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The Villas at Hidden Lakes Condominiums Association, a group of condominium owners organized under a recorded declaration of horizontal property regime, sued its developer, Geupel Construction Company, Inc. and R.G.W. Investment Co., Inc. (together the joint venture Paradise Isle Associates, referred to as the “Developer”), to collect delinquent monthly assessments, retroactive late-payment penalties, and interest, and to foreclose an assessment lien on a lot the Developer still owned. The Developer answered that it owed no assessments on twenty-three of the original fifty-three units because it had recorded an amendment temporarily withdrawing those units into a separate phase, and that the late fees, which had grown to more than $47,000, were unenforceable because they were imposed retroactively and exceeded the twelve percent interest set by the bylaws. The trial court granted the Association summary judgment on both counts and awarded attorney’s fees. Division One of the Arizona Court of Appeals reversed. It held that the Developer had the votes and authority under the declaration to amend it and withdraw the Phase Two units, that the Association had contractual and statutory authority under the Uniform Condominium Act to impose late fees but exercised that power unreasonably by making them retroactive, and that the Association’s supporting affidavit was conclusory and relied on inadmissible hearsay, so it failed to establish a prima facie case. The court also found disputed fact issues on the Lot Six lien and the Developer’s tender of payment, reversed the fee award, and remanded.

The court analyzed each issue against the text of the recorded declaration (“Declaration Two”) and the Uniform Condominium Act. On the withdrawal question, it explained that the dispute was not whether the Developer had a “unilateral” right to amend, but whether it satisfied the declaration’s amendment procedure. Article Fourteen allowed amendment at any time by owners holding at least sixty-seven percent of the votes, and Article Six gave the Developer three votes per owned unit, yielding 144 votes against the five votes of the other owners, far more than enough. Mortgage-holder consent was unnecessary because those owners held under four percent of the votes, and the declaration’s own language (‘until or unless changed’) permitted altering the fractional common-element interests. The court rejected the argument that the recording mistake (a reference to the revoked Declaration One) invalidated the amendment, because the document clearly identified the property and its phasing purpose, gave constructive notice under A.R.S. section 33-416, and was re-recorded to fix the error. Distinguishing Camelback Del Este, Riley, and La Esperanza, the court held that the uniform-treatment rule applies only where the declaration so limits amendments; here the amendment merely provided for phased development and did not alter any covenant. Withdrawal of property (67 percent) was also distinct from termination of the regime (100 percent). On estoppel, the Association showed neither justifiable reliance nor injury, so no prima facie case existed. Turning to late fees, the court held the Association had power to impose them under Article Five and A.R.S. section 33-1242(11), and that the fees were a personal obligation, but that condominium associations must exercise such powers reasonably. Because no penalty schedule existed when the assessments became delinquent, owners never had the chance to choose timely payment over a known penalty; imposing the charge retroactively was therefore unreasonable, arbitrary, and an abuse of discretion. Finally, applying Rule 56(e) and the rules of evidence, the court found the Neal affidavit conclusory and built on computer-generated exhibits that were unauthenticated inadmissible hearsay, defeating the prima facie showing, and it found disputed facts on the Lot Six lien and the Developer’s $600 tender.

For Arizona homeowners and condominium associations, the decision is a leading illustration of two limits on association power. First, the powers a board holds under its declaration and under the Uniform Condominium Act, including the express statutory authority in A.R.S. section 33-1242(11) to impose late-payment charges, must still be exercised reasonably. An association cannot adopt a penalty and then reach backward to punish assessments that were already delinquent before any penalty schedule existed, because owners never had a chance to avoid a charge they could not have known about. Retroactive late fees, the court held, are unreasonable, arbitrary, and an abuse of discretion as a matter of law.

Second, the case underscores that assessment-collection and lien-foreclosure claims are ordinary civil actions in which the association carries the burden of proof. To win summary judgment an association must offer admissible evidence, not a conclusory affidavit attaching computer printouts with no foundation. A ledger or account summary must qualify under the business-records exception and be authenticated by someone with personal knowledge. The opinion also confirms that a developer or owner may validly amend a declaration to phase a project if the voting and recording requirements are met, and it flags the penalties in A.R.S. section 33-420 for recording a groundless lien, reminding associations to verify the amount actually owed before recording.

Video overview of the case record

An AI-generated video overview of The Villas at Hidden Lakes Condominiums Association v. Geupel Construction Co. (No. 1 CA-CV 90-263; 174 Ariz. 72, 847 P.2d 117 (App. 1992)). Developer authority over assessments survived if supported by the declaration and admissible records. This plain-language summary was generated from the court’s filings; the court’s own ruling controls.

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An AI-generated audio deep dive walking through the court record and procedural posture in The Villas at Hidden Lakes Condominiums Association v. Geupel Construction Co.. Generated from the case filings; verify against the linked case records below.

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The rule in one sentence

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What happened and why it matters

Villa de Jardines Association (VJA), an Arizona nonprofit planned community association, filed a judicial foreclosure action in Pinal County Superior Court seeking to enforce its assessment liens against nineteen parcels, contending those liens had priority over the lenders’ deeds of trust. Flagstar Bank, FSB and Federal National Mortgage Association (referred to in the opinion as also known as Freddie Mac), together the Banks, moved for summary judgment. The trial court granted the motion, imposed Rule 11 sanctions on VJA, denied VJA’s own request for attorney fees, and denied VJA’s motion for a new trial. VJA appealed. Division Two of the Arizona Court of Appeals affirmed. The court held that A.R.S. section 33-1807(B)(2) unambiguously grants a recorded first deed of trust priority over an association assessment lien regardless of which was recorded first, because VJA’s contrary first-in-time reading would render the statutory exception superfluous. It upheld the Rule 11 sanctions because VJA had no objectively reasonable basis for its lien-priority position and could not rely on a title company litigation guarantee to avoid Rule 11’s reasonable-inquiry duty. It affirmed the fee award to the Banks as prevailing parties under section 33-1807(H) and rejected VJA’s procedural challenges to the judgment and to the denial of its new-trial motion. Concluding the appeal was frivolous, the court awarded the Banks their attorney fees and costs on appeal under section 33-1807(H) and, as sanctions, under Rule 25, Ariz. R. Civ. App. P., against both VJA and its counsel.

Reviewing summary judgment de novo, the court accepted that the material facts were undisputed, so the outcome turned on statutory interpretation. Under A.R.S. section 33-1807(B), an association’s assessment lien is prior to all other liens and encumbrances except three categories, including ‘[a] recorded first mortgage’ and ‘a recorded first deed of trust on the unit.’ Applying settled canons, the court gave the statute its plain meaning and presumed the legislature does not enact redundant, superfluous, or contradictory provisions. VJA argued that a deed of trust qualifies as a ‘first deed of trust’ only if it is recorded first in time, ahead of the assessment lien. The court rejected that reading because subsection (B)(1) already grants priority to any encumbrance recorded before the assessment lien; if first deeds of trust also had to be recorded first to gain priority, subsection (B)(2) would serve no purpose. The statute therefore unambiguously protects a recorded first deed of trust regardless of recording order.

The court also rejected VJA’s contention that the judgment was ‘overly broad’ by referring to all nineteen parcels and all defendants. The summary judgment ran only in favor of the Banks and gave them no interest in parcels held by other defendants, so it was not a windfall; the Banks never sought relief on behalf of others, making VJA’s standing argument (citing Fernandez v. Takata Seat Belts) inapposite. Nor did the court err by referencing parcels for which default had been entered against Desert Hills Bank and Countrywide, because VJA had obtained no default judgment and was not entitled to one as a matter of law.

On the Rule 11 sanctions, reviewed for abuse of discretion (with the propriety of the legal basis reviewed de novo), the court applied the objective standard of what a competent attorney would do. Because section 33-1807 is clear, no reasonable attorney could argue an assessment lien outranks a first deed of trust, and VJA never argued for an extension or modification of the law. A title company litigation guarantee did not change this: it insures only against loss from incorrect assurances and may guide which parties to name, but it does not trump state law or excuse the duty of reasonable inquiry, and counsel must re-evaluate the client’s position as the case develops. The court further held the trial court properly denied a new trial: Rule 59(c)(1) requires the motion to be in writing, so oral amendment was impermissible and would invite gamesmanship, and no harm arose because the trial court reviewed the entire file sua sponte and found no error. Finally, under section 33-1807(H) the Banks were the prevailing parties, making a fee award mandatory, and because VJA presented no colorable argument the appeal was frivolous, warranting appellate fees and Rule 25 sanctions.

This published, precedential decision resolves a recurring Arizona HOA-collections question: where an association’s assessment lien stands relative to a lender’s first deed of trust. It confirms that A.R.S. section 33-1807(B)(2) protects a recorded first deed of trust regardless of recording order, so an association ordinarily cannot use judicial foreclosure of an assessment lien to eliminate or leapfrog a first mortgage. Boards, community managers, and collection counsel should understand that pursuing foreclosure on the theory that the assessment lien is senior to a first deed of trust is not supported by the statute and can expose both the association and its attorneys to sanctions and fee-shifting.

The opinion also carries broader lessons about litigation conduct and cost exposure. It illustrates that Rule 11 is measured by an objective standard — what a competent attorney would do — and that relying on a title company’s litigation guarantee is no substitute for a reasonable legal inquiry. It underscores that section 33-1807(H) makes a fee award to the prevailing party mandatory in lien-priority actions, and that a party who presses a position contrary to unambiguous statutory text risks not only losing but paying the other side’s attorney fees at trial and on appeal, plus sanctions for a frivolous appeal. For homeowners, lenders, and associations alike, it is a cautionary example of the financial consequences of over-reading assessment-lien priority.

Video overview of the ruling

An AI-generated video overview of Villa De Jardines Association v. Flagstar Bank, FSB (227 Ariz. 91, 253 P.3d 288 (App. 2011)). Recorded first deeds of trust have priority over planned-community assessment liens. This plain-language summary was generated from the court’s filings; the court’s own ruling controls.

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An AI-generated audio deep dive walking through the court’s reasoning and disposition in Villa De Jardines Association v. Flagstar Bank, FSB. Generated from the case filings; verify against the linked ruling below.

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The rule in one sentence

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What happened and why it matters

This memorandum decision from the Arizona Court of Appeals, Division Two, arose from a homeowners association’s judicial foreclosure. In 2018, Trails at Amber Ridge Homeowners Association obtained a default judgment against homeowner Gerardo Macias and foreclosed on his home. Maricopoly, LLC purchased the property at the sheriff’s sale, and after the Association’s judgment was satisfied, $59,819.17 in excess proceeds was deposited with the clerk of court. Maricopoly intervened and claimed the surplus on the theory that it had acquired an “equitable assignment” of the senior lien, but in an earlier appeal Division Two rejected that theory, vacated the order paying Maricopoly, and remanded with directions to have Maricopoly return the funds. On remand, Arizona Home Foreclosure Prevention Funding Corporation (“AZ Home”), a junior lienholder, moved for release of $21,902.81 of the proceeds. The trial court granted that motion on September 1, 2021 — before Maricopoly’s response deadline under Rule 7.1. Maricopoly appealed, arguing the premature ruling denied it procedural due process and that the court wrongly refused to set the order aside under Rule 60. The Court of Appeals agreed the ruling was premature but held the error was harmless: under the appellate mandate and the law-of-the-case doctrine, Maricopoly could only re-assert its already-rejected equitable-assignment claim and could not raise new priority theories. Finding no prejudice, the court affirmed.

The court first agreed with Maricopoly that the trial court had acted prematurely. Under Rule 7.1(a)(3), Ariz. R. Civ. P., an opposing party must file any responsive memorandum within 10 days after service; because AZ Home served its August 19, 2021 motion by U.S. mail under Rule 5(c)(2)(C), five calendar days were added under Rule 6(c), and the weekend/holiday exclusion of Rule 6(a)(2) applied, making Maricopoly’s response due September 7, 2021. The court had signed and filed AZ Home’s order on September 1 — before that deadline. The panel explained that although Rule 7.1(b) permits a court to summarily grant a motion in three situations (noncompliance with Rule 7.1(a), the opposing party’s failure to file a response, or counsel’s failure to appear for oral argument), none applied here, so summary treatment was inappropriate and the trial court erred.

Nevertheless, the court held Maricopoly was not prejudiced and its due process rights were not violated. Procedural due process requires only the opportunity to be heard at a meaningful time and in a meaningful manner (citing Sycamore Hills Estates Homeowners Ass’n v. Zablotny). Maricopoly had already fully presented its sole basis for the surplus — equitable assignment — and the first appeal had rejected it. Under the mandate rule (Raimey v. Ditsworth) and the law-of-the-case doctrine (State v. Bocharski), that prior decision bound the trial court and the parties throughout the remaining proceedings, so Maricopoly could not re-assert equitable assignment or introduce new evidence to support it (United Dairymen of Ariz. v. Schugg; Crouch v. Truman).

The court further held that Maricopoly could not raise “other grounds for priority,” such as equitable subrogation, for the first time on remand, and that its attempt to advance that theory for the first time in its appellate reply brief was untimely and waived (United Bank v. Mesa N. O. Nelson Co.; BMO Harris Bank N.A. v. Espiau). The proper time to raise such theories had been the initial trial-court proceedings before the first appeal. The record also belied Maricopoly’s claim that it would have argued differently if given a chance to respond, because on remand it had told the trial court the case was remanded only to address equitable assignment. And even assuming an argument that surplus proceeds automatically flow up to an unextinguished senior lien, the court noted it would have been unavailing under Tortosa Homeowners Ass’n v. Garcia. Finding no prejudice and thus no reversible error (Volk v. Brame; Creach v. Angulo), the court affirmed and denied Maricopoly’s request for costs because it was not the successful party under A.R.S. § 12-341.

For homeowners, purchasers, and lienholders navigating Arizona HOA assessment-lien foreclosures, this decision illustrates how “excess” or surplus sale proceeds are contested after the association is paid, and how an appellate mandate constrains what can be argued later. When an HOA forecloses and the property sells for more than the association’s judgment, the surplus does not automatically belong to the sheriff’s-sale purchaser; competing junior lienholders (here a state-affiliated foreclosure-prevention corporation) and the former owner may also claim it, and entitlement turns on lien-priority principles rather than on who bought the home.

The case is also a practical lesson in civil procedure. A trial court’s ruling on a motion before the response deadline is error, but Arizona appellate courts will not reverse unless the error actually prejudiced the complaining party. Because the law-of-the-case doctrine and the mandate from the first appeal had already foreclosed Maricopoly’s only viable theory, the premature ruling changed nothing and the panel affirmed. The decision underscores that a party must raise all of its legal theories — such as equitable subrogation — in the trial court before the first appeal, not for the first time on remand or in a reply brief, or it risks waiver. As an unpublished memorandum decision it creates no binding precedent, but it offers a concrete window into surplus-proceeds and remand practice in Arizona HOA foreclosures.

Video overview of the ruling

An AI-generated video overview of TRAILS AT AMBER RIDGE HOMEOWNERS ASSOCIATION, an Arizona nonprofit corporation, Plaintiff, v. GERARDO MACIAS, a married man, as his sole and separate property; COMMUNITY HOUSING RESOURCES OF ARIZONA; ARIZONA HOME FORECLOSURE PREVENTION FUNDING CORPORATION, Defendants/Appellees, MARICOPOLY, LLC, a limited liability company, Intervenor/Appellant. (2 CA-CV 2022-0096). Although the trial court erred by granting the junior lienholder’s motion to release excess foreclosure proceeds… This plain-language summary was generated from the court’s filings; the court’s own ruling controls.

Listen: audio deep dive on the ruling

An AI-generated audio deep dive walking through the court’s reasoning and disposition in TRAILS AT AMBER RIDGE HOMEOWNERS ASSOCIATION, an Arizona nonprofit corporation, Plaintiff, v. GERARDO MACIAS, a married man, as his sole and separate property; COMMUNITY HOUSING RESOURCES OF ARIZONA; ARIZONA HOME FORECLOSURE PREVENTION FUNDING CORPORATION, Defendants/Appellees, MARICOPOLY, LLC, a limited liability company, Intervenor/Appellant.. Generated from the case filings; verify against the linked ruling below.

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The rule in one sentence

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What happened and why it matters

Carla Bartschi owned a home in the Santa Fe Ridge planned community in Glendale, Arizona, subject to the community’s recorded Declaration of Covenants, Conditions and Restrictions (CC&Rs). In November 2006, the Santa Fe Ridge Homeowners’ Association sued her for breach of contract and injunctive relief, alleging she had failed to maintain her landscaping, remove trash and debris from her front yard, and remove a large crate from her lot. Four days after filing, the association recorded a notice of lis pendens against her property under A.R.S. § 12-1191(A). Bartschi counterclaimed for wrongful recordation under A.R.S. § 33-420(A) and moved for partial summary judgment, arguing the lawsuit did not ‘affect title to real property.’ The trial court ultimately agreed, granted her summary judgment, ordered the lis pendens removed, and awarded $5,000 in statutory damages plus $11,110 in attorneys’ fees and $422.20 in costs; it later dismissed the association’s complaint after Bartschi corrected the maintenance issues. The Arizona Court of Appeals, Division One, affirmed that the lis pendens was groundless, holding that a suit merely to compel compliance with already-recorded CC&Rs does not affect title, because any injunction would be personal to the owner and would not run with the land. The court vacated the fee award, however, holding fees under § 33-420(A) could be awarded only for the wrongful-recordation counterclaim, not for defending the association’s separate, arguably meritorious enforcement complaint.

Reviewing the summary judgment de novo, the court first addressed timing. It agreed with the association that A.R.S. § 12-1191(A) plainly permits a lis pendens to be recorded when a complaint is filed, and it read the trial court’s remarks not as requiring a prior judgment or lien but as observing that the relief sought would not affect title unless a monetary judgment or lien was later obtained on future events. The dispositive question, therefore, was whether the underlying action was one ‘affecting title to real property.’

Guided by Evergreen West, Inc. v. Boyd, the court explained that a lis pendens is groundless only when the claim that the action affects title has no arguable basis or is unsupported by any credible evidence, and that this inquiry does not turn on the merits of the underlying claim. Applying Tucson Estates, Inc. v. Superior Court, the court accepted that an action affecting rights ‘incident to’ title falls within the statute, but read that principle narrowly: a lawsuit affects a right incident to title only if a judgment would expand, restrict, or burden the owner’s rights as bestowed by that title. In Tucson Estates the plaintiffs sought to establish and enforce an implied covenant that would bind future owners; here, by contrast, the association sought only to enforce existing CC&Rs whose validity Bartschi did not dispute. Any injunction would be personal to Bartschi, would not run with the land, and would not alter rights already burdened by the recorded CC&Rs. The court also found the purposes of § 12-1191 unserved, because future purchasers took subject to the recorded CC&Rs and could not defeat the association’s ability to obtain relief.

The court then rejected the association’s lien theory under Coventry Homes, Inc. v. Scottscom Partnership. Merely requesting a lien does not make an action one affecting title; there must be a basis to conclude a lien would actually be imposed. Because the association’s lien depended on future events—Bartschi’s noncompliance with an injunction, the association’s incurring self-help expenses, and her refusal to reimburse them—the claim was anticipatory and not ripe, so the recordation was groundless and premature. The court further held the association waived, and in any event could not show error on, the scienter element of § 33-420(A): the situation was readily distinguishable from Tucson Estates, and because the association’s president signed the notice of lis pendens, counsel’s knowledge that the recording was groundless was imputed to the association. Finally, applying Schweiger v. China Doll Restaurant, Inc., the court held the CC&R enforcement complaint was separate and distinct from the wrongful-recordation counterclaim, so § 33-420(A) fees were limited to the counterclaim; it vacated the fee award and remanded, denied the association’s request for appellate fees, and awarded Bartschi her reasonable fees on appeal.

This published 2008 decision is a leading Arizona authority on when a homeowners’ association may record a lis pendens against a member’s property during a governing-documents dispute. It draws a clear line: a routine action to enforce existing, already-recorded CC&Rs—demanding that an owner maintain landscaping, clear debris, or remove an object—does not ‘affect title to real property’ and therefore does not authorize a lis pendens. Because the recorded CC&Rs already burden the land and any compliance injunction is personal to the current owner, recording a lis pendens in that setting is groundless and can trigger mandatory statutory damages of at least $5,000, plus reasonable attorneys’ fees and costs, under A.R.S. § 33-420(A).

For associations and their counsel, the decision is a caution against reflexively clouding an owner’s title during a CC&R dispute; a lis pendens generally becomes appropriate only once the association has a ripe basis for a lien or a judgment that actually affects title, not while relief remains anticipatory. For owners, it confirms a powerful remedy against improperly recorded documents. The opinion also refines fee awards under § 33-420(A): even a homeowner who defeats an improper lis pendens cannot recover fees for defending the association’s separate, arguably meritorious enforcement claim, because unrelated claims that could have been litigated separately must be parsed under Schweiger v. China Doll.

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Key Issues & Findings