Gilreath v. Westgate Daytona, Ltd.
| Decision Date | 02 April 2004 |
| Docket Number | No. 5D02-3699.,5D02-3699. |
| Citation | 871 So.2d 961 |
| Parties | Morgan GILREATH, Jr., etc., Appellant, v. WESTGATE DAYTONA, LTD., etc., Appellee. |
| Court | Florida District Court of Appeals |
Gaylord A. Wood, Jr. and B. Jordan Stuart of Wood & Stuart, P.A., New Smyrna Beach and Mark T. Aliff, Assistant Attorney General, Department of Legal Affairs, Tallahassee, for Appellant.
Michael Marder and Victor Kline of Greenspoon, Marder, Hirschfeld, Rafkin, Ross & Berger, P.A., Orlando, for Appellee.
Morgan Gilreath, Jr., as Volusia County Property Appraiser, appeals the judgment rendered by the trial court that quashed Gilreath's 1998 and 1999 ad valorem tax assessments of certain condominium units owned by Westgate Daytona, Ltd. The judgment declared that these condominium units, which were situated in the Harbour Beach Resort, were improperly assessed by Gilreath as timeshare property.
The issue we must resolve is whether the county, pursuant to its taxing authority bestowed upon it by the State of Florida, may assess a condominium for purposes of ad valorem taxes as a timeshare prior to it becoming a timeshare under Florida law. We conclude that it should not be allowed to do so until the condominium ceases to be a condominium and becomes a timeshare in accordance with Florida law. Accordingly, we affirm the judgment as to the 1998 assessment, but reverse as to the 1999 assessment.
The Florida Legislature has enacted a rather complex statutory scheme that must be complied with in order to convert a condominium into a timeshare. Unless and until these requirements are met, a condominium cannot become a timeshare. The Legislature has also enacted a specific statute that governs how timeshare estates must be assessed for purposes of ad valorem taxation, which clearly requires that the real property be a timeshare under Florida law in order to be assessed and taxed as such. After first discussing the factual background of the instant case, we will discuss the statutory scheme governing the creation of timeshare property in Florida and the specific statutory requirement governing assessment of timeshare property. Thereafter, we will discuss the argument presented by Gilreath that he properly assessed the condominiums according to their highest and best use which, according to Gilreath, was as timeshares.
Harbour Beach Resort began as a condominium complex containing 228 units. The Declaration of Condominium dated January 31, 1995, which governs Harbour Beach Resort, allowed for future creation of timeshare estates. Westgate purchased 24 condominium units in 1995 and began to market 16 units as timeshares in 1997. In the initial Public Offering Statement [POS] filed by Westgate pursuant to section 721.07, Florida Statutes, these 16 condominium units were specified for future sale as timeshare property. Although the POS was filed in February 1997, it was not approved until November 4, 1998. Westgate presented evidence that the delay in obtaining approval of the POS was largely the result of underfunding of the reserve account with the Harbour Beach Condominium Association. One of the approval requirements was that the Association adopt a new budget. Westgate did not control the Association's budget. The Division of Florida Land Sales, Condominiums and Mobile Homes of the Department of Business and Professional Regulation [hereinafter the Division] notified Westgate of many other deficiencies that had to be corrected in order to obtain approval of the POS, which delayed approval of the POS until November 1998. There is no evidence in this record, and Gilreath does not contend, that Westgate did anything other than work diligently to correct the deficiencies as they were presented by the Division.
Westgate began to market timeshare estates in Harbour Beach Resorts in 1997. Every contract entered into between Westgate and a prospective purchaser provided that the purchaser had the right to cancel the contract within ten days of the delivery to the purchaser of a POS that had been finally approved by the Division. Any deed, promissory note or mortgage executed by the purchaser in accordance with the contract was held in escrow and was not delivered until closing occurred after approval of the POS. Moreover, any deposit money paid pursuant to the contract was held in escrow. On the tax returns filed by Westgate, these escrow deposits were listed as a liability because if the POS was not approved, thereby preventing Westgate from conveying title to the timeshare estate, Westgate would have to refund the money. Westgate presented evidence that it financed the sales of the units and paid all of the costs without being able to access the escrowed deposits, thereby causing Westgate to operate on a negative cash flow basis until the actual closings took place after approval of the POS.
Gilreath began investigating the units in 1997. In 1998, when Gilreath sent Westgate the preliminary tax bills, the units were assessed as condominiums at an average assessment of $55,052 per unit. However, approximately two weeks later, Gilreath sent out the final tax bills assessing each unit as a timeshare at an average assessment of $129,166 per unit. In 1999, Gilreath assessed twenty units as timeshares and four as condominiums.
Westgate filed separate suits, subsequently consolidated, regarding the assessments for 1998 and 1999. After a non-jury trial, the trial court entered the judgment under review, quashing the assessments for both years and ordering that Gilreath reassess all of the units as condominiums. The trial court held that until the POS was approved, the sales of the timeshares had closed, the deeds were delivered and recorded, and the escrowed funds were released to Westgate, the units remained condominiums and could not be taxed as timeshares. We conclude that the assessment of the units as timeshares was proper after approval of the POS. In order to explain why we have arrived at this conclusion, we will analyze the pertinent statutory requirements that must be met in order to create a timeshare estate.
In 1981, the Florida Legislature enacted the Florida Vacation Plan and Timesharing Act found in Chapter 721, Florida Statutes,1 when it determined that, with respect to this relatively new form of real property interest, "a uniform and consistent method of regulation is necessary in order to safeguard Florida's tourism industry and the state's economic well-being." § 721.02(5), Fla. Stat. (2002). In section 721.02, Florida Statutes, the declared purposes of the Act are to:
§ 721.02(1)-(4), Fla. Stat. (2002) (emphasis added).
In order to create a timeshare estate in Florida by converting a condominium into a timeshare, the Declaration of Condominium must specifically provide that timeshare estates will or may be created in the future. § 718.1045, Fla. Stat. (2002) (). Section 718.104(4)(o), Florida Statutes, specifically provides that the declaration must contain the following:
If timeshare estates will or may be created with respect to any unit in the condominium, a statement in conspicuous type declaring that timeshare estates will or may be created with respect to units in the condominium. In addition, the degree, quantity, nature, and extent of the timeshare estates that will or may be created shall be defined and described in detail in the declaration, with a specific statement as to the minimum duration of the recurring periods of rights of use, possession, or occupancy that may be created with respect to any unit.
§ 718.104(4)(o), Fla. Stat. (2002) (emphasis added).
§ 721.05(37), Fla. Stat. (2002).3
These statutory provisions clearly establish that no timeshare estate may be created unless these statutory provisions are complied with and the Division approves the POS. Until approval is given, a timeshare cannot exist and a...
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