APPEAL ACCOMPANIED BY THE APPROPRIATE FILING FEE AND WITH CONNIE BLACKMAN, CLERK FOR THE DIVISION OF FLORIDA LAND SALES, CONDOMINIUMS AND MOBILE HOMES WITHIN THIRTY (30) DAYS OF RENDITION OF THIS ORDER.

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true and correct copy of the foregoing has been furnished by U. S. Certified Mail to Henry B. Handler, Esquire, Attorney for Respondents, Interstate Plaza, 1499 West Palmetto Park Road, Boca Raton, Florida 33432, this 28th day of June, 1988.

CONNIE D. BLACKMAN, CLERK

COPIES FURNISHED TO:

Debra Roberts, Esquire

Department of Business Regulation

Alexander Knight, Chief Bureau of Condominiums

Docket for Case No: 86-003007

Orders for Case No: 86-003007