Cao et al. v. PFP Dorsey Investments, LLC, et al.
At a Glance
| Parties | Minority condominium owners sued the condominium association and a majority owner that forced a termination sale. |
|---|---|
| Panel | Justice Clint Bolick, Chief Justice Robert M. Brutinel, Vice Chief Justice Ann A. Scott Timmer, Justice John R. Lopez IV, Justice James P. Beene, Justice William G. Montgomery, Justice Kathryn H. King |
| Statutes interpreted |
Summary
This case arose after a company bought almost all the units in a Tempe condominium project, then used the association’s voting structure to approve termination and force the remaining owners out. The Arizona Supreme Court held that, in these circumstances, the Arizona Condominium Act did not work an unconstitutional taking because the declaration had incorporated the statute and the owners bought subject to that framework. But the court still ruled for the owners on the core statutory issue. It held that A.R.S. § 33-1228(C) did not allow the association to sell only the minority owners’ units while leaving the majority owner’s units untouched. If a nonconsensual termination sale occurs under that section, the statute requires sale of all the common elements and all the units. The court also awarded the owners reasonable fees for the successful declaration-enforcement portion of the case.
Holding
When a declaration incorporates the Condominium Act, termination procedures under A.R.S. § 33-1228 can govern the owners’ rights, but a compelled post-termination sale under § 33-1228(C) must involve the entire condominium, not just the holdouts’ units.
Reasoning
The court first focused on contract and consent. The declaration repeatedly incorporated the Condominium Act, and the purchasers took title subject to that recorded framework. On that basis, the court concluded the case did not require striking the statute down as an unconstitutional taking in the way the owners argued.
The court then turned to statutory text. It read the phrase authorizing sale of all the common elements and units according to its ordinary meaning and emphasized that all means all. Reading the statute to permit sale of only dissenting units would strip critical words of meaning and would not fit the structure of the rest of § 33-1228, which treats termination with sale as a whole-condominium event administered by the association as trustee for all owners.
Why This Matters for HOAs
This is now the leading Arizona case on condominium terminations and forced buyouts. Associations, investors, and counsel can no longer assume that a supermajority can use termination to squeeze out a minority one unit at a time while keeping majority-owned units outside the sale.
The case also matters beyond terminations. It shows that Arizona courts will closely read condominium declarations that incorporate statutes by reference, but they will still enforce the text of the governing statute and declaration against associations that overreach.
