Findings Of Fact The facts in this case were generally undisputed. Respondent is a registered real estate broker and was so acting at all times relevant to the complaint filed herein. Respondent and her husband, George L. Mann, are resident managers of an apartment complex known as Ocean Beach Club at Flagler Beach, Florida. Many of these units are owned by individuals and are rented. Sheldon Carlson owned one of these rented apartments which he had listed with Respondent to sell. Sawyer Young, a businessman from Virginia, was interested in purchasing an apartment in this complex as an investment and after Respondent had showed him two unfurnished units expressed a desire to see a furnished apartment. Respondent showed him the apartment owned by Carlson. Young came back the following morning and asked to see this apartment again after which he submitted an offer to purchase the apartment. This offer was similar to the Contract for Sale and Purchase as shown on Exhibits 1 and 3 with one major exception, viz. that "small appliances, pots, pans, dishes, & etc., and sweeper" had not been deleted. This contract dated January 28, 1976 provided for a deposit of $300 and a purchase price of $30,500. At the time the offer was made Respondent was aware that the seller did not desire to sell the small appliances and kitchen articles, however, this was the offer that was made by the buyer. The contract further provided that if the contract was not accepted by the seller prior to 6:00 P.M. on January 29, 1976 the offer was null and void and the deposit would be returned to the buyer. Upon making the offer the buyer departed for Virginia. Respondent contacted seller, who lived in Mount Dora, by telephone and communicated the offer to him. Carlson told Respondent that he would not include the small appliances, etc. at the offering price and asked her to delete those items from the contract. He confirmed this qualified acceptance of the offer in a mailgram dated 9:19 A.M., January 29, 1976. Upon receipt of this information from seller Respondent deleted those items from the contract that had already been executed by the buyer. When the Respondent contacted the buyer a day or so later in Virginia by telephone and communicated the counter offer of the seller to him he gave every indication that he would accept the changes made by the seller. During the ensuing month Respondent was in communication with the buyer several times to arrange for a closing date. The original closing date was changed by the buyer and shortly before the next scheduled closing date the buyer informed Respondent that he would not go through with the sale and demanded return of his deposit. Respondent advised the buyer that the attorney had performed certain work and the buyer authorized her to pay the attorney the $75 for legal services he had performed. One month later Respondent split the $225 remaining of the deposit between herself and the seller upon the assumption that the buyer had breached the contract. Thereafter a complaint was made to the Real Estate Commission and the investigation and the complaint filed herein followed.
Findings Of Fact This matter arose from the sale of a certain apartment building in Dunedin, Florida, known as Piper's Ten. This building was owned by two foreign corporations, the principals of which are represented by a Mr. Eugene Morgan of Boston, Massachusetts. Douglas S. Kennedy, Defendant, is a registered real estate salesman whose license was registered with Lockhart Realty, Inc., of Seawalls Point, Florida, the broker for which was his then wife Trude Kennedy. The Defendant and his wife were involved in domestic difficulties which eventually lead to a divorce. When the Defendant and his wife separated sometime in late 1972, he sought out his friend and business associate, Eugene Morgan, who suggested that the Defendant move to Dunedin, Florida and reside in the model apartment at Piper's Ten. The Defendant heeded the suggestion and took on the assignment as resident manager of the Piper's Ten Apartments at a final salary of approximately $1,000 per month. According to the Defendant and Mr. Morgan, his prime responsibility was seeing that Morgan and his co-investors in the property "receive a fair shake with the local people in and around Dunedin, Florida." At the time the property was registered with a real estate broker of Dunedin, Florida, whose name is Mr. Woodrow Register, and he had an exclusive listing on the sale of Piper's Ten Apartments. The initial arrangement between Morgan and the Defendant was that the Defendant would live in the apartment rent free and he would be paid an amount to defray his expenses for the management responsibility. When the Defendant became dissatisfied with this arrangement approximately 3 weeks later, he notified Mr. Morgan that he could no longer remain in Dunedin under that arrangement. This set the stage for the new arrangement referred to above whereby the Defendant was to be paid $1,000 per month payable out of the proceeds, when and if the building was sold. According to Morgan, this arrangement was to last for at least 4 to 5 months or until such time as a purchaser was located to purchase the apartment building. During April 1973, Kelly Prior Realty of Dunedin produced a proposed purchaser for the property at the purchase price of $400,000 which was the amount set by the owners who had agreed to pay a real estate commission of 5 percent. Kelly Prior Realty prepared a proposed contract of sale and purchase and submitted it to the offices of the attorney for the seller, Raymond Argyros, who after certain modifications, submitted the contract to the sellers for their approval. At the closing in May 1973, Kelly Prior, the selling broker, received a full commission of 5 percent as agreed upon by their sellers in their open listing of the property. According to attorney Argyros, the Defendant received a check for $5,000 as agreed upon between the Defendant and Morgan and according to him, the contract erroneously referred to such payment as a commission. It is this $5,000 payment which is the matter of controversy in this hearing. According to Morgan, Defendant was hired to "see if he could get Morgan and his associates a fair shake with the local people in Dunedin respecting the management of the apartment building." Originally the two story building was primarily an office space on the lower level and approximately ten apartments on the upper level. The plan was to rent the upper level as a condominium and to lease the office space on the lower level. Morgan was unable to sell the condominiums on the upper level based on the fact that prospective purchasers did not want to buy condominiums in a building approximately 50 percent comprised of office space. With this fact, Morgan and his associates made the decision to convert the lower level to apartments as well. When this was done, the Defendant saw to it that the building was properly managed and provided feedback to Morgan in order to keep him advised at all times of the situation with the apartment building. When the building was sold, Kelly Prior Realty Company received the commission of $20,000 which represented 5 percent of the total purchase price and the Defendant received $5,000 for his efforts. In this regard, the Defendant received a check drawn in the amount of $5,000 and the check bore a notation that the amount represented a commission. When the Defendant noted this, he changed the face of the check to reflect that the amount paid was intended to be an agency fee for the sale of Piper's Ten. The Defendant played no part in the drafting of the purchase and sales agreement. After the closing, the Defendant also was given the furniture from the model apartment and he thereafter departed for Puerto Rico. Trude Kennedy, the Defendant's former wife, testified that Lockhart Realty was in no way associated with the sale of Piper's Ten. Trude Kennedy had several conversations with Mr. Morgan regarding the sales and problems which he encountered with Piper's Ten. However the basis of these statements involved other businesses which she had with Morgan regarding the sale and subdivision of other properties in and around Dunedin. Mrs. Kennedy was unaware of the amount paid to the Defendent and she made no claim for such funds when the payment was disbursed. Morgan denied that the amount in any way reflected a commission but rather was payment for the services which the Defendant rendered in the general upkeep and management of the building such that he could be fully advised at all times of the progress, if any, that the local realtors were having with the sale of the apartment building. With these facts, the undersigned is of the opinion that the $5,000 sum given to Kennedy represented the amount as per the agreement he had with Morgan. There was no evidence that he participated in any way with the sale of the building other than to advise Morgan of any efforts that the other local realtors played in locating purchasers. It was noted that the check which represented payment for these services indicated that the amount originally was a commission. However, the Defendant, when noting that the designation of a commission was included on the check, immediately advised Mr. Argyros, the seller's agent, to correct that mistake by placing a designation that the amount represented was intended to be a "seller's agent" fee. This correction was made prior to the time the check was deposited and it was done with the consent of attorney Argyros. There was no evidence that the Defendant demanded such amount as a commission for his efforts as a salesman or that he showed the property to prospective purchasers as a real estate salesman. Thus it appears that the amount paid to the Defendant was an amount given him for his services as testified to by Morgan. The amount paid also appears to correspond with the arrangement as testified to by Morgan. I therefore find that the $5,000 sum paid the Defendant represented an amount for services that he rendered, not as a real estate salesman, but rather, as a property manager of the Piper's Ten Apartment building.
Findings Of Fact Petitioner herein is the State of Florida, Department of Business Regulation, Division of Florida Land Sales Condominiums and Mobile Homes. One Respondent in this matter is Tanwin Corporation (hereinafter "Tanwin") the developer of two residential condominiums known as Vista Del Lago Condominium I and Vista Del Lago Condominium II, located in West Palm Beach, Florida. The other Respondent is Vista Del Lago Condominium Association, Inc. (hereinafter "Association"), the condominium association for Vista Del Lago Condominiums I and II. Transition from developer control of the Association has not occurred, and at all times pertinent hereto, Respondent Tanwin has in fact controlled the operation of the Respondent Association. The Declaration of Condominium for Vista Del Lago Condominium I (hereinafter "Condo I") was recorded in the public records on December 12, 1980. The Declaration of Condominium for Vista Del Lago Condominium II (hereinafter "Condo II") was recorded in the public records on March 11, 1982. Condo I contains 16 units; and Condo II contains 18 units. Herbert and Judith Tannenbaum are the President and Secretary, respectively, of both Tanwin and the Association and are members of the Association's Board of Directors. The developer-controlled Association failed to provide a proposed budget of common expenses for Condo I for the fiscal year 1982. The developer-controlled Association failed to provide a proposed budget of common expenses for Condo I and Condo II for 1983 until the unit owner meeting in March or April of 1983. The budget provided at that time contained no provision for reserves. Although the document alleged to be the 1983 proposed budget admitted in evidence as Petitioner's Exhibit numbered 17 does contain an allocation for reserves, Petitioner's Exhibits numbered 17 is not the 1983 budget disseminated to unit owners at the annual meeting in 1983. In addition, the 1983 budget was received by the unit owners at the meeting at which the proposed budget was to be considered and not prior to the budget meeting. Statutory reserves were not waived during the period December, 1980 through December, 1983. The "start-up" budgets contained as exhibits to the Declarations of Condominium indicate that reserves were to be collected from unit owners at the rate of $15 per month per unit at least during the first year commencing December of 1980 with the first closing. Hence, reserves were not waived December, 1980 through December, 1981. From November, 1981 through December, 1983, no vote to waive reserves was taken by the unit owners. Although reserves were discussed at the 1983 meeting, no vote was taken during the period in question including 1983, to waive reserves. The developer as owner of unsold units; has failed to pay to the Association monthly maintenance for common expenses during the period December, 1980 through December, 1983. The developer Tanwin has, in the nature of an affirmative defense, alleged the existence of a guarantee of common expenses pursuant to Section 718.116(8), Florida Statutes, which purportedly ran from the inception of the condominiums to date. Accordingly, the initial issue for resolution is whether the developer pursuant to statute guaranteed common expenses. Section 718.116(8)(b) provides that a developer may be excused from payment of common expenses pertaining to developer-owned units for that period of time during which he has guaranteed to each purchaser in the declaration of condominium, purchase contract or prospectus, or by an agreement between the developer and a majority of unit owners other than the developer, that their assessments for common expenses would not increase over a stated dollar amount during the guarantee period and the developer agrees to pay any amount necessary for common expenses not produced by the assessments at the guaranteed level receivable from other unit owners, or "shortfall". Actual purchase agreements were admitted in evidence. Respondents seek to label certain unambiguous language in the purchase contracts as a guarantee. This language, uniform throughout all those contracts as well as the form purchase contract filed with Petitioner except that of Phillip May, provides as follows: 9. UNIT ASSESSMENTS. The Budget included in the Offering Circular sets forth Seller's best estimation of the contemplated expenses for operating and maintaining the Condominium during its initial year. Purchaser's monthly assessment under the aforementioned Budget is in the amount of $109.00. Until Closing of Title, Seller has the right (without affecting Purchaser's obligation to purchase in accordance with the provisions hereof, to modify the estimated Budget and assessments periodically if then current cost figures indicate that an updating of estimates is appropriate). [Emphasis added]. That portion of the purchase agreement set forth above does not constitute a guarantee. Instead, the purchase agreement simply includes a best estimation of expenses for the initial year. It does not govern assessments after the expiration of one year, and even as to the initial year, the language in the contract sets forth only a "best estimation" and not a guarantee that the assessments would not increase during the "guarantee period." Phillip May's purchase agreement reflects that he purchased his unit in August of 1983; after condominium complaints had been filed by the unit owners with the Florida Division of Land Sales Condominiums and Mobile Homes. His purchase agreement has been altered from the purchase agreement of earlier purchasers in that his purchase agreement expressly, by footnote contains a one- year guarantee running from closing. The guarantee contained in his purchase agreement was presented by the developer without any request from Mr. May for the inclusion of a guarantee in his purchase agreement. The guarantee language in this purchase agreement is useful for the purpose of comparing the language with those portions of the pre-complaint contracts which Respondents assert contain or constitute a guarantee. Similarly it is determined that no guarantee of common expenses exists in the Declarations of Condominium for Condo I and II or in the prospectus for Condo II. While Respondents seek to assert the existence of a guarantee in those documents, the portions of those unambiguous documents which according to Respondents contain a guarantee, have no relation to a guarantee or do not guarantee that the assessments for common expenses would not increase. Respondent Tanwin also seeks to prove the existence of an oral guarantee which was allegedly communicated to purchasers at the closing of their particular condominium units. However, purchasers were told by Herbert or Judith Tannenbaum only that assessments should remain in the amount of $109 per month per unit unless there existed insufficient funds in the Association to pay bills. This is the antithesis of a guarantee. During a guarantee period the developer in exchange for an exemption from payment of assessments on developer- owned units agrees to pay any deficits incurred by the condominium association. Accordingly, no guarantee was conveyed at the closing of condominium units. Further Respondent Tanwin's additional contention that an oral guarantee arose when the condominiums came into existence is plainly contradicted by the express language throughout the condominium documents and purchase agreements that there exist no oral representations and that no reliance can be placed on any oral representations outside the written agreements. Further, prior to December, 1983, no reference was ever made by the developer either inside or outside of unit owner meetings as to the existence of the alleged guarantee. Moreover, a comparison between on the one hand, the 1981 and 1982 financial statements prepared in March of 1983, and on the other hand, the 1983 financial statements, clearly reveals that even the accountant for Tanwin was unaware of the existence of a guarantee during the period in question. While the 1983 statements, prepared in 1984 after unit owners filed complaints with Petitioner contain references to a developer guarantee, the 1981 and 1982 statements fail to mention a guarantee. Instead, included in the 1981 and 1982 statements of the Association are references under the current liabilities portion of the balance sheets for those years, to a "Due to Tanwin Corporation" liability in the amounts of $2,138 for 1981 and $2,006 for 1982. Petitioner through Ronald DiCrescenzo, the C.P.A. for Tanwin, established that at a minimum, the $2,006 figure reflected in the 1982 balance sheet was in fact reimbursed to Tanwin. Section 7D-18.05(1),(c), Florida Administrative Code, entitled "Budgets" and effective on July 22, 1980, was officially recognized prior to the final hearing in this cause. That section requires each condominium filing to include an estimated operating budget which contains "[a] statement of any guarantee of assessments or other election and obligation of the developer pursuant to Section 718.116(8); Florida Statutes." The estimated operating budgets for Condo I and Condo II do not include a statement of any guarantee of assessments or other election or obligation of the developer. The testimony of Herbert Tannenbaum with regard to an oral (or written) guarantee is not credible. He first testified that an oral guarantee was communicated to purchasers at the closing of each unit. In contrast, Tannenbaum also testified that the first discussion he had regarding a guarantee occurred with his attorney after the filing of the Notice to Show Cause in this action. Tannenbaum further testified that he did not understand what a guarantee was until after this case had begun and was unaware of the existence of any guarantee prior to consulting with his attorney in regard to this case. Moreover, Ronald DiCrescenzo, the C.P.A. for Tanwin testified that it was Tannenbaum who informed DiCrescenzo of the existence of a guarantee but DiCrescenzo was unable or unwilling to specify the date on which this communication occurred. Respondent Tanwin also seeks to establish the existence of a guarantee through Petitioner's Exhibit numbered 5 which is a document signed by less than the majority of unit owners even including Tannenbaum and his son, and signed on an unknown date during 1984. The document provides: The undersigned Unit Owners at the Vista Del Lago Condominium do not wish to give up the benefits of the developer's continuing guarantee which has been in effect since the inception of the condominium and agreed to by a majority of unit owners and whereby the developer has continuously guaranteed a maintenance level of no more than $109.00 per month per unit, until control of the condominium affairs is turned over to the unit owners in accordance with Florida's Condominium law. According to Respondent Tanwin, Petitioner's Exhibit numbered 5 constitutes a memorandum signed by unit owners evidencing their belief that a continuous guarantee of the developer has been in effect. First, however, this document was never admitted into evidence for that purpose; rather the document was admitted only to establish the fact that a unit owner had signed the document. Second, this document, unlike the purchase agreements or other condominium documents is ambiguous and is not probative of the existence of a guarantee. Instead, the evidence is overwhelming that the document was prepared by the developer in the course of this litigation for use in this litigation. Moreover, unit owner testimony is clear regarding what Mr. and Mrs. Tannenbaum disclosed to unit owners as the purpose for the document when soliciting their signatures, to- wit: that the document was a petition evidencing the unit owners' desire that their monthly maintenance payments not be increased and that prior confusion as to whether reserves had been waived needed resolution. Respondent Tanwin did pay assessments on some developer-owned units during the period December, 1980 through December, 1983, a fact which is inconsistent with its position that a guarantee existed. Noteworthy is the statement by Ronald DiCrescenzo, the C.P.A. for Tanwin, in his August 16, 1983, letter to Herbert Tannenbaum wherein it is stated: "It is my understanding that you are doing the following: . . .[Playing maintenance assessments on units completed but not sold." It is inconceivable that a developer during a "guarantee period" would pay assessments on some developer units as the purpose of the statutory guarantee is to exempt the developer from such assessments. The assessments for common expenses of unit owners other than the developer have increased during the purported guarantee period. At least some, if not all, unit owners paid monthly assessments of $128 - $130 for at least half of 1984. This fact is probative of the issue of whether a guarantee existed because unit owner assessments must remain constant during a guarantee period. At the Spring 1984 meeting chaired by Mr. Tannenbaum a vote was taken for the first time as to whether reserves should be waived. Although only 21 owners were present in person or by proxy; the vote was tabulated as 12 in favor and 12 opposed. Mr. Tannenbaum, therefore, announced an increase in monthly maintenance payments to fund reserves. Thereafter owners began paying an increased assessment. The fact that the developer-controlled Association collected increased assessments from unit owners during 1984, and had up to the time of the final hearing in this cause made no effort to redistribute those funds suggests that the developer-controlled Association and the developer considered themselves to be under no obligation to keep maintenance assessments at a constant level. There was no guarantee of assessments for common expenses by Tanwin from December, 1980, through at least December, 1983. Since there was no guarantee during the time period in question, Respondent Tanwin is liable to the Respondent Association for the amount of monthly assessments for common expenses on all developer-owned units for which monthly assessments have not been paid. In conjunction with the determination that Tanwin owes money to the Association (and not vice versa), Respondent Tanwin attempted to obtain an offset by claiming the benefit of a management contract between either Tannenbaum or Tanwin and the Association. No such management contract exists, either written or oral. Although a management contract is mentioned in one of the condominium documents there is no indication that one ever came into being, and no written contract was even offered in evidence. Likewise, no evidence was offered to show the terms of any oral contract; rather, Tannenbaum admitted that he may never have told any of the unit owners that there was a management contract. Tannenbaum's testimony is consistent with the fact that no budget or financial statement reflects any expense to the Association for a management contract with anyone. Likewise, the "budget" contained within Condo II's documents recorded on March 11, 1982, specifically states that any management fee expense was not applicable. Lastly, Tannenbaum's testimony regarding the existence of a management contract is contrary to the statement signed by him on February 10, 1981, which specifically advised Petitioner that the Association did not employ professional management. To the extent that Respondent Tanwin attempted to establish some quantum meruit basis for its claim of an offset, it is specifically found that no basis for any payment has been proven for the following reasons: Tannenbaum had no prior experience in managing a condominium, which is buttressed by the number of violations of the condominium laws determined herein; Tannenbaum does not know what condominium managers earn; no delineation was made as to specific duties performed by Tannenbaum on behalf of the Association as opposed to those duties performed by Tannenbaum on behalf of Respondent Tanwin; since there was no testimony as to duties performed for the Association, there was necessarily no testimony as to what duties were performed on behalf of the Association in Tannenbaum's capacity as President of the Association and member of the Association's Board of Directors as opposed to duties allegedly performed as a "manager." Tannenbaum's testimony as to the value of his "services" ranged from $10,000 to $15,000 a year to a lump sum of $60,000; it is interesting to note that the value of his services alone some years exceeded the Association's annual budget. Respondent Tanwin has failed to prove entitlement to an offset amount, either pursuant to contract or based upon quantum meruit. The financial statements of the Association--including balance sheets, statements of position, and statements of receipts and expenditures--for 1980-81 and for 1982 reveal consolidation of the records for Condo I and Condo II in these statements. Additionally, DiCrescenzo admitted that separate accounting records were not maintained for each condominium and Herbert Tannenbaum also admitted to maintaining consolidated records. Accordingly, the developer- controlled Association failed to maintain separate accounting records for each condominium it manages. The By-Laws of the Association provide: SECTION. 7. Annual Audit. An audit of the accounts of the Corporation shall be made annually by a Certified Public Accountant - and a copy of the Report shall be furnished to each member not later than April 1st of the year following the year in which the Report was made. The financial statement for 1981 bears the completion date of February 9, 1983. The 1982 financial statement contains a completion date of March 1, 1983. Both the 1981 and the 1982 statements were delivered to the unit owners in March or April, 1983. Accordingly, Respondents failed to provide the 1981 financial report of actual receipts and expenditures in compliance with the Association's By-Laws. As set forth hereinabove, statutory reserves were not waived during the period of December, 1980 through December, 1983. Being a common expense, reserves must be fully funded unless waived annually. In the instant case, Respondents, rather than arguing that reserves had in fact been fully funded, sought to prove that reserves had been waived during the years in question. The fact that reserves were not fully funded is established by reviewing the financial statements. In accordance with the start-up budgets, reserves were initially established at the level of $15.00 per unit per month. Therefore, during 1981, for Condo I containing sixteen units, the Association's reserve account should contain 16 multiplied by $15.00 per month multiplied by 12 months, or $2,880. Since the Declaration of Condominium for Condo II was not recorded until March 11, 1982, assessments for common expenses including allocations to reserves, were not collected from Condo II during 1981. Therefore, the balance in the reserve account as reflected in the balance sheet for the year 1981 should be no less than $2,880. The actual balance reflected in this account is $2,445. Both Tannenbaum and DiCrescenzo testified that most of the balance in that account was composed of purchaser contributions from the closing of each condominium unit "equivalent to 2 months maintenance to be placed in a special reserve fund" as called for in the purchase contracts. Tannenbaum further admitted that instead of collecting $15.00 per month per unit for reserves, the money that would have gone into the reserve account was used "to run the condominium." Similarly, for the year ending 1982, the balance in the reserve account also reflects that reserves were not being funded. First, the amount of reserves which should have been set aside in 1981 of $2,880 is added to the total amount of reserves which should have been collected for 1982 for Condo I ($2880), giving a total figure of $5,760. To this figure should be added the reserves which should have been collected from units in Condo II during 1982. This figure is derived by multiplying the total number of units in Condo II, 18 units, by $15.00 per unit multiplied by 8 months (since Condo II was recorded in March of 1982) to yield a figure for Condo II of $2,160. Adding total reserve assessments for Condo I and II, $2,160 plus $5,760 equals $7,920 the correct reserve balance at the close of 1982. The actual balance for the period ended December 31, 1982, is reflected to be $4,138. Similarly, the amount of reserves required for Condos I and II as of December 31, 1983, can be calculated using the same formula. Although the 1983 financial statement prepared in 1984 reflects the existence of a funded reserve account, both DiCrescenzo and Tannenbaum admitted there was no separate reserves account set up during the time period involved herein. Statutory reserves were not waived and were not fully funded for the period of December, 1980 through December, 1983. All parties hereto presented much evidence, unsupported by the books and records of the corporations, for the determination herein of the amounts of money owed by Respondent Tanwin to the Association to bring current the total amount which Tanwin should have been paying to the Association from the inception of each condominium for monthly maintenance on condominium units not yet sold by the developer, together with the amount owed by Tanwin to the Association so that a separate reserve account can be established and fully funded for all years in which the majority of unit owners including the developer have not waived reserves. No findings of fact determining the exact amount Tanwin owes to the Association will be made for several reasons: first, the determination of that amount requires an accounting between the two Respondents herein which is a matter that can only be litigated, if litigation is necessary, in the circuit courts of this state; second, the determination of the amount due between the private parties hereto is not necessary for the determination by Petitioner of the statutory violations charged in the Amended Notice to Show Cause; and third, where books and records exist; one witness on each side testifying as to conclusions reached from review of those records, even though the witnesses be expert, does not present either the quantity or the quality of evidence necessary to trace the income and outgo of specific moneys through different corporate accounts over a period of time, especially where each expert opinion is based upon questionable assumptions. It is, however, clear from the record in this cause that Respondent Tanwin owes money to the Respondent Association and further owes to the Respondent Association an accounting of all moneys on a specific item by item basis.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law it is, therefore, RECOMMENDED that a Final Order be entered: Finding Respondent Tanwin Corporation guilty of the allegations contained in Counts 1-7 of the Amended Notice to Show Cause; Dismissing with prejudice Count 8 of the Amended Notice to Show Cause; Assessing against Respondent Tanwin Corporation a civil penalty in the amount of $17,000 to be paid by certified check made payable to the Division of Florida Land Sales, Condominiums and Mobile Homes within 45 days from entry of the Final Order herein; Ordering Respondents to forthwith comply with all provisions of the Condominium Act and the rules promulgated thereunder; And requiring Tanwin Corporation to provide and pay for an accounting by an independent certified public accountant of all funds owed by the developer as its share of common expenses on unsold units and the amount for which Tanwin is liable in order that the reserve account be fully funded, with a copy of that accounting to be filed with Petitioner within 90 days of the date of the Final Order. DONE and RECOMMENDED this 9th day of August, 1985, at Tallahassee, Florida. LINDA M. RIGOT, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 9th day of August, 1985. COPIES FURNISHED: Karl M. Scheuerman, Esquire Thomas A. Bell, Esquire Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301 Joseph S. Paglino, Esquire 88 Northeast 79th Street Miami, Florida 33138 E. James Kearney, Director Department of Business Regulation Division of Florida Land Sales Condominiums and Mobile Homes 725 South Bronough Street Tallahassee, Florida 32301 Richard B. Burroughs, Jr., Secretary Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301 ================================================================= AGENCY FINAL CONSENT ORDER ================================================================= STATE OF FLORIDA DEPARTMENT OF BUSINESS REGULATION DIVISION OF FLORIDA LAND SALES, CONDOMINIUMS AND MOBILE HOMES DEPARTMENT OF BUSINESS REGULATION, DIVISION OF FLORIDA LAND SALES, CONDOMINIUMS AND MOBILE HOMES, Petitioner, CASE NO. 84-0437 DOCKET NO. 84001MVC TANWIN CORPORATION and VISTA DEL LAGO CONDOMINIUM ASSOCIATION, INC. Respondents. / FINAL CONSENT ORDER The Division of Florida Land Sales, Condominiums and Mobile Homes, (hereinafter the Division), Vista Del Lago Condominium Inc., (hereinafter the Association), and Tanwin Corporation, (hereinafter Tanwin), hereby stipulate and agree to the terms and issuance of this Final Consent Order as follows: WHEREAS, the Division issued a Notice to Show Cause directed to Respondents and, WHEREAS, after issuance of the Recommended Order in this cause, the parties amicably conferred for the purpose of achieving a settlement of the case, and WHEREAS, Tanwin is desirous of resolving the matters alleged in the Notice to Show Cause without engaging in further administrative proceedings or judicial review thereof, NOW, THEREFORE, it is stipulated and agreed as follows:
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 The Declaration of Condominium for Oaks of Broward was filed by Margen, a Florida Partnership, in May, 1974 in the Public Records of Broward County and with the Petitioner. All documents required to be filed by Margen with Petitioner were filed and the fees paid. Simultaneously a recreational lease was filed of property adjacent to the condominium in which Barnett Bank of Hollywood was named as Trustee and Lessor, and The Oaks Condominium Association, Inc. of Broward as Lessee. Between May 1974 and early 1976 Margen sold to individuals 39 condominium units at Oaks of Broward. In early 1976, Housing Investment Corporation, mortgagee, began foreclosure proceedings which resulted in title to all of the Oaks condominium property, except for the 39 units previously sold, being taken by The Oaks of Broward, Inc., Respondent. Thereby Respondent became successor in title to the previously unsold 75 units in the building and to the position of the Lessor on the long-term recreational lease. On or about August 1977, Respondent offered for sale the 75 condominium units pursuant to prospectus admitted into evidence as Exhibit 2. In addition thereto and as part of the sales effort Respondent executed and recorded the Declaration Waiving Rents, a copy of which was admitted into evidence as Exhibit Neither of these documents was filed with Petitioner. The 75 units owned by Respondent were sold with the recreational lease rents waived. Pursuant to the terms of the recreational lease the original 39 buyers pay $20 per month, either to the Association or directly to the Lessor. This lease is a net/net lease, which means the Lessor performs no services except to provide the premises themselves. The Condominium Association is responsible for and pays all maintenance, taxes, upkeep and expenses for the operation of the Recreation Area. All condominium units, the original 39 as well as the remaining 75, pay to the Association, as part of the common expenses, their pro rate share of those operating expenses. It is this disparate treatment of the two groups of unit owners with respect to the recreational lease rent payment of $20 per month that is one subject of Petitioner's request for a cease and desist order. The second subject of the Petition for a cease and desist order is Petitioner's contention that Respondent is a Developer and is required to file documents and pay a $10 filing fee for each of the 75 condominiums sold, regardless of whether fees for these 75 units were paid by Respondent's predecessor in title.
Findings Of Fact Respondent is a licensed real estate salesman and held such license at all times material to this proceeding. She was a salesman with Miller, Cowherd and Kerver, Inc. Realtors (MCK) at the time of the transactions relevant to this proceeding. Complainant Loretta Fram listed her home in Ft. Lauderdale with Respondent and utilized her services as realtor in the purchase of a condominium apartment in Plantation. Another member of the MCK firm had previously prepared a contract for Fram to purchase the same condominium unit, but it was not executed. The first condominium contract included a contingency clause that required return of Fram's $5,000 deposit if she did not sell her house prior to the condominium closing. This clause was not included in the contract prepared by Respondent even though Fram told her she could not make the condominium down payment due at closing without the proceeds from the sale of her house. Respondent assured Fram the house would be sold in time or that she would work something out. Just prior to the scheduled condominium closing, Respondent arranged a 90-day "swing loan" for $15,000, since funds from the house sale were not forthcoming. Without this loan, Fram would not have been able to close on the condominium and may have had to forfeit her deposit. The swing loan interest and fees amounted to $2,030. Fram paid this amount in January, 1980, on Respondent's assurance that she would be reimbursed. Respondent reduced such assurance to writing in a document dated January 8, 1980 (Petitioner's Exhibit 6). However, after three years, Fram has not been reimbursed. At the time Fram attempted to move into her condominium unit, she was refused admittance by the condominium association. Respondent has reasonably relied on an acceptance the association issued in conjunction with the initial contract. The association thereafter held a meeting and ratified its earlier decision to accept Fram.
Recommendation From the foregoing, it is RECOMMENDED that Petitioner enter a Final Order suspending Respondent's license as a real estate salesman for a period of three years. DONE and ENTERED this 12th day of July, 1983, in Tallahassee, Florida. R. T. CARPENTER, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 12th day of July, 1983. COPIES FURNISHED: Joel S. Fass, Esquire 626 Northeast 124th Street North Miami, Florida 33161 Edward Oddo, Esquire 2660 Northwest 32nd Street Boca Raton, Florida 33432 Harold Huff, Executive Director Division of Real Estate Department of Professional Regulation Post Office Box 1900 Orlando, Florida 32802 William M. Furlow, Esquire Department of Professional Regulation Post Office Box 1900 Orlando, Florida 32802 Fred M. Roche, Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301
Findings Of Fact Based on the stipulations of the parties, on the exhibits received in evidence, and on the testimony of the witnesses at the hearing, I make the following findings of fact. Facts stipulated to by the parties Winston Towers 600 condominium was created by Winston Capital, Inc., which still owns units for sale in the condominium. Control of the association has been relinquished by the creator/developer and turned over by it to the unit owners including joint intervenors. In May of 1983, six Michigan limited partnerships each purchased a number of units in the condominium from Winston Capital, Inc. In March of 1984, four Texas limited partnerships each purchased a number of units in the condominium from Winston Capital, Inc. The joint intervenors consist of the six Michigan limited partnerships and the four Texas limited partnerships. The number of units so purchased gives the joint intervenors, as a block, a controlling interest in the condominium association. The association is controlled by the joint intervenors, who elected two of the three directors of the association. The association hired Hall Management Company, Kent Security Services, Inc., and an unnamed cleaning company. Records of the Secretary of State reveal that among other officers of Hall Management Company are Craig Hall, President and Director, and Christine Erdody, Vice-President. The records of the Secretary of State reveal no entity known as the Hall Real Estate Group. The public records of Dade County, Florida, reveal no fictitious name affidavit for any entity trading as the Hall Real Estate Group. The records of the Division of Florida Land Sales, Condominiums and Mobile Homes reflect that Winston Towers 600 is a residential condominium, located in Dade County, Florida. The joint intervenors are not now offering and have not ever offered condominium units for sale. The joint intervenors are not now offering and have not ever offered condominium units for lease for periods in excess of five years. Winston Towers 600 Condominium Association, Inc., is the non-profit condominium association established to maintain and operate the condominium. In July, 1984, a meeting of the condominium association was held upon instructions of the developer, Winston Capital, Inc. Winston Capital, Inc., scheduled and held the condominium association meeting in July 1984, under the good faith impression and belief that the threshold requirements in Section 718.301 mandating turnover of control of the association board of directors had been met. Joint intervenors, collectively, own more than 50 per cent of the units in the condominium. Joint intervenors, as developers, did not turn over control of the condominium association in July 1984. The declaration of condominium for the condominium and the Florida Statutes grant certain rights and privileges to the developers. The joint intervenors have a substantial economic investment in the condominium. The joint intervenors desire to have the condominium operated and maintained by competent professional management so as to protect and enhance the condominium project. The annual fee being paid to Hall Management Company for management of the condominium is the same fee as had been previously paid by the developer, Winston Capital, Inc., to the prior manager, Keyes Management Company. The names of the board of directors elected to the board of administrators of the association on July 16, 1985, were Ms. Christine Erdody, Mr. James Sherry, and Mr. Joseph Pereira. Ms. Christine Erdody and Mr. James Sherry are general partners in each of the ten limited partnerships. Mr. Craig Hall is President and Ms. Christine Erdody is Vice- President. Other findings based on evidence Adduced at hearing At the turnover meeting in July of 1984, Ms. Erdody cast votes on behalf of each of the ten limited partnerships, voting once for each unit owned by all ten of the limited partnerships. There has never been a meeting of the unit owners in which the limited partnerships turned over control of the association to unit owners other than the ten limited partnerships. The ten limited partnerships have no business ventures or income producing activities other than attempting to offset expenses of operations by leasing the units owned by the limited partnerships and attempting to increase their equity in the condominium units. The units acquired by the joint intervenors were not acquired for their own occupancy. The limited partnerships, while in control of the association, employed Hall Management Company, pursuant to contract, to manage the condominium and to lease the units owned by the limited partnerships. The rental office used by the management company consists of a unit owned by one of the limited partnerships. The contract specifically requires that Hall Management Company attempt to lease those condominiums units owned by the limited partnerships. The limited partnerships have no income producing mechanism other than the disposition of condominium units owned by the listed partnerships pursuant to the contract with the Hall Management Company. A regular, normal, and common activity of each of the ten limited partnerships is to offer to lease and to enter into leases of the condominium units owned by the limited partnerships. They typically engage in this activity through their agent, the Hall Management Company. None of the ten limited partnerships have ever offered any of their units for sale. None of the ten limited partnerships have ever offered any of their condominium units for leases in excess of five years. Ultimately, all of the ten limited partnerships intend to sell all of their condominium units. There is no relationship or affiliation between the creator/developer, Winston Capital, Inc., and any of the joint intervenors. Each of the joint intervenors is a separate limited partnership. However, due to the facts that each of the joint intervenors have a common purpose, each has at least several general partners in common, each has entered into a management contract with a closely related management company, and each has acted in concert with the others in prior matters concerning the condominium facility and the association, for all practical purposes relevant to this case, the joint intervenors may be regarded as a single entity. This is true even though there is no agreement or contract between the joint intervenors requiring them to act collectively in any matter involving or affecting their vote in condominium association matters at Winston Towers 600 Condominium. In all the actions of the joint intervenors in voting their interests at association meetings, they have never thought or acted on the understanding that the joint intervenors were developers of the condominium. The unit owners other than the joint intervenors have selected one-third of the Board of Directors of the Association. The right to vote for a majority of the board of directors of the condominium association is a significant and valuable right which the joint intervenors believed they would be entitled to upon purchasing a majority of the units in the condominium. A substantial number of the purchasers of Florida condominium units are non-residents of Florida. A substantial number of purchasers of condominium units intend to rent their condominiums under leases with a duration of two years or less.
Recommendation On the basis of all of the foregoing, it is recommended that the Division of Florida Land Sales, Condominiums and Mobile Homes issue a declaratory statement to the following effect: That the joint intervenors, individually and collectively, constitute concurrent and successor developers, and that as such concurrent and successor developers who collectively own more than fifty per cent but less than eighty-five per cent of the units, they are entitled to appoint two-thirds of the members of the board of administration of the condominium association. The statement should also note that the joint intervenors should comply with Section 718.3025(1)(e), Florida Statutes, by disclosing any financial or ownership interest which the joint intervenors have, if any, in Hall Management Company That the issue of whether the joint intervenors may have violated the provisions of the declaration of condominium is not a proper subject for a declaratory statement. DONE AND ORDERED this 9th day of April, 1986, at Tallahassee, Florida. MICHAEL M. PARRISH, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 Filed with the Clerk of the Division of Administrative Hearings this 9th day of April, 1986. COPIES FURNISHED: Mr. Arnold Belkin Apartment 912 210 - 174 Street Miami, Florida 33160 Thomas A. Bell, Esquire Deputy General Counsel Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301 Karl M. Scheuerman, Esquire Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 323301 Joseph D. Bolton, Esquire Stephen Gillman, Esquire SHUTTS & BOWEN 1500 Edward Ball Building Miami Center 100 Chopin Plaza Miami, Florida 33131 Linda McMullen, Esquire McFARLAIN, BOBO, STERNSTEIN, WILEY & CASSEDY P. O. Box 2174 Tallahassee, Florida 32301 James Kearney, Jr., Acting Director Division of Florida Land Sales, Condominiums and Mobile Homes Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301 James Kearney, Jr., Secretary Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301 APPENDIX The Following are my specific rulings on each of the proposed findings of fact submitted by all of the parties. Rulings on findings proposed by the Division Paragraphs 1 through 23 of the Division's proposed findings are accepted and incorporated into the findings in this Recommended order. Paragraph 24 is rejected as irrelevant and as not supported by persuasive competent substantial evidence. Paragraph 25 is rejected as irrelevant in part and is redundant in part. The substance of paragraph 26 is accepted with the deletion of certain redundant information. The substance of paragraphs 27, 28, 29, 30, 31, 32, and 33 is accepted with some modifications in the interest of clarity and accuracy and with the deletion of certain redundant information. Rulings on findings proposed by the Joint Intervenors Paragraphs 1 through 12 of the Joint Intervenors' proposed findings are accepted and incorporated into the findings in this Recommended Order. Paragraph 13 is rejected as irrelevant, subordinate, and not supported by competent substantial evidence. Paragraphs 14 and 15 are accepted. Paragraphs 16 and 17 are accepted with additional findings for the purpose of clarity and accuracy. The substance of paragraphs 18, 19, 23, and 26 is accepted. Paragraphs 20, 21, 22, 24, 25, and 27 are accepted. Rulings on findings proposed by Petitioner Paragraphs 1, 2, 3, and 4 of Petitioner's proposed findings are accepted in substance. Paragraph 5 is rejected as irrelevant. Paragraphs 6, 7, 8, 9, and 10 are accepted in substance with the deletion of the reference to the Hall Group of real estate limited partnerships. Paragraph 11 is rejected in part because it is subordinate, in part because not supported by competent substantial evidence and in part because it is a conclusion of law. Paragraphs 12, 13, 14, and 15 are accepted in substance. Paragraph 16 is rejected because it is not supported by competent substantial evidence. Paragraph 17 is rejected because it is irrelevant and subordinate. Paragraphs 18, 19, and 20 are accepted in substance. Paragraphs 21 and 22 are rejected because they constitute argument or conclusions of law and are not supported by competent substantial evidence. Paragraph 23 is rejected because it is irrelevant to the issues to be decided in this case and because portions of it are not supported by competent substantial evidence. Paragraph 24 is accepted. Paragraph 25 is rejected because it is irrelevant to the issues to be decided in this case, because portions of it are not supported by competent substantial evidence, and because portions of it constitute argument or conclusions of law. Paragraph 26 is rejected because it is not supported by competent substantial evidence. Paragraph 27 is rejected because it constitutes argument. Paragraph 28 is rejected because it is irrelevant and redundant. Paragraphs 29 and 30 are rejected because they constitute argument or conclusions of law. Paragraphs 31 and 32 are rejected because they are not supported by competent substantial evidence. Paragraph 33 is rejected because it constitutes argument or conclusions of law. Paragraphs 34 and 35 are rejected because they are irrelevant and because they constitute argument.
The Issue The issue for consideration in this hearing is whether Respondent's license as a real estate broker in Florida should be disciplined because of the matters alleged in the Administrative Complaint filed herein.
Findings Of Fact At all times pertinent to the issue herein the Petitioner, Division of Real Estate, and the Florida Real Estate Commission were the state agencies responsible for the licensing of real estate professionals and the regulation of the real estate profession in Florida. Respondent was licensed as a real estate broker with license number 0414476. Respondent was operating as a real estate broker and operated a real estate brokerage under the name Roney Realty located at 424 Beach Drive Northeast, Number 205, in St. Petersburg. In early 1995, Kathleen M. Mitchell, a single mother and licensed practical nurse, while attending a garage sale, noticed a two bedroom house for sale at 805 59th Street South in Gulfport and called the broker's telephone number shown on the sign. Respondent was the broker listed. On the basis of that telephone call, Respondent and Ms. Mitchell met at the house, owned by Respondent's sister. At the time, Ms. Mitchell advised Respondent that she had credit problems and was burdened with a previous FHA mortgage which was in default. In response, Respondent urged her not to worry and assured her he could get her financing even though she had undergone a prior bankruptcy. He also indicated that the selling price for the house was variable, depending on financing and the amount of the down payment. Ms. Mitchell contends that Respondent indicated to her that he would represent both buyer and seller in a dual agency arrangement, which he got her to acknowledge in writing, and claimed he would not take a commission on the sale. The initial contract signed in this case, however, lists a commission of $1,925.00 to be paid by the seller. This inconsistency was not explained. As a result of the initial negotiations which began in January, 1995, Ms. Mitchell signed a contract for the purchase of the property on February 13, 1995, which, she claims, was to be effective in March, 1995. This agreement, reflecting a sales price of $55,000 also indicates that Ms. Mitchell had made a $200.00 cash down payment, and called for an additional payment of $800.00 within 5 days of signing and an additional $650.00 at closing, to include buyer's closing costs and prepaid items or prorations. This left a balance to be financed of $53,350. There were no other handwritten clauses placed on the contract form. Ms. Mitchell paid the initial $200.00 and agreed to pay the additional $800.00 when she moved in. On the basis of that contract and the deposit made, Ms. Mitchell was allowed to move into the house. Approximately two weeks later, when it became obvious that her financing was going to be a problem, Mr. Roney brought a second contract to the house for her to sign. At this time, Mr. Roney suggested that while the parties were waiting for her financing to be approved, Ms. Mitchell could rent the house for $500.00 per month. Ms. Mitchell agreed to do this if all the defects in the house, which she had identified and reported to Respondent, were fixed. She claims that he verbally agreed to fix everything and she thereafter signed the second contract, which is undated as to signature, but which bears an effective date of April 20, 1995. The second contract reflects a purchase price of $56,650, a deposit of $2,832.50, and a balance to finance of $53,817.50. Ms. Mitchell admits to having made the $200.00 down payment, and it is not clear whether she also paid the $800.00, but at one point in her testimony indicated that is all she paid by way of down payment. She has no idea where the figure of $2,832.50 comes from. Yet, at another point in her testimony, she claims to have given Mr. Roney $1,650.00 on March 1, 1996, which money he put into Stewart Fidelity Title Company's escrow account. The contract also reflects that the deposit is being held in escrow by Stewart Fidelity Title Co. No information was presented as to the current state of the deposit. This contract shows substantial hand-written modification to the standard contract clauses which clearly reflect that changes were made on July 7, 1995, and were "added after signing." However, there are substantial, modifications to paragraph 21 of the contract form, "additional terms", which are confusing as to when they were added and what they mean. For example, one added clause calls for the buyer to make monthly payments of $600.00 until closing ($100.00 per month credited back to buyer at closing). Another provides that the buyer accepts the property as is from day of possession and agrees to maintain the property until closing. A third indicated that the seller agrees to credit $650.00 toward buyer's costs upon closing, and a fourth states that if the buyer cannot obtain a mortgage within one year of possession, the seller may convert the agreement to a lease. The difficulty in interpretation of the above rests in the fact that arrows pointing to various of the comments are not defining in their application. For example, one arrow comes from the word "closing" down the side of the paper into the Acceptance/Rejection section where is stated, "as is meant landscaping [sic]." Another arrow points to the word "may" in the last addition and reflects, "7-7-95 added." Ms. Mitchell adamantly contends that when she signed the second contract, none of the hand-written additions were on it. Mr. Roney admitted as much at hearing, but no informationwas presented to indicate if the additions were agreed to by Ms. Mitchell at any time. She contends that when she saw those post-signing additions, she took the document to her mortgage person who directed her to contact Respondent and stop further proceedings. When Ms. Mitchell did that, she claims, she wastold by Mr. Roney not to talk to her mortgage man again, and that his, Mr. Roney's, mortgage broker would handle the obtaining of her mortgage from then on out. When Ms. Mitchell recounted those instructions to her original mortgage broker, he advised her to contact Respondent's escrow agent, get her deposit back and cancel the contract. Respondent admits to having requested Ms. Mitchell use a different mortgage broker but asserts this was because her broker was not having any apparent success in getting her qualified. Ms. Mitchell lived in the house in question for two months before she moved out. Upon the advice of an attorney, she claims, she paid no rent while she occupied the premises. While she occupied the property, she paid $250.00 to have it appraised by a state certified residential real estate appraiser who opined that as of May 9, 1995 the property was valued at $49,500. In the addendum to the appraisal report, the appraiser stated: The roof has active leaks and improperly installed areas; The front soffit has loose conditions; The electrical system has unsafe wiring and improper size fuses; The heating and AC units are not operating properly ("No source of heat"); The plumbing system has some deficiencies and possible leaks; The pool is in need of "Major Repair", including repair of leaking conditions at the main drain and tiles; termite damage was noted; the water heater needs repair (or replacement), and it is exposed to weather conditions; Window and door screens are missing; The lawn sprinkler is damaged and partially disassembled The storage shed has rust conditions. Though at hearing Respondent attempted to dismiss this appraisal as being based on the home inspection reports done at Ms. Mitchell's request previously and given the appraiser, and not his personal inspection, a review of the document clearly indicates the conditions noted above were determined from review of that report "and/or observation by the appraiser." Ms. Mitchell experienced first hand many of the problem areas noted in the appraisal report. When she mentioned to Respondent that the screen door was missing, he reportedly told her it wasn't necessary. When she complained to Respondent that she had no hot water for several days, he sent over a repairman who ultimately corrected the problem. The repairman's statement, dated "May, 1995", reflecting a charge of $445.00 for his service, indicates he repaired a water leak on the hot water heater; unblocked a restriction in the hot water supply pipe; and replaced defective control knobs on the shower. He also cut the side of the kitchen counter to fit in a new stove and delivered a replacement refrigerator with an ice maker and reconnected the water line to it. This latter installation was the result of Ms. Mitchell's continuing complaint that the refrigerator did not work for quite a while which resulted in her losing a substantial amount of perishable food. The first time that happened, she though it might be her fault and she replaced the lost food. However, when it happened again, she complained to Respondent and he told her to get it fixed. She did, at a cost to her of $100.00, which Respondent did not pay back. Finally, a refrigerator repair man was sent to the property on both April 4 and April 19, 1995. He finally recommended the unit not be repaired but replaced. This was done. When Ms. Mitchell complained to Respondent that the heating and air conditioning unit in the living room did not work, and that the bedroom unit did not heat, she admits that Respondent had a repairman come out and look at the unit. Though she claims the repairman told her it would take $483.00 to repair it, she appears to have confused the appliances, as the repairman's statement, dated April 19, 1995, refers to an estimated cost of $483.00 to replace the compressor on the refrigerator, not the heater/air conditioner. There is no evidence to indicate how the problem with those units was resolved. Ms. Mitchell contends that when she first saw the swimming pool, before she contracted to buy the house, it was clear and the pump was running. When she thereafter heard a noise in the pump, in February, 1995, before she moved in, she reported this to the Respondent. Nothing was done about it. After she moved in, the pool rapidly became unusable. The pump motor was inoperative and the water turned green. Ms. Mitchel claims she called Respondent almost daily about the pool. He told her his sister had the motor removed for repairs and he would get it back. The motor was subsequently returned, along with the pool equipment which had been removed, but the pool leaked, requiring her to add water every day, and she could not keep the water clear. In late April, 1995, a pool man was sent to the property who, according to Ms. Mitchell, indicated that there was a need to replace loose tiles and mastic because of the age of the pool, and a leak at the main drain. It is not clear from the evidence presented if these repairs were made. When the appraisal report was rendered, showing a fair market price considerably less than what she had contracted to pay, Ms. Mitchell advised Respondent on several occasions that she to cancel the contract. On May 2, 1995, after she had seen an attorney and another real estate broker, she wrote to Respondent requesting either that he refund the deposit money she had placed with him and reimburse her in the amount of $500.00 for her personal expenses, in which case she would vacate the property within one week of receipt of the money, or return her deposit within one week, in which case she would vacate the property by June 1, 1995. In either case, she indicated she would pay no more rent. In that regard, it appears she had paid no rent up to that time, though she had agreed to pay rent in the event they could agree upon the terms of a contract and the property was repaired. She claims she did not expect to live in the property rent free, but believed that what she had paid out in repairs was fair rent for her occupancy. No clear total figure for what she paid out was provided. In response, Ms. Mitchell received a letter from the Respondent in which he demanded payment of the rent due. Thereafter, on June l, 1995, Ms. Mitchell received a second letter from the Respondent in which he stated he assumed she had agreed to deduct the amount due for rent from the deposit money she had placed with him and which he held in escrow. According to Respondent's calculations, Ms. Mitchell owed $1,271.56 in back rent after crediting her with $100.00 of the $600.00 per month rent payment she was to make. When this $1,271.56 was deducted from the $1,603.45 escrow balance held by him, $331.89 would be left in the escrow account. Respondent gave her the choice of doing that or of paying what was owed in case, leaving the entire escrow account untouched. He advised her she must make her choice and advise him and the escrow agent within forty-eight hours. Respondent did not satisfactorily explain his calculations at hearing. From the state of the evidence presented, it was impossible for the undersigned to determine exactly how much money Ms. Mitchell paid by way of deposit, rent, or repairs. Between the receipt of Respondent's first and second letters, Ms. Mitchell spoke with him about the condition of the house and what she wanted to do with regard to it. At no time did she authorize Respondent to make any deduction from the amount in escrow. In the interim, she began to look for another house and to seek alternative funding. She also tried to contact Respondent but she was unable to do so, reaching only his pager. Finally, she received a three-day notice dated June 20, 1995 to pay the rent due or vacate. In response, she wrote an undated letter to Respondent in which she said she was sending $1,000.00 to pay $500.00 rent for both May and June, 1995, but neither mailed the letter nor sent the money. Thereafter, she received a second three day notice dated June 30, 1995, directing her to pay the rent due or move out. This notice was left in her mail box by the Respondent. She neither paid the rent nor moved out at that time. Ms. Mitchell finally moved out of the property in issue on July 18, 1995 and thereafter, on a weekly basis, either verbally or in writing, demanded return of her deposit. She did not get it back. Mr. Roney's account of the beginning of the parties' relationship is consistent with that of Ms. Mitchell, except that Ms. Mitchell initially indicated the property could not be worth more than in the mid-forty thousand dollar range. In response, Respondent claimed to have done a market analysis on the property which supported the asking price, and because his sister had put a lot of money into the property, it could not be sold for a price as low as even in the high forty thousand dollar range. It would appear from the independent appraisal done of the property, the true value was closer to Ms. Mitchell's estimation rather than Respondent's. Nonetheless, Ms. Mitchell liked the property and agreed to buy it at the asking price, after she had looked it over with a contractor friend of hers. Respondent admits that Ms. Mitchell was forthright with him in disclosing her financial problems. She told him of her bankruptcy of several years previous, and in response to his questioning, noted several other problems, none of which, by her account, were her fault. When Ms. Mitchell called Respondent on February 13, 1995, indicating she was ready to sign, he referred her to a mortgage company which he felt could help her. Based on what information Ms. Mitchell had provided, Respondent had been told that her financial problems were "fixable". As a result, the first contract was signed and the financing process initiated. On March 18, 1995, Ms. Mitchell called Respondent and indicated she wanted to move into the house prior to closing because her current landlord would neither acknowledge nor fix defects in her property, and she had to get out. Therefore, on or about March 20, 1995, Respondent re-wrote the contract and requested she use another mortgage broker as a condition of taking possession prior to closing. Respondent claims that the seller's disclosure as to the condition of the property was accurate but Ms. Mitchell wanted an independent inspection done to which Respondent agreed. He insisted, however, that if she wanted to move in before closing, she would have to take the property "as is." He advised Ms. Mitchell that his sister had not lived in the property for a year. It was not clear from the evidence presented whether the property was vacant for that entire year or whether it had been rented out. Ms. Mitchell moved in after signing the second contract. Respondent claims Ms. Mitchell called almost daily with some complaint or other and he would have each one fixed. Finally, he met with her and the handyman and they went around to check everything out. She seemed satisfied. Nonetheless, after that Ms. Mitchell called to complain about the swimming pool. Respondent's sister and the handyman both went to the house to explain how to work the filtration system. To insure that there was no leak in the pool, Respondent gave Ms. Mitchell the name of the pool company which had serviced the pool for ten years so that if anything went wrong, she could contact them directly to have it checked and get instruction. While Respondent contends the pool company report indicated no leak and no major problems, Ms. Mitchell wrote on the invoice submitted by the repairman dated April 25, 1993, "... notified me and Mr. Rony [sic] of need to replace loose tiles and main drain leak and re- mastic due to extreme age of pool." Unfortunately, no direct evidence was presented which resolves the apparent inconsistency in the evidence. Mr. Roney claims he tried to remedy any problem Ms. Mitchell had with the house. For example, on April 3, 1995, she called to complain about the refrigerator. On April 4, 1995 he told her to call whomever she wanted, and if the estimate were reasonable, she could deduct the repair charge from the rent. If the charge were estimated to be major, she was instructed to call back. When she called and said the charge would be $100.00, he authorized it. However, a week later, Ms. Mitchell again called and complained about the refrigerator and Mr. Roney replaced it the next day. The problems with the refrigerator are documented by independent evidence of record. The replacement there was admitted by Ms. Mitchell. Respondent asserts that the delinquency notices and track toward the closing. When he found out that Ms. Mitchell was trying to get an appraisal done on the property, he tried to tell her that an appraisal would be done as a part of the mortgage process, but she wanted her own. The results of that independent appraisal were discussed previously. Sometime thereafter, Ms. Mitchell told Respondent she wanted out of the contract. The seller agreed to let her out if Ms. Mitchell would pay some rent for the period she occupied the property. As a result, Respondent tried to get her to pay. When she would not, he sent the eviction notices. Respondent admits he did not receive $2,853.00 in deposit money from Ms. Mitchell. That figure cited was the result of her representations to him that she could come up with it. When the contract was signed, she gave him a check for a part of it and said she'd come up with the balance, but she never came up with the full amount. Any deposit payments made by Ms. Mitchell were deposited with Stewart Title Company where it remains. It is impossible to determine how much was paid as deposit by Ms. Mitchell and how much, if any as rent. Respondent asserts Ms. Mitchell never made any claim to him for return of her deposit. Any claims for return were all made to Stewart Title. Ms. Roney, the owner, did not want to lease the property or sell it on a lease option. She wanted to sell it outright because she needed the money for other investments. She agreed to a lease-purchase arrangement only because the mortgage broker assured her Ms. Mitchell could clear her credit and the sale could go through. She also agreed because Ms. Mitchell had had the property inspected and appeared to be satisfied with its condition. Ms. Roney claims she had no problems with the pool when she lived there and also claims that since the property has been sold, the new owners have not contacted her regarding any problems with the pool. She would not approve a refund of deposit under the conditions of this dispute. Respondent contends there have been no complaints filed against him for the practice of his real estate profession in the 15 years he has been licensed. No evidence of prior misconduct was shown.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Florida Real Estate Commission enter a final order finding Respondent not guilty of misrepresentation and breach of trust in a business transaction and dismissing the Administrative Complaint. DONE and ENTERED this 13th day of December, 1996, in Tallahassee, Florida. ARNOLD H. POLLOCK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 13th day of December, 1996. COPIES FURNISHED: Steven W. Johnson, Esquire Department of Business and Professional Regulation Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802-1900 Paul H. Roney, Jr. 424 Beach Drive Northeast, Suite 205 St. Petersburg, Florida 33701 Henry M. Solares Division Director Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802-1900 Lynda L. Goodgame General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792
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.
