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 Ann Doris Richman is a licensed real estate salesman holding license number 0073487. She was employed by Parman Florida, Inc., and her qualifying broker was John P. Schlicher. On April 20, 1985, Ms. Richman obtained a $1,000. deposit check and a written offer from James A. Angleton, Jr., to purchase condominium unit number 503 at the Charter Club Condominium, 600 Northeast 36th Street, Miami, Florida, at a price of $70,000.00. The offer stated that the transaction was to close within 180 days from receipt of an abstract or, at the purchaser's option, sooner if it was possible to do so. Mr. Angleton was to assume the existing mortgage. The brokerage fee for the transaction was to be $4,200.00. Mr. Angleton informed Ms. Richman that the $1,000.00 check which accompanied his Condominium Deposit Receipt Contract was not good, and would be replaced if the owners of the condominium unit accepted his offer. The owners of the condominium unit resided in Costa Rica and were not readily accessible to Ms. Richman. The $1,000.00 check was brought to the attention of Ms. Richman's broker, Mr. Schlicher, but was not deposited because Ms. Richman had been told that it was not good. The check was kept in the file with the contract. Toward the end of May, 1985, the owners of the apartment came to the Parman office in Miami and were shown the Angleton purchase offer, but the owners would not sell for the $70,000.00 Angleton offered, because it would not have covered the mortgage and the brokerage fee. They made certain handwritten changes to the contract, i.e., that the sales price would be $77,500.00, that the purchaser would deposit an additional $2,000.00 upon execution of the contract, and that the closing date was to be October 1, but sooner if possible. The brokerage fee was reduced to $3,000.00 Ms. Richman then called Mr. Angleton to tell him that the sellers had rejected his offer and made a counter-offer. Mr. Angleton did not come into the office of Parman Florida, Inc. until late June 1985. He initialed the changes the sellers had made on the contract and replaced the original $1,000.00 check with another check, which promptly was deposited. Ms. Richman changed the date at the foot of the contract when the replacement check was received from April 5, 1985 (the date Angleton's original offer had been made and the first $1,000.00 check had been given), to June 24, 1985, the date Angleton accepted the changes made in the contract by the sellers and made the new $1,000.00 deposit. Although the counter-offer included the additional requirement, which the sellers had interlineated by hand and Angleton had initiated, that an additional $2,000.00 deposit would be made upon the execution of the contract, Angleton made no additional $2,000.00 deposit then or at any other time. Ms. Richman never told the sellers the additional $2,000.00 deposit was not received. Angleton has stated various times when he claims to have made the $2,000.00 additional cash deposit the sales contract called for. He has said the cash was provided several days after June 24, 1985 (Tr. 41), and in late May 1985 (Tr. 43). Mr. Angleton and his lawyer, a Mr. Tryson, attempted, in December 1985, to secure the return of the $2,000.00 cash Angleton claims to have given Ms. Richman. In Tryson's letter of December 26, 1985, to Ms. Richman, Tryson stated that the $2,000.00 cash had been given after September 20, 1985. See Finding of Fact 9, post. Mr. Angleton is not only very confused as to the time the deposit was supposed to have been made, but he is wrong on the issue whether he gave a $2,000.00 cash deposit to Ms. Richman. No such thing happened. Ultimately, the sale was cancelled by the sellers because the closing did not take place within the time required by the contract. Mr. Angleton took the position, through his attorney, that the sellers had failed to deliver evidence of good title on a timely basis. The sellers made no claim to the $1,000.00 deposit, and Angleton's lawyer demanded from Ms. Richman on December 26, 1985, the return of the $3,000.00 deposit which Angleton claimed to have made. Angleton received a refund of $1,000.00, the amount of the check which was given on June 24, 1985, and had been deposited by Parman Florida, Inc.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED THAT: As to Count One, Respondent be found guilty of culpable negligence, reprimanded and fined $250.00, and As to Count Two, that count of the Administrative Complaint should be dismissed. DONE AND ORDERED this 24th day of March, 1987, in Tallahassee, Florida. WILLIAM R. DORSEY, JR 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 24th day of March, 1987. APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-3284 The following constitute my specific rulings pursuant to Section 120.59(2), Florida Statutes (1985), on the proposed findings of fact submitted by the parties. Rulings on Proposed Findings of Fact Submitted by Petitioner Covered in Finding of Fact 1. Rejected as unnecessary. Covered in Finding of Fact 2. Covered in Finding of Fact 5. Rejected as unnecessary. Rejected as irrelevant to this matter. Covered in Finding of Fact 6. Rejected as subordinate to the findings made in Findings of Fact 6. Generally covered in Finding of Fact 7, but the date the counteroffer was acceptable was June 24, 1985, not June 25, 1985. Covered in Finding of Fact 7. Covered in Finding of Fact 8. Rejected because no $2,000.00 additional deposit was made by Mr. Angleton. Covered in Finding of Fact 6, although there was no proof that all $3,000.00 of the sales commission would have gone to Richman. Covered in Finding of Fact 8. Covered in Finding of Fact 10. Rejected as irrelevant. Rulings on Proposed Findings of Fact Submitted by Respondent Rejected as unnecessary. Covered in Finding of Fact 2. Covered in Finding of Fact 5. Sentences 1 and 2 covered in Findings of Fact 3 and 5. The remainder rejected as unnecessary. Sentences 1 and 2 rejected as unnecessary. Sentence 3 adopted in Finding of Fact 10. Rejected as unnecessary. Covered in Finding of Fact 7. Covered in Finding of Fact 8. Rejected as unnecessary. Rejected as recitations of testimony not findings of fact. Rejected as unnecessary. Rejected as unnecessary. Rejected as irrelevant and unnecessary. Rejected as argument, not findings of fact. COPIES FURNISHED: Arthur R. Shell, Jr., Esquire Division of Real Estate/DPR 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 Allen P. Reed, Esquire 901 Brickell Avenue Miami, Florida 33131 Harold Huff, Executive Director Division of Real Estate/DPR 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 Van Poole, Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32399-0750 Joe Sole, General Counsel Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32399-0750 =================================================================
Findings Of Fact The Division is the administrative agency of this state empowered to ensure that condominium associations comply with the Condominium Act. The Association is the condominium association which manages and operates 12 separate condominiums known as the Pines of Delray, located in Delary Beach, Florida. This case involves a structure placed on the common elements of three of those condominiums: The Pines of Delray condominiums 5, 6, and 11. Condominium 5 has 64 units, 6 has 72 units, and 11 has 96 units. Initially, the 12 condominiums received television under a "Central Television Antenna System Lease" with the Pines of Delray CAT, an agent of the condominium developer. On November 1, 1979, the unit owners of 8 of the 12 condominiums, including condominiums 5, 6 and 11--by vote equal to or in excess of 75 percent of the unit owners in each of the 8 condominiums--voted to cancel or terminate the television system lease pursuant to Section 718.302, Florida Statutes. The leased television equipment was eventually removed by the owner. On February 1, 1982, the Association entered into a written agreement with A-I Quality TV, Inc. d/b/a Denntronics Cable to provide television service for the 12 condominiums. The agreement was authorized by the Association's board of directors; the unit owners were not given an opportunity to vote on the agreement. An addendum to the agreement was entered in December, 1982. The addendum authorized Denntronics to install a satellite receiving station or dish at an unspecified location on the property of the 12 condominiums. The addendum was authorized by the Association's board of directors, but again, a vote of the unit owners was not taken. The Board subsequently selected the site for the receiving dish, centrally locating it on common elements of condominiums 5, 6, and 11, between building no. 65 in condominium 6, no. 25 in condominium 5, and nos. 66 and 110 in condominium 11. On December 24, 1982, Denntronics, with the Board's authorization, entered the premises of the condominiums and cut down four full-grown pine trees on the site to allow construction of a concrete foundation or pad and erection of the satellite dish. The parties stipulate that this cutting of the trees was an alteration of the common elements and that it was not approved by the owners of 75 percent of the condominium units in the affected area. The pertinent declarations of condominiums provide a specific procedure for obtaining approval before altering or improving common elements of the condominium. Article 5.1(b) of each declaration states: 5 MAINTENANCE, ALTERATION AND IMPROVEMENT Responsibility for the maintenance of the condominium property and restrictions upon the alteration and improvement thereof shall be as follows: .1 Common Elements. (b) Alteration and Improvement. After the completion of the improvements included in the common elements which are contemplated in this Declaration, there shall be no alteration nor further improvement of common elements without prior approval, in writing, by record owners of 75 per cent of all apartments. The cost of such alteration or improve ment shall be a common expense and so assessed. After removing the trees, Denntronics poured the concrete pad and attached it to the realty. The pad measures 10 feet by 10 feet, has a depth of 18 inches, and is reinforced with no. 5 grade steel bars. The construction of this pad, as with the tree removal, was not approved or voted on by the condominium owners. Denntronics then anchored the satellite receiving dish to the concrete pad. The dish is approximately 16 feet in diameter, extending 20 to 25 feet in the air. It remains the property of Denntronics since it was only leased to the Association. It is not a fixture since it may be detached and removed from the concrete pad. The cutting of the trees, the construction of the concrete pad, and the erection of the satellite dish altered the common elements. The condition of the real property was changed and the satellite dish affected nearby residents' view and enjoyment of the park-like green space in which it was placed. The replacement of the trees with the concrete pad and satellite dish affected the appearance of the surrounding area. A park-like environment of grass and pine trees surrounds the condominiums; it was this feature which persuaded some residents to originally purchase condominiums at Pines of Delray. Both the name of the condominium and its accompanying description on the condominium documents, "A Condominium in the Woods" emphasize this aesthetic feature of the condominium. As shown by the photographs in evidence, the reinforced concrete pad with satellite dish is an intruding presence in a park- like, pristine area. It is an incongruous, even imposing structure, 1/ and, in the setting in which it was placed, is aesthetically displeasing. 2/ It has adversely affected some residents' enjoyment of the grassy green space and has disturbed the scenic view which they enjoyed from their windows. Some residents now keep their window shades closed or no longer use the park-like surroundings. One resident was so upset by the sudden placement of the structure that she sold her condominium and moved away. Another nearby resident who purchased his unit, in large part, because of its proximity to the park-like green space, would not have purchased it if the pad and satellite dish had been there. Denntronics has a franchise application pending before the City of Delray Beach. If it is granted a franchise, Denntronics will remove the pad and satellite dish, and replace it with underground cable. If Denntronics is not granted a franchise, it intends to maintain and operate the satellite dish at least until June 30, 1987, when the agreement with the Association expires and is up for renewal. If the satellite dish is removed now, however, the Pines of Delray Condominium will not necessarily be without cable television service. Leadership Cable, the only cable T.V. company franchised by the City of Delray Beach, is willing and able to provide cable T.V. reception to the pines of Delray Condominiums.
Recommendation Based on the foregoing, it is RECOMMENDED: That the Division of Florida Land Sales and Condominiums find the Association guilty of violating Section 718.113(2) and order it to cease and desist from further violations. Further, the order should require the Association to remove the concrete pad and satellite receiving dish within 10 days and restore the affected area, as nearly as possible, to its prior condition. Restoration should include the placing and maintenance of grass sod and at least four healthy trees, aesthetically pleasing and not less than 12 feet in height. DONE and ENTERED this 21st day of June, 1984, in Tallahassee, Florida. R. L. Caleen, Jr. 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 21st day of June, 1984.
Findings Of Fact Respondent, Graystone Fairways Corporation (GFC), is wholly owned by Louis Wingold, a Canadian developer. He is also its president. In January, 1979, GFC entered into a five-year joint venture with Tamway Corporation (Tamway), whose president was Harvey Kaliff. The agreement provided that GFC and Tamway would construct, develop and market a two phase condominium project in Tamarac, Florida known as Fairways of Tamarac III (Fairways or project). Each phase of the project was intended to have thirty units. To date only the first phase of the project has been constructed. Building permits for the second phase have been obtained, but no construction work has commenced. The project was apparently subject to registration requirements with petitioner, Department of Business Regulation, Division of Florida Land Sales, Condominiums and Mobile Homes (Division). It is that agency which has initiated the complaint herein, of which two of three counts therein remain pending. Under the foregoing joint venture agreement, GFC generally provided the financing for the project while Tamway provided the site construction and sales of units. The agreement further designated Tamway as the managing partner to conduct the day-to-day business of the joint venture. Among other things, Tamway was authorized to enter into purchase and sale contracts for the sale of individual units in the project. Accordingly, Wingold had no active participation in the management of the project's day-to-day business, for the agreement provided that Kaliff would have that responsibility. After Fairways of Tamarac III was constructed, Kaliff hired Ron Settler and Victoria Falzone as salespersons to market and sell the individual units. The first unit was sold by Settler to Irving A. Goodman in November, 1982. Goodman was represented by counsel at the closing and, through counsel, received a packet of documents. In the summer of 1984 Goodman learned that he should have received a prospectus prior to closing, but did not. He was given a prospectus by the present project manager, Joan Nathanson, after asking for a copy. Two other units were purchased in July and September, 1983, respectively, by Sidney G. Resnick and Morton Tolmack. Both were sold by either Settler or Falzone. Tolmack was represented by counsel at closing while Resnick had no attorney. Although both executed receipts for condominium documents which reflected a prospectus was included in their packet of documents, their oral testimony to the contrary is accepted as being more credible and persuasive, and it is found that neither received a prospectus at or before closing. When they discovered at a later date they were supposed to have received one, they were given one by Nathanson. Wingold had no knowledge of Tamway's failure to give a prospectus to Goodman, Resnick and Tolmack. He first learned of this when the complaint herein was filed. Sometime in 1983 or early 1984, Wingold discovered that Kaliff was not fulfilling the terms of his obligation under the joint venture. Beginning in February, 1984, three circuit court actions were filed, and a settlement, the joint venture was dissolved, and GFC was given exclusive title and rights to the project by Tamway/Graystone. According to Wingold, Settler was convicted on 22 counts of theft from the project. He was dismissed from employment around May, 1984. During the course of the above litigation, no units could be sold because Kaliff would not agree to sign any documents conveying clear title to the purchaser. Consequently, no sales efforts could be made during this period of time. Except for the time when the litigation was pending, the unsold project units were being offered for sale by the developer in the ordinary course of business. When the settlement was executed on September 5, 1984, thirteen out of thirty units had been sold by Kaliff and Tamway. The last closing under Kaliff's management occurred in May, 1984. Wingold hired a new project manager that same month, and after the litigation was settled, began advertising in local newspapers in an effort to sell the remaining units. This included periodic advertising in two Fort Lauderdale newspapers in September and October, 1984 and January, 1985. This effort met with little or no success due to the then-existing "glut" of condominiums in South Florida. Wingold then searched for a broker to sell the units. Although he had a difficulty in finding a broker who was interested in marketing the units, in February, 1985 he executed a six-month agreement with Condovest, Inc., a firm in Miami that specializes in such sales. Since September, 1984 the developer has closed on six units and has four more under constract at the present time. This leaves seven unsold units, all of which are now rented except one which is used as a model apartment and office. The office is open only on week-days except by special appointment. The unsold units were rented by Wingold due to a large monthly payment ($15,000) on the construction loan. Such units were offered for rent in local newspaper advertisements and at one time on a sign appearing at the front entrance to the property. The rents are used to cover the debt service until the units are sold. The oldest lease agreement expires in May, 1986. Therefore, only the model unit is immediately available for occupancy by a buyer. All others must be sold subject to the lease. Even so, four units are now under contract subject to the leases, and Wingold continues to seek buyers for the remaining rented units. Subsection 718.503(2), Florida Statutes (Supp. 1984), requires that a prospectus be given to purchasers of condominium units prior to closing. Goodman, Resnick and Tolmack were not given such documents as required by law. This finding is based upon the testimony of the three unit owners which is accepted as being the more persuasive evidence on this issue. However, there is no evidence that any of the three was harmed or disadvantaged by their failure to receive copies of the prospectus until 1984 or 1985, particularly since two were represented by counsel at closing. Subsection 718.301(2), Florida Statutes (Supp. 1984), also requires that a meeting be called to allow unit owners to elect a majority of the members of the board of administration when none of the unsold units in the project are being "offered for sale by the developer in the ordinary course of business." There is no evidence of record as to how the agency construes that term, or what is the generally accepted meaning within the condominium industry. It is undisputed that no meeting has yet been called by Wingold. However, Wingold has not done so nor is he required to do so since units have been and are still being offered for sale in the ordinary course of business. Besides this, he fears that he cannot fulfill the terms of the four pending purchase and sell contracts if control of the project is turned over to the present unit owners.3 But this concern is irrelevant to a determination of the issue presented herein.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that respondent be found guilty as charged in Count II of the amended notice to show cause, and that it be fined $500.00 to be paid within thirty days from date of the Final Order in this Cause. Count I should be DISMISSED, with prejudice. DONE and ORDERED this l6th day of December, 1985, 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 16th day of December, 1985.
Findings Of Fact Respondent is a Florida limited partnership which developed a 230-unit condominium in Orlando, Florida, by conversion of existing rental apartments. The condominium was registered with Petitioner, and Respondent received written notice of approval of the condominium documents in January, 1980. Respondent recorded the Declaration of Condominium in June, 1980, and closed the first sale of a condominium unit in September, 1980. The condominium documents prepared by Respondent and approved by Petitioner in January, 1980, included an estimated operating budget for the condominium Association for the year 1980. This budget proved sufficiently accurate that it was used for the years 1981 and 1982 without amendment or republication. This budget established a reserve for replacement of $1,500 per month. Paragraph 20 of the Declaration of Condominium provides: The Developer shall not be liable for the payment of ordinary common expenses on units which it owns. Unless and until the Developer elects to pay the regular assessments for common expenses charged against all other unit owners, the Developer guarantees that: (1) monthly assessments for common expenses shall not increase over the amounts set forth in Schedule B and (2) it will pay all actual ordinary common operating expenses in excess of the amounts collected from unit owners other than the Developer at the amount stated above. Pursuant to the developer's understanding of this provision, no payments were made by the developer for any unit which it owned, i.e., which remained unsold. However, as the units were sold, common expenses were charged to each new owner. No separate agreement was entered into between the developer and the unit owners regarding the former's contribution to the common expenses. Reserves for replacement are a necessary expense for the operation of improved real estate. Here, where the building was not newly constructed but converted from an existing apartment building, the remaining life of the building is shorter than would be the life of a new building, therefore a greater need exists for immediately commencing the funding for replacement than would exist with a new building. Respondent made no contribution to the reserve account for those units it owned before they were sold, but commenced charging the new owners for those expenses as soon as the units were purchased. In February, 1983, Respondent turned over control of the condominium Association to the unit purchasers. At this time there was $24,228.15 in the Association's bank account. Although the unit owners approved a proposed 1983 budget in June, 1982, no proposed budget was submitted to the unit owners in 1980 or 1981 for use in 1981 and 1982. The initial operating budget was used for 1981 and 1982, and this same budget was approved by the unit owners for use in 1983. Respondent failed to provide an annual accounting to each unit owner within 60 days of the end of fiscal years 1980 and 1981. No unit owner requested such an accounting until May of 1982, at which time Respondent' prepared an accounting for the operations of the condominium Association from its inception and delivered it to those two unit owners. Respondent fully accounted for all receipts and expenditures accruing to the Association from its inception until turned over to the unit owners in February, 1983. Petitioner did not audit the books and records of the Association until late in 1982 when the alleged discrepancies were noted.
The Issue The issue in this case is whether Respondent condominium association properly assessed unit owners for common expenses based on their respective proportionate shares of such expenses as set forth in the declaration of condominium.
Findings Of Fact Respondent Eden Isles Condominium Association, Inc. ("Association") is the entity responsible for operating the common elements of the Eden Isles Condominium ("Condominium"). As such, the Association is subject to the regulatory jurisdiction of Petitioner Division of Florida Land Sales, Condominiums, and Mobile Homes ("Division"). The Condominium was created——and continues to be governed by——a Declaration of Condominium ("Declaration"), which has been amended at least once during the Condominium's existence. The Condominium comprises seven identical buildings. Each four-story building contains 52 units. Each unit is laid out according to one of three different floor plans. The Declaration prescribes each unit's proportionate share (expressed as a percentage, e.g. 2.16%, 2.08%, 1.64%, etc.) of the common expenses. These percentages are used to calculate the amounts assessed against each respective unit to collect the funds needed to pay common expenses. For reasons not revealed at hearing, the Declaration——at least in its original form——established a separate and unique schedule of percentages for each building in the Condominium, with the result that similarly situated owners (i.e. those whose units had the same floor plan and comparable locations) did not necessarily pay the same proportionate share of the common expenses. Not surprisingly, owners who were compelled to contribute more toward the common expenses than their similarly situated neighbors were wont to complain about the seeming unfairness of this. Some time in 2004 the Association's governing Board of Directors ("Board") was made aware of an amendment to the Declaration, which, among other things, had revised the appendix that specified each unit's proportionate share of the common expenses. Due to an absence of evidence, the undersigned cannot determine when this amendment took effect, yet neither its existence (a copy is in evidence) nor its authenticity is in doubt. There is, further, no evidence explaining why the Board had not previously been familiar with the amendment, but——for whatever reason(s)——it was not. After deliberating over the meaning and import of the amendment, the Board voted, during an open meeting, to construe the amendment as providing for the assessment of common expenses against all units in the Condominium according to the percentages assigned to the units located in "Building G," which was the last of the buildings in the Condominium to be completed. In other words, the Board interpreted the amendment as requiring that all similarly situated unit owners be assessed the same amount for common expenses, using only the most recent proportionate shares. Consequently, starting in 2005, the Association assessed unit owners for common expenses pursuant to the Board's interpretation of the amendment. While this course of action evidently pleased most residents, someone complained to the Division about the change. The Division investigated. Based on its own understanding of the amendment, which differs from the Board's, the Division determined that the Association was not properly assessing the unit owners; accordingly, it demanded that the Association remedy the situation. Under pressure from the Division, which was threatening to impose penalties against the Association for noncompliance with the Division's directives, and for some other reasons not relevant here, the Board eventually decided to "revert back" to the original proportionate shares, beginning in 2006. The Board continues to believe, however, that its interpretation of the amendment (as requiring similarly situated owners to be assessed at the same percentage) is correct.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Division enter a final order rescinding the Notice to Show Cause and exonerating the Association of the charge of failing to assess for common expenses in the appropriate percentages as set forth in the Declaration, as amended. DONE AND ENTERED this 11th day of May, 2007, in Tallahassee, Leon County, Florida. JOHN G. VAN LANINGHAM Administrative Law Judge Division of Administrative Hearings 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 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 11th day of May, 2007.
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.
