STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
DEPARTMENT OF BUSINESS )
REGULATION, DIVISION OF )
FLORIDA LAND SALES, ) CONDOMINIUMS AND MOBILE HOMES, )
)
Petitioner, )
)
vs. ) CASE NO. 90-1904
)
ROBERT J. LOUGHLIN, )
)
Respondent. )
) DEPARTMENT OF BUSINESS )
REGULATION, DIVISION OF )
FLORIDA LAND SALES, ) CONDOMINIUMS AND MOBILE HOMES, )
)
Petitioner, )
)
vs. ) CASE NO. 90-2515
)
ORLANDO EAST CORPORATION, )
)
Respondent. )
)
RECOMMENDED ORDER
This matter was heard by William R. Dorsey, Jr., the Hearing Officer designated by the Division of Administrative Hearings on Friday, October 21, 1990, in Miami, Florida.
APPEARANCES
For Petitioner: Calvin L. Johnson, Esquire
Assistant General Counsel Department of Business Regulation The Johns Building
725 South Bronough Street Tallahassee, Florida 32399-1007
For Respondents: Harold M. Braxton, Esquire
Suite 400, One Datran Center 9100 South Dadeland Boulevard Miami, Florida 33156
STATEMENT OF THE ISSUES
The issue is whether the Respondents are subject to discipline for offering and selling lots in a subdivision. The Department contends that the Respondents were required to obtain an order of registration before selling land, and to comply with other requirements with respect to their sales practices. The Respondents contend they are exempt from the registration and other regulatory requirements.
PRELIMINARY STATEMENT
The Respondents Robert J. Loughlin and Orlando East Corporation were served with Notices To Show Cause by the Department of Business Regulation, Division of Florida Land Sales, Condominiums and Mobile Homes (Division) alleging they had violated Chapter 498, Florida Statutes, through the offer, disposition or participation in the offer or disposition of subdivided lands when they had not obtained an Order of Registration from the Division, and that they had engaged in misconduct by failing to deliver to potential purchasers a current Florida Public Offering Statement, and by soliciting sales through long distance telephone calls without furnishing prospective purchasers a copy or summary of the sales script which had been approved by the Division before the execution of any sales agreements.
Both Respondents denied that any registration with the Division was required. These proceedings were consolidated for final hearing. The Division offered into evidence Exhibits 1-4, and the testimony of William James Norred. The Respondents offered no exhibits, but did offer the testimony of Mr.
Loughlin.
At the opening of the hearing, the Division moved to remand the case for disposition without a hearing, which was denied.
A transcript of the hearing was filed on November 9, 1990, and on motion of counsel, the time for filing proposed recommended orders was extended to January 7, 1991. Rulings of proposed findings of fact are made in the Appendix to this Recommended Order.
FINDINGS OF FACT
The Division is the state agency responsible for the enforcement of the Florida Uniform Land Sales Practices Act, Chapter 498, Florida Statutes.
Orlando East Corporation is a Florida corporation formed in 1980 by Robert J. Loughlin which engages in the business of selling unimproved real estate in the State of Florida. It is not a government agency. Robert J. Loughlin is the President and sole shareholder of Orlando East Corporation. Between 1980 and 1986 the corporation acquired title to approximately 97 lots in the Partin Park Subdivision, a plated subdivision which contains 768 lots located in Orange County, Florida. The plat is recorded in Plat Book N at page
67 in Public Records of Orange County. The subdivision was originally approved by the Board of County Commissioners of Orange County, on February 9, 1926.
On April 15, 1980, Orlando East purchased lots 1-24 and 25A in block 5 of the subdivision and lots 24-48 in block 14; on December 5, 1985, the corporation purchased lots 1-24 in block 8 of the subdivision; on June 27, 1986, the corporation purchased lots 25-48 of block 8 of the subdivision. Obviously, Orlando East Corporation is not the original subdivider of Partin Park.
The Respondents have offered for sale, and sold 60 of the lots they had purchased in Partin Park by conveying 3-lot parcels in 20 sales transactions. Some of the parcels were sold by agreements for deed (nine sales), or by warranty deed or exchange agreements (11 sales). The relevant documents were executed by Mr. Loughlin on behalf of the corporation. All sales took place before February 16, 1987.
One of the purchasers under an agreement for deed was Shirley Katonka.
Mr. Loughlin solicited purchasers for the parcels owned by Orlando East through long distance telephone calls to out-of-state purchasers. The Respondents have not obtained an Order Of Registration to sell the lots under Sections 498.005(12), and 498.029, Florida Statutes. Neither do the Respondents have a current Public Offering Statement approved by the Division for the lots offered for sale or sold in the Part in Park subdivision.
None of the land conveyed by Orlando East Corporation in the subdivision was sold as part of a reservation program approved by the Division under Section 498.024, Florida Statutes. None of the lots were re-platted after Respondents purchased them. The lots were not offered for sale as cemetery lots.
The offer to sell parcels in Partin Park subdivision was not registered with the Florida Department of Banking and Finance, Division of Securities, nor with the United States Securities and Exchange Commission.
The sales of each 3 lot parcel in the subdivision were for $5,000 or less. The parcels were sold without any residential or commercial buildings located on them and without the obligation of Orlando East Corporation or Mr. Loughlin to construct residential or commercial buildings on them for the purchasers.
The Division had not granted an order exempting Part in Park subdivision from the registration requirements of Chapter 498 Florida Statutes, before any of the 20 sales were made by the Respondents.
None of the 20 purchasers the Respondents solicited for sales received a synopsis, which had been approved by the Division, of the sales script used in conjunction with the long distance telephone solicitations.
The original plan Orlando East Corporation and Mr. Loughlin had for the distribution of the lots was to sell all lots to fewer than 45 persons. This was accomplished by grouping the lots into parcels of 3-lot units. There were no covenants, declarations, or legal restrictions on the property which
prohibited Orlando East Corporation from disposing of the property as individual lots. One of the reasons lots were sold in 3-lot units was to provide a purchaser a large enough piece of property so that the owner might be able to build a house on it, after obtaining a variance from the local government. The property was not sold as a home-site subdivision, however. The individual lots as plated measured 25' x 140', but the 3-lot units meet the county requirements that building lots have 75 feet of frontage and a minimum of 10,000 square feet.
Of the eleven agreements for deed, eight of the original purchasers are making payments on their lots. Ms. Shirley Katonka cancelled her purchase several years ago.
The Respondents are receiving a gross income of $750 per month for the eight active agreements for deed. The monthly expenses of operation for the Respondents' business is between $300 and $350 per month, leaving the Respondents a net profit of between $400 and $450 per month for the eight active contracts, assuming the purchasers continue to pay under their agreements for deed. Orlando East Corporation currently has $450 in the bank. Respondents are not offering or selling lots now, but are awaiting the outcome of this proceeding.
There is no evidence that the Respondents have been selling lots in Partin Park under a common promotional plan with any other person or entity, and the Division does not contend that they are involved in a common promotional plan with any other person or entity.
The Respondents argue that their subjective plan of disposition for their 97 lots is determinative of whether they are entitled to an exemption from the registration requirements of Section 498.025(1)(d), Florida Statutes. They contend that their plan of distribution would have provided for no more than 32 sales.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over this matter. Section 120.57(1), Florida Statutes.
Section 498.025 of the Florida Land Sales Practices Act says:
Unless the method of offer, disposition, or transfer is adopted for the purpose of evading this chapter, the provisions of this chapter do not apply to:
(d) A subdivision as to which the plan of ultimate disposition is to dispose to 45 or fewer persons.
Part in Park is subdivided land as that term is defined in Section 498.005(19), Florida Statutes, because it is contiguous land divided for the purpose of disposition into 50 or more lots. Whether the owners of Partin Park who sold the lots to Respondents are required to register under Chapter 498 is not relevant to this proceeding.
The central question is whether a) the registration and solicitation regulations found in the Florida Uniform Land Sales Practices Act are triggered because Part in Park subdivision has 768 separate lots, which could be, and more likely than not would be sold to more than 50 persons, or b) whether the Act is triggered only if, from among the set of lots in Partin Park purchased by the Respondents, the Respondents intend to sell their subset of lots to 45 or fewer persons.
The decision of the Court of Appeals in Associated Mortgage Investors
v. Department of Business Regulation, 503 So.2d 379 (Fla. 1st DCA), rev. dism,
506 So.2d 1040 (Fla. 1987) specifically rejects the interpretation advocated by Respondents and made by the subdivider in that case. According to the court
[W]e find that the phrase ["plan of disposition" as used in Section 498.025(1)(d)) refers to the overall plan of disposition for the subdivision and includes sales which DAL Builders, Inc. [another purchaser of lots in the subdivision making retail sales] will make to homeowners...
Had the legislative concern been only with the immediate disposition which the particular subdivider would make, it would have, we believe, used the term `subdivider' instead of `subdivision' in Section 498.025(1) (d) , 503 So.2d at 380.
The appellate court in Associated Mortgage Investors supra also noted that its holding was consistent with the long-standing interpretation of the Division as to the meaning of Section 498.025(1)(d) in its numbered Advisory Opinions. This judicial decision makes discussion of the Division's advisory opinions unnecessary.
The failure to qualify for the exemption has a number of consequences for the Respondents. They did not have a valid Order of Registration under Sections 498.029 and .033, Florida Statutes, or an approved reservation program pursuant to Section 498.024 when they sold their 3-lot parcels. Each of the twenty sales of 3 lot parcels constitutes a separate violation of Section 498.023(1)(a), Florida Statutes, and of Section 498.023(2)(a), (b), which prohibit a person from disposing of an interest in subdivided lands without an order of registration, and unless a current public offering statement is delivered to the purchaser prior to the disposition, and the purchaser has a reasonable opportunity to examine the public offering statement before the disposition. The conduct also violates Section 498.023(3), which prohibits long distance telephone solicitations unless, before the execution of the sales agreement, the subdivider furnishes the prospective purchaser with an approved synopsis of the sales script and current public offering statement by mail or personal delivery.
The civil penalties which the Division may impose are found in Section 498.049, Florida Statutes, the relevant parts of which state:
The Division may, by order, impose civil penalties against any person for violation of this chapter or relevant rules. The imposition of a civil penalty shall not preclude the use of any other appropriate remedy authorized by this chapter.
. . . Civil penalties shall be limited to
$10,000 for each offense. The provisions of Section 498.051, Florida Statutes, are also relevant; they state:
The Division may issue an order requiring a person to cease and desist, and to take such affirmative action as will carry out the purpose of this chapter, if the Division determines that the person has:
Violated any provision of this chapter or any lawful order or rule of the Division;
(d) Disposed of any interest in subdivided lands which has not been registered with the Division.
The affirmative action to be taken by a person pursuant to an order authorized by subsection (1) may include, but is not limited to:
Notifying any purchaser of subdivided land who has a rescission right that he may elect to rescind the purchase transaction as provided by contract or by other provisions of this chapter; and
Establishing a trust or escrow account in a financial institution located within this state to assure the payment of refunds to those purchasers who elect to rescind, or to assure the conveyance of and marketable title to those persons who do not elect to rescind.
PENALTY
There is no basis, in this record, to believe that the Respondents purposely engaged in some stratagem to evade the requirements of the Florida Uniform Land Sales Practices Law. Their interpretation of the statute, although erroneous, was a plausible one. All sales took place before the appellate decision in Associated Mortgage Investors, supra. A cease and desist order should be entered requiring them to comply with the law in the future. There are no facts which would justify the imposition of a substantial monetary penalty. The evidence does not show that anyone has been harmed or in any way defrauded. For all this record shows, all purchasers are satisfied with their land purchases.
The Division has recommended a fine of $6,000 to be entered against both Orlando East Corporation and Robert J. Loughlin individually, but there is no discussion in the proposed recommended order of why counsel for the Division believes such significant penalty is justified. The Department has adopted no penalty guidelines. A penalty of $1,000 against each Respondent would be consistent with the Department's regulatory responsibilities given the small size of Respondents and the few lots involved. The penalty should be coupled with an order requiring Respondents to notify all purchasers, within 60 days, of their statutory right to rescind the purchase transactions for failure to deliver the public offering statement, or approved synopsis of the telephone sales script. The violations of the Act give the purchasers the statutory right to reconsider their purchases. Had a public offering statement been delivered to persons solicited to purchase land, as required by Section 498.023(2) (a), that statement would have had to give purchasers the right to cancel the transaction for a period of seven days. Section 498.023(2)(c), Florida Statutes. Any refunds should be made within 90 days of receipt of a refund request.
Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered finding Respondents to be subject
to Chapter 498, to have violated Section 498.051(1)(a) and (d), fining them
$1,000 each, and requiring them to give purchasers the opportunity to rescind their purchases under Sections 498.023(2)(c) and 498.051(3)(a), Florida Statutes.
DONE and ENTERED this 24th day of January, 1991, at Tallahassee, Florida.
WILLIAM R. DORSEY, JR.
Hearing Officer
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-1550
(904) 488-9675
Filed with the Clerk of the Division of Administrative Hearings this 24th day of January, 1991.
APPENDIX TO RECOMMENDED ORDER DOAH CASE NOS. 90-1904 and 90-2515
Rulings on findings proposed by the Department:
Adopted in Finding 2.
Adopted in Finding 2.
Implicit in Finding 3.
4 - 7. Adopted in Finding 3.
To the extent necessary, adopted in Finding 2.
Adopted in Finding 4.
Adopted in Finding 6.
Adopted in Finding 4.
Adopted in Finding 6.
Adopted in Finding 7.
Adopted in Finding 2.
Adopted in Finding 7.
Adopted in Finding 8.
Adopted in Finding 9, but amended to reflect the figure of $5,000.
18 and 19. Adopted in Finding 9.
Adopted in Finding 10.
Adopted in Finding 11.
Adopted in Finding 12.
Adopted in Finding 16.
Rejected as argument.
Rulings on findings proposed by the Respondent:
Adopted in Finding 1.
Adopted in Finding 2.
Adopted in Findings 2 and 3.
Rejected as unnecessary.
Rejected as unnecessary.
Rejected as a conclusion of law.
Adopted in Finding 4.
Adopted in Findings 4 and 5.
Rejected as unnecessary, but implicit in Finding 4.
Rejected as unnecessary. Only the conduct of the Respondent is at issue here.
Implicit in Finding 12.
Implicit in Finding 12, although there is no legal impediment to selling individual lots.
Adopted in Finding 12, except for the final sentence which is rejected as unnecessary.
Adopted in Finding 12.
Implicit in Finding 12.
Sentence one adopted in Finding 4, the remainder rejected as a conclusion of law.
Adopted in Finding 7.
Adopted in Finding 13.
Adopted in Finding 14.
Adopted in Finding 14.
Adopted in Finding 14.
Adopted in Finding 15.
Adopted in Finding 15.
Rejected as irrelevant.
Adopted in Finding 6.
Adopted in Finding 6.
Adopted in Finding 16.
28 - 30. Rejected as unnecessary, because the Division's policy is derived from the language of the act and is consistent with the decision in Associated Mortgage Investors v. Department of Business Regulation, 503 So.2d 379 (Fla. 1st DCA 1987).
COPIES FURNISHED:
Calvin L. Johnson, Esquire Assistant General Counsel Department of Business Regulation The Johns Building
725 South Bronough Street Tallahassee, Florida 32399-1007
Harold M. Braxton, Esquire Suite 400, One Datran Center 9100 South Dadeland Boulevard Miami, Florida 33156
Matthew Carter, Director Department of Business Regulation The Johns Building
725 South Bronough Street Tallahassee, Florida 32399-1000
Janet E. Ferris, Secretary Department of Business Regulation The Johns Building
725 South Bronough Street Tallahassee, Florida 32399-1000
STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
DEPARTMENT OF BUSINESS )
REGULATION, DIVISION OF )
FLORIDA LAND SALES, )
CONDOMINIUMS AND MOBILE )
HOMES, )
)
Petitioner, )
)
vs. ) CASE NO. 90-1904
)
ROBERT J. LOUGHLIN, )
)
Respondent. )
) DEPARTMENT OF BUSINESS )
REGULATION, DIVISION OF )
FLORIDA LAND SALES, )
CONDOMINIUMS AND MOBILE )
HOMES, )
)
Petitioner, )
)
vs. ) CASE NO. 90-2515
) ORLANDO EAST CORPORATION, )
)
Respondent. )
)
CORRECTED RECOMMENDED ORDER
This matter was heard by William R. Dorsey, Jr., the Hearing Officer designated by the Division of Administrative Hearings on Friday, October 21, 1990, in Miami, Florida.
APPEARANCES
For Petitioner: Calvin L. Johnson, Esquire
Assistant General Counsel Department of Business Regulation The Johns Building
725 South Bronough Street Tallahassee, Florida 32399-1007
For Respondents: Harold M. Braxton, Esquire
Suite 400, One Datran Center 9100 South Dadeland Boulevard Miami, Florida 33156
STATEMENT OF THE ISSUES
The issue is whether the Respondents are subject to discipline for offering and selling lots in a subdivision. The Department contends that the Respondents were required to obtain an order of registration before selling land, and to comply with other requirements with respect to their sales practices. The Respondents contend they are exempt from the registration and other regulatory requirements.
PRELIMINARY STATEMENT
The Respondents Robert J. Loughlin and Orlando East Corporation were served with Notices To Show Cause by the Department of Business Regulation, Division of Florida Land Sales, Condominiums and Mobile Homes (Division) alleging they had violated Chapter 498, Florida Statutes, through the offer, disposition or participation in the offer or disposition of subdivided lands when they had not obtained an Order of Registration from the Division, and that they had engaged in misconduct by failing to deliver to potential purchasers a current Florida Public Offering Statement, and by soliciting sales through long distance telephone calls without furnishing prospective purchasers a copy or summary of the sales script which had been approved by the Division before the execution of any sales agreements.
Both Respondents denied that any registration with the Division was required. These proceedings were consolidated for final hearing. The Division offered into evidence Exhibits 1-4, and the testimony of William James Norred. The Respondents offered no exhibits, but did offer the testimony of Mr.
Loughlin.
At the opening of the hearing, the Division moved to remand the case for disposition without a hearing, which was denied.
A transcript of the hearing was filed on November 9, 1990, and on motion of counsel, the time for filing proposed recommended orders was extended to January 7, 1991. Rulings of proposed findings of fact are made in the Appendix to this Recommended Order.
FINDINGS OF FACT
The Division is the state agency responsible for the enforcement of the Florida Uniform Land Sales Practices Act, Chapter 498, Florida Statutes.
Orlando East Corporation is a Florida corporation formed in 1980 by Robert J. Loughlin which engages in the business of selling unimproved real estate in the State of Florida. It is not a government agency. Robert J. Loughlin is the President and sole shareholder of Orlando East Corporation. Between 1980 and 1986 the corporation acquired title to approximately 97 lots in the Partin Park Subdivision, a plated subdivision which contains 768 lots located in Orange County, Florida. The plat is recorded in Plat Book N at page
67 in Public Records of Orange County. The subdivision was originally approved by the Board of County Commissioners of Orange County, on February 9, 1926.
On April 15, 1980, Orlando East purchased lots 1-24 and 24A in block 5 of the subdivision and lots 25-48 in block 14; on December 5, 1985, the corporation purchased lots 1-24 in block 8 of the subdivision; on June 27, 1986, the corporation purchased lots 25-48 of block 8 of the subdivision. Obviously, Orlando East Corporation is not the original subdivider of Partin Park.
The Respondents have offered for sale, and sold 60 of the lots they had purchased in Partin Park by conveying 3-lot parcels in 20 sales transactions. Some of the parcels were sold by agreements for deed (nine sales), or by warranty deed or exchange agreements (11 sales). The relevant documents were executed by Mr. Loughlin on behalf of the corporation. All sales took place on or about December 14, 1987.
One of the purchasers under an agreement for deed was Shirly Katonka.
Mr. Loughlin solicited purchasers for the parcels owned by Orlando East through long distance telephone calls to out-of-state purchasers. The Respondents have not obtained an Order Of Registration to sell the lots under Sections 498.005(12), and 498.029, Florida Statutes. Neither do the Respondents have a current Public Offering Statement approved by the Division for the lots offered for sale or sold in the Partin Park subdivision.
None of the land conveyed by Orlando East Corporation in the subdivision was sold as part of a reservation program approved by the Division under Section 498.024, Florida Statutes. None of the lots were re-platted after Respondents purchased them. The lots were not offered for sale as cemetery lots.
The offer to sell parcels in Partin Park subdivision was not registered with the Florida Department of Banking and Finance, Division of Securities, nor with the United States Securities and Exchange Commission.
The sales of each 3 lot parcel in the subdivision were for $50,000 or less. The parcels were sold without any residential or commercial buildings located on them and without the obligation of Orlando East Corporation or Mr. Loughlin to construct residential or commercial buildings on them for the purchasers.
The Division had not granted an order exempting Partin Park subdivision from the registration requirements of Chapter 498, Florida Statutes, before any of the 20 sales were made by the Respondents.
None of the 20 purchasers the Respondents solicited for sales received a synopsis, which had been approved by the Division, of the sales script used in conjunction with the long distance telephone solicitations.
The original plan Orlando East Corporation and Mr. Loughlin had for the distribution of the lots was to sell all lots to fewer than 45 persons. This was accomplished by grouping the lots into parcels of 3-lot units. There were no covenants, declarations, or legal restrictions on the property which
prohibited Orlando East Corporation from disposing of the property as individual lots. One of the reasons lots were sold in 3-lot units was to provide a purchaser a large enough piece of property so that the owner might be able to build a house on it, after obtaining a variance from the local government. The property was not sold as a home-site subdivision, however. The individual lots as plated measured 25' x 140', but the 3-lot units meet the county requirements that building lots have 75 feet of frontage and a minimum of 10,000 square feet.
Of the eleven agreements for deed, eight of the original purchasers are making payments on their lots. Ms. Shirly Katonka cancelled her purchase several years ago.
The Respondents are receiving a gross income of $750 per month for the eight active agreements for deed. The monthly expenses of operation for the Respondents' business is between $300 and $350 per month, leaving the Respondents a net profit of between $400 and $450 per month for the eight active contracts, assuming the purchasers continue to pay under their agreements for deed. Orlando East Corporation currently has $450 in the bank. Respondents are not offering or selling lots now, but are awaiting the outcome of this proceeding.
There is no evidence that the Respondents have been selling lots in Partin Park under a common promotional plan with any other person or entity, and the Division does not contend that they are involved in a common promotional plan with any other person or entity.
The Respondents argue that their subjective plan of disposition for their 97 lots is determinative of whether they are entitled to an exemption from the registration requirements of Section 498.025(1)(d), Florida Statutes. They contend that their plan of distribution would have provided for no more than 32 sales.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over this matter. Section 120.57(1), Florida Statutes.
Section 498.025 of the Florida Land Sales Practices Act says:
Unless the method of offer, disposition, or transfer is adopted for the purpose of evading this chapter, the provisions of this chapter do not apply to:
* * *
(d) A subdivision as to which the plan of ultimate disposition is to dispose to 45 or fewer persons.
Partin Park is subdivided land as that term is defined in Section 498.005(19), Florida Statutes, because it is contiguous land divided for the purpose of disposition into 50 or more lots. Whether the owners of Partin Park who sold the lots to Respondents are required to register under Chapter 498 is not relevant to this proceeding.
The central question is whether a) the registration and solicitation regulations found in the Florida Uniform Land Sales Practices Act are triggered because Partin Park subdivision has 768 separate lots, which could be, and more likely than not would be sold to more than 50 persons, or b) whether the Act is triggered only if, from among the set of lots in Partin Park purchased by the Respondents, the Respondents intend to sell their subset of lots to 45 or fewer persons.
The decision of the Court of Appeals in Associated Mortgage Investors
v. Department of Business Regulation, 503 So.2d 379 (Fla. 1st DCA), rev. dism,
506 So.2d 1040 (Fla. 1987) specifically rejects the interpretation advocated by Respondents and made by the subdivider in that case. According to the court
[W]e find that the phrase ["plan of disposition" as used in Section 498.025(1)(d)] refers to the overall plan of disposition for the subdivision and includes sales which DAL Builders, Inc. [another purchaser of lots in the subdivision making retail sales] will make to homeowners...
* * *
Had the legislative concern been only with the immediate disposition which the particular subdivider would make, it would have, we believe, used the term 'subdivider' instead of 'subdivision' in Section 498.025(1)(d), 503 So.2d at 380.
The appellate court in Associated Mortgage Investors supra also noted that its holding was consistent with the long-standing interpretation of the Division as to the meaning of Section 498.025(1)(d) in its numbered Advisory Opinions. This judicial decision makes discussion of the Division's advisory opinions unnecessary.
The failure to qualify for the exemption has a number of consequences for the Respondents. They did not have a valid Order of Registration under Sections 498.029 and .033, Florida Statutes, or an approved reservation program pursuant to Section 498.024 when they sold their 3-lot parcels. Each of the twenty sales of 3 lot parcels constitutes a separate violation of Section 498.023(1)(a), Florida Statutes, and of Section 498.023(2)(a), (b), which prohibit a person from disposing of an interest in subdivided lands without an order of registration, and unless a current public offering statement is delivered to the purchaser prior to the disposition, and the purchaser has a reasonable opportunity to examine the public offering statement before the disposition. The conduct also violates Section 498.023(3), which prohibits long distance telephone solicitations unless, before the execution of the sales agreement, the subdivider furnishes the prospective purchaser with an approved synopsis of the sales script and current public offering statement by mail or personal delivery.
The civil penalties which the Division may impose are found in Section 498.049, Florida Statutes, the relevant parts of which state:
The Division may, by order, impose civil penalties against any person for violation of this chapter or relevant rules. The imposition of a civil penalty shall not preclude the use of any other appropriate remedy authorized by this chapter.
(5). . . Civil penalties shall be limited to
$10,000 for each offense.
The provisions of Section 498.051, Florida Statutes, are also relevant; they state:
The Division may issue an order requiring a person to cease and desist, and to take such affirmative action as will carry out the purpose of this chapter, if the Division determines that the person has:
Violated any provision of this chapter or any lawful order or rule of the Division;
* * *
(d) Disposed of any interest in subdivided lands which has not been registered with the Division.
PENALTY
* * *
The affirmative action to be taken by a person pursuant to an order authorized by subsection (1) may include, but is not limited to:
Notifying any purchaser of subdivided land who has a rescission right that he may elect to rescind the purchase transaction as provided by contract or by other provisions of this chapter; and
Establishing a trust or escrow account in a financial institution located within this state to assure the payment of refunds to those purchasers who elect to rescind, or to assure the conveyance of clear and marketable title to those persons who do not elect to rescind.
There is no basis, in this record, to believe that the Respondents purposely engaged in some stratagem to evade the requirements of the Florida Uniform Land Sales Practices Law. Their interpretation of the statute, although erroneous, was a plausible one. All sales took place before the appellate decision in Associated Mortgage Investors, supra. A cease and desist order should be entered requiring them to comply with the law in the future. There are no facts which would justify the imposition of a substantial monetary penalty. The evidence does not show that anyone has been harmed or in any way defrauded. For all this record shows, all purchasers are satisfied with their land purchases.
The Division has recommended a fine of $6,000 to be entered against both Orlando East Corporation and Robert J. Loughlin individually, but there is no discussion in the proposed recommended order of why counsel for the Division believes such significant penalty is justified. The Department has adopted no penalty guidelines. A penalty of $1,000 against each Respondent would be consistent with the Department's regulatory responsibilities given the small size of Respondents and the few lots involved. The penalty should be coupled with an order requiring Respondents to notify all purchasers, within 60 days, of their statutory right to rescind the purchase transactions for failure to deliver the public offering statement, or approved synopsis of the telephone sales script. The violations of the Act give the purchasers the statutory right to reconsider their purchases. Had a public offering statement been delivered
to persons solicited to purchase land, as required by Section 498.023(2)(a), that statement would have had to give purchasers the right to cancel the transaction for a period of seven days. Section 498.023(2)(c), Florida Statutes. Any refunds should be made within 90 days of receipt of a refund request.
RECOMMENDATION
Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that a Final Order be entered finding Respondents to be subject to Chapter 498, to have violated Section 498.051(1)(a) and (d), fining them $1,000 each, and requiring them to give purchasers the opportunity to rescind their purchases under Sections 498.023(2)(c) and 498.051(3)(a), Florida Statutes.
RECOMMENDED this 6th day of February, 1991, at Tallahassee, Florida.
WILLIAM R. DORSEY, JR.
Hearing Officer
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-1550
(904) 488-9675
Filed with the Clerk of the Division of Administrative Hearings this 6th day of February, 1991.
APPENDIX TO RECOMMENDED ORDER, CASE NOS. 90-1904 and 90-2515
Rulings on findings proposed by the Department:
Adopted in Finding 2.
Adopted in Finding 2.
Implicit in Finding 3.
4 - 7. Adopted in Finding 3.
To the extent necessary, adopted in Finding 2.
Adopted in Finding 4.
Adopted in Finding 6.
Adopted in Finding 4.
Adopted in Finding 6.
Adopted in Finding 7.
Adopted in Finding 2.
Adopted in Finding 7.
Adopted in Finding 8.
Adopted in Finding 9, but amended to reflect the figure of $5,000.
18 and 19. Adopted in Finding 9.
Adopted in Finding 10.
Adopted in Finding 11.
Adopted in Finding 12.
Adopted in Finding 16.
Rejected as argument.
Rulings on findings proposed by the Respondent:
Adopted in Finding 1.
Adopted in Finding 2.
Adopted in Findings 2 and 3.
Rejected as unnecessary.
Rejected as unnecessary.
Rejected as a conclusion of law.
Adopted in Finding 4.
Adopted in Findings 4 and 5.
Rejected as unnecessary, but implicit in Finding 4.
Rejected as unnecessary. Only the conduct of the Respondent is at issue here.
Implicit in Finding 12.
Implicit in Finding 12, although there is no legal impediment to selling individual lots.
Adopted in Finding 12, except for the final sentence which is rejected as unnecessary.
Adopted in Finding 12.
Implicit in Finding 12.
Sentence one adopted in Finding 4, the remainder rejected as a conclusion of law.
Adopted in Finding 7.
Adopted in Finding 13.
Adopted in Finding 14.
Adopted in Finding 14.
Adopted in Finding 14.
Adopted in Finding 15.
Adopted in Finding 15.
Rejected as irrelevant.
Adopted in Finding 6.
Adopted in Finding 6.
Adopted in Finding 16.
28 - 30. Rejected as unnecessary, because the Division's policy is derived from the language of the act and is consistent with the decision in Associated Mortgage Investors v. Department of Business Regulation, 503 So.2d 379 (Fla. 1st DCA 1987).
COPIES FURNISHED:
Calvin L. Johnson, Esquire Assistant General Counsel Department of Business Regulation The Johns Building
725 South Bronough Street Tallahassee, Florida 32399-1007
Harold M. Braxton, Esquire Suite 400, One Datran Center 9100 South Dadeland Boulevard Miami, Florida 33156
Matthew Carter, Director Department of Business Regulation The Johns Building
725 South Bronough Street Tallahassee, Florida 32399-1000
Janet E. Ferris, Secretary Department of Business Regulation The Johns Building
725 South Bronough Street Tallahassee, Florida 32399-1000
NOTICE OF RIGHT TO SUBMIT EXCEPTIONS:
All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should contact the agency that will issue the final order in this case concerning agency rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.
| Issue Date | Proceedings |
|---|---|
| Jan. 24, 1991 | Recommended Order (hearing held , 2013). CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Mar. 26, 1991 | Agency Final Order | |
| Jan. 24, 1991 | Recommended Order | Respondent fined for failing to register in compliance with statute before engaging in land sales. |
