Findings Of Fact Based upon my observation of the witnesses and their demeanor while testifying, the documentary evidence received and the entire record compiled herein, I hereby make the following Findings of Fact: The Respondent, Ocean Dunes Development Corporation, is the developer of a residential condominium known as Ocean Dunes, located in Highland Beach, Palm Beach County, Florida. Count One The first closing on a unit in Ocean Dunes occurred on April 30, 1982. The Respondent controlled the operation of the condominium association from the incorporation of the association up to February 4, 1986, when unit owners other than the developer elected a majority of the members of the board of administration of the condominium association. Pursuant to the Articles of Incorporation of the condominium association, the board of directors is composed of three members. According to the by-laws of the association, unit owners other than the developer are entitled to elect at least one-third of the members of the board when they own fifteen per cent of the units in the condominium. The by-laws further provide that within sixty days after unit owners other than the developer are entitled to elect a member of the board, the association shall call and give not less than thirty days notice of a meeting of the unit owners for this purpose. on July 15, 1982, unit owners other than the developer owned fifteen per cent of the total number of units in the condominium. The first association unit owner meeting after July 15, 1982, occurred in April of 1983. Present at the meeting were several unit owners and Mr. Philip Connor, president of both the association and the developer corporation. According to the association by-laws, a quorum is achieved by a majority of the votes of the entire membership. In April of 1983 there were 48 units in the condominium, 17 units were owned by someone other than the developer. Therefore, the developer's unit votes were absolutely necessary to achieve a quorum. At the beginning of the meeting, Mr. Connor, the president of the developer corporation, stated that he was not authorized to utilize the developer's unit votes through proxy or otherwise. Mr. Connor stated: First item, obviously is to determine whether we have a quorum in order to properly conduct business. I am not voting on behalf of the developing company this evening. Mr. Hubert (the general counsel of the developer) as far as I know we do not have a quorum. Therefore, the meeting is officially adjourned. But, Mr. Connor went on to add: However, I would like to spend some time with you this evening to go over and formulate any questions or problems, et cetra. Unit owners other than the developer did not elect a member of the board of administration of the association until April 17, 1984. Count Two While operating the condominium association, the Respondent used condominium association common funds to pay for certain carpentry expenses in the amount of $1,836. The carpentry expenses were the responsibility of the Respondent as developer. During the initial phases of the investigation of this case by the Department of Business Regulation, the Respondent agreed that the carpentry expenses were the developer's responsibility and reimbursed $1,836 to the association on August 29, 1984. Count Three An "election period" is a mechanism by which the developer, as the owner of units, is excused from the payments of assessments against those units for a certain period of time. See Section 718.116(8)(a)(1), Florida Statutes. During an election period, the developer does not pay assessments on developer-owned units, but instead pays the difference between the common expenses of the association and monies received from other unit owners in the form of assessments during that period of time. In other words, if assessments collected from other unit owners are insufficient to meet common expenses, the developer is required to pay the deficiency. The election period must terminate no later than the first day of the fourth calendar month following the month in which the first closing of a unit in a condominium occurs. See Section 718.116(8)(a)(1), Florida Statutes. The first closing on the first unit in Ocean Dunes Condominium occurred on April 30, 1982. During the election period, the developer periodically funded the association and made available to it funds to pay required bills on a current, "as-due" basis. Thus, the Respondent attempted to satisfy its election period payment requirements on a cash accounting basis. The developer did not perform an election period calculation on the condominium's books and records to determine the difference between expenses incurred during the election period and assessments collected form other unit owners. Mr. Larsen, a certified public accountant and the Petitioner's expert witness, reviewed the condominium's financial records and calculated an election period deficit of $45,077.88. Mr. Larsen arrived at the figure of $45,077.88 by calculating that assessment revenues from non-developer unit owners amounted to $5,393.92 and that common expenses during the period amounted to $50,471.40, the difference being $45,077.88. The $45,077.88 figure arrived at by Larsen was composed in part of unfunded reserves during the election period, certain association bills which were left unpaid during the election period but had balances which came due later and certain prepaid assessments from other unit owners paid in advance, but which would have come due after the expiration of the election period. In arriving at the election period deficit of $45,077.88, Larsen completed a review or compilation of the financial records of the association using generally accepted principles of accounting for a review or compilation of financial statements. Count Four Unit owners other than the developer remitted their assessments on a quarterly basis. In contrast, the Respondent developer provided some funds to the association on a monthly, "as-needed" basis. Typically, when the association funds became inadequate to pay outstanding bills, the developer would contribute its assessments. At the end of each calendar year, the developer calculated an outstanding assessment liability on its inventory units and recognized that liability on the association's books. The Declaration of Condominium at Article 6.2, provided that assessments not paid on a timely basis would bear interest at the rate of 10% per annum from the date when due until paid. Although unit owners were paying their assessments on a quarterly basis, neither the Declaration of Condominium nor the by-laws established a date when assessments were due. Count Five The percentage of ownership interest of each individual unit owner in the common elements of Ocean Dunes Condominium is set forth in Exhibit B to the Declaration of Condominium. The percentage of common elements per unit ranged from a minimum of .01959 to a maximum of .02170. The quarterly assessments to unit owners were not based on the percentages of their ownership of the common elements as outlined in the recorded Declaration. Prior to the formal hearing, the Respondent acknowledged that the proper percentages were not being assessed, and adjustments were made for all unit owners' assessments. Count Six A condominium association's annual budget must include a reserve account (unless specifically waived by the association) for capital expenditures and deferred maintenance. The reserve account of the association is set aside for long term items such as roof replacement, building painting and pavement resurfacing. See Section 718.112(2)(f), Florida Statutes. Ocean Dunes Condominium Association established a budgeted annual reserve figure of $6,000 per year (reserves were not waived). On December 31, 1984, the reserve account, if fully funded, would have contained $16,569.86. While in control of the condominium association, the Respondent did not maintain a separate, funded reserve account. Rather, the Respondent showed the reserve account as a liability in its accounting statements. The listing of a reserve account as a liability on a financial statement would not violate, nor be contrary to, generally accepted principles of accounting. The Respondent believed in good faith that it was allowed to carry reserves as liability in the association's financial books. Count Seven The Respondent employed the accounting firm of Coopers and Lybrand to handle the financial books and records of the condominium association. Coopers and Lybrand has offices in both Broward and Palm Beach Counties. Although the Respondent maintained the corporate books and records of the association at the Royal Palm Beach Bank in Palm Beach County, portions of the accounting records were routinely transferred between Coopers and Lybrand's offices in Palm Beach and Broward Counties. Count Eight On February 4, 1986, unit owners other than the developer assumed control of the condominium association. After turnover, the Respondent provided the association with the annual audits performed by the accounting firm of Coopers and Lybrand. The annual audits did not cover the election period and the period early in 1986 which the audit for the year 1985 did not cover. After turnover of counsel of the association, the annual audits were the only review of the association's financial records provided to the association by the developer. After turnover, the association at all times made the corporate books and records available to the developer. Upon turnover, the Respondent offered to the association 9 pages of separate plans and specifications utilized in the construction of the condominium. Although the plans contained the certificate of a surveyor, only one of the nine plans contained a signed affidavit that the plans were authentic.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is. RECOMMENDED that a Final Order be entered: Requiring the Respondent pay to the association $45,077.88 (representing the deficit which existed during the developer election period) no later than 45 days from the date of the Final Order; Requiring that Respondent obtain, and provide to the association, no later than 60 days from the date of the Final Order, a turnover review of the financial records of the association prepared in strict compliance with Section 718.301(4)(c), Florida Statutes, and Rule 7D-23.03, Florida Administrative Code; Requiring that Respondent obtain and deliver to the association no later than 60 days from the date of the Final order, a copy of the construction plans of the condominium with a certificate in affidavit form prepared in strict compliance with Section 318.301(4)(f), Florida Statutes; and Assessing a civil penalty of $5,000. DONE AND ORDERED this 22nd day of December, 1986, in Tallahassee, Florida. W. MATTHEW STEVENSON, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 22nd day of December, 1986. COPIES FURNISHED: Karl M. Scheuerman, Esquire Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32399-1007 Philip R. Connor, Jr., President Ocean Dunes Development Corporation Suite 205 2929 East Commercial Boulevard Ft. Lauderdale, Florida 33308 James Kearney, Secretary Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32399-1007 Thomas A. Bell, Esquire General Counsel Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32399-1007 Richard Coats, Director Division of Florida Land Sales, Condominiums and Mobile Homes Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32399-1007 APPENDIX The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. Rulings on Proposed Findings of Fact Submitted by the Petitioner: Addressed in Procedural Background section. Adopted in Finding of Fact 1. Adopted in Finding of Fact 3. Addressed in Conclusions of Law section. Adopted in substance in Finding of Fact 4. Adopted in substance in Findings of Fact 5 and 9. Adopted in substance in Findings of Fact 6, 7 and 8. Addressed in Conclusions of Law section. Adopted in substance in Findings of Fact 10 and 11. Addressed in Conclusions of Law section. Adopted in substance in Finding of Fact 12. Adopted in substance in Finding of Fact 13. Adopted in substance in Finding of Fact 16. Adopted in substance in Finding of Fact 17. Adopted in substance in Finding of Fact 15. Rejected as a recitation of testimony. Rejected as misleading as stated, but adopted in substance in Finding of Fact 18. Rejected as misleading as stated, but adopted in substance in Findings of Fact 19, 20 and 21. The last sentence of Paragraph 19 is rejected as not supported by the weight of the evidence. Addressed in Conclusions of Law section. Adopted in substance in Finding of Fact 22. Adopted in substance in Finding of Fact 23. Addressed in Conclusions of Law section. Addressed in Conclusions of Law section. Partially adopted in Finding of Fact 25. Matters note contained therein are rejected as subordinate. Partially adopted in Findings of Fact 25 and 26. Matters not contained therein are rejected as subordinate. Addressed in Conclusions of Law section. Adopted in substance in Finding of Fact 29. Addressed in Conclusions of Law section. Adopted in substance in Finding of Fact 32. Rejected as a recitation of testimony. Rejected as a recitation of testimony. Partially adopted in Finding of Fact 34. Matters not contained therein are rejected as argument and/or subordinate. Adopted in substance in Finding of Fact 33. Adopted in substance in Finding of Fact 35. Rulings on Proposed Findings of Fact Submitted by the Respondent: Partially adopted in Findings of Fact 2, 3, 4, 5, 6, 7 and 8 Matters not contained therein are rejected as Subordinate and/or a recitation of testimony. Rejected as not supported by the weight of the evidence. The first sentence of this paragraph is rejected as contrary to the weight of the evidence. The remainder of the paragraph is adopted in substance in Findings of Fact 12, 13, 14, 15, 16, 17 and 18. Matters contained in Paragraph 3 which are inconsistent with the Findings of Fact previously mentioned are rejected as contrary to the weight of the evidence and/or subordinate. Partially adopted in Findings of Fact 19, 20 and 21. Matters not contained therein are rejected as contrary to the weight of the evidence and/or subordinate. Adopted in substance in Findings of Fact 22 and 23. Partially adopted in Findings of Fact 24, 25, 26 and 27. Matters not contained therein are rejected as contrary to the weight of the evidence. Adopted in substance in Finding of Fact 29. Rejected as contrary to the weight of the evidence and/or a recitation of testimony.
Findings Of Fact Petitioner, Division of Florida Land Sales and Condominiums of the Department of Business Regulation, is seeking by a Cease and Dosist Order to enforce the provisions of Chapter 718, Florida Statutes, the "Condominium Act," pursuant to the authority granted in Sections 718.501(1) and 498.051, Florida Statutes, alleging that it has evidence that Respondent has violated Section 718.401(8), Florida Statutes, by binding an owner of a condominium parcel in Covered Bridge Condominium Phase 18 to the provisions of a long-term lease that contains an escalation clause. Respondent, Hovnanian Florida, Inc., is a "developer" as defined in Section 718.103(13), Florida Statutes. Kevork S. Hovnanian is the President of the corporation. Covered Bridge Condominium Association, Inc., incorporated on June 8, 1971, is an "association" as defined in Section 718.103(2) subscribed to by Kevork S. Hovnanian, Lawrence Dombrowski and John R. Langly (Respondent's Exhibit A). Covered Bridge Condominium No. 18 was created by a "Declaration of Condominium," as defined in Section 718.103(12) and filed on December 14, 1978. Attached as "Exhibit 3" and expressly made a part of Covered Bridge Condominium No. 18 is a "Lease Agreement" dated July 8, 1971 in which Respondent was the lessor and Covered Bridge Condominium Association, Inc. is a lessee (Petitioner's Exhibit 1). Kevork S. Hovnanian is the assignee of the Lease Agreement by assignment from Respondent on June 24, 1974 (Respondent's Exhibit C). Covered Bridge Condominium Association, Inc. is the association responsible for operation of the condominium, Covered Bridge Condominium No. 18. Paragraph IX of the foregoing Declaration, The Operating Entity, states in C.(9) in part that "Every owner of a Condominium Parcel, whether he has acquired his ownership by gift, conveyance or transfer by operation of law, or otherwise, shall be bound by the Bylaws of the Association (Exhibit 2), the provisions of this Declaration and the Long-Term Lease" (Exhibit 3). (Petitioner's Exhibit 1) IX A. provides in part: "Covered Bridge Condominium Association, Inc. shall administer, supervise and shall act by and on behalf of the owners of the family units in Covered Bridge Condominium No. 18 in accordance with this instrument, the Bylaws of the Association annexed hereto as 'Exhibit No. 2' and in accordance with the Condominium Act of the State of Florida, its supplements and amendments." Paragraph XIX of the Declaration, Long-Term Lease, requires each original purchaser from the Developer to execute a copy of the Long-Term Lease to secure the unit owner's (original purchaser's) obligation to pay his share of the common expenses as to the Long-Term Lease. The Long-Term Lease referred to in Paragraphs VIII, IX, X, XI, XII, XV, XVII, XIX, XX and XII of the Declaration was attached as "Exhibit 3" and is the aforesaid Lease Agreement of July 8, 1971 in which the Respondent is the lessor and the Developer, and Kevork S. Hovnanian is the assignee. Paragraph XXI, Miscellaneous Provisions, Section G, provides: "If any of the provisions of this Declaration, or of the Bylaws, or of the Long-Term Lease attached hereto, or of the Condominium Act, or any section, sentence, clause, phrase, or work, or the application thereof, in any circumstance, is held invalid, the validity of the remainder of this Declaration, the Bylaws, the Long-Term Lease or the Condominium Act, and of the application of any such provision, action, sentence, clause, phrase, or word, in other circumstances, shall not be affected thereby." XXI K. provides: "The captions used in this Declaration of Condominium and Exhibits annexed hereto, are inserted solely as a matter of convenience and shall not be relied upon and/or used in construing the effect or meaning of any of the text of this Declaration or Exhibits hereto annexed." XXI N. provides in part: "By way of clarification as to Article XIX of this Declaration, the Long-Term Lease may be amended by an instrument in writing, executed by the Lessor and the Condominium Association, by and through its Board of Directors except there shall be no Amendment affecting the Long- Term Lease which would change a unit owner's rent under the Long-Term Lease nor the manner of sharing common expenses under the Long-Term Lease, nor impair the rights of unit owners to the use and enjoyment of the recreational facilities, without the unit owners so affected, and all record owners of Institutional Mortgages thereon, joining in the execution of said Amendment." The Bylaws in Article XIV, Rules and Regulations, Section 4, "Recreation Area and Facilities," establish rules for the recreational facilities. Section 5, "Conflict," provides that should conflict arise the Condominium Act shall prevail (Respondent's Exhibit B). Section IX, Improvements, of the Lease Agreement provides in part: "The Lessor covenants and warrants unto the Lessee that it has constructed, or is in the process of constructing upon the aforedescribed premises, at Lessor's cost and expense, certain recreational facilities, consisting of a swimming pool and sundeck areas, shuffleboard courts, Community Center Building which will include and provide for a meeting area, cardroom, space for arts and crafts, sewing, and billiards, together with equipment and personalty contained therein, and such other improvements and personalty as Lessor determines in its sole discretion." Section XXIV, Rent Adjustment, provides in part: "Lessor and Lessee herein covenant and agree that the rental payments Provided for in Article III above, shall be adjusted, higher or lower, based upon the Cost of Living Index, as hereinafter defined and provided in this Paragraph at one (1) year intervals, commencing January 1st, 1972, and continuing yearly thereafter throughout the term of this Lease" (Petitioner's Exhibit 1). On September 26, 1979 Respondent sold by Warranty Deed a condominium in Covered Bridge Condominium No. 18 to Mr. and Mrs. Milton Marcus. The deed recited the fact of the assignment of the recreational facilities and further recited: "The Long-Term Lease as to the recreational facilities ... has been contemporaneously entered into by the Grantee(s) herein." On the same date the parties executed an "Acknowledgement of Lease Agreement" which recited their covenant to be bound by the 1979 Long-Term Lease Agreement (Petitioner's Exhibit 2). On October 15, 1979 Respondent sold another condominium in Covered Bridge Condominium No. 18 to Mr. and Mrs. Saul Schwartz with similar recitations and with a similar lease acknowledgement agreement (Petitioner's Composite Exhibit 3) Rental payments attributed to the escalation clause in the Long-Term Lease were paid by Covered Bridge Condominium Association, Inc. subsequent to June 4, 1975, the effective date of Section 718.401(8), Florida Statutes, which declared that public policy precludes the inclusion or enforcement of escalation clauses (Stipulation) On June 5, 1979 Petitioner Division of Florida Land Sales and Condominiums served a Notice to Show Cause why a cease and desist order should not issue on Respondent Hovnanian Florida, Inc. alleging: Covered Bridge, Phase 18, is a condominium created pursuant to the provisions of Chapter 718, Florida Statutes. The Respondent is offering for sale and has closed on contracts for sale of condominium parcels in the condominium. Article IX of the Declaration of Condominium binds the owner of a condominium parcel to the provisions of a long-term lease, attached to the Declaration of Condominium as Exhibit 3. Section XXIV of said long-term lease contains an escalation clause as defined and prohibited by Section 718.701(8)(a), Florida Statutes (1978 Supp.). On July 17, 1979 Petitioner requested an administrative hearing. A Notice of Hearing was mailed by the Division of Administrative Hearings on August 6, 1979 notifying the parties that a formal hearing would be held October 24, 1979 in West Palm Beach, Florida. The notice recited: ISSUES: Whether a cease and desist order should be entered against the Respondent for an escala- tion clause prohibited by statute. AUTHORITY: Chapters 120 and 718, F.S. Sections 718.401 and 718.501(b), F.S.; Section 478.171(1), F.S. The hearing was rescheduled and then continued numerous times but went to hearing on April 15, 1980. In the initial stage of the formal hearing on that date the parties jointly moved for a Continuance on the basis of an attached Stipulation, infra, which it was stated would change the character of the hearing and limit the necessity for an extended hearing. The Stipulation is set forth in full for clarity: "Stipulation A Declaration of Condominium creating Covered Bridge Condominium No. 18, address 7240 Covered Bridge Boulevard, Lake Worth, Florida, 33463, was filed and recorded on December 14, 1978, in the Circuit Court of Palm Beach County. Section XI, entitled "Assessments" of the Declaration states that "the portion of the common expenses under the Long-Term Lease shall be fixed and determined by the Lessor as provided under said Lease." Common expenses are defined in Section IH of the Declaration as "the expenses for which the unit owners are liable to the Association." Section XIX of the Declaration, entitled "Long-Term Lease" refers to a Lease and Assignment "... attached hereto as Exhibit 3 and made a part hereof, just as though said Lease were fully set forth herein." Payments under the lease are declared to be common expenses in Section XIX. By the above- referenced language, the Long-Term Lease is incorporated in and made a part of the Declaration of Condominium. Section XIX requires that each unit owner execute a copy of the Long-Term Lease attached as Exhibit 3, and that such lease be recorded in the Public Records of Palm Beach County, together with the deed conveying the unit to the owners. Exhibit No. 3 of the Declaration entitled "Lease Agreement" is an agreement between Hovnanian Florida, Inc., lessor, and Covered Bridge Condominium Association, Inc., lessee, the entity responsible for the operation of the condominium. Therein, it is stated that any reference to an obligation of a "lessee" shall be deemed to include Covered Bridge Condominium Association, Inc., and all individual lessees, jointly and severally. The Long-Term Lease, in Section III C states that rent due under it shall be the obliga- tion of the Individual Lessees and the Lessee-Association. Section XXIV of the Long-Term Lease provides that rental payments due under the lease shall be adjusted yearly. Such adjustment is computed by utilizing a nationally recognized comodity or consumer price index. Such lease was assigned to KEVORK S. HOVNANIAN by HOVNANIAN FLORIDA, INC., on June 24, 1974. Subsequent to the recordation of the Declara- tion of Covered Bridge Condominium No. 18, the developer did sell units to purchasers, and close on such sales. Purchasers were required to and did sign acknowledgements of Lease Agreement, in which purchasers have agreed to be bound by all the terms, covenants and conditions, set forth in the Long-Term Lease, and acknowledged that their signatures constituted an acknowledgement of the Long- Term Lease Agreement and their covenant to be bound by it. Such purchasers purchased sub- sequent to June 4, 1975. In 1975, Section 711.231, Florida Statutes, became effective on June 4, 1975. That act declared that the public policy of this state precludes the inclusion or enforcement of escalation clauses in leases for recreational facilities on other commonly used facilities serving residential condominiums. That statute has since been renumbered and is now Section 718.401(8), Florida Statutes. It is the position of the developer that all rents, including portions due under the esca- lation clause, are and remain the obligation of the association--lessees and the association remains bound to assess unit owners amounts necessary to pay such rents. The lessor has demanded such amounts from the lessee(s), and the lessee Association has refused to pay them. Rental payments attributed to the escalation clause were paid by the association to the lessor subsequent to June 4, 1975. It is stipulated that the following documents are placed before the Hearing Officer for con- sideration in deciding this matter, subject to the recitals in #13 relating to the determina- tion of the relevancy and admissability in this cause For petitioner: Warranty Deed - Hovnanian, Inc. to Saul, Shirly & Schwartz Acknowledgement & Acceptance by Grantee, Saul, Shirly & Schwartz Acknowledgement of Lease Agreement Milton & Rose Marcus Warranty Deed Hovnanian, Inc. to Milton & Rose Marcus Amendment to Declaration of Condominium Covered Bridge No. 18 Recorded August 31, 1979 Amendment to Declaration of Condominium Covered Bridge No. 18 Recorded April 26, 1977 Amendment to Declaration of Condominium Covered Bridge No. 18 Recorded February 21, 1979 Declaration of Condominium Covered Bridge No. 18, with Exhibits Recorded December 14, 1978 Complaint for Damages and Declaratory Relief, Case No. 79-306, 15th Judicial Circuit. Answer, Affirmative Defenses and Counterclaim, Case No. 79-306, 15th Judicial Circuit. Offering Circulars Without Exhibits For Respondent: All documents listed by Petitioner: Bylaws of Covered Bridge Condominium Association, Inc., as recorded in Official Record Book 1913 at pages 1025 through 1054 and in official Record Book 1013 at pages 1085 and 1086 of the Public Records of Palm Beach County. Assignment of Lease dated June 24, 1974 as duly recorded in Official Record Book 2320 at pages 1096 through 1100 of the Public Records of Palm Beach County, Florida. Covered Bridge Plat #1, as recorded in Plat Book 29 on Page 44 of the Public Records of Palm Beach County, Florida. Covered Bridge Plat #2 as recorded in Plat Book 29 on page 79 of the Public Records of Palm Beach County, Florida. 1976 Settlement Agreement entered into between Kevork Hovnanian, Hov- nanian Florida, Inc. and Covered Bridge Condominium Association, Inc. Exhibit 4, Offering Circular Petitioner and Respondent agree and stipulate that the facts recited in this stipulation and the documents are true and accurate. The parties reserve the right to present legal arguments directed to the relevancy and/or materiality of any and all facts and documentary evidence, or the contents thereof, to this action. This stipulation is contingent upon the Hearing Officer granting a Motion for Con- tinuance of the hearing scheduled in this matter for April 15 and 16, 1980. The parties agree that this stipulation will not be intro- duced into evidence in any proceeding or used in any manner unless and until the above- referenced Motion for Continuance is granted and, in the event the Motion for Continuance is denied, this stipulation is null and void. In no event will this stipulation be used in any other proceeding. The parties agree that should the stipu- lation be accepted and the hearing continued by the Hearing Officer no witnesses will be called in this cause at any future time, and additional documentary evidence will be placed before the Hearing Officer only upon the agreement of both the Petitioner and Respon- dent to such admission. Petitioner and Respondent agree that the sole remaining matters to be placed before the Hearing Officer shall consist of legal arguments re- lating to the admissability of evidence as stated above, and argument pertinent to the disposition of this cause." The hearing was continued and rescheduled to be heard June 24, 1980. The Notice of Hearing was in the same form and showed the same issue and authorities as stated in each of the previous notices, but with the addition: "issues involved in Stipulation filed April 15, 1980." Thereafter, a Motion to Dismiss for failure to state a course of action was denied. At the commencement of the formal hearing rescheduled for June 24, 1980, Petitioner moved to amend the complaint on the grounds that Article IX (9) of the Declaration was cited in error in the complaint rather than Article XIX (19). The Motion to Amend was orally granted. A Motion for Continuance was then presented by Respondent on the grounds that since the Motion for Amendment had been granted the Respondent had insufficient time to prepare a defense to the amended charge and had not been informed of the issue involved in the case. Believing that the Notice to Show Cause, both original and as amended, together with the Stipulation filed at the previous hearing and the issue and authorities stated in the numerous Notices of Hearing, the Motions and Memoranda filed by Respondent, and the length of time from the inception of the case to the date of hearing had given Respondent adequate notice of the issues involved in the case and the time to prepare, the Hearing Officer denied Respondent's Motion for Continuance of the administrative hearing then in process. Exerpts from the voluminous documentary evidence which was introduced at the hearing are hereinbefore detailed, but a capsule summary of the facts follows: Covered Bridge Condominium Association, Inc. and the plats of the property show that it was anticipated in June of 1971 that Covered Bridge Condominium No. 18 might be erected on said corporate property and that when erected, purchasers of the' condominium units would become members of the Association. The Bylaws in 1971 authorized the Board of Directors of the Association to enter into long-term leases of recreational facilities. The Developer entered into the subject lease agreement that contained an escalation clause with the Association in July of 1971. The lease provided that common expenses would be assessed against all condominium units. Respondent created Covered Bridge Condominium No. 18 by "Declaration of Condominium" on December 13, 1978 "pursuant to Chapter 718, Florida Statutes (1976)." It incorporated the lease agreement of 1971 by reference as well as the Bylaws of 1971 and provided that the operating entity of 1971 should be Covered Bridge Condominium Association, Inc. The Declaration stated under "Operating-Entity" that Covered Bridge Condominium No. 18 should be administered under Covered Bridge Condominium Association, Inc., its Bylaws and "in accordance with the Condominium Act of the State of Florida, its supplements and amendments." Respondent expressly sought to tie the owners to the long-term lease which contained an escalation clause. When the new units in the condominium created in 1978 were sold in 1979, the deeds bound the purchasers to the 1971 lease agreement which provided recreational facilities to the condominium parcel. The parties submitted proposed findings of fact and memoranda of law, and Respondent submitted a proposed recommended order. These instruments were considered in the writing of this order. To the extent the proposed findings of fact have not been adopted in or are inconsistent with factual findings in this order, they have been specifically rejected as being irrelevant or not having been supported by the evidence.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law the Hearing Officer recommends that an order be entered requiring Respondent Hovnanian Florida, Inc. to cease and desist from enforcing the escalation clause in the "Lease Agreement" of 1971 as it pertains to the condominium created in 1978, Covered Bridge Condominium No. 18, and the purchasers of units in said condominium. DONE and ORDERED this 29th day of August, 1980, in Tallahassee, Leon County, Florida. DELPHENE C. STRICKLAND Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 2nd day of September, 1980. COPIES FURNISHED: Mary Jo M. Gallay, Esquire Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301 Samuel Spector, Esquire Cynthia S. Tunnicliff, Esquire Guyte P. McCord, III, Esquire SPECTOR & TUNNICLIFF, P. A. Suite 750 Barnett Bank Building Post Office Box 82 Tallahassee, Florida 32302
The Issue The issue is whether Respondents discriminated against Petitioner, Christa Bartok, on the basis of her disability, in violation of the Fair Housing Act (FHA).
Findings Of Fact Based on evidence offered at hearing and testimony of witnesses, as well as the facts agreed upon in the Pre-hearing Stipulation, the following Findings of Fact are found: Bayou Breeze is a residential condominium association in Pensacola, Florida. Ms. Bartok was a prospective buyer of a condominium unit from its owner, a Bayou Breeze resident. The address of the unit was 300 Bayou Boulevard, Unit 106, Pensacola, Florida. Ms. Bartok is a person with a non-visible disability, which she described as anxiety, emotional distress disorder, and an autoimmune disease. Ms. Bartok was also the owner of a dog named Moni, weighing more than 40 pounds. She identified Moni as her emotional support dog. At all times material to this matter, Ms. Bartok was represented by Simone Sands, a real estate broker. The seller of Unit 106 was represented by Greg Thomas, also a realtor. The communication regarding all aspects of the sale of the property was through the two realtors. At the time of executing the contract, Bayou Breeze3 Bylaws provided, in pertinent part, Pets. Pets shall be kept or maintained in and about the condominium property only if unit owner is granted a conditional license to maintain one pet by the Association. Such a license will be granted subject to the following conditions and reservations: A. Acceptable Pets. The only pets to be maintained on condominium property shall be dogs under twenty (20) pounds when fully grown, cats and small birds. In addition, the Declaration of Condominium Paragraph XVI provided, in pertinent part, Approval of Purchasers, Lessees and Transferees No unit owner shall sell, lease or otherwise convey a unit, nor shall any sale, lease, conveyance or transfer of a unit other than by foreclosure or by devise or operation of law on account of the death of the unit owner, be effective unless the board of directors of the Association shall have approved the identity of the proposed purchaser, lessee or transferee in writing. Application of a proposed purchaser, lessee or transferee shall be in writing and on a form to be provided by the Association and shall be accompanied by two letters of recommendation. Any such application not rejected within 10 days after receipt by the Association or an officer thereof shall be deemed to have been approved. The costs for the submission of an application shall not exceed $100. … 3 The association name changed from Pensacola Executive House Condominium Association, Inc. to its current name. Right of First Refusal Should an Owner wish to sell or transfer his Unit, he shall deliver to the Association an Owner’s written notice containing a copy of the executed purchase agreement between buyer and seller, which agreement shall be executed subject to the Associations [sic] waiver of its right of first refusal and consent to the sale or transfer. The Owner shall also submit to the Association, within five (5) days from receipt of any request from the Association, any supplemental information as may be required by the Association. Ms. Bartok received the declarations and bylaws. However, a list of items to be submitted to the Association for sale of a property was provided to the owner, which included: letter of intent to sell, application for sale/transfer, two letters of recommendation, background check, and contract for sale. The list of items provided to the owner was not provided to Ms. Bartok. On June 20, 2020, Ms. Bartok executed a residential contract for purchase of Unit 106. A term that Ms. Bartok included in the contract provided, in pertinent part: “contingent upon buyer receiving HOA approval for her emotional support dog which is over condo weight restrictions but meets Fair Housing Act requirements for HOA waiver.”4 Ms. Bartok also provided a letter with her contract dated June 15, 2020, from her treating physician, Timothy Tuel, M.D., of Baptist Health Care. The letter stated: Dear Christa, I do believe you have several medical conditions that would benefit from a properly trained emotional support animal. Please contact me if you have other questions. 4 Ms. Bartok executed a counteroffer for the property on June 24, 2020, which did not change the term regarding approval of her ESA. Although, the letter does not specifically identify Ms. Bartok’s disability, it references her “medical conditions,” and that she could benefit from having an ESA. In addition to the contract and letter from Dr. Tuel, Ms. Bartok provided a completed application, two letters of recommendation, and a receipt for training for her dog.5 Ms. Bartok did not provide a completed background check because Mr. Thomas had advised Ms. Sands that the “HOA manager does it.” In addition, on June 30, 2020, in response to Ms. Sands’ text of, “good morning any reply from HOA,” Mr. Thomas indicated, “[n]o, not yet they’re doing background check.” Thus, Ms. Bartok had a reasonable belief that she could rely upon Mr. Thomas’ statement that the HOA was facilitating the background check and there was no need to provide the information at that time. Ms. Trimaur, the property manager for the Association, has managed Bayou Breeze condominiums for more than 11 years, and generally, receives all applications for sale or transfers of units at Bayou Breeze. She received the application materials Ms. Bartok submitted for the sale of Unit 106, which included the sales contract, letter from Dr. Tuel, reference letters, and the receipt for pet training sessions. Although Ms. Trimaur stated that it was difficult to read the digital copy of the letter from Dr. Tuel, she recalled that there was reference to Ms. Bartok’s “medical condition.” Ms. Trimaur also testified that Mr. Thomas told her that Ms. Bartok requested a waiver of the pet policy. Ms. Trimaur did not receive the financial or criminal background information with Ms. Bartok’s application packet. Ms. Trimaur submitted the application materials to Mr. Cross for review. She testified that she also had verbal discussions about the dog with Mr. Cross. 5 The receipt for training referenced “Beginner Training-for Moni” and was scheduled to begin on July 25, 2020. Mr. Cross, the president of the association, reviewed a copy of the application materials. He testified that Ms. Trimaur bypassed normal approval process by submitting the packet without the background checks due to COVID-19. As the Association president, Mr. Cross is required to review all application materials to determine whether the Association elects to exercise its right of first refusal. Mr. Cross testified that he reviewed the contract. However, he testified that he did not recall reading Ms. Bartok’s term that the acceptance was contingent upon approval of her emotional support dog. Mr. Cross did not state that there were pages missing or that there was anything that would prevent him reviewing the contract in its entirety. Mr. Cross testified that he reviewed the recommendation letters,6 which noted the size of Petitioner’s dog. He also spoke to Ms. Trimaur about the dog. After review of the application materials that Ms. Bartok submitted, Mr. Cross sent a letter to Anai, the owner of Unit 106, on July 2, 2021. The letter stated: Dear Anai, The association is in receipt of your request to sell your condominium unit 106 Bayou Breeze Condominiums, 300 Bayou Breeze, Pensacola, Fla. As you know there are specific requirements a potential new purchaser of a condominium must meet, according to the Bayou Breeze Declaration of Condominiums, Articles of Incorporation, By-Laws and Rules and Regulations, before they will be eligible to purchase a Condominium at the said premises. Section X of the By-Laws states the following: Pets. Pets shall be kept or maintained in and about the 6 The recommendations were not offered into evidence in this case. condominium property only if a unit owner is granted a conditional license to maintain one pet by the association. Such a license will be granted subject to the following conditions and reservations: Section A clearly states that a dog weighting [sic] 20 pounds or less that was fully grown could qualify. Section D. states that the dog must be carried in the arms when taken in and out of the building. The information that you have submitted so far is primarily the request for the Association to waive its pet restrictions in accordance to the By-Laws, section X of the Condominium Governing Laws. Unfortunately, that is something that we cannot do. Don’t get me wrong, I love dogs. I, at one time lived at Bayou Breeze but had to move because I wanted a dog. I have been the president of this association for 29 years. Over the years the association has had many requests much like your potential buyer’s request to waive our rules. We are well aware of the HUD laws as well as the American Disability Act. We have, unfortunately been to court several times on this issue. We have never waived the pet requirements. Even though we have not received all of the background information and detailed documentation that is necessary for the Association to approve a purchase of this unit, I am notifying you that the Association cannot except [sic] this application, because of the current situation that you have presented. Sincerely Charles D. Cross President, Bayou Breeze Condominium Association 300 Bayou Breeze, Pensacola, Fl. 32501 Mr. Cross acknowledged in his written position statement that Ms. Bartok submitted a request for waiver for an ESA. He testified that he did not deny the request for an ESA because it was not clear to him that the request was for an ESA. Both Mr. Cross and Ms. Trimaur testified that Ms. Bartok’s request for an ESA was not accepted because the materials provided were incomplete, i.e. that the application did not include the financial and criminal background check. Both Ms. Trimaur and Mr. Cross testified that other tenants of Bayou Breeze have been approved for ESAs. The letter from Mr. Cross to Anai is inconsistent with Mr. Cross’ testimony. First, the letter signed by Mr. Cross clearly states that he is aware of the request for a “pet waiver” and stated that he is “well aware of the HUD laws as well as the American Disability Act. … We have never waived the pet requirements.” Second, the letter states that “Even though we have not received the background information, … the Association cannot except [sic] the application, because of the current situation that you have presented.” At hearing, Mr. Cross testified that he expected to receive more information. If the application packet was incomplete and Mr. Cross expected to receive additional information, it would follow that Mr. Cross would specify in writing to Anai the items that were needed to complete the application. That did not happen in this case. The letter makes no reference that additional information could be provided or what information was necessary. Last, Mr. Cross claimed the letter to Anai was not a denial letter. However, it clearly stated that the request to waive the pet restriction was something the Association could not do and has never done, even when involving the ADA. The undersigned finds that the statements in the letter together with the term in the contract seeking a waiver and Ms. Bartok’s letter from her physician demonstrates that Respondents had notice of Ms. Bartok’s request for a reasonable accommodation pursuant to the ADA. The undersigned also finds that Respondent’s letter of July 2, 2020, was a denial of Ms. Bartok’s application for purchase of Unit 106 based on her request for a reasonable accommodation, a waiver for her ESA. Ms. Bartok testified that she believed the July 2, 2020, letter was a denial of her application. Believing she could not purchase the property, she canceled the contract on the same date. After Ms. Bartok canceled the contract, believing that the Association improperly denied her request for a “pet waiver” for her ESA, she submitted a letter dated July 8, 2020, requesting a reasonable accommodation for her disability. That letter included another letter from Dr. Tuel, to the Association, which stated, in pertinent part: Dear Housing Association: Christa Bartok is my patient and has been under my care since April 7, 2020. I am intimately familiar with her history and with the functional limitations imposed by her disability. She meets the definition of disability under the Americans with Disabilities Act, the Fair Housing Act, and Rehabilitation Act of 1973. Due to [intentionally omitted] illness, Christa Bartok has certain limitations regarding performing some life activities. [Intentionally omitted] can be a direct effect of a chronic illness. In order to help alleviate these difficulties, and to enhance his/her ability to live independently and to fully use and enjoy the dwelling unit you own and/or administer, I am prescribing an emotional support animal that will assist Christa Bartok in coping with his/her disability. Her dog Monroe (Moni) qualifies as an emotional support animal under the guidelines put forth by the Fair Housing Act and The American’s [sic] with Disabilities Act. … Ms. Bartok credibly testified that she submitted the letter with attachments to Mr. Cross’ email address. She submitted a second request for reconsideration of the Association’s decision on July 10, 2021. Ms. Bartok did not receive a response to her letters. Although Mr. Cross confirmed his email at the final hearing, he denied receiving Ms. Bartok’s emailed requests for reasonable accommodation. The undersigned credits Ms. Bartok’s testimony on the issue of whether the emails were sent to Mr. Cross. Ms. Bartok testified that after she canceled the contract, she purchased another home. She asserts that she incurred costs for the difference in the amount of the mortgage she has paid since the denial letter was issued, the difference in costs for HOA dues, and the loss associated with extending her rental agreement prior to purchasing her new home. Ms. Bartok did not provide any supporting documents to demonstrate her loss that she asserts she incurred as a result of Respondent’s discriminatory actions. Ultimate Findings of Fact The evidence demonstrates that Ms. Bartok established that she suffers from anxiety, emotional distress disorder, and an autoimmune disease, and therefore, she has proved by a preponderance of the evidence that she is disabled within the meaning of the FHA. Ms. Bartok’s additional term included in her application for sale and the request for accommodation submitted following rejection of her application, was sufficient to demonstrate by a preponderance of the evidence that the Association was on notice that Ms. Bartok sought the “pet waiver” as a reasonable accommodation for her ESA. The undersigned finds the preponderance of evidence supports a finding that approving Ms. Bartok’s dog as an ESA was a reasonable accommodation that would assist Ms. Bartok by providing emotional support; and Respondents refused the requested accommodation. There is not sufficient evidence to establish that the Association has articulated a legitimate, non-discriminatory reason for withholding approval of Ms. Bartok’s ESA. Therefore, Ms. Bartok established by a preponderance of evidence that Respondents discriminated against her based on her disability, by failing to approve a request for a reasonable accommodation (approving Ms. Bartok’s ESA) in violation of the FHA.
Conclusions For Petitioner: Christa N. Bartok, pro se 203 Southeast Syrcle Drive Pensacola, Florida 32507 For Respondent: Sharon D. Regan, Esquire Post Office Box 13404 Pensacola, Florida 32591
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Commission on Human Relations issue a final order granting Christa Bartok’s Petition for Relief, in part, as follows: finding that Respondents engaged in a discriminatory housing practice based on Ms. Bartok’s disability, by failing to provide a reasonable accommodation to Ms. Bartok in the form of an ESA; and (b) ordering Respondents to prohibit the practice of denying reasonable accommodations to individuals and potential buyers who request a reasonable accommodation on the basis of their disability. Ms. Bartok, having failed to prove she suffered any quantifiable damages as a result of her purchase of a different home, she is not entitled to damages or other financial relief. DONE AND ENTERED this 8th day of October, 2021, in Tallahassee, Leon County, Florida. COPIES FURNISHED: S YOLONDA Y. GREEN Administrative Law Judge 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 8th day of October, 2021. Tammy S. Barton, Agency Clerk Florida Commission on Human Relations Room 110 4075 Esplanade Way Tallahassee, Florida 32399-7020 Sharon D. Regan, Esquire Post Office Box 13404 Pensacola, Florida 32591 Christa N. Bartok 203 Southeast Syrcle Drive Pensacola, Florida 32507 Stanley Gorsica, General Counsel Florida Commission on Human Relations Room 110 4075 Esplanade Way Tallahassee, Florida 32399-7020
Findings Of Fact For purposes of the Motions to Dismiss filed by Agrico and the Department, the following findings of fact are based upon the pleadings in this case, matters to which the parties have stipulated, and DOAH Case Number 86-3618, as well as final agency action resulting therefrom: On or about August 26, 1986, Petitioners filed with the Department a petition for formal administrative proceeding which challenged the dredge and fill permit that the Department intended to issue to Agrico. The Department transmitted this matter to the Division of Administrative Hearings for hearing, and it was assigned to the undersigned Hearing Officer as DOAH Case Number 86- 3618. Petitioners relied upon Sections 120.57(1) and 403.412(5), Florida Statutes, to "initiate" DOAH Case Number 86-3618 as is clearly set forth in paragraph 20 of their Petition filed in that case. In their Motion for Fees and Costs at paragraph 3, Petitioners further allege, and thereby concede, that they "initiated the above styled proceeding (DOAH Case Number 86-3618)." A final hearing was scheduled to begin on April 28, 1987 in DOAH Case Number 86-3618. However by letter to the Department dated March 2, 1987, Agrico voluntarily withdrew its application for a dredge and fill permit which was the subject of that case. Thereafter, a telephone conference call was held on March 17, 1987, following which an Order Closing File was filed in DOAH Case Number 86-3618 on that same date, and jurisdiction was relinquished to the Department. The Final Order in Case Number 86-3618 was entered by the Department on May 18, 1987 which states: Upon consideration, it is ORDERED that the withdrawal of permit application number 53-1093999 is GRANTED with prejudice to further Department consideration of the application, but without prejudice to the future submission of another dredge and fill application covering the same tract of land covered by application number 53-1093999. The withdrawal of permit application number 53-1093999 divests the Department of jurisdiction to proceed with consideration of (Booker Creek and Manasota's) petition. Humana of Florida, Inc., v. Department of Health and Rehabilitative Services, 500 So.2d 186 (Fla. 1st DCA 1986). Accordingly, the above-captioned case (DOAH Case Number 86-3618) is DISMISSED as moot. On July 16, 1987, Petitioners timely filed their Motion for Fees and Costs which was assigned to the undersigned Hearing Officer and given DOAH Case Number 87-3007F. Petitioners are each incorporated as not-for-profit corporations within the State of Florida, with principal off ices in Florida, and each having less than twenty-five full time employees, as well as a net worth of not more than two million dollars.
Findings Of Fact Respondent A.R.M. Limited, Inc., is the developer of the residential condominium known as Trails at Royal Palm Beach, a phase condominium containing a total number of 230 units when completed, located in Royal Palm Beach, Florida. During 1981 Respondent submitted to Petitioner all documents required to properly register the condominium, including the Declaration of Condominium and the Contract for Sale. By letter dated June 16, 1981, Petitioner notified Respondent that the documents it had received were in acceptable form and that Respondent would soon be advised as to the results of the Petitioner's "content examination". By letter dated July 14, 1981, Petitioner notified Respondent that it had completed its examination, and the condominium documents were proper. On April 27, 1982, Respondent recorded the Declaration of Condominium for Phases I and II in the public records in Palm Beach County. The Offering Circular, the Declaration of Condominium, and the Contract for Sale contained a developer's guarantee of common expenses for a two-year period commencing with the recording of the Declaration of Condominium and guaranteeing that the unit owners' monthly assessment would not exceed $75 a month for the period of the guarantee. Accordingly, the initial guarantee period terminated April 27, 1984. Thereafter, the guarantee period was extended by the developer until April 27, 1985, and again until December 31, 1985. No evidence was offered to show that any unit owner objected to the extension of the guarantee period. However, no vote of the unit owners was taken regarding either of the two extensions, and no written agreement was obtained. During the period of time between the initial guarantee period and January 1, 1986, Respondent did not pay assessments on a regular basis but instead paid the difference between the association's expenses and income. In other words, the developer did fund all shortfalls through December 31, 1985. The Offering Circular approved by Petitioner in 1981 contained a copy of the Contract for Sale which was to be used, and in fact has been used, for the condominiums units. That Contract specifically provides for purchasers to pay an initial contribution to working capital in the amount of "$300 . . . which may be used by the Association for start-up expenses as well as ordinary expenses . . . " Pursuant to that contract, Respondent utilized start-up funds to off set common expenses of the condominium arising from the sale of 28 units between April 27, 1984 and April 27, 1985. Fourteen of those units were sold between April 27, 1984 and October 1, 1984, and 14 of those units were sold between October 1, 1984 and April 27, 1985. In a phase condominium, since the total number of units within the condominium increases as phases are added, the number of unit owners paying assessments for common expenses increases and, consequently the percentage of ownership of the common elements and percentage of common expenses liability changes per unit. When Respondent registered the condominium with Petitioner in 1981 Respondent filed all documents necessary for the entire project (including all phases) but only paid the filing fee related to Phases I and II at that time. As Respondent continued developing the condominium and selling additional units in subsequently-constructed phases, appropriate amendments to the original Declaration were recorded in the public records. Respondent, however, failed to file copies of those recorded amendments with Petitioner. By cover letter dated March 3, 1986, Respondent filed with Petitioner a developer's filing statement for subsequent phases and enclosed a check in the amount of $940 to cover filing fee requirements. According to an attachment to that filing, Respondent was filing Phases 900, 1000, 1100, 1200, 1300, 1400, 2000, 2100, 2200, 2400, and 2500, which in totality comprised 94 units. According to the same attachment, these Phases were added to the condominium through recordation of amendments to the original Declaration with such recordation occurring between 1983 and 1986. According to information submitted by Respondent to Petitioner, as of March 3, 1986, closings had taken place on 77 units in Phases 900, 1000, 1100, 1200, 1300, 1400, 2100, 2400, and 2500 prior to Respondent's filing the subsequent phase documents with Petitioner. There is no allegation that the documents when filed were improper or that Respondent failed to provide them to the unit owners at the time they were executed. In January of 1988 unit owners other than the developer elected a majority of the board of administration of the condominium association, and turnover of control of the association from developer control to control by unit owners other than the developer occurred.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it Is'; RECOMMENDED that a Final Order be entered: Finding Respondent guilty of the allegation contained within count one; Finding Respondent not guilty of the allegations contained within counts two and three of the Notice to Show Cause; Requiring Respondent to effectuate the financial review discussed in the Conclusions of Law section of this Recommended Order and pay to the condominium association any amount of unpaid assessments for the time period in question; and Assessing a fine against Respondent in the amount of $1000. DONE and RECOMMENDED this 20th day of May, 1988, at Tallahassee, Florida. LINDA M. RIGOT, 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 20th day of May, 1988. APPENDIX TO RECOMMENDED ORDER DOAH CASE NO. 87-2917 Petitioner's proposed findings of fact numbered 1, 3, 5, 7, the first sentence of 9, the third sentence of 15, and 16-20 have been adopted either verbatim or in substance in this Recommended Order. Petitioner's proposed finding of fact numbered 8 has been rejected as being immaterial to the issues under consideration herein. Petitioner's proposed findings of fact numbered 2, 4, 6, 9 except for the first sentence, 10-14, and 15 except for the third sentence have been rejected as not constituting findings of fact but rather as constituting conclusions of law, argument of counsel or recitations of the testimony. COPIES FURNISHED: Van B. Poole, Secretary Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32399-1000 Karl M. Scheuerman, Esquire Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32399-1000 A.R.M. Limited, Inc. Trails at Royal Palm Beach Suite 315 1300 North Florida Mango Road West Palm Beach, Florida 33409 Dennis Powers, Esquire Suite 315 1300 North Florida Mango Road West Palm Beach, Florida 33409
Findings Of Fact M. G., Incorporated, a real estate developer in Brevard County, Florida, caused to be constructed The Bello Rio Condominium complex at 255 South Tropical Trail, Merritt Island, Florida. On January 25, 1979, the Chief, Bureau of Condominiums, Department of Business Regulation, State of Florida, advised the attorney for the Developer that, pursuant to Rule 7D-17.05, Florida Administrative Code, the condominium documents submitted for approval for the project in question here had been reviewed and were considered proper for filing, and that the Developer could lawfully close sales contracts on units within the project. Units were sold; and on September 1, 1981, the project was "turned over" by the Developer to the association. At the meeting held for this purpose, several documents were delivered by the Developer to the association's Board of Administration (Board) in the person of Faye Shaffer, a resident of the development. These documents consisted of: Three (3) checks totaling $1,800; The association seal; The original recorded copy of the Declaration; The original copy of the Articles of Incorporation; A condominium insurance policy; A flood insurance renewal declaration; and Certificates of Occupancy for twelve (12) units. All plans and specifications in the hands of the Developer were released to the association's attorney sometime in that general time frame. Further, because there were no common areas covered by warranties, none were available to turn over. Either at the time of turnover or shortly thereafter, during the month of September, 1981, Mrs. Shaffer also received from the Developer five sheets of check ledger paper reflecting the following categories of entries: Date of check; Payee; Check number; Amount of check; Lawn maintenance; Utilities; Insurance; Garbage pickup; Bank service charge; Miscellaneous; and Management fee (10 percent). These ledger sheets were not certified as reviewed by a certified public accountant and constituted the only financial records turned over to the association by the Developer at any time. The accounting and bookkeeping functions for this project were accomplished initially in the offices of the Developer. Thereafter, the Developer retained Guest Realty, Inc., to manage the facility, including the collection of maintenance fees and making payments as required for utilities, etc. During the period of that company's stewardship, all accounting for funds and bank statement reconciliations were handled by Guest Realty, Inc. Any deficiencies resulting between fees collected and expenses paid during that period were made up by the Developer, and Guest Realty, Inc., received a fee of 10 percent of the maintenance fees received for its services. Any bills, receipts, cancelled checks, or other records kept during the period are now in storage; and Mr. Guest, on behalf of Respondent, M. G., Incorporated, will not make the effort to retrieve them unless required to do so by some competent authority.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That Respondent be assessed a penalty of $500 under the provisions of Section 718.501(1)(d)4, Florida Statutes (1981) RECOMMENDED this 13th of May, 1983, in Tallahassee, Florida. ARNOLD H. POLLOCK, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 13th day of May, 1983. COPIES FURNISHED: Helen C. Ellis, Esquire Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301 William C. Irvin, Esquire Post Office Box 606 Cocoa Beach, Florida 32931 Mr. Gary R. Rutledge Secretary Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301 Mr. E. James Kearney Director Division of Florida Land Sales and Condominiums Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301 ================================================================= AGENCY FINAL ORDER =================================================================
The Issue The issue is whether Respondent engaged in a discriminatory housing practice, within the meaning of and in violation of the Florida Fair Housing Act, Sections 760.20 through 760.37, Florida Statutes (2005), by requiring Petitioners to submit a second application for the approval of a condominium purchase.
Findings Of Fact It is undisputed that Petitioner, Allan Kangas, has no handicap and is not a disabled person. At the conclusion of Petitioners' case-in-chief, Mr. Kangas testified that he has no handicap. The undersigned, sua sponte, entered an ore tenus order on the record dismissing the case brought by Mr. Kangas. Petitioner, Anna Kangas, is an elderly female and the mother of Mr. Allan Kangas and Mr. Sheldon Kangas, the latter being the representative in this proceeding for the named Petitioners. It is undisputed that Mr. Sheldon Kangas is not handicapped, but that Mrs. Kangas is handicapped, within the meaning of Section 760.22(7), Florida Statutes (2005), because of Alzheimer's disease. Respondent is a condominium association lawfully incorporated as a Florida corporation (Association). Respondent must operate in accordance with the Articles of Incorporation, By-Laws, and Declaration of Condominium (condominium documents). The condominium documents require the Association to approve each purchase of a condominium. On December 8, 2005, Mr. Sheldon Kangas and Mrs. Anna Kangas contracted with Ms. Mary Cox to purchase condominium unit 15, located at 23 Hatchett Creek Road. Ms. Cox is a real estate agent and a co-owner of unit 15. Ms. Cox notified Ms. Pat Williamson, Association Secretary, of the prospective purchase. For the reasons stated herein, Respondent did not discriminate against the prospective purchasers, but approved the purchase of condominium unit 18 in a timely manner after the purchasers changed their purchase contract from unit 15 to unit 18. The prospective purchasers completed an application for approval of the purchase of unit 15 sometime between December 8 and 10, 2005. The Association conducted a meeting to approve the proposed purchase on December 10, 2005. During the meeting on December 10, 2005, the purchasers informed the Association that they wished to purchase unit 18, located at 29 Hatchett Creek Road, rather than unit 15. Unit 18 was owned by Mr. Brian Isaac. Ms. Cox did not object to releasing the purchasers from the contract for the purchase of unit 15. The Association informed the purchasers that a new application for unit 18 would be required. The purchasers completed a new application under protest. At a meeting conducted on January 3, 2006, the Association approved the application for the purchase of unit 18. The purchase of unit 18 closed on January 25, 2006. The purchasers seek reimbursement of living expenses incurred for hotel rooms and meals during the delay caused by the requirement for a second application. The purchasers are not entitled to reimbursement. The purchase of unit 18 was the first time the Association had required a second application. However, it was also the first time a purchaser had changed his or her choice of units after submitting an application. The Association did not discriminate against Mrs. Kangas because of her handicap. The record evidence contains no justifiable issue of law or fact to support the alleged discrimination.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Commission enter a final order dismissing the Petition for Relief. DONE AND ENTERED this 2nd day of January 2007, in Tallahassee, Leon County, Florida. S DANIEL MANRY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 2nd day of January 2007. COPIES FURNISHED: Cecil Howard, General Counsel Florida Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301 Denise Crawford, Agency Clerk Florida Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301 David G. Muller, Esquire Becker & Poliakoff, P.A. 630 South Orange Avenue, Third Floor Sarasota, Florida 34236 Shelden Kangas Allan Kangas 4578 Manor Drive Sarasota, Florida 34233
Findings Of Fact 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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.
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.
The Issue On February 27, 1987, petitioner issued a Notice to Show Cause which alleged that respondent had violated various provisions of Chapter 718, Florida Statutes, and Chapter 7D-17 and 7D-23, Florida Administrative Code. On March 20, 1987, respondent served petitioner with a Response to Notice to Show Cause and Request for Formal Hearing. The Notice to Show Cause and response identify the specific violations alleged and issues to be resolved as follows: CHARGE: Respondent, while in control of the association, violated Section 718.116(1)(a) and (8)(a), Florida Statutes (1985), by excusing itself from the payment of its share of common expenses pertaining to assessments on unbuilt developer-owned units in Phase VI and VII of Glenwood Manor by failing to pay assessments on the units until certificates of occupancy were issued; RESPONSE: Respondent denied that it had any liability for assessments on unbuilt developer-owned units in Phases VI and VII of Glenwood Manor Condominiums, and alleged that respondent paid assessments on developer-owned units commencing with the creation of the unit pursuant to Section 718.403, Florida Statutes (1985). CHARGE: Respondent, while in control of the association, violated Section 718.112(2)(k), Florida Statutes (1980 Supp.), Section 718.112(2)(f), Florida Statutes (1985), and Rule 7D- 23.04(2), Florida Administrative Code (1985), by failing to properly waive or fully fund reserve accounts for capital expenditures and deferred maintenance for the years 1981, 1982, 1984, 1985 and 1986; RESPONSE: Respondent denied that reserve accounts were improperly waived or funded as alleged in the notice, asserting that reserves were properly waived for the years 1981, 1982, and 1984, were not waived for the year 1985, and that respondent was without knowledge as to 1986 because the turnover of the condominium took place prior to the 1986 annual meeting. CHARGE: Respondent, while in control of the association, violated Section 718.112(2)(h), Florida Statutes (1982 Supp.), and Section 718.112(2)(g), Florida Statutes (1985), by failing to adopt budgets and make assessments for the fiscal years 1984, 1985 and 1986 in an amount no less than required to provide funds in advance for payment of all anticipated current operating expenses and all of the unpaid expenses previously incurred, in that respondent loaned the association $8,000 from May 19, 1983 to May 19, 1985, to cover operating expense, with repayment plus interest due after turnover; RESPONSE: Respondent denied that it failed to adopt budgets and make assessments for fiscal years 1984, 1985 and 1986 in amounts sufficient to provide funds in advance for payment of anticipated current operating expenses and for all of the unpaid expenses previously incurred. Respondent alleged that it adopted in good faith budgets which the association estimated would be required to meet these expenses. Respondent admitted loaning money to the association to meet the needs of the association. CHARGE: Respondent failed to follow its plan of phase development as stated in the original declaration of condominium or amend the plan of phase development, in violation of Sections 718.403(1), (2)(b), (6) and 718.110(4), Florida Statutes (1983), in that the original declaration describes Phase IV as containing eight units while the amendment adding Phase IV created only seven units; RESPONSE: Respondent denied that it failed to follow its plan of phase development as stated in the original declaration of condominium in that the Declaration of Condominium provided that the developer would have the option of constructing a swimming pool in Phase IV and that the construction of the pool would require a reduction in the number of units contained in Phase IV from eight to seven. CHARGE: Respondent violated Section 718.104(4)(f), Florida Statutes (1985), by creating a condominium in which the aggregate undivided share in the common elements appurtenant to each unit, stated as a percentage, does not equal the whole, in that Glenwood Manor consists of 55 units with each unit owning a 1/56th share of the common elements. RESPONSE: Respondent denied that it created a condominium in which the aggregate undivided shares in the common elements appurtenant to each unit did not equal the whole, and alleged that any reference to a unit owner owning 1/56th undivided share in the common elements is due to a scrivener's error which respondent would be willing to correct to clarify that each unit owner owns 1/55th undivided share in the common element. CHARGE: Respondent offered 33 condominium units for sale, and entered into purchase contracts in Phase II, III, V, VI and VIII of Glenwood Manor prior to filling the subsequent phase documents with the Division of Land Sales, Condominiums, and Mobile Homes (Division) on February 5, 1986, in violation of Section 718.502(2)(a), Florida Statutes (1984 Supp.), and Rule 7D- 17.03(2), Florida Administrative Code; CHARGE: Respondent closed on 33 units prior to obtaining Division approval on February 10, 1986, of subsequent phase documents for Phases II, III, V, VI and VII, in violation of Section 718.502(2)(a), Florida Statutes (1984 Supp.), and Rule 7D- 17.01(3), Florida Administrative Code; RESPONSE TO (6) AND (7): Respondent admitted that due to the death of one of its attorneys, it inadvertently did not file the subsequent phase documents for Phases II, III, V, VI and VII prior to offering some of those units for sale and closing on the sale, but filed the necessary documents with the Division and obtained the necessary approvals upon realizing that the documents had not been filed. CHARGE: Respondent accepted a deposit on the purchase contract for unit 605, Phase V, without filing a fully executed escrow agreement for Venice Realty, Inc., with the Division, in violation of Rule 7D-17.02(6), Florida Administrative Code. RESPONSE: Respondent admitted that due to confusion between respondent and the realtor involved, Venice Realty, Inc. inadvertently accepted a deposit on a contract for the purchase of Unit 605, Phase VI, but that prior to closing on the unit, respondent directed Venice Realty to transfer the deposit to the proper escrow agent which transfer was accomplished. Respondent requested a formal hearing on the issues thus joined, and on April 9, 1987, this matter was forwarded to the Division of Administrative Hearings for further proceedings. At the hearing, petitioner presented the testimony of Glen Turnow, a resident of Glenwood Manor Condominium and association board member; Candy McKinney, Examination Specialist with the Bureau of Condominiums; John Benton, Financial Analyst, Division of Florida Land Sales, Condominiums and Mobile Homes; and Marcel Cloutier, Secretary/Treasurer of Waterside Land Corporation. Petitioner's exhibits 1-8 were admitted into evidence. Petitioner's Exhibit No. 1, Petitioner's First Request for Admissions and responses, and petitioner's Exhibit No. 2, Petitioner's First Set of Interrogatories, were admitted into evidence as late-filed exhibits. Marcel Cloutier, an officer of Waterside Land Corporation, was accepted as the authorized representative for respondent and testified on respondent's behalf. Respondent did not enter any exhibits into evidence. A prehearing stipulation was submitted by the parties prior to the hearing. No transcript of the hearing has been filed. However, both petitioner and respondent have filed proposed findings of fact and conclusions of law, and a ruling on each of the proposed findings of fact is included in the Appendix to this Recommended Order.
Findings Of Fact At all times between October 21, 1981, and February 27, 1987, respondent was the developer, as that term is defined by Section 718.103(14), Florida Statutes (1985), of Glenwood Manor Condominium. Glenwood Manor Condominium is a phased condominium consisting of seven (7) phases with fifty-five (55) units located in Sarasota County, Florida. Between October 21, 1981, and February 17, 1986, respondent was in control of the Board of Directors of Glenwood Manor Owners Association, Inc. (Association). Control of the Board of Directors of the Association was turned over to the unit owners on February 17, 1986. The Declaration of Condominium of Glenwood Manor Condominium was recorded in the public records of Sarasota County, Florida, on October 21, 1981. Paragraph II of the Declaration of Condominium provides, in pertinent part, as follows: Developer does hereby declare the property owned by it and first described above, to be Condominium property under the Condominium Act of the State of Florida, now in force and effect, to be known as: GLENWOOD MANOR CONDOMINIUMS, hereinafter referred to as the CONDOMINIUM??, and does submit said Condominium property to Condominium ownership pursuant to said Act. Developer may, but is not obligated to create additional Phases of Development of GLENWOOD MANOR CONDOMINIUMS ... which said Phases, if any, shall be operated and managed in conjunction with this Condominium through that certain nonprofit corporation known as: GLENWOOD MANOR OWNERS ASSOCIATION, INC., and hereinafter referred to as the "ASSOCIATION." The creation of any such further Phases will merge the common elements of this Condominium with the common elements of such additional Phases. As Developer creates such additional Phases, Developer shall ... record an amendment to this Declaration of Condominium describing the lands and improvements so added and the revised percentage of owner- ship in the common elements of this Condominium as so enlarged. (e.s.) The details of the phase development are set forth on Exhibit B to the Declaration of Condominium, entitled Phase Development Exhibit, which provides as follows: This Condominium is being developed as a Phase Development under Florida Statute 718.403. The first Phase of Development, which is the Phase hereby submitted to Condominium ownership, is designated on the Condominium plat described in paragraph II of the Declaration of Condominium above as Phase I. It consists of 8 Condominium Units numbered 1 through 8. Each Unit owner will own 1/8th of the common elements and share 1/8th of the common expenses and is entitled to 1/8th of common surplus relative to this Condominium. Phase II consists of 8 proposed Condominium Units as depicted on said condominium plat. At such time as Phase II is added to this Condominium by appropriate amendment of this Declaration of Condominium, if that be the case, the two phases shall then and there be considered as merged. Upon such merger each unit shall be vested with a 1/16th ownership of the common elements of said phases as merged, bear 1/16th of the common expenses of the merged phases and be entitled to 1/16th of the common surplus of the merged phases. At such time as Phase III is added to this Condominium by appropriate amendment of this Declaration of Condominium, if that be the case, the three phases shall then and there be considered as merged. Upon such mercer each unit shall be vested with a 1/24th ownership of the common elements of said phases as merged, bear 1/24th of the common expenses of the merged phases and be entitled to 1/24th of the common surplus of the merged phases. At such time as Phase IV is added to this Condominium by appropriate amendment of this Declaration of Condominium, if that be the case, the four phases shall then and there be considered as merged. Upon such merger each unit shall be vested with a 1/32nd ownership of the common expenses of said phases as merged, bear 1/32nd of the common expenses of the merged phases and be entitled to 1/32nd of the common surlus [sic] of the merged phases. At such time as Phase V is added to this Condominium by appropriate amendment of this Declaration of Condominium, if that be the case, the five phases shall then and there be considered as merged. Upon such merger each unit shall be vested with a 1/40th ownership of the common elements of said phases as merged, bear 1/40th of the common expenses of the merged phases and be entitled to 1/40th of the common surplus of the merged phases. At such time as Phase VI is added to this Condominium by appropriate amendment of this Declaration of Condominium, if that be the case, the six phases shall then and there be considered as merged. Upon such merger each unit shall be vested with a 1/48th ownership of the common elements of said phases as merged, bear 1/48th of the common expenses of the merged phases and be entitled to 1/48th of the common surplus of the merged phases. At such time as Phase VII is added to this Condominium by appropriate amendment of this Declaration of Condominium, if that be the case, the seven phases shall then and there be considered as merged. Upon such merger each unit shall be vested with a 1/56th ownership of the common elements of said phases as merged, bear 1/56th of the common expenses of the merged phases and be entitled to 1/56th of the common surplus of the merged phases. (e.s.) The units in Phases II - VII were submitted to condominium ownership pursuant to amendments to the Declaration of Condominium filed in the public records of Sarasota County, Florida, on the following dates: First Amendment Phase II November 16, 1981 Second Amendment Phase III June 10, 1983 Third Amendment Phase IV November 3, 1983 Fourth Amendment Phases V, VI and VII April 5, 1984 Each amendment provided for the merger of the common elements of the new phase with the previous phases, listed all units included in the condominium, and indicated the new share of ownership in and expenses for the common elements of the condominium for each unit. For example, the First Amendment of Declaration of Condominium, which added Phase II, consisting of eight units, to the condominium, which initially consisted of eight units, provided: As a result of the addition of the Phase II lands to the Condominium, as set forth above, each unit of Glenwood Manor, Condominiums as amended heretofore and hereby, shall be vested with a 1/16th owner- ship of the common elements of the merged Phases I and II lands and each unit shall bear a 1/16th share of the common expenses and be entitled to a 1/16th share of the common surplus of said merged phases of development. Both the First and Second Amendments added eight units to the condominium in accordance with the Phase Development Exhibit included in the Declaration of Condominium. However, the Third Amendment, adding Phase IV, added only seven units to the condominium, resulting in a total of 31 units. The Third Amendment correctly stated that each unit "shall be vested with a 1/31st ownership of the common elements of the merged Phases I, II, III and IV lands and each unit shall bear a 1/31st share of the common expenses ..." However, when the Fourth Amendment was filed, adding Phases V, VI and VII, each consisting of eight units, the share of ownership in the common elements for each unit was stated as 1/56th, whereas the total number of units included in the condominium was correctly shown as 55. Each amendment to the Declaration of Condominium ratified and confirmed the declaration and plat "[e]xcept as expressly modified" by the amendment. Unit owner and board member Glen Turnow stated that it was his understanding that he owns 1/55th of the common elements and that each unit owner pays 1/55th of the common expenses at Glenwood Manor; however, he has no documents indicating his ownership interest to be other than 1/56th of the common elements. Although the amendment creating the units in Phases VI and VII was filed on April 5, 1984, respondent paid no monthly assessments on developer-owned units in Phases VI and VII until Certificates of Occupancy were issued for those phases. Certificates of Occupancy for Phases VI and VII of Glenwood Manor were issued on October 25, 1985, and November 13, 1985, respectively. The assessment per unit of the condominium per month was $55 from April, 1984, through August, 1985; as of September, 1985, the assessment increased to $70 per unit. For the developer-owned units in Phases VI and VII from the date of amendment until the certificates of occupancy were filed, the assessments would have been $17,182.65. At 18 percent simple interest computed from the end of the year respondent owed for the assessments to the day before turnover of the association to the owners, interest on the assessments totals $2,029.92. Respondent admitted that it paid no assessments on the units in Phase VI and VII until Certificates of Occupancy were issued. Mr. Cloutier testified that respondent did not pay the assessments because it received legal advice that a unit is not in existence until a certificate of occupancy is issued. However, the first assessment was paid on November 4, 1981, and the certificates of occupancy for the first sixteen units were not issued until December 17, 1981. Mr. Cloutier also testified that respondent relied on language in the Declaration of Condominium which excused it from paying such assessments until the certificates of occupancy were issued. However, respondent did not introduce into evidence the portion of the Declaration on which it relied. Further, the Fourth Amendment to the declaration, which added the units in Phases VI and VII to the condominium, clearly provided that each unit would bear a proportionate share of the "common expenses." In the declaration "assessment" is defined as the "share of the funds required for the payment of common expenses." Respondent admitted that it made no guarantee to unit owners at Glenwood Manor Condominium which would excuse it from payment of assessments on developer-owned units other than pursuant to the provisions of Section 718.116(8)(a)1., Florida Statutes (1985), which provides, in pertinent part, as follows: (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 ... in the following cases: 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 ... The closing of the purchase and sale of the first unit at Glenwood Manor occurred on October 20, 1981. Reserves are monies put aside each month to provide for future replacement or repair of major items. The original budget provided for funding of reserves in the amount of $6.00 per unit per month. Funding of reserves at Glenwood Manor for 1981 was waived at a meeting of unit owners on January 10, 1982; for 1982, on January 10, 1982; for 1983 on January 10, 1983, and for 1984, on August 16, 1985. If the reserves cannot be waived retroactively, the respondent would owe $3,036.55 for reserves that were not properly waived. However, respondent made one deposit to reserves in the amount of $1,800; therefore, respondent's total liability for underfunded reserves would be $1,236.55. Between May 19, 1983, and May 20, 1985, the developer made the following loans to the association: June 19, 1983 $ 500 at 13 percent interest June 3, 1983 $ 500 at 13 percent interest August 6, 1984 $1200 at 12 1/2 percent interest September 7, 1984 $1500 at 12 1/2 percent interest September 28, 1984 $2300 at 12 1/2 percent interest March 2, 1985 $ 600 at 12 1/2 percent interest May 20, 1985 $1400 at 12 percent interest On July 14, 1983, the first two loans were repaid with interest. The loans made from the developer to the association during the years 1983, 1984 and 1985 were necessary to provide operating funds for the association. At a meeting of unit owners on August 25, 1985, it was decided that repayment of these loans would take place after turnover of control of the association to the non-developer owners. On the dates these loans were made, the percentages of units which had been sold by the developer were as follows: August 6, 1984 - 56.4 percent; September 7, 1984 - 56.4 percent; September 28, 1984 - 56.4 percent; March 3, 1985 - 60 percent; and May 20, 1985 - 61.8 percent. If the repayment of the loans were based on the percentage of units owned by the developer vis-a-vis the non- developers on the date of the loan, the developer would owe $2954.80 and the non-developer unit owners would owe $4045.20. Respondent offered 33 condominium units for sale, and entered into purchase contracts for units in Phases II, III, V, VI and VII of Glenwood Manor Condominiums, prior to February 5, 1986. Respondent closed on the sales of 33 units in Phases II, III, V, VI and VII of Glenwood Manor Condominiums prior to February 10, 1986. Respondent first filed subsequent phase documents with the Division of Florida Land Sales, Condominiums and Mobile Homes for Phases II, III, V, VI and VII of Glenwood Manor Condominium on February 5, 1986. On August 11, 1985, Venice Realty accepted a deposit from the Days for the purchase of Unit 605 at Glenwood Manor Condominium. Ms. McKinney testified that the Division's records indicated only that the Law Firm of Rosen, Able and Bryant would serve as escrow agent for sales of units at Glenwood Manor Condominium. In its answer to the charges, respondent admitted that Venice Realty was not the proper escrow agent for respondent.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a Final Order be entered finding that respondent committed the violations alleged in Charges 1-7, finding that respondent did not commit the violation alleged in Charge 8, and imposing a civil penalty against respondent of Four Thousand, Two Hundred Fifty Dollars ($4,250), assessed as follows: For the violations set forth in the first charge, $1,000; for the violations set forth in the second charge, $1,000; for the violations set forth in the third charge, $1,000; for the violations set forth in charges four and five, $750; and for the violations set forth in charges six and seven, $500. It is further RECOMMENDED that the Final Order require that the respondent take the following affirmative action: Within sixty (60) days of the Final Order, file the appropriate documents in the public records of Sarasota County, Florida, indicating that Glenwood Manor Condominium consists of 55 units, and that each unit's share of the common elements, expenses, and surplus is 1/55th. The filing of such amendments shall comply fully with the provisions of Chapter 718, Florida Statutes, and Rule 7D-17, Florida Administrative Code. Within thirty (30) days of issuance of the Final Order, remit permanently and irretrievably to Glenwood Manor Owners' Association, Inc., the respondent's liability for assessments and reserves in the amount of $19,210.16 for assessments and $1,236.55 for reserves. Accept as full repayment of the loans made by respondent to the association, the sum of $4,045.20. DONE AND ENTERED this 4th day of March, 1988, in Tallahassee, Leon County, Florida. DIANE A. GRUBBS 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 4th day of March, 1988.
