Case Summary
| Case ID | 22F-H2222039-REL |
|---|---|
| Agency | ADRE |
| Tribunal | OAH |
| Decision Date | 2022-10-03 |
| Administrative Law Judge | Tammy L. Eigenheer |
| Outcome | The Administrative Law Judge denied the petition, finding that the HOA failed to prove the homeowner violated the CC&Rs regarding leasing/occupancy rules, as the homeowner and her roommate's arrangement met the undefined term 'common household' required for a 'Single Family' occupancy. |
| Filing Fees Refunded | $500.00 |
| Civil Penalties | $0.00 |
Parties & Counsel
| Petitioner | Oak Creek Knolls Property Owners Association, Inc. | Counsel | Augustus H. Shaw, IV |
|---|---|---|---|
| Respondent | Kim M. Grill | Counsel | Lawrence J. Felder |
Alleged Violations
Article 2, Section 2.11 of the Restatement of Declaration of Covenants, Conditions and Restrictions (CC&Rs)
Outcome Summary
The Administrative Law Judge denied the petition, finding that the HOA failed to prove the homeowner violated the CC&Rs regarding leasing/occupancy rules, as the homeowner and her roommate's arrangement met the undefined term 'common household' required for a 'Single Family' occupancy.
Why this result: The HOA failed to meet the burden of proving that the homeowner's temporary roommate agreement constituted a violation of CC&R Article 2, Section 2.11.
Key Issues & Findings
Residential Use/Leasing Restrictions
Petitioner HOA alleged Respondent homeowner violated CC&R Article 2, Section 2.11 by entering into a roommate agreement while residing in the home, interpreting this as leasing less than the entire unit and arguing the parties did not constitute a 'Single Family' maintaining a 'common household.'
Orders: Petitioner’s petition denied.
Filing fee: $500.00, Fee refunded: No
Disposition: petitioner_loss
- ARIZ. REV. STAT. §§ 32-2102
- 32-2199 et seq.
- ARIZ. ADMIN. CODE R2-19-119
Analytics Highlights
- ARIZ. REV. STAT. §§ 32-2102
- 32-2199 et seq.
- ARIZ. ADMIN. CODE R2-19-119
- CC&Rs Article 2, Section 2.11
Video Overview
Audio Overview
Decision Documents
22F-H2222039-REL Decision – 1003618.pdf
22F-H2222039-REL Decision – 972982.pdf
22F-H2222039-REL Decision – 973826.pdf
22F-H2222039-REL Decision – 974120.pdf
22F-H2222039-REL Decision – 1003618.pdf
22F-H2222039-REL Decision – 972982.pdf
22F-H2222039-REL Decision – 973826.pdf
22F-H2222039-REL Decision – 974120.pdf
This case was heard by Administrative Law Judge Tammy L. Eigenheer at the Office of Administrative Hearings on August 4, 2022, concerning a dispute referred by the Arizona Department of Real Estate. The Petitioner, Oak Creek Knolls Property Owners Association, Inc., sought enforcement against the Respondent, property owner Kim M. Grill.
Key Facts and Main Issue
The Petitioner alleged that Respondent Grill violated Article 2, Section 2.11 of the Restatement of Declaration of Covenants, Conditions and Restrictions (CC&Rs). This section requires that residential units be used exclusively by a "Single Family" and prohibits an owner from leasing "less than the entire unit" or using the unit for transient purposes, mandating a minimum 30-day lease term.
The dispute focused on a "Temporary roommate agreement" between Respondent Grill and Ken Snyder, a semi-retired attorney, for a period exceeding 30 days, where Mr. Snyder was afforded "full access to all living spaces" of the home. Although the Association's Disclosure Statement, signed by Grill, stated an owner "may NOT occupy a home at the same time as renting out the home," this statement was determined by the ALJ not to constitute a binding agreement, but merely the Association's interpretation.
Legal Arguments and Proceedings
- Jurisdiction: Initially, the question of whether the Association met the statutory definition of a planned community, vesting jurisdiction in the OAH, was raised. After receiving additional briefing, the ALJ concluded that the Petitioner did meet the statutory definition, confirming jurisdiction.
- Petitioner’s Argument: The Association argued that Grill's co-occupancy while receiving rent constituted a violation, primarily because she was leasing less than the entire unit to a non-family member while residing there. Witnesses argued that the owner's presence simultaneously with renters "is what causes the damage or detriment," asserting that failure to comply with the letter of the law harms the community scheme.
- Respondent’s Argument: Respondent argued the arrangement complied because the CC&Rs define "Single Family" to include a "group of not more than three (3) persons not all so related, who maintain a common household". Since the agreement was long-term and provided Mr. Snyder full access, the key legal question was whether Grill and Snyder maintained a "common household". Respondent emphasized that there was no evidence of noise, disturbance, or actual detriment caused by Mr. Snyder.
Outcome and Final Decision
The Petitioner bore the burden of proving the CC&R violation by a preponderance of the evidence.
The ALJ noted that the term "common household" was not defined in the CC&Rs and was "open to different interpretations". The arrangement, involving Mr. Snyder paying a share of living expenses (including utilities, internet, and cable TV) and having full access to the entire property, could "reasonably be interpreted to constitute evidence of a 'common household'".
The Administrative Law Judge Decision concluded that the Petitioner failed to establish by a preponderance of the evidence that the Agreement with Mr. Snyder violated Article 2, Section 2.11 of the CC&Rs. Therefore, the Petitioner's petition was denied. The decision was issued on October 3, 2022.
Questions
Question
Who has the burden of proof when an HOA alleges a violation of the CC&Rs?
Short Answer
The HOA (Petitioner) bears the burden of proof by a preponderance of the evidence.
Detailed Answer
In a dispute before the OAH between an owner and an association, the HOA must prove that the homeowner violated the specific provision of the CC&Rs. The standard is 'preponderance of the evidence,' meaning it is more probable than not that the violation occurred.
Alj Quote
In this proceeding, Petitioner bears the burden of proving by a preponderance of the evidence that Respondent violated Article 2, Section 2.11 of the CC&Rs.
Legal Basis
ARIZ. ADMIN. CODE R2-19-119
Topic Tags
- burden of proof
- legal standards
- dispute resolution
Question
Can an HOA enforce a rule interpretation found in a 'Disclosure Statement' that isn't explicitly in the CC&Rs?
Short Answer
No, a disclosure statement representing the HOA's interpretation is not necessarily a binding agreement.
Detailed Answer
Even if a homeowner acknowledges a disclosure statement during purchase, if that statement merely reflects the HOA's interpretation of the governing documents (e.g., claiming an owner cannot occupy the home while renting it), it does not constitute a binding contract separate from the CC&Rs themselves.
Alj Quote
Notably, Petitioners assertion on the Disclosure Statement that '[a]n owner may NOT occupy a home at the same time as renting out the home' did not constitute a binding agreement between Petitioner and Respondent, but was merely Respondent’s statement indicating its interpretation of the governing documents.
Legal Basis
Contract Law Principles
Topic Tags
- disclosure statements
- enforceability
- governing documents
Question
If my CC&Rs prohibit leasing 'less than the entire unit,' can I still have a roommate?
Short Answer
Potentially yes, if the roommate has full access to the entire property and shares living expenses.
Detailed Answer
The ALJ found that a 'roommate agreement' granting the tenant full access to all living spaces and sharing expenses (utilities, internet, etc.) did not violate a ban on leasing less than the entire unit, as the tenant was not restricted to a specific portion of the home.
Alj Quote
By its terms, the Agreement was for a period of greater than 30 days and afforded Mr. Snyder access to the entire unit.
Legal Basis
CC&R Interpretation
Topic Tags
- rentals
- roommates
- leasing restrictions
Question
How does an HOA define a 'Single Family' if unrelated people live together?
Short Answer
It may depend on whether the group maintains a 'common household.'
Detailed Answer
If the CC&Rs define 'Single Family' to include a group of unrelated persons maintaining a 'common household,' acts like sharing utility costs, living expenses, and having full access to the property can serve as evidence of a common household.
Alj Quote
This arrangement, together with the fact that Mr. Snyder had full access to the entire property, could reasonably be interpreted to constitute evidence of a 'common household.'
Legal Basis
CC&R Definitions
Topic Tags
- single family definition
- occupancy limits
- common household
Question
What happens if a key term like 'common household' is not defined in the CC&Rs?
Short Answer
Undefined terms are open to different reasonable interpretations.
Detailed Answer
When the governing documents fail to define a critical term, it creates ambiguity. In this case, the lack of a definition for 'common household' allowed for an interpretation that included a homeowner and a roommate sharing expenses.
Alj Quote
The term 'common household' was not defined in the CC&Rs and is open to different interpretations.
Legal Basis
Contract Interpretation
Topic Tags
- ambiguity
- definitions
- legal interpretation
Question
Can I rent out a room if my CC&Rs require leases to be for a minimum of 30 days?
Short Answer
Yes, as long as the lease meets the time requirement and grants access to the whole unit (if partial leasing is banned).
Detailed Answer
The ALJ ruled in favor of the homeowner where the roommate agreement was for 12 months (satisfying the 30-day minimum) and granted access to the entire home, distinguishing it from short-term transient use or partial leasing.
Alj Quote
By its terms, the Agreement was for a period of greater than 30 days and afforded Mr. Snyder access to the entire unit.
Legal Basis
CC&R Compliance
Topic Tags
- rental restrictions
- lease terms
- minimum stay
Case
- Docket No
- 22F-H2222039-REL
- Case Title
- Oak Creek Knolls Property Owners Association, Inc. vs Kim M. Grill
- Decision Date
- 2022-10-03
- Alj Name
- Tammy L. Eigenheer
- Tribunal
- OAH
- Agency
- ADRE
Questions
Question
Who has the burden of proof when an HOA alleges a violation of the CC&Rs?
Short Answer
The HOA (Petitioner) bears the burden of proof by a preponderance of the evidence.
Detailed Answer
In a dispute before the OAH between an owner and an association, the HOA must prove that the homeowner violated the specific provision of the CC&Rs. The standard is 'preponderance of the evidence,' meaning it is more probable than not that the violation occurred.
Alj Quote
In this proceeding, Petitioner bears the burden of proving by a preponderance of the evidence that Respondent violated Article 2, Section 2.11 of the CC&Rs.
Legal Basis
ARIZ. ADMIN. CODE R2-19-119
Topic Tags
- burden of proof
- legal standards
- dispute resolution
Question
Can an HOA enforce a rule interpretation found in a 'Disclosure Statement' that isn't explicitly in the CC&Rs?
Short Answer
No, a disclosure statement representing the HOA's interpretation is not necessarily a binding agreement.
Detailed Answer
Even if a homeowner acknowledges a disclosure statement during purchase, if that statement merely reflects the HOA's interpretation of the governing documents (e.g., claiming an owner cannot occupy the home while renting it), it does not constitute a binding contract separate from the CC&Rs themselves.
Alj Quote
Notably, Petitioners assertion on the Disclosure Statement that '[a]n owner may NOT occupy a home at the same time as renting out the home' did not constitute a binding agreement between Petitioner and Respondent, but was merely Respondent’s statement indicating its interpretation of the governing documents.
Legal Basis
Contract Law Principles
Topic Tags
- disclosure statements
- enforceability
- governing documents
Question
If my CC&Rs prohibit leasing 'less than the entire unit,' can I still have a roommate?
Short Answer
Potentially yes, if the roommate has full access to the entire property and shares living expenses.
Detailed Answer
The ALJ found that a 'roommate agreement' granting the tenant full access to all living spaces and sharing expenses (utilities, internet, etc.) did not violate a ban on leasing less than the entire unit, as the tenant was not restricted to a specific portion of the home.
Alj Quote
By its terms, the Agreement was for a period of greater than 30 days and afforded Mr. Snyder access to the entire unit.
Legal Basis
CC&R Interpretation
Topic Tags
- rentals
- roommates
- leasing restrictions
Question
How does an HOA define a 'Single Family' if unrelated people live together?
Short Answer
It may depend on whether the group maintains a 'common household.'
Detailed Answer
If the CC&Rs define 'Single Family' to include a group of unrelated persons maintaining a 'common household,' acts like sharing utility costs, living expenses, and having full access to the property can serve as evidence of a common household.
Alj Quote
This arrangement, together with the fact that Mr. Snyder had full access to the entire property, could reasonably be interpreted to constitute evidence of a 'common household.'
Legal Basis
CC&R Definitions
Topic Tags
- single family definition
- occupancy limits
- common household
Question
What happens if a key term like 'common household' is not defined in the CC&Rs?
Short Answer
Undefined terms are open to different reasonable interpretations.
Detailed Answer
When the governing documents fail to define a critical term, it creates ambiguity. In this case, the lack of a definition for 'common household' allowed for an interpretation that included a homeowner and a roommate sharing expenses.
Alj Quote
The term 'common household' was not defined in the CC&Rs and is open to different interpretations.
Legal Basis
Contract Interpretation
Topic Tags
- ambiguity
- definitions
- legal interpretation
Question
Can I rent out a room if my CC&Rs require leases to be for a minimum of 30 days?
Short Answer
Yes, as long as the lease meets the time requirement and grants access to the whole unit (if partial leasing is banned).
Detailed Answer
The ALJ ruled in favor of the homeowner where the roommate agreement was for 12 months (satisfying the 30-day minimum) and granted access to the entire home, distinguishing it from short-term transient use or partial leasing.
Alj Quote
By its terms, the Agreement was for a period of greater than 30 days and afforded Mr. Snyder access to the entire unit.
Legal Basis
CC&R Compliance
Topic Tags
- rental restrictions
- lease terms
- minimum stay
Case
- Docket No
- 22F-H2222039-REL
- Case Title
- Oak Creek Knolls Property Owners Association, Inc. vs Kim M. Grill
- Decision Date
- 2022-10-03
- Alj Name
- Tammy L. Eigenheer
- Tribunal
- OAH
- Agency
- ADRE
Case Participants
Petitioner Side
- Augustus H. Shaw, IV (HOA Attorney)
SHAW & LINES LLC
Represented Petitioner Oak Creek Knolls Property Owners Association, Inc. - Lisa Frost (Board Member/Witness)
Oak Creek Knolls POA
Association Secretary and testifying witness - Brenda Keller (Board Member/Witness)
Oak Creek Knolls POA
Alternate Director/Chair of the Architectural Committee and testifying witness - Dana Shel (Board Member)
Oak Creek Knolls POA
Association Board President - Denise Dotto (Neighbor/Complainant)
Adjacent property owner whose concerns were noted by Petitioner's witnesses
Respondent Side
- Kim M. Grill (Respondent)
Property owner and Association member - Lawrence J. Felder (Respondent Attorney)
Doncaster Law, PLLC
Represented Respondent Kim M. Grill
Neutral Parties
- Tammy L. Eigenheer (ALJ)
OAH
Administrative Law Judge - Louis Dettorre (ADRE Commissioner)
ADRE
Commissioner of the Arizona Department of Real Estate - AHansen (ADRE Staff)
ADRE
Transmittal recipient - vnunez (ADRE Staff)
ADRE
Transmittal recipient - djones (ADRE Staff)
ADRE
Transmittal recipient - labril (ADRE Staff)
ADRE
Transmittal recipient - Miranda Alvarez (Legal Secretary)
Transmitting administrative staff - c. serrano (Administrative Staff)
Transmitting administrative staff
Other Participants
- Ken Snyder (Housemate/Non-party)
Individual renting under the temporary roommate agreement with Respondent - David Goldman (Housemate/Non-party)
Another individual residing at Respondent's property - Bruce Eert (Neighbor)
- Chris Green (Neighbor)