STATE OF FLORIDA DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION DIVISION OF FLORIDA LAND SALES, CONDOMINIUMS, AND MOBILE HOMES IN RE: PETITION FOR ARBITRATION Central Florida Investments, Inc., Petitioner, v. Case No. 2003-07-1426 26 Sand Lake Village Condominium Association, Inc., Respondent. / SUMMARY FINAL ORDER Comes now, the undersigned arbitrator, and issues this summary final order as follows: The petitioner, Central Florida Investments, Inc., filed its petition in this matter on July 11, 2003. According to the petition, petitioner owns 101 out of a total of 171 units situated within the four phases of the Sand Lake Village Condominium. On January 30, 2003, the association conducted an election to fill vacancies on the board. Mark Waltrip, David Siegel, and Richard Moore are voting representatives of the petitioner who were nominated to run in the election. The election was conducted, and Steve Tarr, Mark Waltrip and Richard Moore received the highest number of votes of the five nominees. After the announcement of the three highest nominees, the association announced that the petitioner was a developer and was therefore prohibited by the operation of 718.301, Florida Statutes, from electing Waltrip and Moore to the board. According to the petition, the petitioner was not the creating developer, and 1
petitioner does not offer condominium parcels for sale or lease in the ordinary course of business. Petitioner acquired its units by various means, including bankruptcy sales, foreclosures, and private purchases. Petitioner maintains that it does not advertise or promote the sale or lease of units. The majority of the units owned by the petitioner are vacant or used for storage. The arbitrator issued an order requiring supplemental information on July 24, 2003, that required the petitioner to prepare a sworn matrix identifying each unit owned by the petitioner, the date each such unit was acquired, the use of each unit for the past 2 years, and other information. The matrix was filed with the arbitrator on September 11, 2003. A status hearing was held in this case on October 7, 2003. It was concluded in the course of the hearing that the respondent association operates a number of independent condominiums and does not operate a phase condominium created pursuant to 718.403, Florida Statutes. It was also determined that based on the affidavit evidence submitted by the petitioner, the petitioner is merely a unit owner, and not a developer, with reference to Phases 1, 2, and 3, and further, that the petitioner is offering units for rent or lease in the ordinary course of business with regards to Condominium #4. As such, the petitioner cannot vote its Condominium #4 unit votes at the next election. In an order entered on October 8, 2003, the arbitrator gave the parties 7 days in which to provide proposed orders to the arbitrator, and each party took this opportunity to file written arguments that have been considered by the arbitrator in the preparation of this final order. 2
The respondent association operates several separate and independent condominiums. The association does not, pursuant to 718.403, Florida Statutes, operate a phase condominium, but is a multi-condominium association. See, the development plan set forth in article 21 of the declaration. The significance of the foregoing finding is as follows. In a phase condominium, each phase is part of the same condominium, and it would follow that determinations of whether a particular entity is a developer would follow the condominium as a whole. Under this scenario, if the developer is offering units for sale in the ordinary course of business in one phase, then the entity is a developer for purposes of the entire condominium. By way of contrast, since each condominium in a multi-condominium is a separate condominium operated by a single association, the status of an entity as developer or simply as unit owner will depend on its activities with reference to each particular condominium, and there is no bleeding of status or identity from one condominium to the other. It is perfectly possible for an entity to constitute a developer in condominium #1 and to be a mere owner in condominium #2, depending on its activities with reference to units owned in each respective condominium. There are 48 units contained in Phase 1; 33 total units contained in Condominium #2; 42 units contained in Condominium #3, and 47 units contained in Condominium #4. The petitioner owns 16 units in Condominium #1; 9 units in Condominium #2; 33 units in Condominium #3; and 43 units in Condominium #4. This information is summarized as follows: 3
Total Units Units Owned by Petitioner Condominium 1 48 16 Condominium 2 33 9 Condominium 3 42 33 Condominium 4 47 43 follows: According to 718.103(16), Florida Statutes, a developer is defined as (16) Developer means a person who creates a condominium or offers condominium parcels for sale or lease in the ordinary course of business, but does not include an owner or lessee of a condominium or cooperative unit who has acquired the unit for his own occupancy,. The term developer is further defined by rule 61B-15.007, Florida Administrative Code as follows: (1) For purposes of Sections 718.202, 718.502, 718.503 and 718.504, Florida Statutes, and subsection 61B-23.003(9), Florida Administrative Code, the term developer includes, subject to the exceptions provided in Section 718.103(14), Florida Statutes, or these rules: (a). (b) A successor or subsequent developer, which means any person, other than the creating developer or concurrent developer, who offers condominium parcels for sale or lease in the ordinary course of business; or (c). 2) For purposes of the above definitions, one is presumed to offer condominium parcels for sale or lease in the ordinary course of business where that person: (a) Offers more than 7 parcels, or for condominiums comprised of less than 70 parcels, where that person offers more than 5 parcels in the condominium within a period of 1 year; 4
The parties have agreed that the petitioner is not offering units for sale in the condominiums; hence in order to achieve developer status, it must be shown that the petitioner has offered the requisite number of units for lease. In accordance with the information submitted by the petitioner, the petitioner has rented at least 5 units in Condominium #4 over the past year. Accordingly, consistent with rule 61B-15.007, Florida Administrative Code, the petitioner is considered a developer with reference to its activities in Condominium #4, and may not cast its votes for units owned in Sand Lake Village (Section 1, Phase 4), a Condominium. The evidence does not support a finding that petitioner is offering units for lease in Condominiums #1, 2, or 3. Petitioner has not offered at least 5 units for sale or lease in any of these condominiums in the past year. While the association has filed a motion for discovery 1 and has asserted that some of the units owned by petitioner in Condominium #3 have been used for storage, offices, and phone banks, these uses do not constitute activities identified by the statute or administrative rules as triggering developer status which is limited instead to offering units for sale or lease. Likewise, the association asserts that some of petitioner s units in Condominium #3 have been used as residential housing for employees of the petitioner corporation or its affiliated entities who work at nearby timeshare resorts. Even assuming this latter assertion to be true, it has not been shown that such use constitutes offering for lease as a matter of law. Compare, Cail v. Sebastian Harbor Villas Condominium Owners Association, Inc., Arb. Case No. 94-0084, Final Order (August 27, 1996), in which the arbitrator found developer status where the various 1 Earlier, the association had filed a motion for summary final order, arguing that there were not material facts in dispute. 5
entities had offered units for lease to the public for a period of years as an ordinary, regular, and common activity. The arbitrator does not believe that discovery would be productive or expedient given that there is no suggestion that any discovery undertaken would be probative of these determinations. 2 Accordingly, the arbitrator rules that the petitioner may not vote its unit votes located in Condominium #4 in any future election. DONE AND ORDERED this 18th day of December, 2003, at Tallahassee, Leon County, Florida. Karl M. Scheuerman, Arbitrator Department of Business and Professional Regulation Arbitration Section Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-1029 Certificate of Service I hereby certify that a true and correct copy of the foregoing final order has been sent by U.S. Mail to the following persons on this 18 th day of December, 2003: Robert B. Jackson, Esquire 135 W. Central Blvd., Ste. 1100 Orlando, Florida 32819 Patrick C. Howell, Esquire Taylor & Carls, P.A. 850 Concourse Parkway South Suite 105 Maitland, Florida 32751 Karl M. Scheuerman, Arbitrator 2 Determinations of developer status that track developer activities may change as the activities undertaken change, and a determination here that the petitioner is not currently engaging in developer activities may or may not apply in the future where activities are shown to change. 6
Right to Appeal As provided by s. 718.1255, F.S., this final order may be appealed by filing a complaint for trial de novo with a court of competent jurisdiction in the circuit in which the condominium is located, within 30 days of the entry and mailing of this final order. This order does not constitute final agency action and is not appealable to the district courts of appeal. If this final order is not timely appealed, it will become binding on the parties and may be enforced in the courts. Attorney s Fees As provided by s. 718.1255, F.S., the prevailing party in this proceeding is entitled to have the other party pay its reasonable costs and attorney s fees. Rule 61B-45.048, F.A.C. requires that a party seeking an award of costs and attorney s fees must file a motion seeking the award not later than 45 days after rendition of this final order. The motion must be actually received by the Division within this 45 day period and must conform to the requirements of rule 61B-45.048, F.A.C. The filing of an appeal of this order does not toll the time for the filing of a motion seeking prevailing party costs and attorney s fees. 7