The Issue Whether or not the Respondent, Michael H. Cohen, based on conduct set forth hereinafter in detail, is guilty of fraud, misrepresentation, false promises and breach of trust in a business transaction in the State of Florida, in violation of subsection 475.25(1)(b), Florida Statutes (1979). Based upon my observation of the witnesses and their demeanor while testifying, the documentary evidence received, the transcript of the proceedings, and the entire record compiled herein, I hereby make the following relevant:
Findings Of Fact By its Administrative Complaint filed herein signed September 29, 1981, the Petitioner, Florida Real Estate Commission (herein called the "Commission" or "Petitioner") seeks to suspend, revoke, or take other disciplinary action against the Respondent as licensee, and against his license as a real estate broker under the laws of the State of Florida. Respondent is a licensed real estate broker who has been issued license No. 0209033. On February 17, 1978, Michael Rappaport sold ten townhouse units in Collonade Condominiums, 2275 N.E. 122nd Street, North Miami, FLORIDA, to the Respondent. The Respondent purchased the townhouses, by deed, in the name of his mother-in-law, Luz Sanabria. At the time of this conveyance, Michael Rappaport owed $2,400 in condominium assessments to the Collonade Condominium Association and, at that time, foreclosure proceedings by the mortgagee, Dade Federal Savings and Loan Association, were pending for failure to pay the mortgages (by Rappaport). Respondent, as agent for Ms. Sanabria, contacted the condominium association and made promises to pay the past due assessments. As stated, following transfer of the title to the Respondent, there remained owing to the condominium association past due assessments by the Respondent. The Respondent negotiated a settlement with the condominium association for payment of the delinquent assessments; however, the Respondent defaulted on the terms of the settlement for payment of the delinquent assessments. On September 25, 1979, Collonade Condominium Association obtained a judgment against Respondent for $7,094.40 which remained unsatisfied at the time of the hearing herein. It is based upon the above-referred to facts that the Petitioner contends that Respondent is guilty of fraud, misrepresentation, false promises and breach of trust in a business transaction in the State of Florida in violation of subsection 475.25(1)(b), Florida Statutes (1979). Respondent takes the position that (1) he was not the real party in interest inasmuch as he was attempting to execute a favorable transaction on behalf of his mother-in-law, and (2) that he attempted to strike deals, negotiate settlements and that to do otherwise, either in his capacity as a real estate agent or as a son-in-law, he would be remiss. To support his position, Respondent points to the fact that he retained a knowledgeable mortgage broker to remove these properties from foreclosure proceedings and to attempt to renegotiate, restructure or otherwise put these mortgages, which were in foreclosure, back into current status. Additionally, Respondent avers that there is nothing improper respecting his attempt to negotiate a settlement with the condominium association, which was an everyday common practice. Respondent admits that he personally agreed to repay the condominium association, which agreement was defaulted and resulted in a judgment being entered against him. However, Respondent's position is that these were matters of a personal nature and were in no manner conduct amounting to fraud, misrepresentation, concealment and false promises, false pretenses, dishonest dealing by trick, scheme, or device or any other acts of conduct which subject him to disciplinary action pursuant to Section 475.25, Florida Statutes, Subsection 1(b) thereof.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Administrative Complaint filed herein be DISMISSED. RECOMMENDED this 22nd day of December, 1982, in Tallahassee, Florida. JAMES E. BRADWELL, 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 22nd day of December, 1982. COPIES FURNISHED: Theodore J. Silver, Esquire 9445 Bird Road Miami Florida 33165 Walter F. McQuade, Esquire 700 Northeast 125th Street North Miami, Florida 33161 William Furlow, Esquire Department of Professional Regulation - Legal Section P.O. Box 1900 Orlando, Florida 32802 Mr. C. B. Stafford Executive Director Florida Real Estate Commission P.O. Box 1900 Orlando, Florida 32802 Fred Roche, Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301
The Issue The Administrative Complaint alleges that the Respondents are guilty of fraudulently withholding a commission and failing to account for said commission. The Respondents contend that there was no commission owed to the salesperson because the salesperson did not obtain the listing contract upon which the transaction closed and had been discharged for cause before a contract for purchase was obtained. The factual issues upon which the case is determined is whether the listing contract upon which the transaction closed was obtained by the salesperson who claimed the commission, and whether the contract for purchase was received before the salesperson was discharged for good cause. Both parties submitted posthearing findings of fact, which were read and considered. Those findings not incorporated herein are found to be either subordinate, cumulative, immaterial, unnecessary, or not supported by the evidence.
Findings Of Fact At all times relevant to the allegations of the Administrative Complaint and at the time of hearing, the Respondent, Jacqueline B. Ousley, held real estate broker's license number 0333339 and operated the Respondent corporation, Touch of Class Realty, Inc., which held corporate real estate broker's license number 0218522. Both licenses were issued by the Florida Real Estate Commission. (See Petitioner's Exhibit 1.) Diane Carroll was employed by the Respondents as a real estate salesperson from February to June l2, 1982. On June 13, 1982, Ms. Carroll was discharged for good cause by the Respondents. On May 25, 1982, Ms. Carroll obtained an open listing on the Breezeway Motel, 2001 North Dixie Highway, Lake Worth, Florida, from Carl C. Summerson. This listing was good through June 25, 1982. (See Petitioner's Exhibit 2.) Based upon this contract, the Respondents showed the property to prospective buyers, to include Anthony and Deborah Hedley, the ultimate purchasers of the property. However, after the Hedleys had become interested in the property, the Respondents became aware that Summerson was not the sole owner of the Breezeway Motel. Because of the interest of the Hedleys and the prospects of selling the property, the Respondents sought and obtained an exclusive listing agreement from both owners of the motel, Carl Summerson and Roy Chapin, which was signed on June 14, 1982. As an exclusive listing, this contract supplanted the open listing obtained by Ms. Carroll on May 25, 1982. The Respondents obtained an offer to purchase the Breezeway Motel from the Hedleys on June 16, 1982, which offer was accepted by Summerson and Chapin. This transaction closed, and the Respondents received one-half of the ten percent commission, $33,800. The custom of the profession is that salespersons earn a listing commission on a listing contract obtained by them while they were employed if a contract for the purchase of the property is obtained before the salesperson leaves the broker's employment. The Respondents tendered a "referral fee" of $845 to Ms. Carroll, as opposed to a salesperson's share of the commission which was $5,070. Ms. Carroll has a civil action pending, seeking to obtain payment of the commission.
Recommendation Having found the Respondents not guilty of violating Sections 475.25(1)(b) and (d), Florida Statutes, as alleged in the Administrative Complaint, it is recommended that the Florida Real Estate Commission dismiss the Administrative Complaint against the Respondents, Jacqueline B. Ousley and Toch of Class Realty, Inc. DONE and RECOMMENDED this 3rd day of October, 1983, in Tallahassee, Leon County, Florida. STEPHEN F. DEAN, 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 3rd day of October, 1983. COPIES FURNISHED: Fred Langford, Esquire Department of Professional Regulation 400 West Robinson Street Orlando, Florida 32801 Donald P. Kohl, Esquire 3003 South Congress Avenue, Suite 1A Palm Springs, Florida 33461 Frederick Roche, Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Harold Huff, Executive Director Florida Real Estate Commission 400 West Robinson Street Orlando, Florida 32801 Randy Schwartz, Esquire Department of Legal Affairs 400 West Robinson Street, Suite 212 Orlando, Florida 32801 =================================================================
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Respondents be found guilty of violating Subsection 718.301(4)(c) , Florida Statutes, and that a $500 civil penalty be imposed; the remaining charge should be DISMISSED. DONE and ENTERED this 12th day of January, 1983 in Tallahassee, Florida. DONALD R. ALEXANDER 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 12th day of January, 1983.
Findings Of Fact In November and December, 1974 John T. Halkowich was a registered real estate salesman with the brokerage office of Ayers F. Egan. Exhibit 2, Return Receipt for Registered Mail, was admitted into evidence to show that Halkowich acknowledged receipt of the Notice of Hearing. When Halkowich applied for registration as a real estate salesman, Egan was one of his sponsors. Upon his successful completion of the requirements for registration Egan agreed to hold Halkowich's license for him in Egan's office, but because business was slow he could not allow Halkowich any floor days. He agreed to allow him to sit on houses that neither Egan nor Egan's associate wanted to hold open. During the period of 1974, when little real estate was selling on the Florida Keys, the housing development project owned by Vogler and Snowman was running on hard tines and the developers were anxious to "get out from under" the property. John Vogler, Jr., the father of the Vogler partner in the project, went to Egan to seek help with the sales. Since Egan had no work for Halkowich he suggested that perhaps the developers could make a deal with Halkowich. The developers needed someone on the property at all times to act as watchman, show prospective buyers around, keep the grass trimmed, and supervise the completion of the project. Halkowich was provided an apartent on the site to live in, complete with utilities, in consideration for performing those services. For each unit of the project that was sold the developers agreed to pay Halkowich $2,000. One of the purchasers who appeared at the hearing had stopped by the development, was shown around by Halkowich, and thereafter made an offer directly to the developers to purchase a unit. A contract was subsequently executed between the developers and the buyer and referred to the developers' attorney who performed the closing. After the closing Halkowich was paid $2,000. When Egan learned that sales had been made and that Halkowich had received compensation from the developers he demanded his commission from Halkowich. When the latter advised Egan he couldn't pay him Egan told him he was in violation of the real estate license law and that he, Egan, would report him to the Florida Real Estate Commission if he didn't pay. Thereafter Egan piously reported Halkowich's transgressions to the Commission and this Administrative Complaint ultimately followed.
The Issue The issues in this matter concern an Administrative Complaint/Notice to Show Cause, which has been brought by the Petitioner against the Respondent charging various violations of Chapter 718, Florida Statutes. Those accusations are more completely described in the conclusions of law.
Findings Of Fact The parties in the person of their counsel entered into a written prehearing stipulation, by which certain facts were agreed to. Those facts are as follows: Stipulated Statement of Facts: The Petitioner herein is the State of Florida, Department of Business Regulation, Division of Florida Land Sales and Condominiums. The Respondent in this matter is Sujac Enterprises, Inc., the developer of a residential condominium known as Ginger Park Condominium located in Jacksonville, Florida. Mr. Jackson M. Jobe is the president of the developer corporation. Transition from developer control of the condominium association occurred pursuant to Section 718.301, Florida Statutes, on November 1, 1983. Prior to this date, Respondent Sujac Enterprises, Inc., was in control of the condominium association. On April 18, 1983, The Division received a condominium complaint from unit owner, Cynthia A. Doallas, filed against Sujac Enterprises, developer of the Ginger Park Condominium. The Division investigation file was opened on April 20 and this investigation was assigned to Janice Snover, specialist and investigator. The Declaration of Condominium was recorded March 12, 1982. The condominium association was incorporated February 16, 1982. Section 8.4 of the declaration of condominium provides for an assessment guarantee for so long as the developer shall own any condominium units within the condominium. At the time of this stipulation, the developer still owns at least one condominium unit within the condominium. The developer controlled association failed to maintain the accounting records provided by Section 718.111(7)(a), (b), Florida Statutes, during the period beginning with the incorporation of the association through at least March 1983. Accounting records were assembled after March of 1983. Mr. Phillip DiStefano was elected to the board of administration in March of 1983 in accordance with Section 718.301(1) , which provides that when unit owners other than the developer own 15 percent or more of the units, the unit owners other than the developer shall be entitled to elect no less than one-third of the members of the board of administration. Mr. DiStefano was elected by unit owners other than the developer. The developer through its president instituted recall procedures pursuant to the procedure as outlined in Section 718.112(2)(g), Florida Statutes, against board member Phillip DiStefano, by circulating a form entitled "Removal of Director or Directors." Mr. Jobe solicited signatures for the agreement, and further, voted the developer corporation's unsold unit votes in favor of the recall. Mr. DiStefano was recalled, with a sufficient number of unit owners other than the developer voting in favor of recall to approve the recall. The developer controlled condominium association failed to provide to unit owners a financial statement of actual receipts and expenditures for the fiscal/calendar year ending December 21, 1982, within 60 days of the end of the year. This financial statement was, however, provided to unit owners approximately three months after the 60 day time period provided in Section 718.111(13), Florida Statutes, had elapsed. The following additional facts are found based upon the presentation made at the final hearing: At the point of the final hearing, the developer still owned a condominium unit within the condominium. The developer had allowed other persons to take charge of the accounting procedures of the condominium association from the inception of the association through March 1983. Those other persons operated on the basis of a checkbook in which check stubs were maintained and deposit slips kept. Some invoices were also maintained. These records, in addition to not being maintained by the developer when the developer was serving as the association in this period through March 1983, were not in accordance with good accounting practices. Moreover, they did not contain an account for each unit, designating the name and current mailing address for the unit owner, with the amount of each assessment, the dates and the amounts in which the assessments came due and the amount paid upon these individual accounts, with the balance due being reflected. As revealed by an audit which the developer had requested of an accountant which it hired, this audit dating from June 7, 1983, there was a deficit in the reserve account on that date. This discovery was made prior to the transfer of the accounting records from the developer to other condominium unit owners. In effect, on June 7, 1983, the reserve account for capital expenditures and maintenance was insufficiently funded. The exact amount of deficit was not shown in the course of the hearing. Therefore, it has not been demonstrated that the deficit of June 7, 1983, corresponds to the deficit in the reserve account in the amount of $1,186.18, effective December 31, 1983 as found by Petitioner's accountant. Respondent in its efforts to refute responsibility for the reserve deficit has failed to demonstrate, by way of defense, that charges incurred on behalf of other condominium unit owners should reduce the developer's deficit responsibility. This pertains to its reference to prepaid insurance, pest control and construction costs related to a fence. The reserve account for capital expenditures and maintenance is a common expense. The developer, pursuant to Section 8.4 of the declaration of condominium is responsible for the deficit in the reserve account as reflected on June 7, 1983, in keeping with the assessment guarantee set forth in that section. That guarantee continued until the account was tranferred to the other condominium unit owners. Features of the aforementioned guarantee related to responsibility to insure against additional assessments attributable to deficits other than those in the reserve account, i.e. for other forms of common expenses, developer's share, only would occur at the point of sale of the last condominium unit. That contingency had not occurred at the time of the conduct of the final hearing. The developer kept the accounting records from April 1983 until June 1983. Subsequently when the records were turned over to the other condominium unit owners as a part of the transition of association control, the developer failed to have a transitional review conducted by an independent accountant related to financial records of the association.
Recommendation It is recommended that a final order be entered which imposes a penalty in the amount of $2,500 for those violations established pertaining to Count I, IV and V and that Counts II and III be dismissed. DONE AND ORDERED this 3rd day of July 1984, in Tallahassee, Florida. CHARLES C. ADAMS 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 3rd day of July, 1984. COPIES FURNISHED: Karl M. Scheuerman, Esquire Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301 Jerry A. Funk, Esquire 1020 Atlantic Bank Building Jacksonville, Florida 32202 E. James Kearney, Director Division of Land Sales and Condominiums The Johns Building 725 South Bronough Street Tallahassee, Florida 32301 Gary Rutledge, Secretary Department of Business Regulation The Johns Building 725 South Bronough Street Tallahassee, Florida 32301 =================================================================
Findings Of Fact Robert Hartnett was at all times pertinent to this complaint a registered real estate broker. Bill Dew and Dave Allman sought to lease a specific piece of real property for business purposes. In this regard they contacted William Hartnett, who had previously leased a piece of real property which included the specific piece of property Messrs. Dew and Allman desired to lease. Messrs. Allman and Dew entered into an agreement to sublease a portion of the Hartnett leasehold. A contract was prepared by William Hartnett and delivered by Robert Hartnett to Dew and Allman, who executed the contract. Although there is conflicting testimony, the testimony of Robert Hartnett is accepted as the more accurate explanation of his role in the transaction. Robert Hartnett had no interest in William Hartnett's business venture or in the leasehold, and did not appear or function as a real estate broker in this transaction. The owner of the property, Mr. Grossinger, testified he agreed to lease the property to William Hartnett. Hartnett was permitted to occupy the premises and paid rent. William Hartnett prepared a written lease which was not signed by the owner, Mr. Grossinger. Grossinger terminated the agreement when Hartnett subleased the premises to Allman and Dew without notifying him and instituted legal action to evict William Hartnett. Under the circumstances, there was an oral lease between Hartnett and Grossinger. Messrs. Dew and Allman made arrangements with contractors to make modifications to the subleased premises, and the modifications were begun. These modifications were in part the cause for the owner terminating the lease with William Hartnett. Messrs. Dew and Allman or their agents did have occupancy of the premises.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law the Hearing Officer recommends that the Florida Real Estate Commission take no action against Respondent Robert Hartnett. DONE and ORDERED this 14th day of June, 1979, in Tallahassee, Leon County, Florida. STEPHEN F. DEAN Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: Manuel E. Oliver, Esquire Florida Real Estate Commission 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 Louis M. Jepeway, Esquire 619 Dade Federal Building 101 East Flagler Street Miami, Florida 33131
Findings Of Fact Petitioner herein is the State of Florida, Department of Business Regulation, Division of Florida Land Sales Condominiums and Mobile Homes. One Respondent in this matter is Tanwin Corporation (hereinafter "Tanwin") the developer of two residential condominiums known as Vista Del Lago Condominium I and Vista Del Lago Condominium II, located in West Palm Beach, Florida. The other Respondent is Vista Del Lago Condominium Association, Inc. (hereinafter "Association"), the condominium association for Vista Del Lago Condominiums I and II. Transition from developer control of the Association has not occurred, and at all times pertinent hereto, Respondent Tanwin has in fact controlled the operation of the Respondent Association. The Declaration of Condominium for Vista Del Lago Condominium I (hereinafter "Condo I") was recorded in the public records on December 12, 1980. The Declaration of Condominium for Vista Del Lago Condominium II (hereinafter "Condo II") was recorded in the public records on March 11, 1982. Condo I contains 16 units; and Condo II contains 18 units. Herbert and Judith Tannenbaum are the President and Secretary, respectively, of both Tanwin and the Association and are members of the Association's Board of Directors. The developer-controlled Association failed to provide a proposed budget of common expenses for Condo I for the fiscal year 1982. The developer-controlled Association failed to provide a proposed budget of common expenses for Condo I and Condo II for 1983 until the unit owner meeting in March or April of 1983. The budget provided at that time contained no provision for reserves. Although the document alleged to be the 1983 proposed budget admitted in evidence as Petitioner's Exhibit numbered 17 does contain an allocation for reserves, Petitioner's Exhibits numbered 17 is not the 1983 budget disseminated to unit owners at the annual meeting in 1983. In addition, the 1983 budget was received by the unit owners at the meeting at which the proposed budget was to be considered and not prior to the budget meeting. Statutory reserves were not waived during the period December, 1980 through December, 1983. The "start-up" budgets contained as exhibits to the Declarations of Condominium indicate that reserves were to be collected from unit owners at the rate of $15 per month per unit at least during the first year commencing December of 1980 with the first closing. Hence, reserves were not waived December, 1980 through December, 1981. From November, 1981 through December, 1983, no vote to waive reserves was taken by the unit owners. Although reserves were discussed at the 1983 meeting, no vote was taken during the period in question including 1983, to waive reserves. The developer as owner of unsold units; has failed to pay to the Association monthly maintenance for common expenses during the period December, 1980 through December, 1983. The developer Tanwin has, in the nature of an affirmative defense, alleged the existence of a guarantee of common expenses pursuant to Section 718.116(8), Florida Statutes, which purportedly ran from the inception of the condominiums to date. Accordingly, the initial issue for resolution is whether the developer pursuant to statute guaranteed common expenses. Section 718.116(8)(b) provides that a developer may be excused from payment of common expenses pertaining to developer-owned units for that period of time during which he has guaranteed to each purchaser in the declaration of condominium, purchase contract or prospectus, or by an agreement between the developer and a majority of unit owners other than the developer, that their assessments for common expenses would not increase over a stated dollar amount during the guarantee period and the developer agrees to pay any amount necessary for common expenses not produced by the assessments at the guaranteed level receivable from other unit owners, or "shortfall". Actual purchase agreements were admitted in evidence. Respondents seek to label certain unambiguous language in the purchase contracts as a guarantee. This language, uniform throughout all those contracts as well as the form purchase contract filed with Petitioner except that of Phillip May, provides as follows: 9. UNIT ASSESSMENTS. The Budget included in the Offering Circular sets forth Seller's best estimation of the contemplated expenses for operating and maintaining the Condominium during its initial year. Purchaser's monthly assessment under the aforementioned Budget is in the amount of $109.00. Until Closing of Title, Seller has the right (without affecting Purchaser's obligation to purchase in accordance with the provisions hereof, to modify the estimated Budget and assessments periodically if then current cost figures indicate that an updating of estimates is appropriate). [Emphasis added]. That portion of the purchase agreement set forth above does not constitute a guarantee. Instead, the purchase agreement simply includes a best estimation of expenses for the initial year. It does not govern assessments after the expiration of one year, and even as to the initial year, the language in the contract sets forth only a "best estimation" and not a guarantee that the assessments would not increase during the "guarantee period." Phillip May's purchase agreement reflects that he purchased his unit in August of 1983; after condominium complaints had been filed by the unit owners with the Florida Division of Land Sales Condominiums and Mobile Homes. His purchase agreement has been altered from the purchase agreement of earlier purchasers in that his purchase agreement expressly, by footnote contains a one- year guarantee running from closing. The guarantee contained in his purchase agreement was presented by the developer without any request from Mr. May for the inclusion of a guarantee in his purchase agreement. The guarantee language in this purchase agreement is useful for the purpose of comparing the language with those portions of the pre-complaint contracts which Respondents assert contain or constitute a guarantee. Similarly it is determined that no guarantee of common expenses exists in the Declarations of Condominium for Condo I and II or in the prospectus for Condo II. While Respondents seek to assert the existence of a guarantee in those documents, the portions of those unambiguous documents which according to Respondents contain a guarantee, have no relation to a guarantee or do not guarantee that the assessments for common expenses would not increase. Respondent Tanwin also seeks to prove the existence of an oral guarantee which was allegedly communicated to purchasers at the closing of their particular condominium units. However, purchasers were told by Herbert or Judith Tannenbaum only that assessments should remain in the amount of $109 per month per unit unless there existed insufficient funds in the Association to pay bills. This is the antithesis of a guarantee. During a guarantee period the developer in exchange for an exemption from payment of assessments on developer- owned units agrees to pay any deficits incurred by the condominium association. Accordingly, no guarantee was conveyed at the closing of condominium units. Further Respondent Tanwin's additional contention that an oral guarantee arose when the condominiums came into existence is plainly contradicted by the express language throughout the condominium documents and purchase agreements that there exist no oral representations and that no reliance can be placed on any oral representations outside the written agreements. Further, prior to December, 1983, no reference was ever made by the developer either inside or outside of unit owner meetings as to the existence of the alleged guarantee. Moreover, a comparison between on the one hand, the 1981 and 1982 financial statements prepared in March of 1983, and on the other hand, the 1983 financial statements, clearly reveals that even the accountant for Tanwin was unaware of the existence of a guarantee during the period in question. While the 1983 statements, prepared in 1984 after unit owners filed complaints with Petitioner contain references to a developer guarantee, the 1981 and 1982 statements fail to mention a guarantee. Instead, included in the 1981 and 1982 statements of the Association are references under the current liabilities portion of the balance sheets for those years, to a "Due to Tanwin Corporation" liability in the amounts of $2,138 for 1981 and $2,006 for 1982. Petitioner through Ronald DiCrescenzo, the C.P.A. for Tanwin, established that at a minimum, the $2,006 figure reflected in the 1982 balance sheet was in fact reimbursed to Tanwin. Section 7D-18.05(1),(c), Florida Administrative Code, entitled "Budgets" and effective on July 22, 1980, was officially recognized prior to the final hearing in this cause. That section requires each condominium filing to include an estimated operating budget which contains "[a] statement of any guarantee of assessments or other election and obligation of the developer pursuant to Section 718.116(8); Florida Statutes." The estimated operating budgets for Condo I and Condo II do not include a statement of any guarantee of assessments or other election or obligation of the developer. The testimony of Herbert Tannenbaum with regard to an oral (or written) guarantee is not credible. He first testified that an oral guarantee was communicated to purchasers at the closing of each unit. In contrast, Tannenbaum also testified that the first discussion he had regarding a guarantee occurred with his attorney after the filing of the Notice to Show Cause in this action. Tannenbaum further testified that he did not understand what a guarantee was until after this case had begun and was unaware of the existence of any guarantee prior to consulting with his attorney in regard to this case. Moreover, Ronald DiCrescenzo, the C.P.A. for Tanwin testified that it was Tannenbaum who informed DiCrescenzo of the existence of a guarantee but DiCrescenzo was unable or unwilling to specify the date on which this communication occurred. Respondent Tanwin also seeks to establish the existence of a guarantee through Petitioner's Exhibit numbered 5 which is a document signed by less than the majority of unit owners even including Tannenbaum and his son, and signed on an unknown date during 1984. The document provides: The undersigned Unit Owners at the Vista Del Lago Condominium do not wish to give up the benefits of the developer's continuing guarantee which has been in effect since the inception of the condominium and agreed to by a majority of unit owners and whereby the developer has continuously guaranteed a maintenance level of no more than $109.00 per month per unit, until control of the condominium affairs is turned over to the unit owners in accordance with Florida's Condominium law. According to Respondent Tanwin, Petitioner's Exhibit numbered 5 constitutes a memorandum signed by unit owners evidencing their belief that a continuous guarantee of the developer has been in effect. First, however, this document was never admitted into evidence for that purpose; rather the document was admitted only to establish the fact that a unit owner had signed the document. Second, this document, unlike the purchase agreements or other condominium documents is ambiguous and is not probative of the existence of a guarantee. Instead, the evidence is overwhelming that the document was prepared by the developer in the course of this litigation for use in this litigation. Moreover, unit owner testimony is clear regarding what Mr. and Mrs. Tannenbaum disclosed to unit owners as the purpose for the document when soliciting their signatures, to- wit: that the document was a petition evidencing the unit owners' desire that their monthly maintenance payments not be increased and that prior confusion as to whether reserves had been waived needed resolution. Respondent Tanwin did pay assessments on some developer-owned units during the period December, 1980 through December, 1983, a fact which is inconsistent with its position that a guarantee existed. Noteworthy is the statement by Ronald DiCrescenzo, the C.P.A. for Tanwin, in his August 16, 1983, letter to Herbert Tannenbaum wherein it is stated: "It is my understanding that you are doing the following: . . .[Playing maintenance assessments on units completed but not sold." It is inconceivable that a developer during a "guarantee period" would pay assessments on some developer units as the purpose of the statutory guarantee is to exempt the developer from such assessments. The assessments for common expenses of unit owners other than the developer have increased during the purported guarantee period. At least some, if not all, unit owners paid monthly assessments of $128 - $130 for at least half of 1984. This fact is probative of the issue of whether a guarantee existed because unit owner assessments must remain constant during a guarantee period. At the Spring 1984 meeting chaired by Mr. Tannenbaum a vote was taken for the first time as to whether reserves should be waived. Although only 21 owners were present in person or by proxy; the vote was tabulated as 12 in favor and 12 opposed. Mr. Tannenbaum, therefore, announced an increase in monthly maintenance payments to fund reserves. Thereafter owners began paying an increased assessment. The fact that the developer-controlled Association collected increased assessments from unit owners during 1984, and had up to the time of the final hearing in this cause made no effort to redistribute those funds suggests that the developer-controlled Association and the developer considered themselves to be under no obligation to keep maintenance assessments at a constant level. There was no guarantee of assessments for common expenses by Tanwin from December, 1980, through at least December, 1983. Since there was no guarantee during the time period in question, Respondent Tanwin is liable to the Respondent Association for the amount of monthly assessments for common expenses on all developer-owned units for which monthly assessments have not been paid. In conjunction with the determination that Tanwin owes money to the Association (and not vice versa), Respondent Tanwin attempted to obtain an offset by claiming the benefit of a management contract between either Tannenbaum or Tanwin and the Association. No such management contract exists, either written or oral. Although a management contract is mentioned in one of the condominium documents there is no indication that one ever came into being, and no written contract was even offered in evidence. Likewise, no evidence was offered to show the terms of any oral contract; rather, Tannenbaum admitted that he may never have told any of the unit owners that there was a management contract. Tannenbaum's testimony is consistent with the fact that no budget or financial statement reflects any expense to the Association for a management contract with anyone. Likewise, the "budget" contained within Condo II's documents recorded on March 11, 1982, specifically states that any management fee expense was not applicable. Lastly, Tannenbaum's testimony regarding the existence of a management contract is contrary to the statement signed by him on February 10, 1981, which specifically advised Petitioner that the Association did not employ professional management. To the extent that Respondent Tanwin attempted to establish some quantum meruit basis for its claim of an offset, it is specifically found that no basis for any payment has been proven for the following reasons: Tannenbaum had no prior experience in managing a condominium, which is buttressed by the number of violations of the condominium laws determined herein; Tannenbaum does not know what condominium managers earn; no delineation was made as to specific duties performed by Tannenbaum on behalf of the Association as opposed to those duties performed by Tannenbaum on behalf of Respondent Tanwin; since there was no testimony as to duties performed for the Association, there was necessarily no testimony as to what duties were performed on behalf of the Association in Tannenbaum's capacity as President of the Association and member of the Association's Board of Directors as opposed to duties allegedly performed as a "manager." Tannenbaum's testimony as to the value of his "services" ranged from $10,000 to $15,000 a year to a lump sum of $60,000; it is interesting to note that the value of his services alone some years exceeded the Association's annual budget. Respondent Tanwin has failed to prove entitlement to an offset amount, either pursuant to contract or based upon quantum meruit. The financial statements of the Association--including balance sheets, statements of position, and statements of receipts and expenditures--for 1980-81 and for 1982 reveal consolidation of the records for Condo I and Condo II in these statements. Additionally, DiCrescenzo admitted that separate accounting records were not maintained for each condominium and Herbert Tannenbaum also admitted to maintaining consolidated records. Accordingly, the developer- controlled Association failed to maintain separate accounting records for each condominium it manages. The By-Laws of the Association provide: SECTION. 7. Annual Audit. An audit of the accounts of the Corporation shall be made annually by a Certified Public Accountant - and a copy of the Report shall be furnished to each member not later than April 1st of the year following the year in which the Report was made. The financial statement for 1981 bears the completion date of February 9, 1983. The 1982 financial statement contains a completion date of March 1, 1983. Both the 1981 and the 1982 statements were delivered to the unit owners in March or April, 1983. Accordingly, Respondents failed to provide the 1981 financial report of actual receipts and expenditures in compliance with the Association's By-Laws. As set forth hereinabove, statutory reserves were not waived during the period of December, 1980 through December, 1983. Being a common expense, reserves must be fully funded unless waived annually. In the instant case, Respondents, rather than arguing that reserves had in fact been fully funded, sought to prove that reserves had been waived during the years in question. The fact that reserves were not fully funded is established by reviewing the financial statements. In accordance with the start-up budgets, reserves were initially established at the level of $15.00 per unit per month. Therefore, during 1981, for Condo I containing sixteen units, the Association's reserve account should contain 16 multiplied by $15.00 per month multiplied by 12 months, or $2,880. Since the Declaration of Condominium for Condo II was not recorded until March 11, 1982, assessments for common expenses including allocations to reserves, were not collected from Condo II during 1981. Therefore, the balance in the reserve account as reflected in the balance sheet for the year 1981 should be no less than $2,880. The actual balance reflected in this account is $2,445. Both Tannenbaum and DiCrescenzo testified that most of the balance in that account was composed of purchaser contributions from the closing of each condominium unit "equivalent to 2 months maintenance to be placed in a special reserve fund" as called for in the purchase contracts. Tannenbaum further admitted that instead of collecting $15.00 per month per unit for reserves, the money that would have gone into the reserve account was used "to run the condominium." Similarly, for the year ending 1982, the balance in the reserve account also reflects that reserves were not being funded. First, the amount of reserves which should have been set aside in 1981 of $2,880 is added to the total amount of reserves which should have been collected for 1982 for Condo I ($2880), giving a total figure of $5,760. To this figure should be added the reserves which should have been collected from units in Condo II during 1982. This figure is derived by multiplying the total number of units in Condo II, 18 units, by $15.00 per unit multiplied by 8 months (since Condo II was recorded in March of 1982) to yield a figure for Condo II of $2,160. Adding total reserve assessments for Condo I and II, $2,160 plus $5,760 equals $7,920 the correct reserve balance at the close of 1982. The actual balance for the period ended December 31, 1982, is reflected to be $4,138. Similarly, the amount of reserves required for Condos I and II as of December 31, 1983, can be calculated using the same formula. Although the 1983 financial statement prepared in 1984 reflects the existence of a funded reserve account, both DiCrescenzo and Tannenbaum admitted there was no separate reserves account set up during the time period involved herein. Statutory reserves were not waived and were not fully funded for the period of December, 1980 through December, 1983. All parties hereto presented much evidence, unsupported by the books and records of the corporations, for the determination herein of the amounts of money owed by Respondent Tanwin to the Association to bring current the total amount which Tanwin should have been paying to the Association from the inception of each condominium for monthly maintenance on condominium units not yet sold by the developer, together with the amount owed by Tanwin to the Association so that a separate reserve account can be established and fully funded for all years in which the majority of unit owners including the developer have not waived reserves. No findings of fact determining the exact amount Tanwin owes to the Association will be made for several reasons: first, the determination of that amount requires an accounting between the two Respondents herein which is a matter that can only be litigated, if litigation is necessary, in the circuit courts of this state; second, the determination of the amount due between the private parties hereto is not necessary for the determination by Petitioner of the statutory violations charged in the Amended Notice to Show Cause; and third, where books and records exist; one witness on each side testifying as to conclusions reached from review of those records, even though the witnesses be expert, does not present either the quantity or the quality of evidence necessary to trace the income and outgo of specific moneys through different corporate accounts over a period of time, especially where each expert opinion is based upon questionable assumptions. It is, however, clear from the record in this cause that Respondent Tanwin owes money to the Respondent Association and further owes to the Respondent Association an accounting of all moneys on a specific item by item basis.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law it is, therefore, RECOMMENDED that a Final Order be entered: Finding Respondent Tanwin Corporation guilty of the allegations contained in Counts 1-7 of the Amended Notice to Show Cause; Dismissing with prejudice Count 8 of the Amended Notice to Show Cause; Assessing against Respondent Tanwin Corporation a civil penalty in the amount of $17,000 to be paid by certified check made payable to the Division of Florida Land Sales, Condominiums and Mobile Homes within 45 days from entry of the Final Order herein; Ordering Respondents to forthwith comply with all provisions of the Condominium Act and the rules promulgated thereunder; And requiring Tanwin Corporation to provide and pay for an accounting by an independent certified public accountant of all funds owed by the developer as its share of common expenses on unsold units and the amount for which Tanwin is liable in order that the reserve account be fully funded, with a copy of that accounting to be filed with Petitioner within 90 days of the date of the Final Order. DONE and RECOMMENDED this 9th day of August, 1985, at Tallahassee, Florida. LINDA M. RIGOT, 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 9th day of August, 1985. COPIES FURNISHED: Karl M. Scheuerman, Esquire Thomas A. Bell, Esquire Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301 Joseph S. Paglino, Esquire 88 Northeast 79th Street Miami, Florida 33138 E. James Kearney, Director Department of Business Regulation Division of Florida Land Sales Condominiums and Mobile Homes 725 South Bronough Street Tallahassee, Florida 32301 Richard B. Burroughs, Jr., Secretary Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301 ================================================================= AGENCY FINAL CONSENT ORDER ================================================================= STATE OF FLORIDA DEPARTMENT OF BUSINESS REGULATION DIVISION OF FLORIDA LAND SALES, CONDOMINIUMS AND MOBILE HOMES DEPARTMENT OF BUSINESS REGULATION, DIVISION OF FLORIDA LAND SALES, CONDOMINIUMS AND MOBILE HOMES, Petitioner, CASE NO. 84-0437 DOCKET NO. 84001MVC TANWIN CORPORATION and VISTA DEL LAGO CONDOMINIUM ASSOCIATION, INC. Respondents. / FINAL CONSENT ORDER The Division of Florida Land Sales, Condominiums and Mobile Homes, (hereinafter the Division), Vista Del Lago Condominium Inc., (hereinafter the Association), and Tanwin Corporation, (hereinafter Tanwin), hereby stipulate and agree to the terms and issuance of this Final Consent Order as follows: WHEREAS, the Division issued a Notice to Show Cause directed to Respondents and, WHEREAS, after issuance of the Recommended Order in this cause, the parties amicably conferred for the purpose of achieving a settlement of the case, and WHEREAS, Tanwin is desirous of resolving the matters alleged in the Notice to Show Cause without engaging in further administrative proceedings or judicial review thereof, NOW, THEREFORE, it is stipulated and agreed as follows:
The Issue Whether Herbert Lane is guilty of violation of Section 475.25(1)(a) and (2), Florida Statutes.
Findings Of Fact Herbert Lane is a registered real estate salesman. Herbert Lane was employed by International Land Services Chartered, Inc. He was paid by International Land Sales Chartered, Inc.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, the Hearing Officer recommends that the Florida Real Estate Commission take no action against the registration of Herbert Lane as a registered real estate salesman. DONE and ORDERED this 7th day of April 1978, in Tallahassee, Florida. STEPHEN F. DEAN, Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Manuel E. Oliver, Esquire and Charles Felix, Esquire Florida Real Estate Commission 400 West Robinson Street Orlando, Florida 32801 Herbert Lane 3890 Swenson Apts. No. 503 Las Vegas, Nevada 89109 ================================================================= AGENCY FINAL ORDER ================================================================= FLORIDA REAL ESTATE COMMISSION FLORIDA REAL ESTATE COMMISSION, Petitioner, vs. CASE NO. 77-208 PROGRESS DOCKET HERBERT LANE, NO. 2960 DADE COUNTY Respondent. /
The Issue The issue framed by the Notice to Show Cause is whether Allison on the Ocean, Inc., violated Section 718.502(2)(a), Florida Statutes (1984 Supp.) by accepting a deposit of $85,000 and executing a "Memorandum of Agreement" with Hildagard Waltraud Bitton when that Memorandum of Agreement had not been approved for use as a reservation agreement form by the Division of Land Sales Condominium and Mobile Homes?
Findings Of Fact Allison on the Ocean, Inc., is an active, for profit Florida Corporation (PX 4). 1/ Ms. Chantal Fianson is the owner of all five hundred shares of authorized stock in Respondent (PX 4; testimony of Ms. Fianson). The Allison Hotel in Miami Beach, consisting of studio apartments, was leased by Ms. Fianson. She intended to convert it to condominium ownership. Apparently the lease was held in the name of Allison on the ocean, Inc. An attorney was retained by Ms. Fianson to prepare the necessary papers for the condominium conversion. In connection with that conversion application, a reservation deposit agreement had been submitted to the Department of Business Regulation, copy of which was entered into evidence as PX 2. After those conversion papers were submitted to the Division in Tallahassee, Ms. Fianson was informed in April 1954 that the condominium conversion would not be approved because although she had a long-term lease, a condominium project required ownership of the land on which the building stood (testimony of Ms. Fianson). Before the Department of Business Regulation declined to approve the condominium project as originally proposed by Ms. Fianson, on March 2, 1984, an agreement entitled "Memorandum of Agreement" was executed between Allison on the ocean, Inc., and Hildagard Waltraud Bitton by their respective representatives stating Ms. Bitton's intent to purchase or sublease three units in the property (PX 1). That memorandum shows by its terms that it was not intended to be the contract for the purchase and sale of the units. It provided for the cancellation of the agreement within ninety days, at the buyer's option, and stated that the validity and the interpretation of the agreement would be governed by Florida law (PX 1 paragraph 7). Ms. Bitton paid $85,000 to Allison on the Ocean, Inc., in connection with this Memorandum of Agreement, which money was then used for expenses related to the conversion of the building to a condominium (testimony of Ms. Fianson). Significantly, the prefatory "whereas" clauses in the agreement stated that "Developer is in the process of converting the Allison Hotel, located at 6261 Collins Avenue, Miami Beach, Florida to a Condominium . . ." after which by hand interlineation was written "or SUB LEASE" and the initials of the representatives of both parties appear. The memorandum expressed the intention of the parties that if the proposed condominium conversion were not approved, Ms. Bitten would receive not a fee ownership in condominium units, but a sublease of an unspecified term from the lessee-developer, under the long-term lease which the Respondent did have on the Allison Hotel. The attorney for the purchaser/lessee Ms. Bitten drew up the Memorandum of Agreement (PX 1), and it was not submitted to the Division for review before it was executed. After learning in April 1984 that the condominium project would not be approved, Ms. Fianson did arrange to purchase the land from its owner, and another lawyer was obtained to file condominium documents reflecting the fee ownership by the developer. In the interim, the condominium market became very bad, and ultimately the bank which had provided the Respondent the purchase money mortgage for the property foreclosed on the Allison Hotel. The evidence does not show whether the $85,000 which was used in the conversion process was ever returned to Ms. Bitton.
Recommendation It is recommended that the notice to show case issued in this case be dismissed. DONE AND ORDERED this 5th day of September 1986 in Tallahassee, Leon County, Florida. WILLIAM R. DORSEY Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 FILED with the Clerk of the Division of Administrative Hearings this 5th day of September 1986.
Findings Of Fact Eden Isles Condominiums are residential condominiums consisting of 7 identical buildings with 52 units in each building. Each building has a separate Declaration of Condominium which declaration is identical with the other 6 Declarations of Condominiums except as to the identification of the condominium. There are 4 swimming pools, parking areas, etc., the expenses for which are shared by the 7 condominiums. The Declarations of Condominiums provide for the percentage of the common ownership and expense associated with each unit in the condominium. The Declarations provide that the affairs of each condominium will be managed by the Eden Isles Condominium Association, Inc., Respondent. Duties of the Association include the preparation of budgets, collection of assessments for expense of maintaining common elements from each unit owner, maintenance of all common elements and generally conducting all of the business dealings associated with the common elements. From the inception of the Association in 1972 a common budget has been prepared for the 7 condominiums which is assessed against unit owners by taking total expenses for the common elements of the 7 buildings, dividing this by 7 and then allocating to each of the 52 unit owners in each building his pro rata share of those expenses. This has the effect of requiring the unit owners housed in Building D to share the cost for the replacement of an elevator in Building P or the replacement of a roof on Building C. The net result of the consolidated budget is to treat the 7 condominiums as one for the purpose of maintaining the common elements. When built and the Declarations of Condominiums recorded, Eden Isles was not a phased development.
