DEPARTMENT OF BUSINESS REGULATION, ) DIVISION OF FLORIDA LAND SALES, ) CONDOMINIUMS AND MOBILE HOMES, )
vs. ) CASE NO. 90-5933
Respondent. )
Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Veronica E. Donnelly, held a formal hearing in the above styled case on January 30, 1991, in Tampa, Florida.
For Petitioner: Kathryn E. Price, Esquire
Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32399-1007
For Respondent: David S. Bernstein, Esquire
St. Petersburg, Florida 33733 STATEMENT OF THE ISSUES
Whether the Petitioner should issue a Cease and Desist Order and impose civil penalties upon Respondent for the alleged violations of law set forth in the Notice to Show Cause dated July 16, 1990.
In a Notice to Show Cause, the Department of Business Regulation, Division of Florida Land Sales, Condominiums and Mobile Homes (the Division) charged the Respondent, Wilder Corporation of Delaware t/a Pleasant Living Mobile Home Park (Wilder), with a series of violations of regulatory laws involving mobile home parks. Essentially, Respondent Wilder is charged with improperly placing 1986 water, sewage, garbage and ad valorem tax costs in the base rents during the 1987 lease year.
By letter dated July 27, 1990, the Respondent disputed the allegations of fact contained in the Notice to Show Cause and requested a formal administrative hearing.
During the hearing, the Division called thirteen witnesses and filed three exhibits. The Respondent presented one witness and moved for the admission of one exhibit. All of the exhibits were admitted into evidence. In addition, a final hearing memorandum was filed by Respondent. The documents attached to the memorandum were also accepted into evidence as Respondent's Exhibit #2.
A transcript of the proceeding was filed on February 15, 1991. Proposed recommended orders were filed by March 1, 1991. Rulings on the proposed findings of fact submitted by the parties are in the Appendix of the Recommended Order.
Pleasant Living Mobile Home Park (Pleasant Living) is an established park with 245 lots in Riverview, Florida. It has been in existence for a number of years, and has had at least three different owners, according to the records and testimony presented at hearing. One witness who testified at hearing recalls moving into the park between 1974 and 1975.
Since at least 1981, Pleasant Living has had written leases with each of its tenants. For purposes of this proceeding there are two different paragraphs in the lease that are important: (1) Paragraph 5 which limits annual rent adjustments to fifteen percent of the existing rental amount. (2) Paragraph 6 which requires the tenant to pay as additional rent its proportionate share of any increases in real estate taxes, utility assessments, or any other governmental costs or taxes if such taxes or costs increase during the term of this lease.
In 1981, published park rules and regulations made it clear to park residents that lot rent includes water, sewer and trash collections.
On June 4, 1984, Chapter 723, Florida Statutes, which is also known as "The Florida Mobile Home Act", was enacted. The Division is the state agency charged with the responsibility to enforce the statutes involving landlord/tenant relationships in mobile home parks in which homes are owned by the tenants and are affixed to lots owned by the landlord. Pleasant Living is a park which falls in the category of parks regulated by these statutes.
Once Chapter 723, Florida Statutes, became law, park owners were required to file a prospectus or offering circular with the Division prior to entering into an enforceable rental agreement with tenants. The Division was to review the prospectus and decide if it meets the requirements of the act. If the prospectus did not meet the requirements, the park owner was to be notified of the deficiencies.
Prospectus number 2900243P was prepared by the owner of Pleasant Living in order to comply with the act. It was filed with the Division in November 1984.
As part of the prospectus review process, the park owner was required to complete a Park Owner Filing Statement. The owner notified the Division that two hundred and twenty-two mobile home lots would receive the prospectus being filed. The lot designations and the names of the two hundred and twenty-two tenants in the park on December 18, 1984, were given to the Division. In a separate listing, the names and lot designations of the two hundred and eight tenants residing in the park on June 4, 1984, were also provided. Copies of the
two different rental agreements to be offered with the prospectus were also filed. One was going to be used for resales, the other would be used for new sales.
The lease that applies to resales is the same lease used since 1981. The lease that applies to new sales contains the same wording as the other lease concerning the payment of additional rent for proportionate shares of any increases in real estate taxes, utility assessments, or any other governmental costs or taxes during the term of this lease. Again, this tenant obligation was found in paragraph 6 of the new agreement. Paragraph 5 provided that rent increases would not exceed an average of ten percent annually.
The prospectus filed by Pleasant Living went through the review process within the Division, and after some revision, it was determined that the document met the requirements of Chapter 723, Florida Statutes. The prospectus was officially approved on April 26, 1986.
The approved prospectus advised tenants that they would receive at least ninety days notice in advance of an increase in rent. Only the new rental agreement originally designated as the one that applies to new sales was referenced in the prospectus. It was emphasized that all lots are governed by this rental agreement, which provides for rental increases not to exceed an average of ten percent annually.
The payment of pass through charges by the tenant was also mentioned in the approved prospectus. Tenants were referred to the rental agreement, and were informed that the tenant will be responsible for payment of all costs charged to the park owner as a result of any action by state and local government, or public/private utilities. Tenants were further advised, as follows:
The charges may be assessed more often than annually. The costs charged to the Park Owner will be assessed to the tenant on a pro rata basis. Any such increases shall be shared equally by the tenants of all leased lots in the mobile home park. The amount of an increase in pass-through charges shall be limited to the increased costs charged to the Park Owner and maintenance and administrative costs as permitted by Chapter 723, Florida Statutes. As to pass-through charges, the Park Owner cannot with any degree of accuracy disclose the potential financial obligation which the tenant will be responsible for paying.
The rent may only be increased as is stated in the above Rental Agreement. The only other increased (sic) to rent will be per the increases that result from pass-through charges created by any governmental (sic) or utility as explained above.
Tenancies under the 1981 lease form were still in effect, and the tenants could rely on the representations set forth in them. However, the landlord voluntarily waived his right to any maximum average annual rent
increase that exceeded ten percent annually. Pursuant to these leases, which were obligations of contract that could not be impaired by the new laws, these leases were automatically renewed annually. Pursuant to the provisions of Chapter 723, Florida Statutes, the landlord informed all tenants that they would receive ninety days notice before any increases in rent occurred, as opposed to the thirty days set forth in the leases. This was a procedural change in the notice requirements that was governed by the new Florida Mobile Home Act.
During the 1986 legislative session, amendments were made to the portions of Chapter 723, Florida Statutes, that set forth the information a prospectus or offering circular is required to contain. More stringent disclosure regarding services, user fees, and lot rental amounts charged by the park owner were required.
To reconcile these changes with existing laws, the Legislature allowed previously approved prospectuses delivered to tenants on or before July 1, 1986, to remain valid if the park owner complied with all of the conditions set forth in the newly amended Section 723.011, Florida Statutes [1986 Supp.].
In order to comply with the new disclosure requirements in the laws relating to prospectuses for mobile home parks, the 1986 Pleasant Living park owner filed amendments to the original prospectus with the Division in August of 1986. The amended prospectus was given identification number 2900243P86, and was deemed adequate to meet the 1986 amendments to the statutes on September 26, 1986.
When the proposed amendments to the prospectus were examined by the Division on August 28, 1986, the park manager was advised in writing that pursuant to Rule 7D-30.04, Florida Administrative Code, the approved amendments must be delivered to existing tenants prior to the renewal of their rental agreements. The two rental agreements used by the park remained the same after the amended prospectus became the park's disclosure document for tenants who came to the park on or after July 2, 1986.
Respondent Wilder purchased Pleasant Living on June 11, 1987. Prior to the purchase, Respondent's predecessor in interest increased the rent to be paid in the 1987 rental year beginning August 1, 1987 by $7.00 per month for the upcoming one year term. Notice was given of the increase on April 24, 1987, to each affected mobile home owner. Notice was also given to the board of directors of the homeowner's association on April 29, 1987. These notices of rental increase complied with all of the procedural and time requirements imposed on the owner by Chapter 723, Florida Statutes.
The notices specifically informed the recipients that Hillsborough County increased the ad valorem taxes for the park in the 1986 tax year, during the current term of each lease. The increase per unit was $76.22. Under the annual leases, the increase was payable at $6.35 per month for twelve months, effective August 1, 1987.
The pass-through of the increased ad valorem taxes to tenants is authorized by Chapter 723, Florida Statutes, and was disclosed prior to occupancy to tenants who came to the park when the 1981 lease, the 1986 prospectus number 2900243P and the 1986 amended prospectus under number 2900243P86 were in effect. As all tenants who lived in the park prior to 1981 had the same written lease as the 1981 lease, according to the Park Owner Filing Statement completed in December 1984, the landlord had the right to charge
additional rent based upon the tax increase. All leases specifically mention the ad valorem taxes, increases in governmental costs, as well as the three utilities: water, sewer and garbage.
The notices sent in April 1987 by Respondent Wilder's predecessor in interest, also informed the recipients of the increases in the costs of the following utilities: rubbish pick-up, water charges, and sewer charges.
The increase of the cost of rubbish pick-up during 1986 by $20.76 per unit charged by East Bay Sanitation was an increase in a utility charge which occurred during the current term of each lease. Under the leases, the increase was passed on to the mobile home owners. The charges were to be paid as additional rent or pass-through charges for one year at the rate of $.94 per month, effective August 1, 1987.
The increase in the cost for water during 1986 by $18.36 per unit charged by Hillsborough County was an increase in a utility charge which occurred during the current term of the annual lease. Under the leases, the increase was passed on to the mobile home owners. The charges were to be paid as additional rent or pass-through charges for one year at the rate of $1.53 per month.
The increase in the cost of sewer charges during 1986 by $9.48 per unit charged by Wilder corporation was an increase in a utility charge which occurred during the current term of the annual leases. Under the leases, the increase was passed on to the mobile home owners. The charges were to be paid as additional rent or pass-through charges for one year at the rate of $.79 per month.
At the time of the purchase of the park, Respondent Wilder was aware that tenants had been given notice of the additional rent or pass-through charges which increased the payments to the park owner for the use of the lots during the 1987 rental year.
The additional rent or pass-through charges were collected by Wilder for the one-year period, as stated in the notices.
All of the above listed facts were contained in the agency's files prior to the issuance of the Notice to Show Cause.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and the subject matter pursuant to Section 120.57(1), Florida Statutes.
The Division of Florida Land Sales, Condominiums, and Mobile Homes has the authority to enter a Notice to Show Cause and impose administrative sanctions in accordance with its regulatory authority as to the operation of mobile home parks. Section 723.006, Florida Statutes [1986 Supp.].
In this case, the evidence clearly indicates that Respondent Wilder collected a separate charge for the increased costs for water, sewer, garbage and ad valorem taxes that occurred in 1986 during the 1987 rental year. The Division contends that these charges violate Section 723.031(6), Florida Statutes [1986 Supp.], which states:
Except for pass-through charges, as defined in this chapter, failure on the part of the mobile home park owner or developer to disclose fully all fees, charges, or a assessments prior to tenancy, unless it can be shown that such fees, charges, or assessments have been collected as a matter of custom between the mobile home park owner and the mobile home owner, shall prevent the park owner or operator from collecting said fees, charges and assessments; and refusal
by the mobile home owner to pay any such fee, charge, or assessment shall not be used by the park owner or developer as a cause for eviction in any court of law.
The Respondent is not in violation of the above referenced statute because all of the park tenants, including those who testified at hearing, have written leases which advise them that such increases in utilities and ad valorem taxes could be passed on to them, after proper notice is given by the park owner. The fact that these leases, including those written leases which were in existence prior to the enactment of the Florida Mobile Home Act, were given to all tenants is established by the verified Park Owner Prospectus Filing Statement filed January 14, 1985. Great weight has been given to this document, which was prepared for an unrelated purpose years before the issuance of the Notice to Show Cause.
Prior to the filing of an amended prospectus by Respondent Wilder, the tenants and the owner of Pleasant Living were bound by three separate sets of agreements: (1) those leases in effect prior to June 4, 1984 with automatic renewals, which are subject to the park rules and regulations; (2) those leases entered into between June 4, 1984 and July 1, 1986, with automatic renewals, which are subject to prospectus number 2900243P; and (3) those leases entered into after July 1, 1986, with automatic renewals, which are subject to prospectus number 2900243P86.
For purposes of the Notice to Show Cause, the Division was concerned with rental agreements and assumed rental agreements which were in effect prior to June 4, 1984.
Article I, Section 10 of the Florida Constitution, prohibits the passage of laws impairing the obligation of contracts. This protection is afforded only to those obligations which result from valid and binding contracts. Suntide Condominium v. Division of Florida Land Sales, 409 So.2d 65 (Fla. 1st DCA 1982). As it is well established in Florida law that the landlord and the tenants in mobile home parks each have basic property rights in their hybrid property relationship, it is reasonable to assume that contracts entered into prior to the enactment of the Florida Mobile Home Act on June 4, 1984 remain valid and enforceable. State v. City of Miami, 137 So. 261 (Fla. 1931), Jennie Harris, et al. v. Martin Regency, Ltd., etc., 16 FLW 598 (Fla. January 17, 1991).
Section 83.760(3), Florida Statutes [1981] which applies to all of the leases that are the subject of the Notice to Show Cause, provides as follows, in pertinent part:
... The lease shall contain a provision that Part II of Chapter 83 governs mobile home park tenancies. The lease shall contain the amount of rent, any security deposit, installation charges, fees, assessments and any other financial obligations of the mobile home owner. However, this provision shall not be construed to prevent any mobile home park owner from passing on to the mobile home
owner any costs, including increased cost for utilities, which are incurred due to the actions of any state or local government. (Emphasis added.)
In Lemon v. Aspen Emerald Lakes Associates, Ltd., 446 So.2d 177 (Fla. 5th DCA 1984), the appellate court reviewed a lease clause which is identical to the one found in the 1981 leases in this case. Upon review of the relevant statutory provisions of Chapter 83, Florida Statutes, the court ruled:
Any increase in the costs of these utilities, as clearly shown by paragraph 6 of the leases, may be considered and computed by Aspen in regard to its rights to increase rents in a subsequent year.
Accordingly, Respondent Wilder has the corresponding right to charge additional rent (pass-through charges) for the increased costs of ad valorem taxes, water, sewer and garbage for 1986 in the subsequent lease year, after proper notice. The notice requirements imposed by Chapter 723, Florida Statutes, were met by the park owner. As a result, the charges are lawful.
In its presentation before the Division of Administrative Hearings, the Division of Florida Land Sales, Condominiums and Mobile Homes emphasized that the park owner had never sought to collect such increased utility and tax costs prior to the August 1, 1987 lease year. This prior practice is secondary to the issue of whether or not the park owner properly disclosed that it had the right to charge for such increases in a subsequent lease year prior to the tenancy of the mobile home owners. In this case, proper disclosure prior to tenancy and proper notice of the increase occurred before the charges were passed on to the mobile home owners in the monthly payments to the park owner.
The Division cannot prohibit the park owner from enforcing its rights as set forth in the applicable lease document. The fact that the owner has not collected such increases in the past is of no consequence. The crucial issue is whether proper disclosure of the possibility of such charges was made by the owner prior to tenancy. Respondent Wilder met this burden, according to the documents found in the Division's files prior to the issuance of the Notice to Show Cause. As a result, there is no basis for the Cease and Desist Order the Division seeks to issue, or the civil penalties it seeks to impose.
Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended the Division enter a Final Order finding the Respondent not guilty of the alleged violations of Section 723.031(6), Florida Statutes, set forth in the Notice to Show Cause dated July 16, 1990.
RECOMMENDED this 20th day of March, 1991, in Tallahassee, Leon County, Florida.
VERONICA E. DONNELLY
20th day of March, 1991.
APPENDIX TO RECOMMENDED ORDER,CASE NO. 90-5933
6. Accepted. See HO #17, #18, #20 - #23.
9.-21. Accepted.
Kathryn E. Price, Esquire Assistant General Counsel Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32399-1007
David S. Bernstein, Esquire Robbins, Gaynor & Bronstein, P.A. Post Office Box 14034
St. Petersburg, Florida 33733
E. James Kearney, Director Division of Florida Land Sales,
Condominiums and Mobile Homes 725 South Bronough Street Tallahassee, Florida 32399-1000
Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32399-1000
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.
