state of florida - Department of Business and Professional Regulation

STATE OF FLORIDA
DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION
DIVISION OF FLORIDA CONDOMINIUMS, TIMESHARES AND MOBILE HOMES
IN RE: PETITION FOR ARBITRATION
Noel Levine, et al.,
Petitioner,
v. Case No. 2009-00-1101
Brazilian Court Condominium
Association, Inc.,
Respondent.
/
SUMMARY FINAL ORDER
On January 5, 2009, Novel Levin, Robert Krasnow, Faith Krasnow, Lewis B.
Cullman, Morgan Wheelock, Philip Craft, James Bardwil, Eric. M. Rottier, Nora Rottier,
William B. Astrop, David Popovich, Karen DeMelio, Alvin S. Trenk, Bennet Model,
Michael De Vivo, Ginger De Vivo, CDS International Realty, LLC, GM Properties, LLC,
Springfield LLC, Dinosaur Partners BC, LLC, David Guggenheim, Sherri Guggenheim,
Fairfax & Sammons Enterprises and L. Thomas Applegate filed a petition for mandatory
non-binding arbitration naming Brazilian Court Condominium, Inc. as the respondent.
Petitioners allege that the association has failed to permit them access to its official
records.
The association filed an answer to the petition on March 3, 2009. On March 29,
2009, a case management conference was held in this matter at which time the parties
agreed to file a joint stipulation of facts. By order dated June 1, 2009, the parties were
directed to file a joint stipulation of facts, a complete set of the condominium’s governing
documents and legal memoranda in support of their positions. The parties filed a joint
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stipulation of facts and legal memoranda on June 5, 2009. The association filed a
response to the petitioners’ arguments on June 23, 2009. On June 23, 2009, the
petitioners filed an objection to the association’s response and requested that it be
stricken.
The parties were directed to file legal memoranda in support of their positions.
They were not given leave to file responses to the legal memoranda. Therefore, the
association’s response was improper and is hereby stricken.
Findings of Fact
1. Petitioners are owners of residential units in the Brazilian Court Hotel and
Condominium (the “Condominium”) located in the Palm Beach, Florida.
2. The Condominium contains seventy-nine residential units, two commercial
units, and one hotel unit. 1
3. The hotel unit owner and operator (the “Hotel Operator”) owns and maintains
the “shared components”, which are shared by the unit owners and the Hotel Operator.
All unit owners pay the Hotel Operator their share of the expenses incurred by the Hotel
Operator in connection with the maintenance and improvement of the shared
components.
4. An owner of a residential unit may, through a separate contractual agreement
with the Hotel Operator, place his or her unit in the hotel rental program.
5. The Hotel Operator acts as the sole and exclusive rental agent of the units in
the rental program.
6. The Association does not act as an agent for the rental of condominium units.
1 The hotel unit consists of multiple hotel rooms.
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7. Respondent, the Association, is the entity responsible for the operation of the
common elements of the Condominium. The common elements include the portions of
the condominium property not included within the residential units, commercial units,
and the hotel unit.
8. The Association is controlled by CSC Brazilian, L.P, (“Developer”), a Delaware
limited partnership. Mr. Adam Schlesinger is the President of the Association.
9. The Developer owns twenty-seven residential units in the Condominium.
10. The Developer is the owner of the hotel unit in the Condominium. Mr.
Schlesinger is the President of CSC Brazilian GP Corp., the general partner of the
Developer.
11. On or about May 8, 2008, Noel Levine sent a written request to inspect
official records of the Association purportedly pursuant to the provisions of the Florida
Condominium Act. Mr. Levine designated Mr. William Michaelson to act has his
authorized representative for the inspection of the Association’s official records.
12. On or about June 16, 2008, Mr. Michaelson inspected the Association’s
official records. After an inspection of the records, Mr. Michaelson requested to review
additional records regarding the Hotel Operator’s rental records and the accounting
records that document the shared component expenses of the hotel unit. Mr.
Schlesinger advised Mr. Michaelson that the additional records sought would not be
made available as they were records of the Hotel Operator and not the Association.
13. On or about August 18, 2008, Petitioners delivered a notice and demand
letter (“Demand Letter”) to inspect the rental records and the accounting records that
document the shared component expenses of the hotel unit.
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14. On or about August 27, 2008, counsel for the Developer responded to the
Demand Letter. Developer’s counsel informed Petitioners that they had already
received access to all of the Association’s official records regarding the Association’s
financial matters and stated that the Petitioners were impermissibly seeking access to
financial records of the Hotel Operator, rather than the Association.
Conclusions of Law
Petitioners seek access to the review records regarding the Hotel Operator’s
rental records and the accounting records that document the shared component
expenses of the Hotel Operator. A condominium association must make its official
records available to its members in accordance with § 718.111(12)(b), Fla. Stat.
Section 718.111(12)(a), Fla. Stat., states the types of records that shall constitute
official records:
From the inception of the association, the association shall maintain each
of the following items, when applicable, which shall constitute the official
records of the association:
1. A copy of the plans, permits, warranties, and other items provided by
the developer pursuant to § 718.301(4), Fla. Stat.
2. A photocopy of the recorded declaration of condominium of each
condominium operated by the association and of each amendment to
each declaration.
3. A photocopy of the recorded bylaws of the association and of each
amendment to the bylaws.
4. A certified copy of the articles of incorporation of the association, or
other documents creating the association, and of each amendment
thereto.
5. A copy of the current rules of the association.
6. A book or books which contain the minutes of all meetings of the
association, of the board of administration, and of unit owners, which
minutes shall be retained for a period of not less than 7 years.
7. A current roster of all unit owners and their mailing addresses, unit
identifications, voting certifications, and, if known, telephone numbers. The
association shall also maintain the electronic mailing addresses and the
numbers designated by unit owners for receiving notice sent by electronic
transmission of those unit owners consenting to receive notice by
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electronic transmission. The electronic mailing addresses and numbers
provided by unit owners to receive notice by electronic transmission shall
be removed from association records when consent to receive notice by
electronic transmission is revoked. However, the association is not liable
for an erroneous disclosure of the electronic mail address or the number
for receiving electronic transmission of notices.
8. All current insurance policies of the association and condominiums
operated by the association.
9. A current copy of any management agreement, lease, or other contract
to which the association is a party or under which the association or the
unit owners have an obligation or responsibility.
10. Bills of sale or transfer for all property owned by the association.
11. Accounting records for the association and separate accounting
records for each condominium which the association operates. All
accounting records shall be maintained for a period of not less than 7
years. Any person who knowingly or intentionally defaces or destroys
accounting records required to be maintained by this chapter, or who
knowingly or intentionally fails to create or maintain accounting records
required to be maintained by this chapter, is personally subject to a civil
penalty pursuant to § 718.501(1)(d), Fla. Stat. The accounting records
shall include, but are not limited to:
a. Accurate, itemized, and detailed records of all receipts and
expenditures.
b. A current account and a monthly, bimonthly, or quarterly statement of
the account for each unit designating the name of the unit owner, the due
date and amount of each assessment, the amount paid upon the account,
and the balance due.
c. All audits, reviews, accounting statements, and financial reports of the
association or condominium.
d. All contracts for work to be performed. Bids for work to be performed
shall also be considered official records and shall be maintained by the
association.
12. Ballots, sign-in sheets, voting proxies, and all other papers relating to
voting by unit owners, which shall be maintained for a period of 1 year
from the date of the election, vote, or meeting to which the document
relates, notwithstanding paragraph (b).
13. All rental records, when the association is acting as agent for the
rental of condominium units.
14. A copy of the current question and answer sheet as described by §
718.504, Fla. Stat.
15. All other records of the association not specifically included in the
foregoing which are related to the operation of the association.
16. A copy of the inspection report as provided for in § 718.301(4)(p), Fla.
Stat.
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Subsection 13. requires an association to maintain all rental records when the
Association is acting as agent for the rental of the condominium units. In the instant
case, the Association is not acting as the rental agent. Therefore, the Association is not
required to maintain rental records. The Hotel Operator is the rental agent. The Hotel
Operator’s rental records are not official records that the Association is required to
maintain and do not constitute official records of the association. Therefore, Petitioners
are not entitled to access the records.
Petitioners also seek access to records that document the shared component
expenses of the hotel unit. Article 2.45 of the declaration defines “shared components.”
The definition contains an extensive list that includes what one would typically expect to
be the structural and physical common elements of a condominium. The definition also
provides that the shared components are part of the hotel unit.
Article 3.2 describes the three types of units contained in the condominium,
residential units, commercial units and the hotel unit. The residential and commercial
units are described in terms of upper, lower and perimetrical boundaries. The hotel unit
is described as consisting of all of the condominium property less and except only the
residential units, commercial units, common elements and association property (if any).
Article 7.3 of the declaration obligates the Hotel Operator to maintain the hotel
unit, including the shared components. The article also requires the residential and
commercial unit owners to pay a share of the expenses incurred by the Hotel Operator
in connection with the maintenance, repair, replacement, improvement, management,
operation and insurance of the shared components.
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The residential and commercial units are required to pay 80% of the shared
component costs pursuant to article 12.1 of the declaration. This article also authorizes
the Hotel Operator to charge the individual the residential and commercial unit owners
for the cost. Article 12.4 of the declaration provides that the Hotel Operator has lien on
each condominium parcel to secure payment of charges. Article 9.1(h) of the
declaration authorizes the Association to collect, on behalf of and at the request of the
Hotel Operator, from each residential unit owner and/or commercial unit owner the
share of the shared costs allocated to such unit.
Petitioners argue that the declaration attempts to create a condominium without
common elements. This conclusion defeats Petitioners’ argument that they are entitled
to access the documents under chapter 718, Fla. Stat., as it would result in the
conclusion that Brazilian Court Condominium is not a condominium under chapter 718,
Fla. Stat. Moreover, article 2.16 of the declaration at least creates a common element
consisting of an easement of support in every portion of a unit which contributes to the
support of the building.
Petitioners argue that regardless of their designation in the declaration, some of
the shared components are common elements pursuant to §718.108(1), Fla. Stat.
Therefore, the related shared component costs are actually common expenses under
§ 718.115(1)(a), Fla. Stat. As such the association would be required to maintain
related accounting records pursuant to §718.111(12)(a)11., Fla. Stat.
Petitioners further argue that the declaration’s structure of “shared component costs”
that are not considered common expenses of the association, constitutes an attempted
waiver by the developer of a provision of the Condominium Act that adversely affects
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the rights of unit owners and the purpose of § 718.111(12), Fla. Stat., which is
prohibited by § 718.303(2), Fla. Stat.
Petitioners note that the declaration’s concept of shared components conflicts
with § 718.112(2)(f), Fla. Stat., which requires the association’s budget, in addition to
other items, to include reserve accounts for roof replacement. Petitioners contend that
the association’s budget cannot comply with this requirement because the condominium
roof is not part of the common elements.
In order to rule upon whether the financial records requested by Petitioners are
official records that the Association must maintain and permit members to access, the
undersigned must determine the nature and propriety of the shared components costs
system created by the declaration. To grant Petitioners their requested relief, the
undersigned would have to declare the shared components to be common elements
and that any attempt to declare them otherwise would not be permitted by chapter 718,
Fla. Stat. 2
This would necessarily affect the appurtenances to the units and would
affect the interests of all unit owners. Such a dispute would undoubtedly involve unit
owners on each side of the dispute (certainly the Hotel Operator would be a necessary
and interested party opposed to declaring the shared components common elements).
The undersigned does not have jurisdiction over such disputes.
Because the
undersigned cannot rule upon all the arguments presented by the petitioner regarding
the financial records dispute, the undersigned declines jurisdiction over this dispute.
Based upon the foregoing, it is ORDERED:
1. The petitioner’s request for relief regarding access to unit rental records is
denied.
2 This is the gravamen of the petitioners’ complaint.
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2. The dispute involving access to the financial records for the shared
components is dismissed due to lack of jurisdiction. The petitioner may file the claim in
a court of competent jurisdiction.
DONE AND ORDERED this 20 th
day of August, 2009, at Tallahassee, Leon
County, Florida.
_________________________________
James W. Earl, Arbitrator
Department of Business and
Professional Regulation
Arbitration Section
1940 North Monroe Street
Tallahassee, Florida 32399-1029
Telephone: 850.414.6867
Facsimile: 850.487.0870
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 day 20 th of August, 2009:
David A. Core, Esq.
St. John, Core & Lemme, P.A.
1601 Forum Place, Suite 701
West Palm Beach, FL 33401
Mark F. Bideau, Esq.
Greenberg Traurig, P.A.
777 South Flagler Drive
Suite 300 East
West Palm Beach, FL 33401
_________________________________
James W. Earl, Arbitrator
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