Tag Archives: voting-and-elections

Jie Cao, et al. v. PFP Dorsey Investments, LLC, et al.

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Jie Cao, et al. v. PFP Dorsey Investments, LLC, et al.

1 CA-CV 21-0275 · Court of Appeals · July 7, 2022

At a Glance

Parties Minority condominium owners challenged a forced sale of their unit after a supermajority termination vote under the condominium statute.
Panel Presiding Judge Paul J. McMurdie, Chief Judge Kent E. Cattani, Vice Chief Judge David B. Gass
Statutes interpreted

Summary

This case addressed a forced condominium termination and sale in which the buyer had already acquired most of the units and then used its voting power to approve termination. The Court of Appeals held that Arizona’s condominium-termination statute is constitutional as applied when owners bought subject to a declaration that incorporated the statute. But the court also held that later substantive statutory changes cannot simply be folded into the declaration without fair notice. Because the trial court had applied the 2018 version of A.R.S. § 33-1228 instead of the earlier version in place when the owners bought, the Court of Appeals reversed and remanded. The opinion is one of the most important Arizona appellate cases on condo termination, minority-owner protections, and the use of Kalway-style notice principles outside classic HOA amendment disputes.

Holding

The court held that A.R.S. § 33-1228 was not unconstitutional as applied in principle, but the owners were entitled to application of the earlier statutory version in effect when they purchased because later substantive changes were not incorporated without adequate notice.

Reasoning

The panel first rejected the broad argument that every forced condominium termination under § 33-1228 is an unconstitutional private taking. It reasoned that the authority for termination came from contract as well as statute because buyers accepted a declaration incorporating condominium law.

The harder issue was which version of the statute governed. Drawing on notice and reasonable-expectations principles, the court concluded that a declaration’s generic incorporation of laws ‘as amended from time to time’ does not automatically bind owners to later substantive changes that alter core property rights in an unforeseen way. Because the 2018 amendments changed how dissenting owners were treated, the earlier purchase-time version controlled.

Why This Matters for HOAs

Cao is unusually important for Arizona condominium practitioners. It limits after-the-fact use of statutory changes to restructure owners’ exit rights and compensation in termination deals.

For minority owners, the case provides serious appellate support for arguing that purchase-time expectations and fair notice still matter even when the declaration broadly references future statutory amendments.

Topics

cc-and-rsprocedurevoting-and-elections

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Duffy v. Sunburst Farms East Mutual Water & Agricultural Co.

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Duffy v. Sunburst Farms East Mutual Water & Agricultural Co.

124 Ariz. 413, 604 P.2d 1124 (1979) · Arizona Supreme Court · November 28, 1979

At a Glance

Parties Subdivision owners and a mutual association disputed the validity of an amendment to recorded restrictions.

Summary

Duffy is an important Arizona Supreme Court decision on how amendment clauses in recorded restrictions actually work. The dispute centered on whether subdivision restrictions could be changed or revoked by a vote of the lot owners under the amendment language in the declaration, and whether extra meeting procedures found elsewhere in association documents had to be layered onto that process. The court enforced the amendment framework written into the recorded restrictions themselves. It treated the declaration as controlling and did not let separate bylaws override the declaration’s stated amendment mechanism. The opinion is also widely cited for two broader propositions: courts read restrictive covenants by looking at both the words used and the surrounding circumstances, and changes to restrictions must be grounded in the recorded document rather than in later procedural improvisation. Arizona courts and HOA lawyers still cite Duffy whenever the validity of a covenant amendment process is at issue.

Holding

When a recorded declaration expressly authorizes amendment or revocation by the specified vote of owners, Arizona courts will generally enforce that mechanism, and separate bylaws do not add requirements that the declaration itself does not impose.

Reasoning

The court approached the recorded restrictions as the operative contract running with the land. Because the declaration itself spelled out how amendments could occur, that language controlled the analysis. The court would not rewrite the amendment clause by importing additional procedural conditions from other association documents unless the declaration itself required that result.

The opinion also read restrictive covenants in context, not by isolated words alone. That contextual approach later fed into Arizona’s broader covenant-interpretation cases and remains important in disputes about amendment power, owner voting rights, and the relationship between declarations and bylaws.

Why This Matters for HOAs

Duffy is still useful in modern HOA litigation whenever parties argue over whether an amendment was adopted under the right document and by the right vote. It reminds boards that the declaration usually sits at the top of the governing-document hierarchy for land-use restrictions.

For homeowners, Duffy cuts both ways. It can support enforcement of a clearly written amendment clause, but it also limits boards from inventing amendment authority or procedures that the declaration never gave them.

Topics

cc-and-rsboard-governancevoting-and-elections

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