CEO 76-162 -- September 13, 1976

FINANCIAL DISCLOSURE

DISCLOSURE OF REAL PROPERTY OWNED BY A CLOSE CORPORATION IN WHICH PUBLIC OFFICER OWNS A CONTROLLING INTEREST

To: Dayton Logue, Panama City

Prepared by: Gene Rhodes

SUMMARY:

A public officer is required to report on his Statement of Financial Disclosure "[t]he location or description of real property in this state, except for residences and vacation homes, owned directly or indirectly by the person reporting, when such person owns in excess of 5 percent of the value of such real property . . . ." Fla. Stat. s. 112.3145(3)(c)(1975). The term "indirect" is further defined by the code to mean "an interest in which legal title is held by another as trustee or other representative capacity, but the equitable or beneficial interest is held by the person required to file under this part." Fla. Stat. s. 112.312(9)(1975). Where a mayor owns a material interest in three closely held corporations which own real property in Florida, which corporations hold the titles to such property which eventually will be sold, the corporations are deemed to hold the title to real property in a representative capacity for the corporations' owners, who possess the equitable interest in said real property. Accordingly, the subject mayor is required to disclose such property on his statement of financial disclosure.

QUESTION:

Must a public officer disclose in s. 1, Part F, of his Statement of Financial Disclosure the location or legal description of real property owned by a close corporation in which that public officer owns a material interest?

This question is answered in the affirmative.

The Code of Ethics for Public Officers and Employees requires that each Statement of Financial Disclosure include:

The location or description of real property in this state, except for residences and vacation homes, owned directly or indirectly by the person reporting, when such person owns in excess of 5 percent of the value of such real property, and the general description of any intangible personal property worth in excess of 10 percent of such person's total assets. For the purposes of this paragraph indirect ownership shall not include ownership by a spouse or minor child. [Fla. Stat. s. 112.3145(3)(c)(1975).]

The Code of Ethics defines the term "indirect" to mean

an interest in which legal title is held by another as trustee or other representative capacity, but the equitable or beneficial interest is held by the person required to file under this part. [Fla. Stat. s. 112.312(9)(1975).]

You have advised our staff that the mayor owns a material interest in three separate closely held corporations which own real property in Florida. He owns one-quarter of the first corporation, one-third of another, and 98 percent of the last. Additionally, you have informed our staff that these corporations are used for the purpose of holding the title to real property which eventually will be sold. This being the case, we find that the subject corporations are holding the title to real property in a representative capacity for the corporations' owners, who own the equitable interest in said real property.

As owner of more than 5 percent of each of the subject corporations, the mayor owns more than 5 percent of all the real property held by each corporation. Accordingly, we find that the mayor is required to disclose the location or legal description of all real property owned by the three corporations.