Findings Of Fact The parties to this proceeding have stipulated to the correctness of the following facts: Respondent filed a Consent and Joinder simultaneously with the Declaration of Tuscany Place, a condominium, which was recorded in Official Records Dock 1281, Page 1833, Public Records of Seminole County, Florida, and was filed with the Division of Florida Land Sales and Condominiums under I.D. #80 CN5742. Respondent accepted deeds in lieu of foreclosure from the Developer, Goehring Development Corp., under paragraph number 16.5 of the Declaration of Condominiums which deeds were dated May 10 and May 12, 1982, and recorded in Official Records Book of Seminole County, Florida. (Copies of the deeds are attached [to the Stipulation as to Facts] and are self-explanatory.) Respondent sold Unit 16-E to Huey M. Napier. All remaining units were sold to Larry J. Whittle on January 31, 1983. Copies of contracts for the two purchases are attached [to the Stipulation as to Facts]. The term "developer" was defined in paragraph 21.7 of the Condominium Declaration and was approved for filing by the Division including the provision that any successor or alternate developer must indicate its consent to be treated as the developer. Respondent attempted to comply with oral and written communications from the Division as to the regulation relating to "Subsequent Developer," as Respondent could not locate Statutes or Division Rules requiring Subsequent Developer filing. Copies of letters from the Division are attached [to the Stipulation as to Facts]. Respondent admits the sales described above, but denies any liability under Statutes or Rules as a matter of Law. The above-numbered paragraphs constitute the facts stipulated between the parties. Attached to the parties' stipulation are a series of documents. These documents establish that the aforementioned sale from Respondent to Huey M. Napier occurred on or about October 22, 1982. This sale involved a single condominium unit. The remaining ten units obtained by Respondent from the original developer by virtue of a deed in lieu of foreclosure were sold on or about January 4, 1983. On or about November 29, 1982, representatives of Petitioner warned Respondent's counsel that failure to file as a second developer with Petitioner in accordance with Section 718.502, Florida Statutes, would place Respondent in violation of that law. Respondent subsequently filed with Petitioner in accordance with the requirements of Section 718.502, Florida Statutes, on or about January 14, 1983.
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 Petitioner, Division of Florida Land Sales and Condominiums of the Department of Business Regulation, is seeking by a Cease and Dosist Order to enforce the provisions of Chapter 718, Florida Statutes, the "Condominium Act," pursuant to the authority granted in Sections 718.501(1) and 498.051, Florida Statutes, alleging that it has evidence that Respondent has violated Section 718.401(8), Florida Statutes, by binding an owner of a condominium parcel in Covered Bridge Condominium Phase 18 to the provisions of a long-term lease that contains an escalation clause. Respondent, Hovnanian Florida, Inc., is a "developer" as defined in Section 718.103(13), Florida Statutes. Kevork S. Hovnanian is the President of the corporation. Covered Bridge Condominium Association, Inc., incorporated on June 8, 1971, is an "association" as defined in Section 718.103(2) subscribed to by Kevork S. Hovnanian, Lawrence Dombrowski and John R. Langly (Respondent's Exhibit A). Covered Bridge Condominium No. 18 was created by a "Declaration of Condominium," as defined in Section 718.103(12) and filed on December 14, 1978. Attached as "Exhibit 3" and expressly made a part of Covered Bridge Condominium No. 18 is a "Lease Agreement" dated July 8, 1971 in which Respondent was the lessor and Covered Bridge Condominium Association, Inc. is a lessee (Petitioner's Exhibit 1). Kevork S. Hovnanian is the assignee of the Lease Agreement by assignment from Respondent on June 24, 1974 (Respondent's Exhibit C). Covered Bridge Condominium Association, Inc. is the association responsible for operation of the condominium, Covered Bridge Condominium No. 18. Paragraph IX of the foregoing Declaration, The Operating Entity, states in C.(9) in part that "Every owner of a Condominium Parcel, whether he has acquired his ownership by gift, conveyance or transfer by operation of law, or otherwise, shall be bound by the Bylaws of the Association (Exhibit 2), the provisions of this Declaration and the Long-Term Lease" (Exhibit 3). (Petitioner's Exhibit 1) IX A. provides in part: "Covered Bridge Condominium Association, Inc. shall administer, supervise and shall act by and on behalf of the owners of the family units in Covered Bridge Condominium No. 18 in accordance with this instrument, the Bylaws of the Association annexed hereto as 'Exhibit No. 2' and in accordance with the Condominium Act of the State of Florida, its supplements and amendments." Paragraph XIX of the Declaration, Long-Term Lease, requires each original purchaser from the Developer to execute a copy of the Long-Term Lease to secure the unit owner's (original purchaser's) obligation to pay his share of the common expenses as to the Long-Term Lease. The Long-Term Lease referred to in Paragraphs VIII, IX, X, XI, XII, XV, XVII, XIX, XX and XII of the Declaration was attached as "Exhibit 3" and is the aforesaid Lease Agreement of July 8, 1971 in which the Respondent is the lessor and the Developer, and Kevork S. Hovnanian is the assignee. Paragraph XXI, Miscellaneous Provisions, Section G, provides: "If any of the provisions of this Declaration, or of the Bylaws, or of the Long-Term Lease attached hereto, or of the Condominium Act, or any section, sentence, clause, phrase, or work, or the application thereof, in any circumstance, is held invalid, the validity of the remainder of this Declaration, the Bylaws, the Long-Term Lease or the Condominium Act, and of the application of any such provision, action, sentence, clause, phrase, or word, in other circumstances, shall not be affected thereby." XXI K. provides: "The captions used in this Declaration of Condominium and Exhibits annexed hereto, are inserted solely as a matter of convenience and shall not be relied upon and/or used in construing the effect or meaning of any of the text of this Declaration or Exhibits hereto annexed." XXI N. provides in part: "By way of clarification as to Article XIX of this Declaration, the Long-Term Lease may be amended by an instrument in writing, executed by the Lessor and the Condominium Association, by and through its Board of Directors except there shall be no Amendment affecting the Long- Term Lease which would change a unit owner's rent under the Long-Term Lease nor the manner of sharing common expenses under the Long-Term Lease, nor impair the rights of unit owners to the use and enjoyment of the recreational facilities, without the unit owners so affected, and all record owners of Institutional Mortgages thereon, joining in the execution of said Amendment." The Bylaws in Article XIV, Rules and Regulations, Section 4, "Recreation Area and Facilities," establish rules for the recreational facilities. Section 5, "Conflict," provides that should conflict arise the Condominium Act shall prevail (Respondent's Exhibit B). Section IX, Improvements, of the Lease Agreement provides in part: "The Lessor covenants and warrants unto the Lessee that it has constructed, or is in the process of constructing upon the aforedescribed premises, at Lessor's cost and expense, certain recreational facilities, consisting of a swimming pool and sundeck areas, shuffleboard courts, Community Center Building which will include and provide for a meeting area, cardroom, space for arts and crafts, sewing, and billiards, together with equipment and personalty contained therein, and such other improvements and personalty as Lessor determines in its sole discretion." Section XXIV, Rent Adjustment, provides in part: "Lessor and Lessee herein covenant and agree that the rental payments Provided for in Article III above, shall be adjusted, higher or lower, based upon the Cost of Living Index, as hereinafter defined and provided in this Paragraph at one (1) year intervals, commencing January 1st, 1972, and continuing yearly thereafter throughout the term of this Lease" (Petitioner's Exhibit 1). On September 26, 1979 Respondent sold by Warranty Deed a condominium in Covered Bridge Condominium No. 18 to Mr. and Mrs. Milton Marcus. The deed recited the fact of the assignment of the recreational facilities and further recited: "The Long-Term Lease as to the recreational facilities ... has been contemporaneously entered into by the Grantee(s) herein." On the same date the parties executed an "Acknowledgement of Lease Agreement" which recited their covenant to be bound by the 1979 Long-Term Lease Agreement (Petitioner's Exhibit 2). On October 15, 1979 Respondent sold another condominium in Covered Bridge Condominium No. 18 to Mr. and Mrs. Saul Schwartz with similar recitations and with a similar lease acknowledgement agreement (Petitioner's Composite Exhibit 3) Rental payments attributed to the escalation clause in the Long-Term Lease were paid by Covered Bridge Condominium Association, Inc. subsequent to June 4, 1975, the effective date of Section 718.401(8), Florida Statutes, which declared that public policy precludes the inclusion or enforcement of escalation clauses (Stipulation) On June 5, 1979 Petitioner Division of Florida Land Sales and Condominiums served a Notice to Show Cause why a cease and desist order should not issue on Respondent Hovnanian Florida, Inc. alleging: Covered Bridge, Phase 18, is a condominium created pursuant to the provisions of Chapter 718, Florida Statutes. The Respondent is offering for sale and has closed on contracts for sale of condominium parcels in the condominium. Article IX of the Declaration of Condominium binds the owner of a condominium parcel to the provisions of a long-term lease, attached to the Declaration of Condominium as Exhibit 3. Section XXIV of said long-term lease contains an escalation clause as defined and prohibited by Section 718.701(8)(a), Florida Statutes (1978 Supp.). On July 17, 1979 Petitioner requested an administrative hearing. A Notice of Hearing was mailed by the Division of Administrative Hearings on August 6, 1979 notifying the parties that a formal hearing would be held October 24, 1979 in West Palm Beach, Florida. The notice recited: ISSUES: Whether a cease and desist order should be entered against the Respondent for an escala- tion clause prohibited by statute. AUTHORITY: Chapters 120 and 718, F.S. Sections 718.401 and 718.501(b), F.S.; Section 478.171(1), F.S. The hearing was rescheduled and then continued numerous times but went to hearing on April 15, 1980. In the initial stage of the formal hearing on that date the parties jointly moved for a Continuance on the basis of an attached Stipulation, infra, which it was stated would change the character of the hearing and limit the necessity for an extended hearing. The Stipulation is set forth in full for clarity: "Stipulation A Declaration of Condominium creating Covered Bridge Condominium No. 18, address 7240 Covered Bridge Boulevard, Lake Worth, Florida, 33463, was filed and recorded on December 14, 1978, in the Circuit Court of Palm Beach County. Section XI, entitled "Assessments" of the Declaration states that "the portion of the common expenses under the Long-Term Lease shall be fixed and determined by the Lessor as provided under said Lease." Common expenses are defined in Section IH of the Declaration as "the expenses for which the unit owners are liable to the Association." Section XIX of the Declaration, entitled "Long-Term Lease" refers to a Lease and Assignment "... attached hereto as Exhibit 3 and made a part hereof, just as though said Lease were fully set forth herein." Payments under the lease are declared to be common expenses in Section XIX. By the above- referenced language, the Long-Term Lease is incorporated in and made a part of the Declaration of Condominium. Section XIX requires that each unit owner execute a copy of the Long-Term Lease attached as Exhibit 3, and that such lease be recorded in the Public Records of Palm Beach County, together with the deed conveying the unit to the owners. Exhibit No. 3 of the Declaration entitled "Lease Agreement" is an agreement between Hovnanian Florida, Inc., lessor, and Covered Bridge Condominium Association, Inc., lessee, the entity responsible for the operation of the condominium. Therein, it is stated that any reference to an obligation of a "lessee" shall be deemed to include Covered Bridge Condominium Association, Inc., and all individual lessees, jointly and severally. The Long-Term Lease, in Section III C states that rent due under it shall be the obliga- tion of the Individual Lessees and the Lessee-Association. Section XXIV of the Long-Term Lease provides that rental payments due under the lease shall be adjusted yearly. Such adjustment is computed by utilizing a nationally recognized comodity or consumer price index. Such lease was assigned to KEVORK S. HOVNANIAN by HOVNANIAN FLORIDA, INC., on June 24, 1974. Subsequent to the recordation of the Declara- tion of Covered Bridge Condominium No. 18, the developer did sell units to purchasers, and close on such sales. Purchasers were required to and did sign acknowledgements of Lease Agreement, in which purchasers have agreed to be bound by all the terms, covenants and conditions, set forth in the Long-Term Lease, and acknowledged that their signatures constituted an acknowledgement of the Long- Term Lease Agreement and their covenant to be bound by it. Such purchasers purchased sub- sequent to June 4, 1975. In 1975, Section 711.231, Florida Statutes, became effective on June 4, 1975. That act declared that the public policy of this state precludes the inclusion or enforcement of escalation clauses in leases for recreational facilities on other commonly used facilities serving residential condominiums. That statute has since been renumbered and is now Section 718.401(8), Florida Statutes. It is the position of the developer that all rents, including portions due under the esca- lation clause, are and remain the obligation of the association--lessees and the association remains bound to assess unit owners amounts necessary to pay such rents. The lessor has demanded such amounts from the lessee(s), and the lessee Association has refused to pay them. Rental payments attributed to the escalation clause were paid by the association to the lessor subsequent to June 4, 1975. It is stipulated that the following documents are placed before the Hearing Officer for con- sideration in deciding this matter, subject to the recitals in #13 relating to the determina- tion of the relevancy and admissability in this cause For petitioner: Warranty Deed - Hovnanian, Inc. to Saul, Shirly & Schwartz Acknowledgement & Acceptance by Grantee, Saul, Shirly & Schwartz Acknowledgement of Lease Agreement Milton & Rose Marcus Warranty Deed Hovnanian, Inc. to Milton & Rose Marcus Amendment to Declaration of Condominium Covered Bridge No. 18 Recorded August 31, 1979 Amendment to Declaration of Condominium Covered Bridge No. 18 Recorded April 26, 1977 Amendment to Declaration of Condominium Covered Bridge No. 18 Recorded February 21, 1979 Declaration of Condominium Covered Bridge No. 18, with Exhibits Recorded December 14, 1978 Complaint for Damages and Declaratory Relief, Case No. 79-306, 15th Judicial Circuit. Answer, Affirmative Defenses and Counterclaim, Case No. 79-306, 15th Judicial Circuit. Offering Circulars Without Exhibits For Respondent: All documents listed by Petitioner: Bylaws of Covered Bridge Condominium Association, Inc., as recorded in Official Record Book 1913 at pages 1025 through 1054 and in official Record Book 1013 at pages 1085 and 1086 of the Public Records of Palm Beach County. Assignment of Lease dated June 24, 1974 as duly recorded in Official Record Book 2320 at pages 1096 through 1100 of the Public Records of Palm Beach County, Florida. Covered Bridge Plat #1, as recorded in Plat Book 29 on Page 44 of the Public Records of Palm Beach County, Florida. Covered Bridge Plat #2 as recorded in Plat Book 29 on page 79 of the Public Records of Palm Beach County, Florida. 1976 Settlement Agreement entered into between Kevork Hovnanian, Hov- nanian Florida, Inc. and Covered Bridge Condominium Association, Inc. Exhibit 4, Offering Circular Petitioner and Respondent agree and stipulate that the facts recited in this stipulation and the documents are true and accurate. The parties reserve the right to present legal arguments directed to the relevancy and/or materiality of any and all facts and documentary evidence, or the contents thereof, to this action. This stipulation is contingent upon the Hearing Officer granting a Motion for Con- tinuance of the hearing scheduled in this matter for April 15 and 16, 1980. The parties agree that this stipulation will not be intro- duced into evidence in any proceeding or used in any manner unless and until the above- referenced Motion for Continuance is granted and, in the event the Motion for Continuance is denied, this stipulation is null and void. In no event will this stipulation be used in any other proceeding. The parties agree that should the stipu- lation be accepted and the hearing continued by the Hearing Officer no witnesses will be called in this cause at any future time, and additional documentary evidence will be placed before the Hearing Officer only upon the agreement of both the Petitioner and Respon- dent to such admission. Petitioner and Respondent agree that the sole remaining matters to be placed before the Hearing Officer shall consist of legal arguments re- lating to the admissability of evidence as stated above, and argument pertinent to the disposition of this cause." The hearing was continued and rescheduled to be heard June 24, 1980. The Notice of Hearing was in the same form and showed the same issue and authorities as stated in each of the previous notices, but with the addition: "issues involved in Stipulation filed April 15, 1980." Thereafter, a Motion to Dismiss for failure to state a course of action was denied. At the commencement of the formal hearing rescheduled for June 24, 1980, Petitioner moved to amend the complaint on the grounds that Article IX (9) of the Declaration was cited in error in the complaint rather than Article XIX (19). The Motion to Amend was orally granted. A Motion for Continuance was then presented by Respondent on the grounds that since the Motion for Amendment had been granted the Respondent had insufficient time to prepare a defense to the amended charge and had not been informed of the issue involved in the case. Believing that the Notice to Show Cause, both original and as amended, together with the Stipulation filed at the previous hearing and the issue and authorities stated in the numerous Notices of Hearing, the Motions and Memoranda filed by Respondent, and the length of time from the inception of the case to the date of hearing had given Respondent adequate notice of the issues involved in the case and the time to prepare, the Hearing Officer denied Respondent's Motion for Continuance of the administrative hearing then in process. Exerpts from the voluminous documentary evidence which was introduced at the hearing are hereinbefore detailed, but a capsule summary of the facts follows: Covered Bridge Condominium Association, Inc. and the plats of the property show that it was anticipated in June of 1971 that Covered Bridge Condominium No. 18 might be erected on said corporate property and that when erected, purchasers of the' condominium units would become members of the Association. The Bylaws in 1971 authorized the Board of Directors of the Association to enter into long-term leases of recreational facilities. The Developer entered into the subject lease agreement that contained an escalation clause with the Association in July of 1971. The lease provided that common expenses would be assessed against all condominium units. Respondent created Covered Bridge Condominium No. 18 by "Declaration of Condominium" on December 13, 1978 "pursuant to Chapter 718, Florida Statutes (1976)." It incorporated the lease agreement of 1971 by reference as well as the Bylaws of 1971 and provided that the operating entity of 1971 should be Covered Bridge Condominium Association, Inc. The Declaration stated under "Operating-Entity" that Covered Bridge Condominium No. 18 should be administered under Covered Bridge Condominium Association, Inc., its Bylaws and "in accordance with the Condominium Act of the State of Florida, its supplements and amendments." Respondent expressly sought to tie the owners to the long-term lease which contained an escalation clause. When the new units in the condominium created in 1978 were sold in 1979, the deeds bound the purchasers to the 1971 lease agreement which provided recreational facilities to the condominium parcel. The parties submitted proposed findings of fact and memoranda of law, and Respondent submitted a proposed recommended order. These instruments were considered in the writing of this order. To the extent the proposed findings of fact have not been adopted in or are inconsistent with factual findings in this order, they have been specifically rejected as being irrelevant or not having been supported by the evidence.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law the Hearing Officer recommends that an order be entered requiring Respondent Hovnanian Florida, Inc. to cease and desist from enforcing the escalation clause in the "Lease Agreement" of 1971 as it pertains to the condominium created in 1978, Covered Bridge Condominium No. 18, and the purchasers of units in said condominium. DONE and ORDERED this 29th day of August, 1980, in Tallahassee, Leon County, Florida. DELPHENE C. STRICKLAND Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 2nd day of September, 1980. COPIES FURNISHED: Mary Jo M. Gallay, Esquire Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301 Samuel Spector, Esquire Cynthia S. Tunnicliff, Esquire Guyte P. McCord, III, Esquire SPECTOR & TUNNICLIFF, P. A. Suite 750 Barnett Bank Building Post Office Box 82 Tallahassee, Florida 32302
Findings Of Fact Respondent A.R.M. Limited, Inc., is the developer of the residential condominium known as Trails at Royal Palm Beach, a phase condominium containing a total number of 230 units when completed, located in Royal Palm Beach, Florida. During 1981 Respondent submitted to Petitioner all documents required to properly register the condominium, including the Declaration of Condominium and the Contract for Sale. By letter dated June 16, 1981, Petitioner notified Respondent that the documents it had received were in acceptable form and that Respondent would soon be advised as to the results of the Petitioner's "content examination". By letter dated July 14, 1981, Petitioner notified Respondent that it had completed its examination, and the condominium documents were proper. On April 27, 1982, Respondent recorded the Declaration of Condominium for Phases I and II in the public records in Palm Beach County. The Offering Circular, the Declaration of Condominium, and the Contract for Sale contained a developer's guarantee of common expenses for a two-year period commencing with the recording of the Declaration of Condominium and guaranteeing that the unit owners' monthly assessment would not exceed $75 a month for the period of the guarantee. Accordingly, the initial guarantee period terminated April 27, 1984. Thereafter, the guarantee period was extended by the developer until April 27, 1985, and again until December 31, 1985. No evidence was offered to show that any unit owner objected to the extension of the guarantee period. However, no vote of the unit owners was taken regarding either of the two extensions, and no written agreement was obtained. During the period of time between the initial guarantee period and January 1, 1986, Respondent did not pay assessments on a regular basis but instead paid the difference between the association's expenses and income. In other words, the developer did fund all shortfalls through December 31, 1985. The Offering Circular approved by Petitioner in 1981 contained a copy of the Contract for Sale which was to be used, and in fact has been used, for the condominiums units. That Contract specifically provides for purchasers to pay an initial contribution to working capital in the amount of "$300 . . . which may be used by the Association for start-up expenses as well as ordinary expenses . . . " Pursuant to that contract, Respondent utilized start-up funds to off set common expenses of the condominium arising from the sale of 28 units between April 27, 1984 and April 27, 1985. Fourteen of those units were sold between April 27, 1984 and October 1, 1984, and 14 of those units were sold between October 1, 1984 and April 27, 1985. In a phase condominium, since the total number of units within the condominium increases as phases are added, the number of unit owners paying assessments for common expenses increases and, consequently the percentage of ownership of the common elements and percentage of common expenses liability changes per unit. When Respondent registered the condominium with Petitioner in 1981 Respondent filed all documents necessary for the entire project (including all phases) but only paid the filing fee related to Phases I and II at that time. As Respondent continued developing the condominium and selling additional units in subsequently-constructed phases, appropriate amendments to the original Declaration were recorded in the public records. Respondent, however, failed to file copies of those recorded amendments with Petitioner. By cover letter dated March 3, 1986, Respondent filed with Petitioner a developer's filing statement for subsequent phases and enclosed a check in the amount of $940 to cover filing fee requirements. According to an attachment to that filing, Respondent was filing Phases 900, 1000, 1100, 1200, 1300, 1400, 2000, 2100, 2200, 2400, and 2500, which in totality comprised 94 units. According to the same attachment, these Phases were added to the condominium through recordation of amendments to the original Declaration with such recordation occurring between 1983 and 1986. According to information submitted by Respondent to Petitioner, as of March 3, 1986, closings had taken place on 77 units in Phases 900, 1000, 1100, 1200, 1300, 1400, 2100, 2400, and 2500 prior to Respondent's filing the subsequent phase documents with Petitioner. There is no allegation that the documents when filed were improper or that Respondent failed to provide them to the unit owners at the time they were executed. In January of 1988 unit owners other than the developer elected a majority of the board of administration of the condominium association, and turnover of control of the association from developer control to control by unit owners other than the developer occurred.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it Is'; RECOMMENDED that a Final Order be entered: Finding Respondent guilty of the allegation contained within count one; Finding Respondent not guilty of the allegations contained within counts two and three of the Notice to Show Cause; Requiring Respondent to effectuate the financial review discussed in the Conclusions of Law section of this Recommended Order and pay to the condominium association any amount of unpaid assessments for the time period in question; and Assessing a fine against Respondent in the amount of $1000. DONE and RECOMMENDED this 20th day of May, 1988, at Tallahassee, Florida. LINDA M. RIGOT, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 20th day of May, 1988. APPENDIX TO RECOMMENDED ORDER DOAH CASE NO. 87-2917 Petitioner's proposed findings of fact numbered 1, 3, 5, 7, the first sentence of 9, the third sentence of 15, and 16-20 have been adopted either verbatim or in substance in this Recommended Order. Petitioner's proposed finding of fact numbered 8 has been rejected as being immaterial to the issues under consideration herein. Petitioner's proposed findings of fact numbered 2, 4, 6, 9 except for the first sentence, 10-14, and 15 except for the third sentence have been rejected as not constituting findings of fact but rather as constituting conclusions of law, argument of counsel or recitations of the testimony. COPIES FURNISHED: Van B. Poole, Secretary Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32399-1000 Karl M. Scheuerman, Esquire Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32399-1000 A.R.M. Limited, Inc. Trails at Royal Palm Beach Suite 315 1300 North Florida Mango Road West Palm Beach, Florida 33409 Dennis Powers, Esquire Suite 315 1300 North Florida Mango Road West Palm Beach, Florida 33409
The Issue The issue in this case is whether Respondent condominium association properly assessed unit owners for common expenses based on their respective proportionate shares of such expenses as set forth in the declaration of condominium.
Findings Of Fact Respondent Eden Isles Condominium Association, Inc. ("Association") is the entity responsible for operating the common elements of the Eden Isles Condominium ("Condominium"). As such, the Association is subject to the regulatory jurisdiction of Petitioner Division of Florida Land Sales, Condominiums, and Mobile Homes ("Division"). The Condominium was created——and continues to be governed by——a Declaration of Condominium ("Declaration"), which has been amended at least once during the Condominium's existence. The Condominium comprises seven identical buildings. Each four-story building contains 52 units. Each unit is laid out according to one of three different floor plans. The Declaration prescribes each unit's proportionate share (expressed as a percentage, e.g. 2.16%, 2.08%, 1.64%, etc.) of the common expenses. These percentages are used to calculate the amounts assessed against each respective unit to collect the funds needed to pay common expenses. For reasons not revealed at hearing, the Declaration——at least in its original form——established a separate and unique schedule of percentages for each building in the Condominium, with the result that similarly situated owners (i.e. those whose units had the same floor plan and comparable locations) did not necessarily pay the same proportionate share of the common expenses. Not surprisingly, owners who were compelled to contribute more toward the common expenses than their similarly situated neighbors were wont to complain about the seeming unfairness of this. Some time in 2004 the Association's governing Board of Directors ("Board") was made aware of an amendment to the Declaration, which, among other things, had revised the appendix that specified each unit's proportionate share of the common expenses. Due to an absence of evidence, the undersigned cannot determine when this amendment took effect, yet neither its existence (a copy is in evidence) nor its authenticity is in doubt. There is, further, no evidence explaining why the Board had not previously been familiar with the amendment, but——for whatever reason(s)——it was not. After deliberating over the meaning and import of the amendment, the Board voted, during an open meeting, to construe the amendment as providing for the assessment of common expenses against all units in the Condominium according to the percentages assigned to the units located in "Building G," which was the last of the buildings in the Condominium to be completed. In other words, the Board interpreted the amendment as requiring that all similarly situated unit owners be assessed the same amount for common expenses, using only the most recent proportionate shares. Consequently, starting in 2005, the Association assessed unit owners for common expenses pursuant to the Board's interpretation of the amendment. While this course of action evidently pleased most residents, someone complained to the Division about the change. The Division investigated. Based on its own understanding of the amendment, which differs from the Board's, the Division determined that the Association was not properly assessing the unit owners; accordingly, it demanded that the Association remedy the situation. Under pressure from the Division, which was threatening to impose penalties against the Association for noncompliance with the Division's directives, and for some other reasons not relevant here, the Board eventually decided to "revert back" to the original proportionate shares, beginning in 2006. The Board continues to believe, however, that its interpretation of the amendment (as requiring similarly situated owners to be assessed at the same percentage) is correct.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Division enter a final order rescinding the Notice to Show Cause and exonerating the Association of the charge of failing to assess for common expenses in the appropriate percentages as set forth in the Declaration, as amended. DONE AND ENTERED this 11th day of May, 2007, in Tallahassee, Leon County, Florida. JOHN G. VAN LANINGHAM Administrative Law Judge Division of Administrative Hearings Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 11th day of May, 2007.
Findings Of Fact Barkwood Square Condominium was developed by Mr. John Nell (Respondent). The declaration of condominium was filed on May 23, 1980, and transfer of control from Respondent to the condominium association took place at a meeting held on June 30, 1981. At the time of turnover, Bieder Management Company was Respondent's agent for the operation, maintenance and management of Barkwood Square. Bieder was accepted as the association's agent at turnover and continued in this capacity until February, 1982. No documents were produced at the transfer meeting, and all records and accounts then in existence remained in the hands of Bieder. In February, 1982, the condominium association became dissatisfied with Bieder and replaced it with Hotz Management Company. The records turned over to Hotz by Bieder at that time were incomplete, and the association then sought the assistance of Petitioner to obtain complete records and a financial accounting. Through its investigation in 1982, Petitioner and the condominium association obtained all records available. The testimony of Petitioner's investigator and two of the unit owners (who are also condominium association directors) established that no review of the financial records of the association had ever been conducted by an independent certified public accountant (CPA). The testimony of the unit owners-directors established that Respondent had not delivered any of the following items to the association within 60 days of turnover: Original or certified copy of the declaration of condominium. A certified copy of the articles of incorporation of the association. A copy of the bylaws. Minutes of association meetings. Resignation of officers and directors resulting from change of control. The investigation revealed that Respondent owes $4,138.32 in contributions to the condominium association. Respondent concedes that he owes this amount, which is based on common expenses incurred in excess of assessments to unit owners between July and October, 1980. Respondent paid certain association expenses with personal funds and was later reimbursed. Respondent concedes this procedure was not in keeping with good accounting practices. Respondent also failed to keep or turn over to the association the financial records pertaining to the period when he did not employ a management agent.
Recommendation Based on the foregoing, it is RECOMMENDED that Petitioner enter a Final Order directing Respondent to take the corrective action discussed herein as authorized by Subsection 718.501(1)(d)(2), F.S., and assessing a civil fine in the amount of $1,500 as authorized by Subsection 718.501(1)(d)4, F.S. DONE and ENTERED this 27th 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 27th day of July, 1983. COPIES FURNISHED: Helen C. Ellis, Esquire Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301 N. Staten Bitting, Jr., Esquire 3835 Central Avenue Post Office Box 15339 St. Petersburg, Florida 33733 E. James Kearney, Director Division of Florida Land Sales and Condominiums Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301 Gary R. Rutledge, Secretary Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301
