Case Summary
| Case ID |
08F-H088006-BFS |
| Agency |
DFBLS |
| Tribunal |
OAH |
| Decision Date |
2008-05-30 |
| Administrative Law Judge |
Lewis D. Kowal |
| Outcome |
partial |
| Filing Fees Refunded |
$2,000.00 |
| Civil Penalties |
$0.00 |
Parties & Counsel
| Petitioner |
William W. Kayser |
Counsel |
— |
| Respondent |
Barclay Place Homeowners Association |
Counsel |
Heather A. Fazio |
Alleged Violations
Bylaws Article VII, Section 8(d)
A.R.S. § 33-1805
A.R.S. § 33-1805
Bylaws Article III, Section 3
Outcome Summary
Petitioner prevailed on claims regarding failure to conduct outside audits, failure to provide records timely, and failure to provide proper meeting notice. Petitioner lost on claims regarding assessment notices and meeting quorums. Respondent ordered to provide records and refund full filing fee.
Key Issues & Findings
Failure to accomplish annual audit of 2006
Petitioner alleged the Association failed to conduct annual audits. The ALJ found the Association violated the Bylaws requiring an annual audit by an outside firm, although it complied with statutory monthly compilation requirements.
Orders: Association ordered to comply with Bylaws regarding audits.
Filing fee: $500.00, Fee refunded: Yes
Disposition: petitioner_win
Cited:
- A.R.S. § 33-1810
- Bylaws Article VII, Section 8(d)
Failure to retain and provide Association records
Petitioner requested various financial records and minutes. The Association failed to provide them within the statutory 10-day timeframe and failed to maintain complete records as required by Bylaws.
Orders: Association ordered to provide all existing requested documents at no expense to Petitioner.
Filing fee: $500.00, Fee refunded: Yes
Disposition: petitioner_win
Cited:
- A.R.S. § 33-1805
- Bylaws Article VII, Section 2(a)
- Bylaws Article X
Failure to give 30 day notice of assessment
Petitioner alleged failure to receive notice of assessment increases. Respondent provided evidence that notices were sent.
Filing fee: $500.00, Fee refunded: Yes
Disposition: petitioner_lose
Cited:
- CC&Rs Article IV, Section 3
- CC&Rs Article IV, Section 6
Failure to provide proper notice for special meeting
Petitioner challenged the notice for the Nov 23, 2007 meeting. ALJ found posting at mailboxes did not satisfy Bylaw notice requirements for a special meeting of members.
Orders: Association ordered to comply with notice provisions.
Filing fee: $500.00, Fee refunded: Yes
Disposition: petitioner_win
Cited:
- Bylaws Article III, Section 3
Decision Documents
08F-H088006-BFS Decision – 191832.pdf
Uploaded 2026-02-11T05:32:19 (113.1 KB)
Briefing Doc – 08F-H088006-BFS
Briefing Document: Kayser v. Barclay Place Homeowners Association (No. 08F-H088006-BFS)
Executive Summary
This briefing document summarizes the administrative law decision regarding a dispute between William W. Kayser (Petitioner) and the Barclay Place Homeowners Association (Respondent). The case centered on allegations of financial mismanagement, failure to provide corporate records, and violations of meeting notice and quorum procedures.
The Administrative Law Judge (ALJ) concluded that while the Petitioner did not prevail on every specific count, he succeeded on the “most substantial issues.” Specifically, the Association was found in violation of its Bylaws for failing to conduct an annual audit by an outside public accounting firm and failing to maintain and provide complete corporate records within the statutory timeframe. Consequently, the Petitioner was deemed the prevailing party and awarded a reimbursement of his $2,000.00 filing fee. The Association was ordered to provide all requested documents and comply with governing documents and state statutes moving forward.
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Procedural Context and Scope
The hearing was conducted on May 12, 2008, under the jurisdiction of the Arizona Office of Administrative Hearings. The scope of the hearing was limited by the effective date of A.R.S. § 41-2198.01 et seq., the enabling legislation for this administrative process.
• Excluded Items: Claims regarding real estate conveyances prior to the statute’s effective date and bank statements lacking specific dates were ruled outside the scope of the hearing.
• Timeframe of Focus: The analysis was limited to acts occurring on or after September 21, 2006, as well as specific events in 2007 and 2008.
• Burden of Proof: The Petitioner bore the burden of proving violations by a “preponderance of the evidence,” defined as evidence showing the fact is more probable than not.
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Analysis of Key Themes and Findings
1. Financial Accountability and Auditing Requirements
The dispute involved a distinction between internal financial management and formal auditing requirements mandated by the Association’s governing documents.
• Current Practice: R & R Management Company, which manages the Association’s records, performs monthly financial compilations. Testimony indicated that a certified public accountant reviews these records monthly.
• The Violation: The ALJ found that while the Association complied with A.R.S. § 33-1810 regarding monthly financial compilations, it violated Bylaws, Article VII, Section 8 (d). This provision requires an annual audit to be performed by an outside public accounting firm.
• Admission: The management company admitted that while they follow internal processes, they do not have annual audits performed by an independent public accounting firm.
2. Record Retention and Member Access
A central theme of the petition was the Association’s failure to provide documents requested by the Petitioner in a timely and complete manner.
Legal Requirement
Finding
Response Time
A.R.S. § 33-1805 requires records be provided within 10 business days.
Violation: Evidence established documents were not provided within the 10-day window.
Record Maintenance
Bylaws Article VII & X require a complete record of Association acts and corporate affairs.
Violation: The Association failed to maintain complete records. A Board member testified that previous documents were boxed up and could not be located.
Annual Statements
Bylaws Article VII, Section 2(a) requires a statement at annual meetings.
No Violation: Testimony established that statements were provided at the 2006 and 2007 annual meetings.
3. Governance: Meetings, Notices, and Assessments
The Petitioner challenged the validity of assessment increases and the legality of a specific meeting held on November 23, 2007.
• Assessment Increases: The Association’s Board has the authority to increase annual assessments by up to 5% without a vote from the membership. The ALJ found the 2007 and 2008 increases were within this 5% limit; therefore, no membership vote was required.
• The November 23, 2007 Meeting: This meeting was a “rescheduled” meeting due to a lack of quorum at a November 12 meeting.
◦ Nature of the Meeting: The ALJ determined this was a “special meeting of members.”
◦ Notice Violation: The Association posted notice at mailboxes. The ALJ ruled that mailbox postings do not satisfy the notice requirements for a special meeting of members as defined in Bylaws, Article III, Section 3.
◦ Quorum: Despite the notice issue, the action taken (the assessment increase) was valid because it was accomplished by a quorum of the Board of Directors, which did not require a member vote for a sub-5% increase.
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Conclusion of Law and Final Order
The ALJ reached the following conclusions regarding the prevailing party and required remedies:
Determination of Prevailing Party
Although the Association prevailed on several individual counts (such as the 30-day notice of assessment and the 5% cap on increases), the Petitioner was designated the prevailing party. The ALJ cited the Petitioner’s success on “substantial issues,” specifically:
1. The failure to perform mandatory independent annual audits.
2. The failure to provide access to records within the statutory 10-day timeframe.
3. The failure to maintain complete corporate records.
Mandatory Relief
Under A.R.S. § 41-2198.02, the Association was ordered to:
• Document Production: Provide, at no expense to the Petitioner, copies of all previously requested documents within 10 days of the order.
• Reimbursement: Pay the Petitioner $2,000.00 to reimburse his filing fee within 40 days.
• Statutory Compliance: Comply with all provisions of the CC&Rs, Bylaws, and state statutes previously found to be in violation.
Civil Penalties and Administrative Limits
The ALJ declined to impose civil penalties, stating they were not warranted by the particular facts of the case. Furthermore, the ALJ noted that specific directives requested by the Petitioner regarding how the Association should act in the future were outside the scope of the ALJ’s authority.
Study Guide – 08F-H088006-BFS
Study Guide: Administrative Law Case No. 08F-H088006-BFS
This study guide examines the administrative law proceedings and ultimate decision regarding the dispute between William W. Kayser and the Barclay Place Homeowners Association. The document focuses on the legal standards, findings of fact, and conclusions of law presented during the May 2008 hearing.
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Part 1: Short-Answer Quiz
Instructions: Answer the following questions using 2-3 sentences based on the information provided in the source text.
1. What was the primary conflict regarding the Association’s 2006 annual audit?
2. Why were Items 1 and 2 of the original Petition ruled to be outside the scope of the hearing?
3. What did the Administrative Law Judge (ALJ) conclude regarding the HOA’s obligation to provide documents within a specific timeframe?
4. How did the management company, R & R Management, define its responsibility toward non-financial Association records?
5. What was the finding regarding the 30-day notice of annual assessments for 2006 and 2007?
6. Explain the dispute regarding the meeting held on November 23, 2007, at Robb & Stucky.
7. Under what conditions can the Association’s Board of Directors increase annual assessments without a vote from the general membership?
8. Why did the ALJ determine that the posting of meeting notices at mailboxes was legally insufficient for the November 23 meeting?
9. What was the legal definition of “preponderance of the evidence” used to decide this case?
10. Despite not prevailing on every item in his petition, why was William Kayser designated the “prevailing party”?
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Part 2: Answer Key
1. While the Association conducted monthly financial reviews, the Petitioner argued that the By-Laws required an audit by an outside public accounting firm. The ALJ found that the Association violated Article VII, Section 8(d) of the By-Laws by failing to secure this external audit.
2. These items pertained to a real estate conveyance that took place before the effective date of the enabling legislation (A.R.S. § 41-2198.01 et seq.). Consequently, the ALJ did not have the statutory authority to address those specific historical claims.
3. The ALJ ruled that the Association violated A.R.S. § 33-1805 by failing to provide certain requested financial documents within ten business days. It was established that unapproved copies were eventually provided, but the delay exceeded the legal requirement.
4. R & R Management stated it was contractually obligated to maintain financial records but was not required to keep a complete set of records for all other Association activities. They provided other documents to homeowners only as a “courtesy” rather than a contractual duty.
5. The ALJ found that the Petitioner failed to prove a violation of the notice requirements. Evidence from R & R Management’s records indicated that notice was sent, and the ALJ concluded the Association had indeed provided the required 30-day notice for those years.
6. The Petitioner claimed he saw a meeting notice that later disappeared and that there was no record of a meeting at the venue; however, a Board member testified the meeting did occur with a quorum present. The ALJ eventually concluded it was a “special meeting of members” rather than an annual or regular meeting.
7. The Board of Directors has the authority to set an assessment increase as long as the amount does not exceed 5% of the previous assessment. If the increase is within this 5% threshold, no vote of the Association members is required.
8. The ALJ found that while mailboxes were used for posting, this method did not satisfy the specific notice requirements for a “special meeting of members” as dictated by Article III, Section 3 of the By-Laws. The judge noted that special meetings have stricter procedural notice standards.
9. According to Black’s Law Dictionary, as cited in the case, it is evidence that is of “greater weight or more convincing” than the opposing evidence. It effectively means the facts sought to be proved are “more probable than not.”
10. The ALJ determined that Kayser prevailed on the “most substantial issues,” including the requirement for an annual audit and the failure of the Association to maintain and provide complete records. Because these issues were central to the dispute, he was entitled to a reimbursement of his $2,000 filing fee.
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Part 3: Essay Questions
Instructions: Use the case details to develop comprehensive responses to the following prompts.
1. Statutory vs. Internal Governance: Analyze the differences between the Association’s violations of Arizona Revised Statutes (A.R.S.) and violations of its own By-Laws and CC&Rs. How did the ALJ distinguish between these different legal authorities in his decision?
2. The Role of Management Companies: Discuss the complexities of Association record-keeping as evidenced by the testimony of R & R Management and the “lost boxes” mentioned by the Board of Directors. What are the potential legal risks when an HOA delegates record-keeping to a third party?
3. Quorum and Notice Procedures: Evaluate the procedural confusion surrounding the November 2007 meetings. Contrast the requirements for a “regular meeting,” a “special meeting,” and a “Board of Directors meeting” as they apply to member rights and Association authority.
4. Burden of Proof in Administrative Hearings: Examine the Petitioner’s burden to prove allegations by a “preponderance of the evidence.” Which claims did the Petitioner fail to prove, and what specific evidence (or lack thereof) led to those failures?
5. Administrative Remedies and Limitations: Discuss the limits of the ALJ’s authority regarding the relief requested by the Petitioner. Why were specific directions and civil penalties denied despite the findings of certain violations?
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Part 4: Glossary of Key Terms
Definition
A.A.C.
Arizona Administrative Code; the rules governing administrative proceedings.
A.R.S.
Arizona Revised Statutes; the state laws cited as the basis for many of the legal obligations in the case.
Administrative Law Judge; the official presiding over the hearing and issuing the decision.
Annual Audit
A formal examination of the Association’s financial records, required by the By-Laws to be performed by an outside public accounting firm.
Declaration of Covenants, Conditions and Restrictions; the primary governing documents that define the rights and obligations of Community members and the Association.
Enabling Legislation
The specific statutes (A.R.S. § 41-2198.01 et seq.) that grant the Office of Administrative Hearings the power to hear HOA disputes.
Financial Compilation
The monthly process of organizing financial records, performed by R & R Management, which the ALJ distinguished from a formal annual audit.
Petitioner
The party who files the petition or complaint; in this case, William W. Kayser.
Preponderance of the Evidence
The legal standard of proof in civil and administrative cases, meaning the evidence is more convincing than the opposition’s.
Prevailing Party
The participant in a legal proceeding who “wins” on the most substantial issues and may be entitled to fee reimbursements.
Quorum
The minimum number of members or directors required to be present at a meeting to make the proceedings and decisions valid.
Respondent
The party against whom a petition or complaint is filed; in this case, Barclay Place Homeowners Association.
Special Meeting
A meeting called for a specific purpose that is not part of the regular meeting schedule, often requiring more formal notice to members.
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End of Study Guide
Blog Post – 08F-H088006-BFS
The $2,000 Paper Trail: 5 Surprising Lessons from One Homeowner’s Fight Against His HOA
Living in a Homeowners Association (HOA) often feels like navigating a shadow government where transparency is treated as a nuisance rather than a mandate. For many, the governing documents are a dense thicket of “shalls” and “musts” that only seem to apply to the residents, while the Board operates behind a veil of opacity.
The case of William Kayser vs. Barclay Place Homeowners Association serves as a definitive David-vs-Goliath narrative, proving that a single homeowner armed with the law can force an association into compliance. When Mr. Kayser challenged his HOA before the Arizona Office of Administrative Hearings, Administrative Law Judge (ALJ) Lewis D. Kowal issued a decision that pulled back the curtain on the hidden legal obligations of these organizations. Here are five surprising lessons from that $2,000 legal victory—lessons that every homeowner should memorize.
1. “Lost in Boxes” is Not a Legal Defense
One of the most persistent excuses used to dodge transparency is the claim that records have simply vanished during leadership transitions. In this case, Board member Jack Van Royen testified that a previous Association president had “boxed up documents” and the current leadership was unable to locate them.
As a matter of corporate governance, this is an unacceptable breach of fiduciary continuity. An HOA is a legal entity with a statutory mandate to maintain a historical record of its operations, regardless of who occupies the Board seats. Leadership changes do not reset the clock on these obligations. It was only after the legal pressure of a hearing that the Association suddenly promised to make a “concerted effort” to find the missing files—a clear admission that accountability only arrives when a judge is watching.
2. When an “Audit” Isn’t Actually an Audit
There is a massive distinction between internal financial “compilations” and a true independent audit. Kevin Young of R&R Management testified that his firm prepared monthly financial records and that a CPA, Andrew Carr, reviewed them. However, Young’s testimony was riddled with contradictions regarding whether Carr was an “in-house” accountant or a truly independent third party.
ALJ Kowal’s ruling sharpened the focus on Bylaws, Article VII, Section 8(d), which requires an annual audit to be performed by an “outside public accounting firm.” The Association’s attempt to blur the lines by presenting management-led compilations as a substitute for professional oversight was a failure of transparency. For homeowners, the lesson is clear: internal reviews by the very people managing the money are not a substitute for the procedural safeguards of an external audit.
3. The 10-Day Clock for Transparency
Under A.R.S. § 33-1805, Arizona associations have a strict 10-business-day window to provide requested documents to members. In this case, Mr. Kayser’s requests for bank statements and corporate records were met with delays and excuses.
Perhaps the most common stall tactic used by HOAs is the claim that financial records cannot be shared because they are “unapproved” by the Board. ALJ Kowal effectively dismantled this defense. The statutory right to inspect records is not contingent upon the Board’s final “stamp of approval.” Transparency laws are designed to grant members access to the raw data of their community’s operations, not just the sanitized versions the Board chooses to release.
4. Mailbox Postings Don’t Equal Legal Notice
A central dispute in this case involved a November 23, 2007 meeting where the Board acted to increase assessments. The Association claimed they satisfied notice requirements by posting announcements at the community mailboxes 48 hours in advance.
ALJ Kowal ruled this was legally insufficient. Because a previous meeting lacked a quorum, the November 23 gathering was classified as a “special meeting of members” under Bylaws, Article III, Section 3. This classification carries specific notice requirements that a mere mailbox posting cannot satisfy. Furthermore, the “scavenger hunt” nature of this meeting was highlighted by the fact that it was held at a Robb & Stucky conference room in Scottsdale, yet Mr. Kayser testified that the store had no record of the meeting and he saw no evidence of it occurring when he arrived. Strict adherence to notice procedures is a protection for the members, not a suggestion for the Board.
5. You Don’t Have to Win Every Count to Win the Case
The most significant takeaway for any homeowner considering legal action is the definition of a “prevailing party.” Numerically, Mr. Kayser lost a majority of his claims. For instance, the ALJ found the Association did not violate CC&R Article IV, Section 3 because the assessment increase remained under the 5% threshold that would have required a member vote.
However, ALJ Kowal ruled that winning on “substantial issues”—specifically the failure to conduct an outside audit and the failure to provide record access—outweighed the losses on minor technicalities. This is a critical distinction: you don’t need a perfect scorecard to hold your HOA accountable.
The court ordered the Association to reimburse that $2,000 fee within 40 days. This serves as a powerful deterrent against HOA non-compliance, proving that a Board’s refusal to follow its own Bylaws can be an expensive mistake.
Conclusion: The Power of Accountability
The Kayser vs. Barclay Place case proves that Bylaws and State Statutes are the bedrock of community governance, not mere “best practices” to be ignored when convenient. When a Board fails in its fiduciary duty to maintain records or follow notice procedures, it isn’t just a clerical error—it is a violation of the law.
Real accountability begins when homeowners demand the transparency they are legally owed. Your governing documents are your greatest weapon in ensuring your Association serves its members rather than its own interests.
Final Ponder Point: If you asked for your community’s last external audit tomorrow, would your board provide a report or an excuse?
Case Participants
Petitioner Side
- William W. Kayser (Petitioner)
Barclay Place Community
Appeared on his own behalf
Respondent Side
- Heather A. Fazio (Respondent Attorney)
Doyle, Berman, Murdy, P.C.
- Kevin Young (Property Manager/Witness)
R & R Management Company
Testified regarding financial records and association management
- Denise Lehn (Accountant)
R & R Management Company
Oversees financials for the Association
- Andrew Carr (CPA)
Reviews and audits financial records monthly
- Jack Van Royen (Board Member/Witness)
Barclay Place Homeowners Association Board
- Bonnie Braun (Board Member)
Barclay Place Homeowners Association Board
Present at Nov 23, 2007 meeting
- Pamela Nicita (Board Member)
Barclay Place Homeowners Association Board
Present at Nov 23, 2007 meeting
Neutral Parties
- Lewis D. Kowal (ALJ)
Office of Administrative Hearings
- Robert Barger (Agency Director)
Department of Fire, Building and Life Safety
Listed on mailing distribution
- Debra Blake (Agency Staff)
Department of Fire, Building and Life Safety
Listed on mailing distribution
