The Issue This case concerns the issue of whether the Respondent offered condominium units for sale to the public and offered contracts for sale of those units in violation of Section 718.502(2)(a), Florida Statutes. The Respondent is charged with having offered units for sale and offered contracts prior to the time of filing the required condominium documents with the Division of Florida Land Sales and Condominiums as required by Section 718.502 and the rules promulgated thereunder. At the formal hearing, Petitioner called as its witness Luis Stabinski, an officer and 50 percent owner of the Respondent corporation. The Petitioner also presented testimony by the deposition of Luis Stabinski, which was entered into evidence as Petitioner's Exhibit 1, and the deposition of Paul Scherman, which was admitted into evidence as petitioner's Exhibit 2. Petitioner's Exhibit 3 was a deposition of William Hirsch, an investigator for the Department of Business Regulation. There was an objection made to the admissibility of the deposition of Mr. Hirsch by the Respondent on the grounds that Mr. Hirsch had previously investigated a prior development in which the owners and officers of Finst Development, Inc. were involved. The undersigned Hearing Officer took that objection under advisement and after having reviewed the deposition, overrules the objection and admits Petitioner's Exhibit 3, the deposition of William Hirsch. Petitioner also offered and had admitted Petitioner's Exhibits 4 - 9. Mr. Luis Stabinski was also called as a witness by the Respondent in the Respondent's case-in-chief. Respondent did not offer any exhibits into evidence. Counsel for the Petitioner and for the Respondent submitted proposed findings of fact and conclusions of law for consideration by the Hearing Officer. To the extent that those proposed findings of fact and conclusions of law are not adopted herein, they were considered by the undersigned Hearing Officer and determined to be irrelevant to the issues in this cause or not supported by the evidence.
Findings Of Fact Based upon a stipulation between Petitioner and Respondent, the following facts (a) through (b) are found: The condominium development which is the subject of this action is named Indian Creek Club and Marina Condominium North. Twenty-eight (28) contracts, other than Petitioner's Exhibit 8, for the purchase of units in the Indian Creek Club and Marina Condominium North bear dates or are dated by their terms prior to September 25, 1981. The Indian Creek Club and Marina Condominium North contains 52 units and was developed by the Respondent, Finst Development, Inc. Finst Development, Inc., is a Florida corporation for profit and is owned in equal shares by Mr. Luis Stabinski and Mr. Richard Finvarb. Mr. Finvarb was president of the corporation and Mr. Stabinski served as vice- president and secretary. On September 25, 1981, the Respondent, Finst Development, Inc., filed the following items with the Department of Business Regulation, the Division of Florida Land Sales and Condominiums: Condominium documents for Indian Creek Club and Marina Condominium North. Condominium filing statement. Condominium filing checklist. Check in the sum of $520.00, representing filing fee for the above-referenced condominium project. The Declaration of Condominium was executed by Richard Finvarb and Luis Stabinski on September 30, 1980. The Articles of Incorporation of Indian Creek Club and Marina Condominium Association North, Inc., were executed by Richard Finvarb, Bell Stabinski, and Luis Stabinski on August 12, 1981. The bylaws for Indian Creek Club and Marina Condominium North were executed on August 12, 1981. Each of these three documents is part of the required filing which was filed on September 25, 1981. On December 9, 1981, the Respondent was notified by Petitioner that the review of the documents filed by the Respondent in connection with Indian Creek Club and Marina Condominium North was complete. That notice also informed Respondent that the documents were considered proper for filing purposes and the developer "may close on contracts for sale or lease for a lease period of more than five years." (See Petitioner's Composite Exhibit 6.) Upon the insistence of Mr. Stabinski, his law firm, Stabinski, Funt, Levine, and Vega, P.A., did all the legal work in connection with the condominium. Specifically, Mr. Paul Scherman, an associate and employee of the firm, did the legal work for the condominium. Mr. Scherman worked under the direct supervision of Mr. Stabinski. Prior to the filing of the condominium documents on September 25, 1981, the fifty-two (52) units of the condominium were offered for ale to the public. Contracts for the purchase and sale of units in the condominium were also offered to the public. Prior to filing the condominium documents on September 25, 1981, the Respondent entered into 29 contracts for the purchase and sale of units in Indian Creek Club and Marina Condominium North. There were no closings held on any units prior to approval of the condominium documents by the Department. During the construction and sale of units in Indian Creek Club and Marina Condominium North, Richard Finvarb was in charge of construction, sales, and supervision of the Finst Development, Inc. office and personnel. Luis Stabinski's involvement was as an investor. The documents filed by Respondent with the Department were prepared by Paul Scherman, an associate in Mr. Stabinski's law firm. Mr. Scherman also attended all closings on units and received copies of contracts entered into by Respondent for the sale of units in the condominium. Mr. Scherman was aware that contracts were being entered into prior to the filing of the condominium documents described in Paragraph 2 above. Luis Stabinski has been a practicing attorney for 13 years. He represents individual condominium purchasers and has been involved as an investor in three other condominium projects prior to the Indian Creek Club and Marina North Condominium. Following the initial filing of the condominium documents, the Respondent promptly responded to and made the changes and corrections required by the Department in two Notices of Deficiencies. After being provided with the required documents, all but five or six of the purchasers who had entered into contracts prior to the filing of the documents closed on their units. The five or six that did not close are presently in litigation with the Respondent.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That the Department enter a final order imposing a civil penalty of $7,500 and ordering the Respondent to cease and desist from any further violations of Chapter 718 or the rules promulgated thereunder. DONE and ENTERED this 8th day of June, 1983, in Tallahassee, Florida. MARVIN E. CHAVIS, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 9th day of June, 1983. COPIES FURNISHED: Thomas A. Bell, Esquire Staff Attorney Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301 Norman Funt, Esquire Stabinski & Funt, P.A. 757 N.W. 27th Avenue Third Floor Miami, Florida 33125 Mr. Gary Rutledge Secretary Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301 Mr. E. James Kearney Director Division of Florida Land Sales and Condominiums 725 South Bronough Street Tallahassee, Florida 32301
Findings Of Fact Petitioner is authorized statutorily to license and regulate real estate salesmen and brokers. At all times material to these charges, Donald J. Munch was a licensed real estate salesman holding license number 045938. From December, 1987 through May 30, 1989, Munch was licensed as a salesman with Active One Realty, Inc., Winter Park, Florida. He now holds a broker's license. Sand Dollar Condominium Association was an association of condominium owners who owned apartments in Sand Dollar Condominiums. Owners of apartments in the condominium had entered into agreements with the association to rent out their apartments. This agreement provided that the association would receive 20% of the rents received. Munch was the owner of Four Seasons Properties (Four Seasons), a property management company, which contracted with Sand Dollar Condominium Association (Sand Dollar) from December 13, 1987 until May 30, 1989 to provide various management services, including but not limited to, recruiting, hiring and supervising all personnel; installing and maintaining an electronic bookkeeping system; collecting monthly assessments; maintaining a bank account; preparing and mailing delinquent notices; auditing accounts and records; and collecting delinquencies; negotiating outside contracts for Sand Dollar; and supervising a rental program organization with advertising, printing, electronic bookkeeping, rotation scheduling and mailings. Although not specifically stated, Four Seasons was to collect for the rental of apartments. Four Seasons was to be paid for its management services $2,000.00 per month payable on the first of every month during the duration of the contract. It is uncontroverted that, in addition to this compensation, Four Seasons also received 15% of the 20% of receipts from the rental of apartments which were payable to Sand Dollar by the owners of apartments who participated in the rental program provided by the association and managed by Four Seasons. It is uncontroverted that, when Four Seasons began management of the condominium, the condominium was over $10,000.00 in arrears with regard to money used by the association for upkeep of the condominium which had been taken from the rental escrow accounts. Four Seasons, through its owner Munch, rented apartments for the association, collected fees from owners, rents from lessees, deposited the proceeds into the bank account of Four Seasons maintained in accordance with its contract with the association, and accounted periodically to the association and owners during the period of its management. The Respondent's broker knew of the Respondent's activities and did not expect commissions or deposits to his account from the Respondent. Four Seasons and Munch assert that Sand Dollar owed Four Seasons $7,100.00 when their contract was terminated. Four Seasons provided Sand Dollar a complete financial statement and a check for $10,079.92 to Sand Dollar. Four Seasons retained $7,100.00, the amount which it claimed it was owed by Sand Dollar. Subsequently, Sand Dollar sued Four Seasons over the $7,100.00 claim and Munch paid the money into Sand Dollar's attorney's trust account.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Administrative Complaint be dismissed. DONE AND ENTERED this 15th day of August, 1990, in Tallahassee, Leon County, Florida. STEPHEN F. DEAN Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 15th day of August, 1990. COPIES FURNISHED: Janine A. Bamping, Esq. Senior Attorney Department of Professional Regulation Division of Real Estate 400 West Robinson Street P.O. Box 1900 Orlando, FL 32802 Howard Hadley, Esq. 2352 Carolton Road Maitland, FL 32751 Kenneth E. Easley, Esq. General Counsel Department of Professional Regulation 1940 North Monroe Street Tallahassee, FL 32399-0792 Darlene F. Keller Division Director Division of Real Estate Department of Professional Regulation 400 West Robinson Street P.O. Box 1900 Orlando, FL 32801 ================================================================= AGENCY FINAL ORDERS ================================================================= STATE OF FLORIDA DEPARTMENT OF PROFESSIONAL REGULATION FLORIDA REAL ESTATE COMMISSION DEPARTMENT OF PROFESSIONAL REGULATION, DIVISION OF REAL ESTATE, Petitioner, vs. CASE NO. 0164284 DOAH NO. 90-0709 DONALD J. MUNCH Respondent. /
Findings Of Fact M. G., Incorporated, a real estate developer in Brevard County, Florida, caused to be constructed The Bello Rio Condominium complex at 255 South Tropical Trail, Merritt Island, Florida. On January 25, 1979, the Chief, Bureau of Condominiums, Department of Business Regulation, State of Florida, advised the attorney for the Developer that, pursuant to Rule 7D-17.05, Florida Administrative Code, the condominium documents submitted for approval for the project in question here had been reviewed and were considered proper for filing, and that the Developer could lawfully close sales contracts on units within the project. Units were sold; and on September 1, 1981, the project was "turned over" by the Developer to the association. At the meeting held for this purpose, several documents were delivered by the Developer to the association's Board of Administration (Board) in the person of Faye Shaffer, a resident of the development. These documents consisted of: Three (3) checks totaling $1,800; The association seal; The original recorded copy of the Declaration; The original copy of the Articles of Incorporation; A condominium insurance policy; A flood insurance renewal declaration; and Certificates of Occupancy for twelve (12) units. All plans and specifications in the hands of the Developer were released to the association's attorney sometime in that general time frame. Further, because there were no common areas covered by warranties, none were available to turn over. Either at the time of turnover or shortly thereafter, during the month of September, 1981, Mrs. Shaffer also received from the Developer five sheets of check ledger paper reflecting the following categories of entries: Date of check; Payee; Check number; Amount of check; Lawn maintenance; Utilities; Insurance; Garbage pickup; Bank service charge; Miscellaneous; and Management fee (10 percent). These ledger sheets were not certified as reviewed by a certified public accountant and constituted the only financial records turned over to the association by the Developer at any time. The accounting and bookkeeping functions for this project were accomplished initially in the offices of the Developer. Thereafter, the Developer retained Guest Realty, Inc., to manage the facility, including the collection of maintenance fees and making payments as required for utilities, etc. During the period of that company's stewardship, all accounting for funds and bank statement reconciliations were handled by Guest Realty, Inc. Any deficiencies resulting between fees collected and expenses paid during that period were made up by the Developer, and Guest Realty, Inc., received a fee of 10 percent of the maintenance fees received for its services. Any bills, receipts, cancelled checks, or other records kept during the period are now in storage; and Mr. Guest, on behalf of Respondent, M. G., Incorporated, will not make the effort to retrieve them unless required to do so by some competent authority.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That Respondent be assessed a penalty of $500 under the provisions of Section 718.501(1)(d)4, Florida Statutes (1981) RECOMMENDED this 13th of May, 1983, in Tallahassee, Florida. ARNOLD H. POLLOCK, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 13th day of May, 1983. COPIES FURNISHED: Helen C. Ellis, Esquire Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301 William C. Irvin, Esquire Post Office Box 606 Cocoa Beach, Florida 32931 Mr. Gary R. Rutledge Secretary Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301 Mr. E. James Kearney Director Division of Florida Land Sales and Condominiums Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301 ================================================================= AGENCY FINAL ORDER =================================================================
The Issue The issues are whether Respondents are guilty of the following: (a) breach of fiduciary relationship in violation of Section 718.111(1)(a), Florida Statutes; (b) failure to respond in writing to written inquiries in violation of Section 718.112(2)(a)2., Florida Statutes; (c) failure to properly notice a meeting in which regular assessments were discussed in violation of Section 718.112(2)(c), Florida Statutes; (d) failure to proportionately excuse payment of common expenses for all units owners after doing so for one unit owner in violation of Section 718.116(9)(a), Florida Statutes; and (e) willfully and knowingly violating Chapter 718, Florida Statutes, in violation of Section 718.501(d)(4), Florida Statutes.
Findings Of Fact Ocean Gate is a unit-owner controlled condominium located in St. Augustine, Florida. A three-member board of directors governs Ocean Gate. However, Article V of Ocean Gate's Articles of Incorporation states as follows in relevant part: This corporation shall have three (3) directors initially. Thereafter, the number of directors may be increased from time to time in the manner provided by the Bylaws, but shall never be fewer than three. Ocean Gate's original developer was Robert Laurence/Ocean Gate Development, Inc. On or about June 16, 1999, the developer recorded Ocean Gate's Declaration of Condominium in the official record book 1417, page 1932, of the public records of St. Johns County, Florida. At that time, Ocean Gate's directors, as set forth in the Articles of Incorporation, were Roger W. McClain, Leslie Gallagher, and Robert J.L. Laurence. The property at issue includes two buildings (2.1 and 2.2) containing a total of 10 units. Units 600, 604, 608, 612, 616, and 620 are located in Ocean Gate's 2.1 building. Units 605, 609, 613, and 617 are located in Ocean Gate's 2.2 building. On June 16, 1999, the following deeds were recorded in the official record book of St. Johns County, Florida: (a) unit 600 to Mr. and Mrs. Grissom (later sold to the Mr. Barrow/Flag Development Corporation); (b) unit 604 to Mr. and Mrs. McNeely; (c) unit 608 to Dr. and Mrs. Blankenship; (d) unit 612 to Mr. and Mrs. Klinehoffer; (e) unit 616 to Mr. and Mrs. Pittman (later sold to Mr. and Mrs. Weaver); and (f) unit 620 to Mr. and Mrs. Carabetta. The unit owners in the 2.1 building had to lend the developer funds to complete the construction of their units. Even so, these unit owners had to foreclose on that loan and spend additional funds to complete the construction on their units. On or about July 1, 1999, Ocean Gate issued a Notice of Owners Meeting. The meeting was scheduled for July 17, 1999. The agenda attached to the notice included the following: (a) call to order; (b) establish a quorum; (c) waiver of 60-day notice; (d) introduction of May Management Services, Inc. (May Management); (e) official approval of management contract; (f) discussion of board members; (g) discussion of contract; and (h) adjournment. Ocean Gate held its first unit owners' meeting on July 17, 1999. Mr. Klinehoffer, Mr. and Mrs. Pittman, Dr. and Mrs. Blankenship, Mr. and Mrs. McNeely, Mr. Grissom, and Mr. and Mrs. Carabetta attended the meeting. The developer did not attend the meeting. During the July 17, 1999, meeting, the unit owners accepted the resignation of Les R. Gallagher, as a director, and elected the following directors/officers: Mr. Grissom, president; Mr. Kleinhoffer, vice president; and Mrs. Pittman, secretary/treasurer. The representative of May Management announced that the developer had turned over $8,308.44 to the unit owners. Ocean Gate conducted a unit owners meeting on December 4, 1999. Mr. Grissom and Dr. Blankenship attended the meeting. Mrs. Pittman attended by proxy. A representative of the developer was also in attendance. During the meeting, the unit owners approved Ocean Gate's 2000 operating budget. On or about January 14, 2000, Mrs. Pittman resigned as a director and secretary/treasurer. A unit owners meeting took place on January 29, 2000. Mr. Grissom, Dr. and Mrs. Blankenship, Mr. Carabetta, Mr. and Mrs. McNeely, and Mr. Weaver were in attendance. In a notice dated March 22, 2000, Ocean Gate scheduled a unit owners meeting for April 15, 2000. The agenda included the following: (a) call to order; (b) establish a quorum; (c) approval of minutes of January 29, 2000; (d) financial report; (e) old business (release of lien payment for John M. Williams); (f) new business, including election of director; (g) date of next meeting; and (h) adjournment. During the meeting, Mr. Weaver was elected to fill a vacancy on Ocean Gate's board of directors. The Carabettas' unit, which is located in the 2.1 building, is the largest unit on the property. Mr. Carabetta refused to pay some of Ocean Gate's assessments because he did not believe Ocean Gate was properly maintaining his unit. In time, he filed at least one lawsuit against Ocean Gate and its board of directors. He also filed defamation and discrimination lawsuits against some of the unit owners in their individual capacities. Mr. Carabetta testified at hearing that Ocean Gate failed to maintain his unit while expending funds to maintain the units of the Weavers, the Blankenships, the McNeelys, and the Klinehoffers. There is no persuasive evidence that the directors of Ocean Gate improperly refused to pay for maintenance/repair of the common elements in the 2.1 building, including the limited common elements directly affecting Mr. Carabetta's unit. The 2.2 building was the subject of a foreclosure suit. It was sold on the courthouse steps to Flag Development Corporation on June 13, 2000. Pursuant to that sale, Flag Development Corporation also bought two additional condominium developments, Ocean Gate Phase II and Ocean Gate Phase III, which are not a part of the property at issue here. The record contains a Certificate of Title conveying real and personal property to Flag Development Corporation. The certificate refers to a description of real and personal property, "Exhibit A," which is not attached to the copy of the certificate in the record. John Williams and Mr. Barrow are business associates affiliated with Flag Development Corporation. After receiving title to the 2.2 building, their company did nothing more than clean up the property. They did no construction, maintenance, or repair work. In two letters, Jones & Pellicer, Inc., civil engineers and land surveyors, responded to Mr. Weaver's request for a survey to determine the square footage for each unit. The first letter dated May 31, 2000, referred to the survey of units 600, 604, 608, 612, 616, and 620 in the 2.1 building. The second letter dated July 31, 2000, referred to the survey of units 605, 609, 613, and 617 in the 2.2 building. According to the letters, the surveys determined the square footage for each unit using the floor area, as defined by Section 4.7-Unit Boundaries "A" and "B" in the Ocean Gate Declaration of Condominium. Mr. Walters purchased the four units in Ocean Gate's 2.2 building from John Williams/Flag Development Corporation in late July or early August 2000. The purchase price was approximately one million dollars. The record contains a copy of the corporate warranty deed conveying the 2.2 building to Mr. Walters. The deed states that the transfer of title is "subject to taxes for the current year, covenants, restrictions, and easements of record, if any." The attachments to the deed describing the property include Schedule A, Exhibit A, and Exhibit A Continued. The document identified as Exhibit A Continued, and which appears to be signed by the original developer, is not legible. When Mr. Walters bought the four units, the 2.2 building had a roof, windows, walls, and doors from which the square footage of each unit could be determined. The building was about 45 percent complete but not sufficiently complete to qualify any of the units in the building for a certificate of occupancy. Mr. Walters hired a contractor to complete the construction on his units. The construction, which involved a considerable sum of money, included work on the common elements and the interior of the units. There were liens on the 2.2 building for Ocean Gate's assessments when Mr. Walters purchased his four units. Mr. Walters refused to pay any past or ongoing assessments on his four units. In turn, Ocean Gate refused to expend any funds to maintain or repair the 2.2 building. Ocean Gate continued to impose assessments on all unit owners, including Mr. Walters and Mr. Carabetta. Ocean Gate also had to impose special assessments on some unit owners to make up the shortfall when Mr. Walters and/or Mr. Carabetta refused to pay their regular assessments. On October 17, 2000, Ocean Gate filed a Revised Claim of Lien against Mr. Walters for unpaid assessments and late charges. The Revised Claim of Lien alleged that Mr. Walters owed Ocean Gate a balance of $20,983.42. In a letter dated October 18, 2000, Ocean Gate advised Mr. Walters that a foreclosure suit would be instituted if he did not pay the assessments and charges. Early in 2001, Ocean Gate filed a Complaint seeking foreclosure of the liens against Mr. Walters in Case No. CA-01- 85, in the Circuit Court, Seventh Judicial Circuit, in and for St. Johns County, Florida. On or about March 1, 2001, Mr. Walters filed a Motion to Dismiss in Case No. CA-01-85, in the Circuit Court, Seventh Judicial Circuit, in and for St. Johns County, Florida. Mr. Walters took the position that he was not obliged to pay condominium assessment until a certificate of occupancy was issued and that the original developer had never relinquished control of Ocean Gate. Mr. Walters and Mr. Carabetta together owned over 51 percent of the total square footage in all units. Therefore, they controlled a majority of Ocean Gate's voting interests, which are directly proportional to the square footage in each unit. Specifically, Mr. Walters controlled a total of 36.207 percent of the membership voting interests and Mr. Carabetta controlled a total of 15.990 percent of the membership voting interests. Mr. Weaver was Ocean Gate's president in September 2001. Mr. McNeely and Mr. Klinehoffer were also directors/officers. All three of the directors were named as defendants in one or more of Mr. Carabetta's lawsuits. On or about September 26, 2001, Mr. Weaver issued the second notice of Ocean Gate's annual meeting of unit owners. The notice included the following agenda items: (a) roll call; (b) reading of minutes of last meeting; (c) reports of officers; (d) election of directors; (e) unfinished business; (f) original resolutions and new business; and (g) adjournment. The annual meeting of Ocean Gate's unit owners took place on October 27, 2001. During the meeting Mr. Walters and Mr. Carabetta, in concert with one additional unit owner, used their majority voting interests to elect themselves as directors. Mr. Walters and Mr. Carabetta received 64 percent of the votes. Dr. Blankenship, receiving 84.69 percent of the votes, became Ocean Gate's third director and "acting" president. After the election of the directors, Mr. Walters expressed his frustration about the liens on his property and the pending foreclosure action involving at that time approximately $50,000 in assessments and interest. In an effort to resolve the conflict, Dr. Blankenship proposed the following as a global concept: Homer Barrow and the newly elected Ocean Gate Phase I Condo Association Board will attempt to satisfy the concerns of the Carabetta's [sic] with regard to correction of deficiencies on their unit. The Carabettas will dismiss all lawsuits and complaints against other unit owners and boards and pay overdue assessments. Richard Walters will contribute $10,000 to the Phase I Association as final settlement of lien/foreclosure action. Unit owners will end foreclosure action against Richard Walters and forgive existing liens against Richard Walters. It is understood that the above action and commitments are interdependent and sequential in the order listed above. Minutes of Meeting of the Unit Owners, October 27, 2001. Mr. Walters initially objected to paying the $10,000. However, John Williams persuaded Mr. Walters to join in the proposed agreement. After Dr. Blankenship's motion regarding the proposed agreement was seconded, the unit owners who were present at the October 27, 2001, meeting verbally approved the proposed agreement. The unit owners never reduced the proposed agreement to writing. They never signed a copy of the minutes containing the proposed agreement. Mr. Klinehoffer was the only unit owner who was not present at the meeting. Mr. Klinehoffer had not given Mr. Weaver or any other unit owner his proxy to vote in favor of a settlement of the pending litigation against Mr. Walters. More importantly, the consideration of assessments and a settlement agreement regarding the foreclosure suit were not included as agenda items in the notice of the unit owners' meeting. On November 17, 2001, Ocean Gate's directors held another meeting. They elected the following officers: Dr. Blankenship, president; Mr. Walters, vice-president; and Mr. Carabetta, secretary/treasurer. During the November 17, 2001, meeting, Mr. Walters wanted to discuss implementing the proposed settlement agreement from the October 27, 2001, unit owners' meeting. In other words, Mr. Walters wanted Ocean Gate to drop the foreclosure suit against him in exchange for $10,000. However, the minority unit owners asserted that Mr. Carabetta had not dropped his lawsuits against Ocean Gate and the other unit owners in the 2.1 building. Mr. Weaver took the position that the proposed settlement agreement was not valid unless it was implemented sequentially beginning with coming to terms with Mr. Carabetta and Mr. Carabetta dropping all of his lawsuits. Mr. McNeely asserted that he would not agree to participate in the global agreement. Mr. Klinehoffer stated that he did not agree to the global agreement and specifically objected to any change in Mr. Walters' assessment responsibilities or liabilities. On December 10, 2001, Mr. Walters and Mr. Carabetta conducted a board of directors meeting. A facsimile transmission had been sent to Dr. Blankenship as notice of the meeting, but he was out of town and had no actual prior knowledge about the meeting or its agenda. The notice for the December 10, 2001, board of directors meeting was posted on Ocean Gate's property 48 hours in advance of the meeting. The agenda attached to the notice made reference to a non-specific item identified as "approval of resolutions" without reference to the subject matter and without mention of assessments or settlement agreements. During the December 10, 2001, board of directors meeting, Mr. Walters proposed a resolution to allow him to pay $10,000 in lieu of his past due assessments, to release the liens on his four units, and to dismiss the foreclosure action. After Mr. Walters proposed the resolution, Mr. Carabetta provided a second and voted to pass the resolution. Mr. Weaver and Mr. McNeely protested that Mr. Walters could not vote due to a conflict of interest and that without Mr. Walters' vote, the board of directors did not have a quorum. Mr. Walters then recused himself. Next Mr. Weaver contacted Dr. Blankenship by telephone. However, on faulty advice from Mr. Carabetta's personal attorney, Mr. Walters and Mr. Carabetta refused to let Dr. Blankenship vote on the resolution. Mr. Walters and Mr. Carabetta also refused to let Ocean Gate's attorney, Roseanne Perrine, participate in the meeting by telephone. Before the meeting adjourned, Mr. Walters declared that the resolution had passed and the matter was closed based on Mr. Carabetta's sole affirmative vote. Next, Mr. Walters proposed that Ocean Gate terminate its contract with May Management. Mr. Walters then introduced a representative of Coastal Realty and Property Management, Inc. (Coastal). Over Mr. Weaver's objections, Mr. Walters and Mr. Carabetta voted to replace May Management with Coastal. The greater weight of the evidence indicates that May Management was a reputable company with no major complaints from the unit owners. In a letter dated December 11, 2001, Ms. Perrine reminded Mr. Walters and Mr. Carabetta that her firm represented Ocean Gate in the foreclosure action against Mr. Walters. She claimed that the resolution passed on December 10, 2001, was invalid. She asserted that she would withdraw as counsel of record if requested to dismiss the lawsuit based on the December 10, 2001, resolution. In a letter dated December 12, 2001, Mr. Carabatta enclosed a copy of a check made payable to Ocean Gate in the amount of $8,062.54. According to the letter, the check represented the amount of Mr. Carabetta's assessments though year 2001. The letter stated that the check had been delivered to Coastal for deposit into an operating account for Ocean Gate. Finally, the letter demanded that May Management stop all foreclosure proceedings against Mr. Carabetta and release the lien of record against his property. On December 12, 2001, Mr. Carabetta authorized Coastal to open new bank accounts for Ocean Gate using his check as an initial deposit. Dr. Blankenship wrote a letter dated December 13, 2001, to Mr. Walters and Mr. Carabetta. In the letter, Mr. Blankenship objected to the lack of notice regarding the December 10, 2001, board of directors meeting and its agenda. Dr. Blankenship's letter complained that he had not been allowed to vote when he was called during the meeting. On or about December 16, 2001, the Circuit Court Judge in Case No.: CA-01-85, in the Seventh Judicial Circuit, in and for St. Johns County, Florida, entered an Order Granting in Part and Denying in Part Defendants Motion to Dismiss. The order states as follows in pertinent part: Third, the Defendants assert the Plaintiff is without standing to assess maintenance fees, file liens, or foreclose any lien because the developer never turned over control of the association to the unit owners pursuant to Article 8.5 of the Declaration of Condominium of Ocean Gate Phase I, A Condominium. Nothing contained in Article 8.5 of the Declaration supports the Defendant's assertion. The Association was given the authority to assess fees in Paragraph 7 of the Declaration, not Article 8.5. Paragraph 7 states: Assessments. To provide the funds necessary for proper operation and maintenance of the Condominium, the Phase I Association has been granted the right to make, levy, and collect Assessments and Special Assessments against all Unit Owners and Units. Fourth, the Defendants' assert the condominium association had no authority to charge condominium fees since the buildings have not yet been completed, nor have certificates of occupancy been issued. According to Ris Investment Group, Inc. v. Dep't of Business and Professional Regulation, 695 So. 2d 357 (Fla. 4th DCA 1997), the question before the Court is whether, in accordance with the Declaration, the term "unit" was intended to encompass raw land and/or condominiums which had not yet been purchased, or just land upon which the condominium units had already been built and/or purchased. A review of the pertinent portion of the Declaration is necessary to answer the foregoing questions. Paragraph 7 of the Declarations states: Assessments. To provide the funds necessary for proper operation and maintenance of the Condominium, the Phase I Association has been granted the right to make, levy, and collect Assessments and Special Assessments against all Unit Owners and Units. Paragraph 3 of the Declaration states: Definitions. ‘Unit’ means a part of the Condominium Property, which is to be subject to exclusive private ownership as defined in the Condominium Act. ‘Condominium Property’ means the parcel of real property described in Exhibit "A" attached hereto, together with all improvements built or to be built thereon, and the easements and rights appurtenant thereto. A review of Exhibit ‘A’ and ‘A-1’ reveals that the term "Condominium Property" refers to the entire condominium complex, not just one unit. Reading the pertinent portions of the Declaration, in toto, it appears as though the parties intended that the Association could assess fees from "units" which encompass any portion of the condominium property, whether improvements have been built or are to be built thereon. Accordingly the Defendant's assertion is without merit and the Motion to Dismiss in this regard is denied. Around the first of January 2002, Mr. Walters tendered a check to Ocean Gate in the amount of $10,000. The front side of Mr. Walter's check, number 652, indicates that it was for association dues in full through December 31, 2001. The backside of the check states, "Endorsement of this instrument constitutes payment in full for association dues on 605, 609, 613, and 617, Mediterranean Way, thru December 31, 2001." There is no evidence that the $10,000 check was deposited to Ocean Gate's bank account. After the December 2001 meeting, the Weavers, McNeelys, Klinehoffers, and Blankenships sent numerous letters by certified mail to Mr. Walters and Mr. Carabetta. The letters protested the manner in which Mr. Walters and Mr. Carabetta had conducted the December 10, 2001, and subsequent meetings, demanding that they remove themselves as directors, and inquiring about many other matters relating to the operation and management of Ocean Gate. Many of the letters specifically requested Mr. Walters and Mr. Carabetta to respond in writing within 30 days as required by Section 718.112(2)(a)2., Florida Statutes. Mr. Carabetta responded to one of the complaint letters. All subsequent complaint letters were referred to Alan Scott, Esquire. Mr. Scott did not provide a written response to the letters unless specifically directed to do so by Mr. Walters and/or Mr. Carabetta. Mr. Scott responded to one complaint letter. On or about January 24, 2002, Mr. Scott, writing on behalf of Mr. Walters and Mr. Carabetta, sent a letter to Dr. Blankenship and May Management. The letter stated that a majority of Ocean Gate's voting interests (Mr. Walters and Mr. Carabetta) had entered into written agreements to remove Dr. Blankenship from his position as a director. On January 29, 2002, Mr. Carabetta filed a Notice of Voluntary Dismissal without Prejudice in one of his lawsuits naming Ocean Gate as defendant. That case was Case No. CA01-858 in the Circuit Court, Seventh Judicial Circuit, in and for St. Johns County, Florida. Competent evidence indicates the Mr. Carabetta dismissed all of his lawsuits against his neighbors after the December 2001 meeting. Ocean Gate's directors issued a notice dated February 4, 2002. The notice indicated that the directors would meet on February 7, 2002. The agenda for that meeting included the following: (a) call to order; (b) roll call; (c) appointment of new director; (d) fill officer vacancies; (e) consider discharge of association attorneys and appointment of new association legal counsel; (f) consider discharge of May Management and appointment of Coastal; and (g) consider change of association mailing address and resident agent. During the directors' meeting on February 7, 2002, Mr. Walters and Mr. Carabetta appointed Mr. Barrow as a director. The directors then elected Mr. Walters as president, Mr. Barrow as vice-president, with Mr. Carabetta retaining his office as secretary/treasurer. Next, the directors voted to make the following changes: (a) to fire May Management and hire Coastal as Ocean Gate's management company; (b) to discharge Ms. Perrine and retain Mr. Scott as Ocean Gate's attorney; and (c) to update the corporate report data showing Mr. Scott as registered agent. In a letter dated February 8, 2002, Mr. Klinehoffer, Mr. Weaver, Mr. McNeely, and Dr. Blankenship advised Mr. Walters and Mr. Carabetta that the February 7, 2002, directors' meeting had not been properly noticed. The letter alleged that the notice had not been posted on the property 48 hours in advance of the meeting and that none of the minority unit owners had received notice by fax, phone, or letter. By letter dated March 1, 2002, Mr. Walters, Mr. Carabetta and Mr. Barrows advised Ms. Perrine's law firm that her services as counsel for Ocean Gate were terminated. The letter directed Mr. Perrine to turn over her foreclosure file to Mr. Scott, who would replace her as counsel for Ocean Gate. By letter dated March 25, 2002, the minority unit owners objected to the termination of Ms. Perrine as Ocean Gate's attorney. During an April 10, 2002, directors' meeting, Mr. Carabetta and Mr. Barrows voted to accept Mr. Walters' payment of $10,000 in satisfaction of his past due assessments, penalties and interest. Thereafter, Mr. Walters tendered his check for $10,000 on the same day that Ocean Gate's new attorney, Mr. Scott, dismissed the foreclosure suit against Mr. Walters. In a letter dated April 17, 2002, Mr. Weaver protested the actions taken by Mr. Walters, Mr. Carabetta, and Mr. Barrows during the April 10, 2002, directors' meeting. Additionally, the minority unit owners continued to send Mr. Walters, Mr. Carabetta, and Mr. Barrow letters complaining about various problems in the management of Ocean Gate and requesting a response within 30 days. The minority unit owners did not receive any responses to these letters. In a letter dated April 17, 2002, Petitioner's investigator, Eurkie McLemore, advised Mr. Walters about the complaints filed against him and Mr. Carabetta by the minority unit owners. Ms. McLemore requested a response to the allegations by April 30, 2002. The letter contained the following warning: Please note that if you as a MEMBER OF THE BOARD OF DIRECTORS AND OFFICER OF THE ASSOCIATION fail to respond to this letter, or if another complaint is received, the Division will pursue an enforcement resolution, which may result in civil penalties of up to $5,000 per violation. Therefore, you are urged to respond appropriately to this warning letter and to use your best efforts to comply with sections 718.111(1)(a), 718.116(9)(a), 718.112(2)(c), 718.112(2)(a)2., Florida Statutes, now and in the future. By letter dated April 30, 2002, Ocean Gate's attorney, Mr. Scott, responded to Ms. McLemore's letter. According to the letter, Mr. Walters and Mr. Carabetta denied the allegations and did not indicate that any corrective action would be taken. In June 2002 Ocean Gate's directors authorized Mr. Scott, as Ocean Gate's counsel, to file a voluntary dismissal with prejudice in the foreclosure suit against Mr. Walters. Mr. Walters sold his units at an on-site auction in July 2002. Mr. Walters executed warranty deeds for the three successful bidders in August 2002. As of January 31, 2002, Mr. Walters owed Ocean Gate past-due assessments plus interest in the amount of $62,943.56. The accrued interest on that amount as of June 16, 2003, was $15,767.36. Mr. Walters paid his quarterly assessments at the end of March and June 2002. He also paid Ocean Gate $10,000 when the foreclosure suit was dismissed in June 2002. Therefore, the total amount that Mr. Walters owed Ocean Gate as of June 16, 2003, was $68,710.92 During the hearing, Mr. Walters presented evidence that he was entitled to an offset for his expense in maintaining and repairing the 2.2 building. However, the evidence presented is insufficient to determine whether Mr. Walters' expenses were related to maintenance and repair of common elements. The greater weight of the evidence indicates that Mr. Walters is not entitled to an offset.
Recommendation Based on the foregoing Findings of Facts and Conclusions of Law, it is RECOMMENDED: That Petitioner issue a final order imposing a civil penalty on Respondents in the amount of $10,000 each and requiring Mr. Walters to make restitution to Ocean Gate in the amount of $68,710.92 plus interest on this amount from June 16, 2003, until the date payment is made. DONE AND ENTERED this 8th day of August, 2003, in Tallahassee, Leon County, Florida. S SUZANNE F. HOOD Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 8th day of August, 2003. COPIES FURNISHED: John B. Bamberg, Esquire Post Office Box 2210 St. Augustine, Florida 32085 Joseph S. Garwood, Esquire Department of Business and Professional Regulation 1940 North Monroe Street, Suite 60 Tallahassee, Florida 32399-2202 Ross Fleetwood, Division Director Division of Florida Land Sales, Condominiums, and Mobile Homes Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0892 Hardy L. Roberts, III, General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-2202
Findings Of Fact Eden Isles Condominiums are residential condominiums consisting of 7 identical buildings with 52 units in each building. Each building has a separate Declaration of Condominium which declaration is identical with the other 6 Declarations of Condominiums except as to the identification of the condominium. There are 4 swimming pools, parking areas, etc., the expenses for which are shared by the 7 condominiums. The Declarations of Condominiums provide for the percentage of the common ownership and expense associated with each unit in the condominium. The Declarations provide that the affairs of each condominium will be managed by the Eden Isles Condominium Association, Inc., Respondent. Duties of the Association include the preparation of budgets, collection of assessments for expense of maintaining common elements from each unit owner, maintenance of all common elements and generally conducting all of the business dealings associated with the common elements. From the inception of the Association in 1972 a common budget has been prepared for the 7 condominiums which is assessed against unit owners by taking total expenses for the common elements of the 7 buildings, dividing this by 7 and then allocating to each of the 52 unit owners in each building his pro rata share of those expenses. This has the effect of requiring the unit owners housed in Building D to share the cost for the replacement of an elevator in Building P or the replacement of a roof on Building C. The net result of the consolidated budget is to treat the 7 condominiums as one for the purpose of maintaining the common elements. When built and the Declarations of Condominiums recorded, Eden Isles was not a phased development.
The Issue On February 27, 1987, petitioner issued a Notice to Show Cause which alleged that respondent had violated various provisions of Chapter 718, Florida Statutes, and Chapter 7D-17 and 7D-23, Florida Administrative Code. On March 20, 1987, respondent served petitioner with a Response to Notice to Show Cause and Request for Formal Hearing. The Notice to Show Cause and response identify the specific violations alleged and issues to be resolved as follows: CHARGE: Respondent, while in control of the association, violated Section 718.116(1)(a) and (8)(a), Florida Statutes (1985), by excusing itself from the payment of its share of common expenses pertaining to assessments on unbuilt developer-owned units in Phase VI and VII of Glenwood Manor by failing to pay assessments on the units until certificates of occupancy were issued; RESPONSE: Respondent denied that it had any liability for assessments on unbuilt developer-owned units in Phases VI and VII of Glenwood Manor Condominiums, and alleged that respondent paid assessments on developer-owned units commencing with the creation of the unit pursuant to Section 718.403, Florida Statutes (1985). CHARGE: Respondent, while in control of the association, violated Section 718.112(2)(k), Florida Statutes (1980 Supp.), Section 718.112(2)(f), Florida Statutes (1985), and Rule 7D- 23.04(2), Florida Administrative Code (1985), by failing to properly waive or fully fund reserve accounts for capital expenditures and deferred maintenance for the years 1981, 1982, 1984, 1985 and 1986; RESPONSE: Respondent denied that reserve accounts were improperly waived or funded as alleged in the notice, asserting that reserves were properly waived for the years 1981, 1982, and 1984, were not waived for the year 1985, and that respondent was without knowledge as to 1986 because the turnover of the condominium took place prior to the 1986 annual meeting. CHARGE: Respondent, while in control of the association, violated Section 718.112(2)(h), Florida Statutes (1982 Supp.), and Section 718.112(2)(g), Florida Statutes (1985), by failing to adopt budgets and make assessments for the fiscal years 1984, 1985 and 1986 in an amount no less than required to provide funds in advance for payment of all anticipated current operating expenses and all of the unpaid expenses previously incurred, in that respondent loaned the association $8,000 from May 19, 1983 to May 19, 1985, to cover operating expense, with repayment plus interest due after turnover; RESPONSE: Respondent denied that it failed to adopt budgets and make assessments for fiscal years 1984, 1985 and 1986 in amounts sufficient to provide funds in advance for payment of anticipated current operating expenses and for all of the unpaid expenses previously incurred. Respondent alleged that it adopted in good faith budgets which the association estimated would be required to meet these expenses. Respondent admitted loaning money to the association to meet the needs of the association. CHARGE: Respondent failed to follow its plan of phase development as stated in the original declaration of condominium or amend the plan of phase development, in violation of Sections 718.403(1), (2)(b), (6) and 718.110(4), Florida Statutes (1983), in that the original declaration describes Phase IV as containing eight units while the amendment adding Phase IV created only seven units; RESPONSE: Respondent denied that it failed to follow its plan of phase development as stated in the original declaration of condominium in that the Declaration of Condominium provided that the developer would have the option of constructing a swimming pool in Phase IV and that the construction of the pool would require a reduction in the number of units contained in Phase IV from eight to seven. CHARGE: Respondent violated Section 718.104(4)(f), Florida Statutes (1985), by creating a condominium in which the aggregate undivided share in the common elements appurtenant to each unit, stated as a percentage, does not equal the whole, in that Glenwood Manor consists of 55 units with each unit owning a 1/56th share of the common elements. RESPONSE: Respondent denied that it created a condominium in which the aggregate undivided shares in the common elements appurtenant to each unit did not equal the whole, and alleged that any reference to a unit owner owning 1/56th undivided share in the common elements is due to a scrivener's error which respondent would be willing to correct to clarify that each unit owner owns 1/55th undivided share in the common element. CHARGE: Respondent offered 33 condominium units for sale, and entered into purchase contracts in Phase II, III, V, VI and VIII of Glenwood Manor prior to filling the subsequent phase documents with the Division of Land Sales, Condominiums, and Mobile Homes (Division) on February 5, 1986, in violation of Section 718.502(2)(a), Florida Statutes (1984 Supp.), and Rule 7D- 17.03(2), Florida Administrative Code; CHARGE: Respondent closed on 33 units prior to obtaining Division approval on February 10, 1986, of subsequent phase documents for Phases II, III, V, VI and VII, in violation of Section 718.502(2)(a), Florida Statutes (1984 Supp.), and Rule 7D- 17.01(3), Florida Administrative Code; RESPONSE TO (6) AND (7): Respondent admitted that due to the death of one of its attorneys, it inadvertently did not file the subsequent phase documents for Phases II, III, V, VI and VII prior to offering some of those units for sale and closing on the sale, but filed the necessary documents with the Division and obtained the necessary approvals upon realizing that the documents had not been filed. CHARGE: Respondent accepted a deposit on the purchase contract for unit 605, Phase V, without filing a fully executed escrow agreement for Venice Realty, Inc., with the Division, in violation of Rule 7D-17.02(6), Florida Administrative Code. RESPONSE: Respondent admitted that due to confusion between respondent and the realtor involved, Venice Realty, Inc. inadvertently accepted a deposit on a contract for the purchase of Unit 605, Phase VI, but that prior to closing on the unit, respondent directed Venice Realty to transfer the deposit to the proper escrow agent which transfer was accomplished. Respondent requested a formal hearing on the issues thus joined, and on April 9, 1987, this matter was forwarded to the Division of Administrative Hearings for further proceedings. At the hearing, petitioner presented the testimony of Glen Turnow, a resident of Glenwood Manor Condominium and association board member; Candy McKinney, Examination Specialist with the Bureau of Condominiums; John Benton, Financial Analyst, Division of Florida Land Sales, Condominiums and Mobile Homes; and Marcel Cloutier, Secretary/Treasurer of Waterside Land Corporation. Petitioner's exhibits 1-8 were admitted into evidence. Petitioner's Exhibit No. 1, Petitioner's First Request for Admissions and responses, and petitioner's Exhibit No. 2, Petitioner's First Set of Interrogatories, were admitted into evidence as late-filed exhibits. Marcel Cloutier, an officer of Waterside Land Corporation, was accepted as the authorized representative for respondent and testified on respondent's behalf. Respondent did not enter any exhibits into evidence. A prehearing stipulation was submitted by the parties prior to the hearing. No transcript of the hearing has been filed. However, both petitioner and respondent have filed proposed findings of fact and conclusions of law, and a ruling on each of the proposed findings of fact is included in the Appendix to this Recommended Order.
Findings Of Fact At all times between October 21, 1981, and February 27, 1987, respondent was the developer, as that term is defined by Section 718.103(14), Florida Statutes (1985), of Glenwood Manor Condominium. Glenwood Manor Condominium is a phased condominium consisting of seven (7) phases with fifty-five (55) units located in Sarasota County, Florida. Between October 21, 1981, and February 17, 1986, respondent was in control of the Board of Directors of Glenwood Manor Owners Association, Inc. (Association). Control of the Board of Directors of the Association was turned over to the unit owners on February 17, 1986. The Declaration of Condominium of Glenwood Manor Condominium was recorded in the public records of Sarasota County, Florida, on October 21, 1981. Paragraph II of the Declaration of Condominium provides, in pertinent part, as follows: Developer does hereby declare the property owned by it and first described above, to be Condominium property under the Condominium Act of the State of Florida, now in force and effect, to be known as: GLENWOOD MANOR CONDOMINIUMS, hereinafter referred to as the CONDOMINIUM??, and does submit said Condominium property to Condominium ownership pursuant to said Act. Developer may, but is not obligated to create additional Phases of Development of GLENWOOD MANOR CONDOMINIUMS ... which said Phases, if any, shall be operated and managed in conjunction with this Condominium through that certain nonprofit corporation known as: GLENWOOD MANOR OWNERS ASSOCIATION, INC., and hereinafter referred to as the "ASSOCIATION." The creation of any such further Phases will merge the common elements of this Condominium with the common elements of such additional Phases. As Developer creates such additional Phases, Developer shall ... record an amendment to this Declaration of Condominium describing the lands and improvements so added and the revised percentage of owner- ship in the common elements of this Condominium as so enlarged. (e.s.) The details of the phase development are set forth on Exhibit B to the Declaration of Condominium, entitled Phase Development Exhibit, which provides as follows: This Condominium is being developed as a Phase Development under Florida Statute 718.403. The first Phase of Development, which is the Phase hereby submitted to Condominium ownership, is designated on the Condominium plat described in paragraph II of the Declaration of Condominium above as Phase I. It consists of 8 Condominium Units numbered 1 through 8. Each Unit owner will own 1/8th of the common elements and share 1/8th of the common expenses and is entitled to 1/8th of common surplus relative to this Condominium. Phase II consists of 8 proposed Condominium Units as depicted on said condominium plat. At such time as Phase II is added to this Condominium by appropriate amendment of this Declaration of Condominium, if that be the case, the two phases shall then and there be considered as merged. Upon such merger each unit shall be vested with a 1/16th ownership of the common elements of said phases as merged, bear 1/16th of the common expenses of the merged phases and be entitled to 1/16th of the common surplus of the merged phases. At such time as Phase III is added to this Condominium by appropriate amendment of this Declaration of Condominium, if that be the case, the three phases shall then and there be considered as merged. Upon such mercer each unit shall be vested with a 1/24th ownership of the common elements of said phases as merged, bear 1/24th of the common expenses of the merged phases and be entitled to 1/24th of the common surplus of the merged phases. At such time as Phase IV is added to this Condominium by appropriate amendment of this Declaration of Condominium, if that be the case, the four phases shall then and there be considered as merged. Upon such merger each unit shall be vested with a 1/32nd ownership of the common expenses of said phases as merged, bear 1/32nd of the common expenses of the merged phases and be entitled to 1/32nd of the common surlus [sic] of the merged phases. At such time as Phase V is added to this Condominium by appropriate amendment of this Declaration of Condominium, if that be the case, the five phases shall then and there be considered as merged. Upon such merger each unit shall be vested with a 1/40th ownership of the common elements of said phases as merged, bear 1/40th of the common expenses of the merged phases and be entitled to 1/40th of the common surplus of the merged phases. At such time as Phase VI is added to this Condominium by appropriate amendment of this Declaration of Condominium, if that be the case, the six phases shall then and there be considered as merged. Upon such merger each unit shall be vested with a 1/48th ownership of the common elements of said phases as merged, bear 1/48th of the common expenses of the merged phases and be entitled to 1/48th of the common surplus of the merged phases. At such time as Phase VII is added to this Condominium by appropriate amendment of this Declaration of Condominium, if that be the case, the seven phases shall then and there be considered as merged. Upon such merger each unit shall be vested with a 1/56th ownership of the common elements of said phases as merged, bear 1/56th of the common expenses of the merged phases and be entitled to 1/56th of the common surplus of the merged phases. (e.s.) The units in Phases II - VII were submitted to condominium ownership pursuant to amendments to the Declaration of Condominium filed in the public records of Sarasota County, Florida, on the following dates: First Amendment Phase II November 16, 1981 Second Amendment Phase III June 10, 1983 Third Amendment Phase IV November 3, 1983 Fourth Amendment Phases V, VI and VII April 5, 1984 Each amendment provided for the merger of the common elements of the new phase with the previous phases, listed all units included in the condominium, and indicated the new share of ownership in and expenses for the common elements of the condominium for each unit. For example, the First Amendment of Declaration of Condominium, which added Phase II, consisting of eight units, to the condominium, which initially consisted of eight units, provided: As a result of the addition of the Phase II lands to the Condominium, as set forth above, each unit of Glenwood Manor, Condominiums as amended heretofore and hereby, shall be vested with a 1/16th owner- ship of the common elements of the merged Phases I and II lands and each unit shall bear a 1/16th share of the common expenses and be entitled to a 1/16th share of the common surplus of said merged phases of development. Both the First and Second Amendments added eight units to the condominium in accordance with the Phase Development Exhibit included in the Declaration of Condominium. However, the Third Amendment, adding Phase IV, added only seven units to the condominium, resulting in a total of 31 units. The Third Amendment correctly stated that each unit "shall be vested with a 1/31st ownership of the common elements of the merged Phases I, II, III and IV lands and each unit shall bear a 1/31st share of the common expenses ..." However, when the Fourth Amendment was filed, adding Phases V, VI and VII, each consisting of eight units, the share of ownership in the common elements for each unit was stated as 1/56th, whereas the total number of units included in the condominium was correctly shown as 55. Each amendment to the Declaration of Condominium ratified and confirmed the declaration and plat "[e]xcept as expressly modified" by the amendment. Unit owner and board member Glen Turnow stated that it was his understanding that he owns 1/55th of the common elements and that each unit owner pays 1/55th of the common expenses at Glenwood Manor; however, he has no documents indicating his ownership interest to be other than 1/56th of the common elements. Although the amendment creating the units in Phases VI and VII was filed on April 5, 1984, respondent paid no monthly assessments on developer-owned units in Phases VI and VII until Certificates of Occupancy were issued for those phases. Certificates of Occupancy for Phases VI and VII of Glenwood Manor were issued on October 25, 1985, and November 13, 1985, respectively. The assessment per unit of the condominium per month was $55 from April, 1984, through August, 1985; as of September, 1985, the assessment increased to $70 per unit. For the developer-owned units in Phases VI and VII from the date of amendment until the certificates of occupancy were filed, the assessments would have been $17,182.65. At 18 percent simple interest computed from the end of the year respondent owed for the assessments to the day before turnover of the association to the owners, interest on the assessments totals $2,029.92. Respondent admitted that it paid no assessments on the units in Phase VI and VII until Certificates of Occupancy were issued. Mr. Cloutier testified that respondent did not pay the assessments because it received legal advice that a unit is not in existence until a certificate of occupancy is issued. However, the first assessment was paid on November 4, 1981, and the certificates of occupancy for the first sixteen units were not issued until December 17, 1981. Mr. Cloutier also testified that respondent relied on language in the Declaration of Condominium which excused it from paying such assessments until the certificates of occupancy were issued. However, respondent did not introduce into evidence the portion of the Declaration on which it relied. Further, the Fourth Amendment to the declaration, which added the units in Phases VI and VII to the condominium, clearly provided that each unit would bear a proportionate share of the "common expenses." In the declaration "assessment" is defined as the "share of the funds required for the payment of common expenses." Respondent admitted that it made no guarantee to unit owners at Glenwood Manor Condominium which would excuse it from payment of assessments on developer-owned units other than pursuant to the provisions of Section 718.116(8)(a)1., Florida Statutes (1985), which provides, in pertinent part, as follows: (8)(a) No unit owner may be excused from the payment of his share of the common expense of a condominium unless all unit owners are likewise proportionately excused from payment, except ... in the following cases: If the declaration so provides, a developer or other person who owns condominium units offered for sale may be excused from the payment of the share of the common expenses and assessments related to those units for a stated period of time subsequent to the recording of the declaration of condominium. The period must terminate no later than the first day of the fourth calendar month following the month in which the closing of the purchase and sale of the first condominium unit occurs ... The closing of the purchase and sale of the first unit at Glenwood Manor occurred on October 20, 1981. Reserves are monies put aside each month to provide for future replacement or repair of major items. The original budget provided for funding of reserves in the amount of $6.00 per unit per month. Funding of reserves at Glenwood Manor for 1981 was waived at a meeting of unit owners on January 10, 1982; for 1982, on January 10, 1982; for 1983 on January 10, 1983, and for 1984, on August 16, 1985. If the reserves cannot be waived retroactively, the respondent would owe $3,036.55 for reserves that were not properly waived. However, respondent made one deposit to reserves in the amount of $1,800; therefore, respondent's total liability for underfunded reserves would be $1,236.55. Between May 19, 1983, and May 20, 1985, the developer made the following loans to the association: June 19, 1983 $ 500 at 13 percent interest June 3, 1983 $ 500 at 13 percent interest August 6, 1984 $1200 at 12 1/2 percent interest September 7, 1984 $1500 at 12 1/2 percent interest September 28, 1984 $2300 at 12 1/2 percent interest March 2, 1985 $ 600 at 12 1/2 percent interest May 20, 1985 $1400 at 12 percent interest On July 14, 1983, the first two loans were repaid with interest. The loans made from the developer to the association during the years 1983, 1984 and 1985 were necessary to provide operating funds for the association. At a meeting of unit owners on August 25, 1985, it was decided that repayment of these loans would take place after turnover of control of the association to the non-developer owners. On the dates these loans were made, the percentages of units which had been sold by the developer were as follows: August 6, 1984 - 56.4 percent; September 7, 1984 - 56.4 percent; September 28, 1984 - 56.4 percent; March 3, 1985 - 60 percent; and May 20, 1985 - 61.8 percent. If the repayment of the loans were based on the percentage of units owned by the developer vis-a-vis the non- developers on the date of the loan, the developer would owe $2954.80 and the non-developer unit owners would owe $4045.20. Respondent offered 33 condominium units for sale, and entered into purchase contracts for units in Phases II, III, V, VI and VII of Glenwood Manor Condominiums, prior to February 5, 1986. Respondent closed on the sales of 33 units in Phases II, III, V, VI and VII of Glenwood Manor Condominiums prior to February 10, 1986. Respondent first filed subsequent phase documents with the Division of Florida Land Sales, Condominiums and Mobile Homes for Phases II, III, V, VI and VII of Glenwood Manor Condominium on February 5, 1986. On August 11, 1985, Venice Realty accepted a deposit from the Days for the purchase of Unit 605 at Glenwood Manor Condominium. Ms. McKinney testified that the Division's records indicated only that the Law Firm of Rosen, Able and Bryant would serve as escrow agent for sales of units at Glenwood Manor Condominium. In its answer to the charges, respondent admitted that Venice Realty was not the proper escrow agent for respondent.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a Final Order be entered finding that respondent committed the violations alleged in Charges 1-7, finding that respondent did not commit the violation alleged in Charge 8, and imposing a civil penalty against respondent of Four Thousand, Two Hundred Fifty Dollars ($4,250), assessed as follows: For the violations set forth in the first charge, $1,000; for the violations set forth in the second charge, $1,000; for the violations set forth in the third charge, $1,000; for the violations set forth in charges four and five, $750; and for the violations set forth in charges six and seven, $500. It is further RECOMMENDED that the Final Order require that the respondent take the following affirmative action: Within sixty (60) days of the Final Order, file the appropriate documents in the public records of Sarasota County, Florida, indicating that Glenwood Manor Condominium consists of 55 units, and that each unit's share of the common elements, expenses, and surplus is 1/55th. The filing of such amendments shall comply fully with the provisions of Chapter 718, Florida Statutes, and Rule 7D-17, Florida Administrative Code. Within thirty (30) days of issuance of the Final Order, remit permanently and irretrievably to Glenwood Manor Owners' Association, Inc., the respondent's liability for assessments and reserves in the amount of $19,210.16 for assessments and $1,236.55 for reserves. Accept as full repayment of the loans made by respondent to the association, the sum of $4,045.20. DONE AND ENTERED this 4th day of March, 1988, in Tallahassee, Leon County, Florida. DIANE A. GRUBBS Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 4th day of March, 1988.
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.
