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 Whether Respondent, the developer of Hidden Banyan Condominium, violated provisions of Chapter 718, Florida Statutes, and implementing rules by failing to timely call a meeting to allow unit owners, other than the developer, to elect one-third of the members of the board of directors; by failing to include reserve accounts in the condominium association's 1982 and 1983 budgets; by failing to call an annual meeting in 1981, 1982 and 1983; and by failing to pay its share of common expenses.
Findings Of Fact Respondent is the developer of Hidden Banyan Condominium, a 24-unit condominium located in Lantana, Florida. This condominium was created, in law, on March 6, 1980, with the filing of a Declaration of Condominium, and construction was completed soon thereafter. Under the Declaration of Condominium, Hidden Banyan Condominium Association, Inc., a Florida not-for- profit corporation, was responsible for the operation of the condominium. Respondent sold the first condominium units on April 18, 1980, May 15, 1980, July 1, 1980, and two units on August 1, 1980. Consequently on August 1, 1980, unit owners other than Respondent owned more than 15 percent of the condominium units. Respondent controlled the condominium association until September 26, 1983, when a duly noticed condominium association meeting was held. Four non- developer unit owners were elected to the five seats on the governing board. Sam Seppala, a contractor and president of the Respondent corporation, was formerly director of the condominium association's governing board. Although several informal meetings of unit owners were held, no duly noticed annual meeting was held in 1982 or in February, 1983. 1/ As Mr. Seppala explained, he was "too busy" and unaware of the February annual meeting date designated by the Declaration. Respondent admits that, during the time it controlled the association, it failed to call a meeting of the unit owners within sixty days of August 1, 1980, to allow unit owners (other than the developer) to elect one-third of the membership of the governing board. The budgets for the condominium association during 1982 and 1983, when the association was controlled by the developer, contained reserve accounts but did not separately designate or "line itemize" reserve accounts for roof replacement, building painting, and pavement resurfacing. Both before and after July 1, 1980, 2/ - until August 5, 1983, when the Notice to Show Cause was issued - Respondent paid no monthly common expense assessments for the units which it owned. It did, however, pay all of the condominium association's budgetary deficits during that period, and no net amount is now owed by it to the association. There is no evidence that the condominium association suffered any monetary loss from Respondent's failure to itemize reserve accounts for roof replacement, building painting, and pavement resurfacing, or from its failure to pay common expenses otherwise due for the units which it owns. Beginning in March, 1982, the Division notified Respondent - on four separate occasions - of the alleged violations which later became the subject of its Notice to Show Cause, resulting in this proceeding. Respondent was given ample opportunity to voluntarily comply with the statute, yet did not do so until September 1, 1983.
Recommendation Based on the foregoing, it is RECOMMENDED: That respondent be fined $3000 for multiple violations of Ch. 718, Florida Statutes. DONE and ENTERED this 5th 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 5th day of June, 1984.
Findings Of Fact Respondent is the condominium association of a portion of a residential condominium complex comprised of 450 units and encompassing approximately 800 acres of land. On April 26, 1982, Respondent's Board of Directors approved the construction of a new parking area containing three parking spaces on a portion of the common-elements lawn and thereafter designated that new parking area as "limited common elements" reserved for use by the owners of the two condominium units for whose benefit it was approved. The parking area was constructed on May 12 and 13, 1982. Two-thirds of the cost of construction was paid by the owners of the two units benefited. One-third of the cost of construction, $450, was paid by Respondent out of funds collected for common expenses through assessments of all unit owners. Prior to construction, the Board's authorization of the construction was not ratified by the affirmative vote of a majority of the unit owners. After Petitioner issued its Notice to Show Cause on May 9, 1983, (a year after the construction of the parking areas) Respondent, for the first time, sought the approval of its unit owners by sending them a newsletter and "Referendum" form on June 3, 1983. The newsletter/referendum, however, did not request the unit owners to approve or ratify the construction of the parking area, the redesignation of common elements into limited common elements, or the expenditure of common funds for the benefit of an individual unit. Rather, it requested a vote on whether the parking area should be removed at the expense of all unit owners. Further, the form provided that disapproval of the expense involved in returning the parking area to common-elements property could be conveyed by simply not bothering to vote. Approximately 75 percent of the unit owners did not vote on the "referendum." The failure to vote (and the votes against the removal and additional expense) may well have been in response to Respondent's explanation of the issue, such as advising the unit owners that a requirement that the Board remove the parking area might mean that concrete slabs under "dumpsters" would be prohibited and that ". . . dog owners will possibly be required to carry a 'pooper scooper' when they walk their pet on common area." Respondent's Declaration of Condominium provides that: There shall be no material alterations, door or color changes, enclosing of balconies, or substantial additions to the common elements, except the same are authorized by the Board of Directors, and ratified by the affirmative vote of a majority of the unit owners or as otherwise authorized herein. No unit owner shall block, hamper, or otherwise interfere with the common elements of the property to the operation thereof. Additionally, the approved parking areas for the development are those shown on diagrams attached to and incorporated in the Declaration of Condominium and are part of the recorded plat. Where the Declaration specifically grants authority over parking areas to the Board of Directors, it grants the Board discretion to assign parking spaces; nowhere does the Declaration authorize the Board to create parking spaces, pay for same with common funds, or convert common elements into personal parking spaces. Up to the time of the formal hearing in this cause, Respondent's authorization of the construction of the new parking area and of the use of common funds and of common elements for that construction have never been approved or ratified by the affirmative vote of a majority of the unit owners, and the Board had made no attempt to obtain that approval. Constructing a parking area where there had been community lawn space is a material alteration to the common elements.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered: Finding Respondent guilty of the allegations contained in the Notice to Show Cause; Imposing a civil penalty of $2,500 against Respondent to be paid by a date certain; Ordering Respondent to cease and desist from materially altering or substantially adding to the common elements of the condominium in any manner other than as provided in its Declaration of Condominium; Affording Respondent a reasonable time in which to obtain approval of the subject construction from the unit owners, subject to Petitioner's approval as to compliance with Respondent's Declaration of Condominium and the Condominium Act; and Requiring the immediate removal of the subject parking area and the restoration of that space to its preconstruction appearance and usage if Respondent fails to obtain approval of the construction within a reasonable time from either the unit owners or from Petitioner. DONE AND RECOMMENDED this 6th day of January 1984 in Tallahassee, Leon County, Florida. LINDA M. RIGOT Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 6th day of January 1984. COPIES FURNISHED: David M. Maloney, Esquire Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301 Jeffrey M. Feuer, Esquire 20466 South Dixie Highway Miami, Florida 33189 Gary R. Rutledge, Secretary Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301 =================================================================
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, as well as the parties' factual stipulations, the following relevant facts are found: Respondent Sheldon West, Inc. was the developer of Sheldon West Mobile Home Community, a "condominium," as those terms are used and defined in Chapter 718, Florida Statutes. The Declaration of Condominium was recorded in the official records of Hillsborough County on September 27, 1978. The respondent transferred control of the Sheldon West Condominium Owner's Association, Inc. to the unit owners on June 30, 1986. In the Declaration of Condominium, respondent provided a guarantee of common expenses pursuant to Section 718.116(8)(a)2, Florida Statutes. Under the guarantee, respondent was excused from the payment of common expense assessments on developer-owned units for a period of five years. During that period, respondent guaranteed to unit owners that assessments would not exceed a certain stated level, and respondent obligated itself to pay any amount of common expenses incurred during the period and not produced by the assessments at the guaranteed level receivable from other unit owners. Common expenses during the guarantee period amounted to $57,895.00. Assessments collected from unit owners during the guarantee period amounted to $49,190.00. Thus, respondent's liability for common expenses during the guarantee period was $8,705.00. Respondent's guarantee of common expenses ended September 26, 1983. From September 27, 1983, through June 30, 1986, the date of the turnover, respondent paid no assessments on the lots it still owned. The Declaration of Condominium provides that assessments not paid within five days of the due date shall bear interest at the rate of ten percent per annum from the due date until paid. Respondent's liability for assessments from September 27, 1983, through June 30, 1986, amounted to $40,870.00, and the interest on the overdue assessments amounted to $7,032.35. The Homeowners Association over-reimbursed respondent for expenses incurred during the guarantee period in the amount of $12,968.00. In addition, respondent received two payments from Association funds in June, 1986 of $7,000.00 and $8, 000.00. In January of 1986, the respondent and the Department of Business Regulation entered into a Final Consent Order, which called for a $500.00 civil penalty. The respondent paid the civil penalty, and, in March of 1986, he was reimbursed from the Association funds for payment of said penalty. The payables due from the respondent to the Homeowners Association, amounting to almost $70,000.00, were not paid to the Association at turnover. Instead, they were applied and offset against what were represented to be advances and receivables payable to the respondent from the Association in the amount of $77,142.00. This amount represents the cost of construction by the respondent of a pool and a clubhouse on the common property, interest charged on the advance of funds from respondent to the Association, and management fees due on uncollected assessments. Construction on the pool and clubhouse began in November of 1980 and ended in February of 1981. Neither the Prospectus nor the Declaration of Condominium mention the construction of a pool or clubhouse. No vote on construction of the pool and clubhouse was ever taken of unit owners other than the Board of Directors. No approval in writing was ever given by unit owners. The Declaration of Condominium was never amended to reflect the addition of a pool or clubhouse. The minutes of a special meeting of the Directors of the Association held on October 21, 1980, reflect that one of the three Directors gave a report that "residents wanted a Pool and Rec. Building" located on the common property and "were willing to pay for the same from the assessments on the residents." The minutes further reflect that a motion was made and adopted that the developer construct the pool and building and that, in return, the Association agreed to repay the developer the cost of same, estimated at $60,000.00, on or before turnover to the resident unit owners. The minutes further state "copy sent to Residents and Directors." These minutes are unsigned, but typewritten are the names of Tom F. Brown, the President of Sheldon West, Inc.; Anna K. Laughridge, Mr. Brown's daughter; and Ken Lord, who apparently was a unit owner. As reflected in a document received into evidence as petitioner's Exhibit 11, the members of the Board of Directors of the Association on January 2, 1981, consisted of Ora Katherine Brown, apparently Tom Brown's wife; and Anna K. Laughridge. The minutes of a "special joint meeting of Board of Directors" of the Association held on January 2, 1981, reflect that the resignation of Ora Katherine Brown as an officer and director was accepted, and that Tom Fairfield Brown and Anna K. Laughridge were named as Directors. The minutes of a "special meeting of directors" of Sheldon West, Inc., held at 10:00 A.M. on February 24, 1981, reflect the adoption of a motion that Sheldon West, Inc. would advance the funds for payment of the cost of construction of the pool and recreation building with the understanding that it would be repaid for the funds so advanced, and that it would receive credit therefore by the Association for any sums which might be due, owing or claimed by the Association. The minutes make reference to a promissory note evidencing the agreement. The promissory note, respondent's Exhibit 4, states that at a special meeting of the Association held on February 24, 1981, the Association agreed to repay and credit Sheldon West, Inc. for all sums advanced for the construction of the pool and recreation building. This promissory note is dated February 24, 1981, and is signed by Tom F. Brown as the President of the Association. The minutes of the "special meeting of directors" of the Association held on February 24, 1981, at 4:00 P.M. reflect that Directors Tom F. Brown, Anna K. Laughridge and Ken Lord were present. The minutes further make reference to an agreement that the costs of the pool and recreation building were to be advanced by Sheldon West, Inc. with the understanding that it would receive credit for such funds and be reimbursed for any balance on the date of turnover to the unit owners. These minutes state "copy posted outside clubhouse and del. to residents."
Recommendation Based upon the Findings of Fact and Conclusions of Law recited herein, it is RECOMMENDED that: Respondent be found guilty of violating Section 718.116(8)(a)2, Florida Statutes, for its failure to fund the deficit during the guarantee period; and that a civil penalty in the amount of $5,000.00 be imposed for this violation; Respondent be found guilty of violating Section 718.116(1)(a) and (8)(a), Florida Statutes, for its failure to pay assessments on developer-owned units after expiration of the guarantee period; and that a civil penalty in the amount of $5,000.00 be imposed for this violation; and Respondent be found guilty of violating Rule 7D- 23.003(3), Florida Administrative Code, for utilizing Association funds for the payment of a civil penalty; and that a civil penalty in the amount of $1,000.00 be imposed for this violation. Respectfully submitted and entered this 2nd day of December, 1988, in Tallahassee, Florida. DIANE D. TREMOR 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 2nd day of December, 1988. APPENDIX The proposed findings of fact submitted by the parties have been carefully considered and are accepted, incorporated and/or summarized in this Recommended Order, with the following exceptions: Petitioner 24 and 25. Accepted as factually correct, but not included as irrelevant and immaterial to the issues in dispute. Respondent 4 and 5. Partially rejected and discussed in the Conclusions of Law. 7 and 9. Rejected as irrelevant to the issues in dispute. 10. Amount stated rejected as contrary to the greater weight of the evidence. COPIES FURNISHED: Scott Charlton, Esquire Peavyhouse, Grant, Clark Charlton, Opp & Martino 1715 N. Westshore Post Office Box 24268 Tampa, Florida 33623 David L. Swanson, Esquire Sandra E. Feinzig, Esquire Assts. General Counsel Department of Business Regulation 725 S. Bronough Street Tallahassee, Florida 32399-1007 James Kearney, Director Department of Business Regulation Division of Florida Land Sales, Condominiums and Mobile Homes 725 South Bronough Street Tallahassee, Florida 32399-1007 =================================================================
Findings Of Fact Background Respondent, Edgewater Condominium Association, Inc., is a nonprofit corporation and association of unit owners of Edgewater Beach Towers, a condominium project with sixty residential units located at 420 North Surf Road, Hollywood, Florida. It is subject to the regulatory requirements of petitioner, Department of Business Regulation, Division of Florida Land Sales, Condominiums and Mobile Homes (Division). The project was initially constructed as a sixty five unit project. During the construction phrase, the original developer, K.S.L. Building Corporation, was unable to financially complete the project, and the project went into receivership under the auspices of the primary lender, Home Federal Savings and Loan Association of Florida. Eventually the project was completed and its declaration was filed on January 15, 1971. The respondent took over the active operation of the project that same date. An association such as respondent is subject to various Division requirements, including those relating to the levying of monthly assessments on unit owners for common expenses, and the adherence to certain association election procedures. This case stems from a complaint filed with petitioner by an attorney who represented certain unit owners. The complaint related to the manner in which respondent levied both monthly and special assessments over the years, and respondent's use of write-in ballots at annual meetings. This complaint precipitated the instant proceeding. Count I Under Division requirements, an association must levy all monthly and special assessments against unit owners in the proportions or percentages provided in the declaration. In this case, the association's declaration identifies five different classes of units, the number of each, and their percentage of ownership in the common elements. They are as follows: Type of Unit Percentage No. of Units one bedroom, one bath .01204453 1 one bedroom, one and one half bath .01475458 38 two bedroom, two bath .01927130 21 two bedroom, two bath deluxe .02205365 1 recreational units and areas .00013262 4 Paragraph 6 of the declaration specifically provides that the four recreational units "shall not contribute to the common expenses" of the association. This is also confirmed in paragraph 15(a) of the same document. Moreover, at the time the association took control of the project in January 1971, the association was required by order of the circuit court to purchase these four units for $236,000 in order to pay off subcontractor bills still owed at that time. Since their purchase, these units have remained common elements, and therefore no assessments could be properly levied on them. Unit 303 is the one bedroom, one bath unit referred to in the declaration, and has served as the manager's unit since the receiver relinquished control to the association in 1971. It, too, is characterized as a common element and is exempt from assessment requirements. The original floor plan of the twelfth floor of the structure reflects five penthouse (PH) units, of which unit PH 2/3 is the two bedroom, two bath deluxe unit referred to in the declaration. Uncontradicted testimony established that approximately one-half of that unit's floor space has been dedicated to common use and has served as the swimming pool equipment room. Consequently, the remaining portion of the unit has been properly classified as a one bedroom, one and one-half bath unit for assessment purposes. However, the declaration has never been amended to reflect this change. After taking into account the above changes, there are now and have been since 1971 only two classes of units in the project: one bedroom, one and one-half baths, and two bedroom, two baths. They number 39 and 21 units, respectively. Since its inception, the association established monthly assessments for only the above two classes of units. The monthly assessments are set forth on respondent's exhibit 1 received in evidence and reflect increases in April 1972, April 1976, October 1980, October 1984, September 1985 and May 1986. In all cases, the two bedroom, two bath monthly assessment has exceeded the smaller unit assessment by at least $10 per month, and most recently the spread increased to $16 per month. However, the assessments have not been calculated using the precise square footage of the units as dictated by the declaration. More specifically, section 15(a) of the declaration provides that "each unit owner . . . shall be liable for a proportionate share of the common expenses." This provision has not been strictly followed. Although the association amended its bylaws in February 1984 to eliminate the word "proportionately" and substitute the word "equally" when referring to future maintenance and special assessment fees, no such change was made to the declaration, and the latter document remains controlling. Through its president, respondent asserts it has, in good faith, previously charged the foregoing assessments due to financial and budgetary problems caused by the original developer being forced into receivership. However, she represented that all future assessments will be strictly assessed in accordance with the declaration. The notice to show cause alleges, and respondent concedes, that on April 13, 1985, respondent imposed a one-time special assessment of $350 on all unit owners, regardless of the size of the unit, for common element roof repairs made in April 1985. This assessment was calculated in a manner consistent with the way in which all other special assessments have been calculated in the past. According to testimony, the board of directors derived this amount by dividing the roofing contractor's bill of $21,680 by sixty units to arrive at a special assessment of $350 per unit. 1/ This was contrary to the declaration which required that such an assessment be based upon each unit owner's "percentages in the common elements," as well as section 3 of Article VII of the by-laws which states that "special assessments . . . shall be levied and paid in the same manner as hereinabove provided for regular assessments." The association opposes any requirement that it retroactively recalculate any assessment on the ground it is now impractical to do so since ownership of units may have changed hands. It also points out that it is willing to strictly adhere to all declaration requirements in the future. Count II It has been the practice of the association since 1972 to allow persons absent from annual meetings to participate by write-in vote without going through the formality of preparing a written proxy. This practice was confirmed through testimony of a unit owner who had cast a write-in vote on behalf of another unit owner at the 1985 annual meeting. Section 6 of Article V of the association's bylaws requires that voting to transact business matters at meetings shall be done "in person" or "by written proxy." This is also confirmed in Section 2 of Article IV. There is no provision for "write-in" votes in either the bylaws or the declaration. Therefore, this practice was contrary to section 8(d) of respondent's declaration, which provides that "the administration of the condominium shall be in accordance with the bylaws." Respondent has agreed to strictly adhere to this requirement in the future.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that respondent be found guilty of violating Subsection 718.115(2), Florida Statutes (1985), in two respects and Subsections 718.112(2)(b)1. and (2)(d)3., Florida Statutes (1985), in one respect as discussed in the Conclusions of Law Portion of this order. It is further recommended that a $500 civil fine be imposed, that in the future respondent cease and desist from such unlawful activities, and that it recalculate all monthly assessments on and after May, 1986, and make such additional collections or refunds (credits) as may be required. DONE and ORDERED this 15th day of July 1986, in Tallahassee, 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 15th day of July 1986.
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.
