Suzanne Thomas v. Woodland Hills Improvement Association

Case Summary

Case ID 25F-H075-REL
Agency Arizona Department of Real Estate
Tribunal Office of Administrative Hearings
Decision Date 2026-04-13
Administrative Law Judge Samuel Fox; Velva Moses-Thompson
Outcome Dismissed
Filing Fees Refunded
Civil Penalties

Parties & Counsel

Petitioner Suzanne Thomas Counsel Pro se
Respondent Woodland Hills Improvement Association Counsel Melissa Tone

Alleged Violations

No violations listed

Video Overview

Audio Overview

Decision Documents

25F-H075-REL Decision – 1357393.pdf

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25F-H075-REL Decision – 1357396.pdf

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25F-H075-REL Decision – 1371727.pdf

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25F-H075-REL Decision – 1373509.pdf

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25F-H075-REL Decision – 1374306.pdf

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25F-H075-REL Decision – 1374309.pdf

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25F-H075-REL Decision – 1386995.pdf

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25F-H075-REL Decision – 1390740.pdf

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25F-H075-REL Decision – 1405182.pdf

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25F-H075-REL Decision – 1415323.pdf

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Briefing Document: Suzanne Thomas v. Woodland Hills Improvement Association

Executive Summary

This document provides a comprehensive analysis of the administrative hearing Suzanne Thomas v. Woodland Hills Improvement Association (No. 25F-H075-REL), conducted before the Arizona Office of Administrative Hearings (OAH). The dispute centered on a petition filed by homeowner Suzanne Thomas (Petitioner) alleging that the Woodland Hills Improvement Association (Respondent/Association) violated Section 8.1 of the Covenants, Conditions, and Restrictions (CC&Rs) by failing to plant winter rye grass and maintain a grassy common area.

The conflict reflects a broader struggle between long-standing community traditions and a new Board of Directors’ efforts to modernize governance, address aging infrastructure, and respond to environmental realities in Tucson, Arizona. Following hearings on March 16 and March 24, 2026, Administrative Law Judge (ALJ) Velva Moses-Thompson issued a decision on April 13, 2026, dismissing the petition. The ALJ concluded that the CC&Rs do not mandate the planting of grass and that the Association’s previous practices of seasonal seeding were based on informal agreements rather than codified requirements.


Case Overview and Procedural History

The proceedings involved multiple continuances and a transition to virtual hearings due to a flood at the OAH offices.

Date Event
July 22, 2025 Suzanne Thomas files a petition alleging violations of CC&R Section 8.1.
September 30, 2025 Arizona Department of Real Estate issues a notice of hearing.
October 7, 2025 Continuance granted; hearing rescheduled for December 3, 2025.
December 1, 2025 OAH orders all hearings to be virtual due to an office flood.
Dec 2025 – Jan 2026 Multiple continuances granted for administrative and scheduling reasons.
March 16, 2026 Evidentiary Hearing Day 1: Testimony from Petitioner and witnesses.
March 24, 2026 Evidentiary Hearing Day 2: Testimony from Board and closing arguments.
April 13, 2026 ALJ Final Decision: Petition dismissed.

Analysis of Key Themes

1. Interpretation of Governing Documents

The central legal question was whether CC&R Section 8.1, which lists "mowing grass" and "sprinkler system" as common area expenses, created an affirmative duty for the Board to maintain a lawn.

  • Petitioner’s Argument: Section 8.1 implies the community was designed as a "grassy park." Petitioner argued that because the document includes "mowing grass" in the pro-rata share of operating expenses, the Board cannot unilaterally decide to eliminate it.
  • Board’s Argument: The Board contended that Section 8.1 is a general guideline for how dues may be spent if certain assets exist. If the Board decides to remove grass, "mowing" is no longer a necessary expense. They argued that the common area is under the Board's jurisdiction and management.
2. Informal Precedent vs. Formal Governance

The hearing revealed a history of "informal" operations within the 19-home community.

  • Historical Practice: For over 12 years, the community planted winter rye grass. Testimony from Frank Cushing and Barbara Evers indicated this was funded through a "balloon payment" or "assessment" collected every fall to avoid raising monthly dues.
  • Board Modernization: The current Board (elected in late 2024) sought to formalize these processes. They argued that because the grass seeding was never part of the formal annual pro-rata budget, it constituted a "Special Assessment" requiring a two-thirds majority vote under CC&R Section 8.7. A vote was held, but it failed to reach the 13-vote threshold, leading the Board to cancel the seeding.
3. Financial and Ecological Stewardship

The Board justified the move to xeriscaping (desert landscaping) through two primary lenses:

  • Fiscal Responsibility: Treasurer Shawn Kopriva testified that grass maintenance and watering previously consumed 74% of the Association's budget. The community is 53 years old and requires urgent repairs to galvanized pipes, rusting ironwork around the pool, and lamp posts.
  • Ecological Reality: The Board cited Tucson’s dwindling water tables and potential 77% reduction in Colorado River water allotments. They argued that planting "ornamental grass" that only survives five months a year is irresponsible.
4. Impact on Community Assets and Aesthetics
  • Property Values: Petitioner provided evidence (Zillow/MLS listings) suggesting that homes in their community ("Woodland Hills 1") sold for higher prices than the twin community ("Woodland Hills 2") because of the lush grass and tree canopy.
  • The "Legacy Trees": Both parties expressed concern for 90+ "heritage" mesquite trees. Petitioner argued that stopping the sprinklers would kill trees that have adapted to shallow watering for 50 years. The Board countered that shallow watering from sprinklers made the trees unstable and dangerous, as evidenced by limbs falling onto patios.

Important Quotes and Context

Regarding CC&R Duties

"It is not mandating we have grass. It’s saying to a homeowner that if we have grass, your dues may go to paying for the grass."

— Melissa Tone, Board Secretary Context: Explaining the Board's interpretation of Section 8.1 as a permissive rather than mandatory spending guideline.

Regarding Historical Practice

"We were very, very informal or we were a very informal organization up until the current regime… it was a normal assessment as a balloon payment essentially on our normal dues."

— Frank Cushing, Witness and Former President Context: Describing the community's 12-year history of paying for winter grass without a formal 2/3 vote.

Regarding the Shift to Xeriscaping

"We have an opportunity right now to pivot from the past to the future and that future should be xeriscaping attracting pollinators and birds that this region is known for."

— Melissa Tone, Board Secretary Context: Outlining the Board’s vision to move away from high-maintenance turf toward sustainable desert beauty.

Regarding Legal Authority

"The common area is under the jurisdiction, the choice of the board at the time… the any cost, any special assessment would come under a vote."

— Mary Claire Lazar, Board President Context: Summarizing legal counsel received regarding the Board's power to change landscaping without a community vote, provided they use existing funds rather than new assessments.


Key Data Points

  • Financial Impact of Grass: Seeding costs approximately $6,000 annually.
  • Historical Budget Allocation: Grass and water accounted for 74% of the total budget under previous leadership.
  • Infrastructure Liability: Replacing the galvanized pipe system is estimated at $75,000; pool ironwork repairs are estimated at over $15,000.
  • Community Size: The Association consists of 19 townhomes.
  • Grass Vote Results (2025): 11 votes in favor of seeding, 8 votes against. (Failed to meet the 13-vote requirement for a Special Assessment).

Actionable Insights and Conclusions

Legal Precedent Established

The ALJ’s decision clarifies that specific mentions of maintenance tasks (like "mowing grass") in CC&Rs do not necessarily mandate the perpetual existence of the asset being maintained. Unless the governing documents explicitly require a specific type of landscaping, the Board retains the authority to modify common areas as part of its management duties.

Governance Requirements

The dispute highlights the danger of "informal" financial arrangements in HOAs. The Association's failure to codify the grass payment as a regular assessment allowed the current Board to reclassify it as a Special Assessment, effectively giving a minority of homeowners (those voting "no") the power to block the tradition.

Transition to Sustainability

The Association is now legally cleared to proceed with its xeriscaping plan. To ensure community cohesion following this divisive case, the following steps were identified during the hearing:

  • Incremental Implementation: The Board plans a gradual transition to desert landscaping to manage costs and allow residents to adapt.
  • Strategic "Islands": The Board is considering artificial turf "islands" (approximately 3,000 sq. ft. total) to maintain some greenery while eliminating water use.
  • Tree Care: Specialized watering plans for the heritage mesquite trees (drip systems or deep watering) are necessary to prevent the "decline and death" warned of by the University of Arizona Cooperative Extension.

Dispute Analysis: Thomas v. Woodland Hills Improvement Association

This study guide provides a comprehensive overview of the administrative hearing between Suzanne Thomas (Petitioner) and the Woodland Hills Improvement Association (Respondent), docketed as No. 25F-H075-REL. The case centers on the interpretation of homeowners' association (HOA) governing documents regarding landscaping requirements, financial assessments, and environmental stewardship in Tucson, Arizona.


I. Case Fundamentals and Core Themes

1. Central Legal Dispute

The primary issue was whether the Woodland Hills Improvement Association (the Association) violated section 8.1 of its Covenants, Conditions, and Restrictions (CC&Rs) by failing to plant winter grass. The Petitioner contended that the CC&Rs mandated grass maintenance, while the Respondent argued that landscaping choices fall under the Board’s discretionary authority to manage common areas.

2. Key Entities and Figures
  • Petitioner: Suzanne Thomas, a homeowner in the Woodland Hills I development.
  • Respondent: Woodland Hills Improvement Association (represented by the Board of Directors).
  • Administrative Law Judges (ALJ): Samuel Fox (initial orders) and Velva Moses-Thompson (final decision).
  • Witnesses for Petitioner: Frank Cushing (former board member), Barbara Evans (long-time resident).
  • Witnesses for Respondent: Melissa Tone (Secretary), Mary Claire Lazar (President), Terry Turner (Vice President), Shawn Kopriva (Treasurer).
3. Primary Governing Documents
  • CC&R Section 8.1 (Operating Expenses): Outlines that owners pay a pro-rata share for maintenance of common areas, including activities such as "mowing grass, caring for the grounds, sprinkler system, [and] swimming pool."
  • CC&R Section 8.7 (Special Assessments): Requires a two-thirds (2/3) majority vote of the members to approve assessments for capital improvements or unexpected repairs.
  • Bylaws Article 8: Outlines the powers and duties of the Board, including the preparation of an annual budget.

II. Competing Arguments and Evidence

The Petitioner’s Perspective (Suzanne Thomas)

The Petitioner’s case rested on historical precedent and a literal interpretation of the CC&Rs as a mandate for a specific aesthetic.

  • Codified Requirement: Argued that because CC&R 8.1 mentions "mowing grass," the community is inherently a "grass community."
  • Historical Precedent: The community had maintained grass since its inception in 1973. Although it transitioned from Bermuda to Ryegrass around 2010–2012, the presence of grass remained a constant expectation.
  • Ecological Impact: Testimony suggested that the "legacy" mesquite trees (some over 100 years old) have developed shallow root systems due to 50 years of sprinkler irrigation. Stopping the watering of grass would allegedly lead to the decline and eventual death of these trees.
  • Property Value: Provided evidence from home listings and sales data suggesting that the "park-like setting" provided by the grass led to higher property values compared to the neighboring Woodland Hills II, which had removed its grass.
The Association’s Perspective (The Board)

The Board’s case focused on fiscal responsibility, environmental necessity, and the legal flexibility of the governing documents.

  • Discretionary Maintenance: Argued that CC&R 8.1 lists items that may be maintained if they exist, but does not compel the Association to maintain a specific feature (e.g., if there is no pool, there is no duty to pay for pool maintenance).
  • Water Scarcity and Climate: Noted that Tucson faces significant cuts to its Colorado River (CAP) allotment. Argued that planting "non-use ornamental grass" that only lives for five months is irresponsible in a desert environment.
  • Fiscal Responsibility: Stated that the Association was "grass poor," with lawn maintenance and water previously consuming up to 74% of the budget. Funds were needed for critical infrastructure, such as aging galvanized pipes, ironwork repairs (estimated at $15,000 for the pool fence), and sidewalk safety.
  • Voting Thresholds: Asserted that seeding grass was historically handled as a "special assessment" because it was not in the regular budget. Since recent votes for seeding did not reach the 2/3 majority required by CC&R 8.7 (recent votes were 11-7 and 11-8), the Board could not legally move forward with the assessment.

III. Short-Answer Practice Questions

  1. What was the final decision of the Administrative Law Judge regarding the Petitioner’s claim?
  • Answer: The ALJ dismissed the petition, concluding that the Association did not violate CC&R 8.1 and is not required to plant grass.
  1. According to the Board, what percentage of the budget did grass-related costs consume in the past?
  • Answer: Approximately 74%.
  1. What specific environmental concern did the Petitioner raise regarding the removal of the sprinkler system?
  • Answer: That the 90+ legacy mesquite trees would decline and die due to their reliance on the shallow watering provided by the grass sprinklers.
  1. Why did the Board argue that a "two-thirds" vote was necessary for planting grass?
  • Answer: Because they classified the cost of seeding as a "special assessment" under CC&R 8.7, rather than a regular operating expense.
  1. What alternative landscaping plan did the Board propose?
  • Answer: "Xeriscaping" or desert landscaping, which includes heat-tolerant plants, cacti, and "islands" of artificial turf to attract pollinators and provide year-round color.
  1. How did the ALJ characterize the Association's past decision to pay for grass in the fall?
  • Answer: The ALJ characterized it as an "informal" agreement that was never codified or added as an amendment to the governing documents.

IV. Essay Prompts for Deeper Exploration

  1. The Interpretation of "Mandatory" vs. "Permissive" Language: Analyze the language of CC&R Section 8.1. Does the inclusion of the phrase "including, but not limited to, mowing grass" create an affirmative duty for the Board to ensure grass exists to be mown, or does it merely describe how funds may be spent if grass is present? Support your argument using the findings of the Administrative Law Judge.
  2. Environmental Stewardship vs. Historical Aesthetic: Evaluate the tension between the homeowners' desire to maintain a 50-year-old "park-like" ecosystem and the Board's argument regarding the Tucson water crisis. To what extent should an HOA board be allowed to override established community traditions in the name of ecological and fiscal necessity?
  3. The Validity of Informal Precedents: In the hearing, the Petitioner relied heavily on 13 years of precedent and informal voting to argue that grass was a standard maintenance item. The ALJ ultimately ruled these informal agreements were not binding. Discuss the risks and benefits of HOAs operating "informally" and the legal implications when those informal practices are challenged by new leadership.

V. Glossary of Important Terms

Term Definition
CC&Rs Covenants, Conditions, and Restrictions; the legal documents that govern the use of property and the operations of a homeowners' association.
Special Assessment A fee levied by an HOA board in addition to regular dues, typically for major repairs or capital improvements, often requiring a higher voting threshold for approval.
Pro-rata Share A proportionate allocation of expenses among all owners; in this case, 1/19th of the actual costs per home.
Xeriscaping A style of landscape design that requires little or no irrigation or other maintenance, used often in arid regions.
Legacy Trees Mature trees (such as the mesquite trees mentioned in the case) that have significant age and value to the community’s ecosystem and property value.
Administrative Law Judge (ALJ) A judge who conducts hearings and makes decisions for government agencies, such as the Office of Administrative Hearings.
Continuance A legal order to postpone a hearing to a later date.
Petitioner The party who files a petition or brings a case to court (Suzanne Thomas).
Respondent The party against whom a petition is filed (Woodland Hills Improvement Association).
Bermuda vs. Rye Two types of grass; Bermuda is a summer grass that goes dormant in winter, while Ryegrass is a winter grass seeded annually in the fall.

From Green Lawns to Desert Landscapes: Inside the Woodland Hills HOA Legal Dispute

1. Introduction: A Community at a Crossroads

In the sun-drenched suburbs of Tucson, Arizona, the Woodland Hills Improvement Association recently became the site of a landmark legal battle over the future of the American Southwest’s landscape. The dispute mirrors a growing regional tension: the clash between long-standing community tradition and the harsh realities of environmental and fiscal sustainability.

At the center of the conflict was a petition filed by homeowner Suzanne Thomas against the Association’s Board of Directors. The catalyst was the Board's decision to cease the decades-old practice of planting winter rye grass, opting instead for a transition toward a sustainable "zero-scape" aesthetic. The case eventually narrowed to a pivotal legal question: Does a specific mention of "mowing grass" within community bylaws mandate that a board maintain that grass in perpetuity, or is it merely an example of a permissible expense?

2. The Petitioner's Case: Tradition, Property Value, and Legacy Trees

Suzanne Thomas, representing nearly half of the 19-home community, argued that the Board was abandoning its foundational duties to maintain the character and value of the neighborhood. Her case rested on the expectation of a "park-like" setting that has defined the development for half a century.

The Case for Tradition

  • A 50-Year Legacy: Residents testified that the community has featured lush grass since its inception in 1973. Thomas argued that homeowners purchased their properties with the explicit expectation that this specific aesthetic would be preserved.
  • Quantifiable Property Disparity: Drawing on real estate data, Thomas highlighted a significant gap in market value between Woodland Hills 1 (the subject of the dispute) and the neighboring Woodland Hills 2, which had previously transitioned away from grass. She noted that homes in Woodland Hills 1 were valued at approximately $175 per square foot, whereas those in the grassless Woodland Hills 2 hovered between $134 and $158 per square foot.
  • Environmental and Health Risks: Thomas expressed concerns that removing the ground cover would create a "dust bowl," leading to respiratory issues for the community’s many seniors, including those suffering from COPD and allergies.
  • The Health of Legacy Trees: The community is home to over 90 legacy mesquite trees. Citing an expert from the University of Arizona Cooperative Extension, Thomas argued that these trees developed shallow root systems due to 50 years of sprinkler irrigation. The expert warned that while the trees might not perish immediately, without supplemental water, they will "decline and die eventually."
3. The Board’s Defense: Sustainability and Fiscal Responsibility

The Board—comprised of Melissa Tone, Claire Lazar, Terry Turner, and Sean Kopriva—defended their decision as an exercise of their fiduciary duty. They argued that they were acting as responsible stewards of the Association's dwindling funds and Arizona’s increasingly scarce water resources.

Challenges to Modern HOA Management

Issue Impact Board’s Proposed Solution
Water Scarcity Looming loss of up to 77% of Colorado River (CAP) allotments in Tucson. Transition to "zero-scaping" with native, drought-tolerant plants.
Aging Infrastructure 53-year-old galvanized pipes and rusted ironwork around the pool that is no longer to code. Reallocate funds ($75,000 for pipes; $15,000 for iron) to critical structural repairs.
Budgetary Strain Grass maintenance and watering previously consumed 74% of the total budget. Prioritize essential "grounds maintenance" over seasonal "ornamental" grass.

The Board’s "pivot to the future" involves replacing the high-maintenance rye grass with native pollinator-friendly plants and strategically placed "islands" of high-quality artificial turf to maintain visual appeal without the ecological cost.

4. The Legal Pivot: Special Assessments vs. Regular Maintenance

The legal core of the dispute focused on the classification of the grass-seeding costs.

  • The Petitioner’s View: Thomas argued that seeding is a standard maintenance task explicitly covered under CC&R Section 8.1, which lists "mowing grass" as a common expense. She contended the Board was required to include these costs in the regular operating budget.
  • The Board’s View: The Board countered that while the Association may mow grass if it exists, it is not mandated to plant it. They reclassified the seasonal seeding as a "nice to have" special assessment. When the 2025 budget was put to a vote, it failed to reach the required 2/3 majority (the result was 11 in favor, 8 against). The Board used this failure to justify the cessation of the grass, arguing that since the community would not explicitly approve it as an "extra," they had no duty to provide it.
5. The Verdict: The Administrative Law Judge's Decision

On April 13, 2026, Administrative Law Judge Velva Moses-Thompson issued a final ruling in favor of the Association. The decision clarified that the Board had not violated its governing documents by choosing to let the winter rye tradition end.

The Judge noted that while the CC&Rs provide examples of activities the Board may fund, they do not create a permanent mandate for specific landscaping assets. Verbatim, the Judge’s conclusion stated:

"The Administrative Law Judge concludes that the Association is not required to plant grass under CC&R § 8.1 or any other governing documents."

The ruling further emphasized that the community’s 12-year history of "informal" fall payments did not constitute a formal amendment to the CC&Rs. Consequently, the Board was within its authority to prioritize the Association’s fiscal health and infrastructure over the maintenance of the grass.

6. Key Takeaways for Homeowners and Boards

This case serves as a critical precedent for community associations across the Southwest. Key lessons include:

  1. Language Matters: The phrase "including but not limited to" in Section 8.1 granted the Board discretion. It defined their authority to spend on grass if it existed, but did not strip them of the power to remove it.
  2. Informal Precedent vs. Written Code: For over a decade, the community relied on "informal" fall balloon payments for seed. The court found that these long-standing traditions carry no legal weight compared to the codified bylaws. Communities wishing to protect specific features must ensure they are explicitly mandated in writing.
  3. The Fiduciary Duty of Evolution: The Board successfully argued that their primary duty was to address the "ground maintenance" of a 53-year-old property, ranging from galvanized pipes to heritage tree care, which outweighed the aesthetic preference for winter rye.
  4. Environmental Realities: The ruling acknowledges that as water tables deplete and municipal allotments shift, Boards have the right—and perhaps the obligation—to adapt landscaping to the local climate.
7. Conclusion: The Future of the Common Area

The Woodland Hills dispute marks the end of an era for this Tucson community. As the "status quo" of the last 50 years yields to the necessity of the next 50, the Association faces the task of healing internal divisions while managing its new desert landscape.

For real estate professionals and homeowners alike, this case is a harbinger. It demonstrates that in an era of water scarcity and aging infrastructure, the legal definition of "maintenance" is evolving. Balancing the nostalgic expectations of the past with the ecological and fiscal demands of the future is now the primary challenge of modern community governance.

Case Participants

Petitioner Side

  • Suzanne Thomas (Petitioner)
    Self-represented
  • Frank Cushing (Witness)
  • Barbara Evers (Witness)
    Also referred to as Barbara Evans in the ALJ decision

Respondent Side

  • Melissa Tone (Representative and Witness)
    Woodland Hills Improvement Association
    Secretary of the Board
  • Mary Claire Lazar (Witness)
    Woodland Hills Improvement Association
    President of the Board; also referred to as Clair Lazar in the ALJ decision
  • Terry Turner (Witness)
    Woodland Hills Improvement Association
    Vice President of the Board
  • Shawn Kopriva (Witness)
    Woodland Hills Improvement Association
    Treasurer of the Board; also spelled Copriva/Capria in transcripts and Koptiva in the ALJ decision

Neutral Parties

  • Velva Moses-Thompson (Administrative Law Judge)
    Office of Administrative Hearings
    Presided over the hearings on March 16 and March 24, 2026
  • Samuel Fox (Administrative Law Judge)
    Office of Administrative Hearings
    Issued multiple continuance orders
  • Susan Nicolson (Commissioner)
    Arizona Department of Real Estate

Michele Beauchamp V. The Villages at Rio Paseo Condominium Association

Case Summary

Case ID 24F-H051-REL
Agency ADRE
Tribunal OAH
Decision Date 2025-07-18
Administrative Law Judge Samuel Fox
Outcome The ALJ ruled in favor of the Petitioner, finding that the Respondent's Code of Conduct was not properly enacted at the time of the alleged violation in December 2020. Consequently, the notice of violation was inappropriately issued. The ALJ rejected the Respondent's argument that the matter was moot because the fine had been removed, stating a violation is not nullified by the removal of a fine.
Filing Fees Refunded $500.00
Civil Penalties $0.00

Parties & Counsel

Petitioner Michele Beauchamp Counsel
Respondent The Villages at Rio Paseo Condominium Association Counsel Madeline Gegg

Alleged Violations

ARS 33-1242; ARS 33-1248; CC&Rs

Outcome Summary

The ALJ ruled in favor of the Petitioner, finding that the Respondent's Code of Conduct was not properly enacted at the time of the alleged violation in December 2020. Consequently, the notice of violation was inappropriately issued. The ALJ rejected the Respondent's argument that the matter was moot because the fine had been removed, stating a violation is not nullified by the removal of a fine.

Key Issues & Findings

Improper Enactment of Code of Conduct and Subsequent Violation Notice

Petitioner challenged a violation notice and fine issued regarding her conduct at a board meeting. The parties stipulated that the Code of Conduct used as the basis for the violation was not properly enacted until January 2025. Respondent argued the issue was moot because the fine was waived. The ALJ ruled the violation was not nullified by the removal of the fine.

Orders: Respondent is ordered to pay Petitioner the filing fee of $500.00 within 30 days. Respondent is directed to comply with the requirements of its Community Documents going forward.

Filing fee: $500.00, Fee refunded: Yes

Disposition: petitioner_win

Cited:

  • 3480
  • 3482
  • 3483
  • 3487
  • 3488

Video Overview

Audio Overview

Decision Documents

24F-H051-REL Decision – 24F-H051-REL.pdf

Uploaded 2026-06-11 01:18:36 (98.2 KB)

Synthesis of Operations, Governance, and Legal Compliance for The Village at Rio Paseo Condominium Association

This briefing document provides a comprehensive analysis of the operational, financial, and legal landscape of The Village at Rio Paseo Condominium Association, based on internal board communications, meeting transcripts, financial reports, and regulatory guidelines.

Executive Summary

The Association is currently navigating a complex transition in management and governance, characterized by significant administrative cleanup and internal conflict. Key takeaways include:

Management Transition Hurdles: The shift from previous management to AAM, LLC has revealed substantial “messes,” including unorganized contracts, utility billing errors, and a lack of transparency regarding vendor relationships.

Financial Discrepancies: Audits of recent financials have identified over $7,000 in misallocated electrical payments for individual units and highly inconsistent fire monitoring fees across different buildings.

Infrastructure Priorities: Critical focus is required for fire safety inspections to prevent insurance lapses, addressing recurring sewage backups in specific units, and resolving community-wide issues such as pigeon infestations and parking shortages.

Governance and Conduct: The Board has formally adopted a Code of Conduct to address professional lapses during meetings. Legal mediation is currently underway between a resident/board member and the Association through the Office of Administrative Hearings.

Legal Compliance: Adherence to the Fair Housing Act (FHA) regarding reasonable accommodations is a core requirement, emphasizing the Association’s duty to provide equal opportunity for residents with disabilities without imposing undue financial burdens.

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I. Governance and Internal Conflict

Adoption of the Code of Conduct

On December 14, 2020, the Board of Directors unanimously adopted a formal Code of Conduct pursuant to Section 15.4 of the CC&Rs and Arizona Revised Statutes Section 10-3821. This resolution aims to:

• Govern the personal conduct of Members, Board Members, and invitees at all Association meetings.

• Establish reasonable rules for expediting Association business.

• Ensure participants treat others with courtesy and respect and behave in a professional, businesslike manner.

Allegations of Misconduct

Immediately following the adoption of the Code of Conduct, the Board President, Charlotte Morgan, issued a verbal warning via email to a fellow board member, Michelle. The warning cited several violations during a Zoom meeting held on December 14, 2020:

Lack of Engagement: The member was observed texting, speaking with others in her home while on mute, and appearing uninterested during a Reserve Study vote.

Disruptive Behavior: Recurring interruptions of other speakers and a condescending tone toward the Board during parking discussions.

Potential Sanctions: The President noted that failure to correct this behavior would lead to formal fines and noted the member’s right to appeal as established in the Code.

Ongoing Litigation

As of August 2024, the matter of Michele Beauchamp v. The Villages at Rio Paseo Condominium Association (No. 24F-H051-REL) is pending before the Arizona Office of Administrative Hearings. The parties have requested mediation, and a previously scheduled status update for November 2024 has been vacated pending those results.

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II. Operational and Financial Management

Transition from Previous Management

The Board has expressed significant frustration with the “mess” left by previous property management (specifically citing an individual named “Sam”). Critical issues identified during the transition to AAM, LLC include:

Missing Documentation: The Board lacked copies of active vendor contracts, forcing them to conduct an “email blast” to vendors to identify existing agreements and account codes.

Inconsistent Monitoring Fees: Board members discovered that one building was being charged $236 for monitoring while others ranged from $26 to $42. There were also concerns about being billed for a building that was no longer being constructed.

Financial Audits and Utility Errors

In-depth reviews of invoices revealed substantial financial mismanagement:

Electrical Overpayments: The Association paid over $7,000 for electricity for two individual units because the accounts were mistakenly left in the Association’s name and categorized as “street lights.”

Billing Delays: Previous management reportedly failed to pay bills on time or in full, leading to deficits in certain months.

Budgetary Surpluses: Despite these errors, the November 2020 Budget Comparison Statement showed a Year-to-Date (YTD) surplus of $42,635.54 in the operating fund and $54,714.84 in the reserve fund.

Reserve Study Analysis

The Association evaluated multiple proposals for a required Reserve Study update in late 2020/early 2021:

Vendor

Proposed Fee

Association Reserves

$2,230

Recommended by AAM; 15-week turnaround; specialized in HOAs.

Reserve Advisors

$3,950

Includes a cloud-based software solution (ForeSite).

Advanced Reserve Solutions

$1,400 – $3,000

Previous vendor; AAM warned of potential errors/missing components in their work.

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III. Infrastructure, Maintenance, and Safety

Fire Safety and Insurance

A critical deadline was identified for September 24 (likely 2021), by which fire safety inspections must be completed to prevent Farmers Insurance from dropping the fire hazard policy. The Board is working to ensure they do not pay for “re-inspections” of systems that already have valid certificates.

Plumbing and Sewer Issues

A November 2020 inspection by Schroeder Plumbing LLC revealed systemic issues following a sewage backup in a unit. Key findings included:

Design Flaws: All units in the building share a common sewer line.

Physical Obstructions: A “major lip on fittings” just outside the building was identified as a likely cause of backups.

Damage: Evidence showed water and sewage backing up through kitchen sinks and into dishwashers, causing dried water stains and debris.

Pigeons and Community Feedback

A community survey revealed that residents consider the pigeon infestation a major issue, with some describing it as “beyond reflectors and spikes.” Residents have reported that pigeon droppings make outdoor spaces unusable. The Board is considering various control methods, including shock strips and nest removal.

Parking and Striping

The Fire Marshal for the City of Goodyear clarified that all streets within the community are considered “fire apparatus access roads.” Because the streets are 26 feet wide or less, parking must be restricted on both sides at all times.

Enforcement: Since the streets are private, the HOA is responsible for enforcement.

Maintenance: The Association received bids for parking re-striping ranging from $750 (Cactus Asphalt) to $3,900 (Associated Contracting Resources).

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IV. Legal Frameworks: Reasonable Accommodations

The Association is bound by the Fair Housing Act regarding “Reasonable Accommodations” for persons with disabilities. According to joint statements from the DOJ and HUD:

Definition: A reasonable accommodation is a change or adjustment to a rule, policy, or service necessary to afford a person with a disability an equal opportunity to use and enjoy a dwelling.

The Interactive Process: When a request is made, providers should engage in an interactive process to discuss the need and potential alternatives if the initial request is deemed an “undue financial and administrative burden” or a “fundamental alteration” of operations.

Verification: If a disability is not obvious, providers may request reliable disability-related information to verify the need for the accommodation but may not inquire into the specific nature or severity of the disability.

No Extra Fees: Associations may not charge extra fees or deposits as a condition of granting a reasonable accommodation (e.g., waiving a “no pets” policy for an assistance animal).

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V. Key Perspectives and Insights

“I want what I asked for back in October. I want to see the contracts… because it’s going to be a learning experience on what a mess this association is in.” — Michelle, Board Member

“Our community has been really hurt very bad… they were sold a bill of goods that wasn’t true. Our assessments were supposed to be at 236 and now they’re at 310 and our property doesn’t look like it.” — Monique, Board President

“A current, reliable Reserve Study is a hallmark of well-managed associations, and an important part of a homeowner board’s fiduciary duty to act in the best interest of their association members.” — Association Reserves Proposal

Comprehensive Study Guide: The Village at Rio Paseo Condominium Association and Fair Housing Compliance

This study guide provides an in-depth review of the governance, financial management, and legal obligations of The Village at Rio Paseo Condominium Association, alongside federal guidelines for reasonable accommodations under the Fair Housing Act.

——————————————————————————–

Part I: Short-Answer Quiz

Instructions: Answer the following ten questions based on the provided source context. Each response should be between 2 and 3 sentences.

1. What specific behaviors were cited as violations of the Code of Conduct during the December 14, 2020, Board meeting?

2. Under the Fair Housing Act, what constitutes a “reasonable accommodation”?

3. According to the Association’s resolution, who is responsible for the cost of repairs if damage occurs solely to a single Lot and the amount is less than the insurance deductible?

4. What are the four criteria required for an item to be considered a “Reserve Component” in a Reserve Study?

5. How does the Goodyear Fire Marshal define “fire apparatus access roads,” and what are the associated parking restrictions?

6. What legal process is required for the Association to decrease the number of Board members from five to three?

7. What is a “fundamental alteration” in the context of a housing provider’s operations under the Fair Housing Act?

8. What did the Schroeder Plumbing leak detection report conclude regarding the sewage backup at the condo?

9. According to the Joint Statement from HUD and the DOJ, what must a housing provider do before excluding an individual with a disability who is perceived as a “direct threat”?

10. What was the outcome of the August 2, 2024, Order from the Office of Administrative Hearings regarding the matter of Michele Beauchamp v. The Villages at Rio Paseo?

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Part II: Answer Key

1. Code of Conduct Violations: A Board member was cited for lack of engagement, specifically for muting audio to speak with others at home and texting or using a phone during the meeting. Additionally, the member was accused of interrupting others, missing votes on proposals, and displaying condescension toward the Board.

2. Reasonable Accommodation: A reasonable accommodation is a change, exception, or adjustment to a rule, policy, practice, or service necessary to provide a person with a disability an equal opportunity to use and enjoy a dwelling. This includes adjustments to public and common use spaces, such as allowing assistance animals in “no pets” buildings or assigning specific parking spaces.

3. Insurance Deductible Responsibility: If damage occurs solely to one Lot and the cost is less than the Association’s deductible, the individual Lot Owner is responsible for the full cost of repair or restoration. While the Board reserves the right to determine if the Association will make repairs to certain portions like roofs, the financial burden remains with the Owner.

4. Reserve Component Criteria: To be included in a Reserve Study, a component must be the association’s responsibility and have a limited useful life. It must also have a predictable remaining useful life and a cost that exceeds a specific “threshold cost.”

5. Fire Marshal Restrictions: Fire apparatus access roads include public and private streets, fire lanes, and parking lot lanes used by fire stations to access buildings. On streets that are 26 feet wide or less, parking must be restricted on both sides at all times to maintain required clear width.

6. Decreasing Board Size: According to the Association’s attorney, the bylaws require approval from 75% of the membership (homeowners) to decrease the Board size from five to three. This change must be placed on the ballot for a vote during an annual meeting.

7. Fundamental Alteration: A fundamental alteration is a modification that changes the essential nature of a housing provider’s operations. For example, a provider is not required to provide transportation or grocery shopping services if such services are not part of their standard business model.

8. Plumbing Report Conclusion: The technician found no sign of a pressurized or drain leak on the plumbing system but observed that all units in the building share a common sewer line. The report indicated a sewage backup from the kitchen sink into the dishwasher, likely caused by a major lip on fittings just outside the building.

9. Direct Threat Assessment: A housing provider must perform an individualized assessment based on reliable objective evidence, such as recent overt acts, rather than stereotypes or fear. The assessment must consider the nature and severity of the risk, the probability of injury, and whether any reasonable accommodation could eliminate the threat.

10. OAH Order Outcome: The Administrative Law Judge vacated the Status Update originally scheduled for November 22, 2024, because the parties had requested mediation. Additionally, the Respondent’s Motion to Continue was denied, and the office planned to contact parties with mediation session details.

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Part III: Essay Questions

Instructions: Use the source context to develop comprehensive responses for the following five topics.

1. The Intersection of Fiduciary Duty and Board Conduct: Discuss how the expectations of professional behavior outlined in the Code of Conduct relate to a Board member’s fiduciary duty to the community.

2. Navigating Financial Transparency and Stewardship: Analyze the challenges faced by the Board regarding utility billing errors, contract management, and the importance of regular Reserve Studies in maintaining property values.

3. Balance of Rights in Fair Housing: Evaluate the “interactive process” between housing providers and residents. Discuss how providers can balance the needs of disabled residents with the limitations of “undue financial burden” and “fundamental alteration.”

4. Infrastructure and Safety Management: Examine the complexities of managing fire safety compliance, including the roles of the Fire Marshal, insurance providers, and specialized vendors in an HOA setting.

5. Community Governance and Membership Participation: Reflect on the survey results regarding pigeons and parking. How should a Board integrate varied (and sometimes conflicting) homeowner opinions into formal resolutions and enforcement policies?

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Part IV: Glossary of Key Terms

Definition

ARS (Arizona Revised Statutes)

The laws enacted by the Arizona State Legislature; specifically referenced regarding non-profit corporation actions (Section 10-3821) and HOA open meetings (Section 33-1804).

Declaration of Covenants, Conditions, and Restrictions; the governing documents that outline the rules for the Association and the responsibilities of the Board and members.

Common Elements

Areas of the condominium project intended for the use and enjoyment of all owners, which the Association is typically responsible for maintaining.

Fair Housing Act (FHA)

Federal legislation prohibiting discrimination in housing based on race, color, religion, sex, national origin, familial status, and disability.

Fundamental Alteration

A requested modification to a housing provider’s rules or services that would significantly change the essential nature of the provider’s business.

Interactive Process

The dialogue between a housing provider and a resident to discuss a disability-related need and identify effective, reasonable accommodations.

Major Life Activity

Functions of central importance to daily life, such as walking, seeing, hearing, breathing, learning, and performing manual tasks.

Physical or Mental Impairment

A broad range of conditions—including orthopedic, visual, speech, and hearing impairments, as well as chronic diseases and emotional illness—that may qualify an individual for protection under the FHA.

Reasonable Accommodation

A necessary adjustment to a rule or policy that allows a person with a disability an equal opportunity to use and enjoy their home.

Reserve Study

A long-term financial planning document used to forecast and fund major repair and replacement projects for an association’s common components.

Undue Financial and Administrative Burden

A situation where a requested accommodation is too costly or complex for a provider to implement, determined by a case-by-case analysis of resources and benefits.

Working Capital Fees

Fees typically collected at the time of a home sale to ensure the association has sufficient funds for initial or ongoing operations.

The HOA Paradox: 5 Impactful Lessons from the Front Lines of Community Governance

1. Introduction

The “HOA horror story” is a staple of suburban lore, typically featuring overzealous boards issuing fines for a non-compliant shade of beige or a wayward blade of grass. Yet, this caricature ignores a far more complex reality: Homeowners Associations are essentially micro-governments. They manage multi-million dollar asset portfolios, oversee critical infrastructure, and navigate a labyrinth of federal and state statutory mandates—all while being led by volunteers.

The friction occurs when professional standards and legal compliance collide with the informal nature of residential living. Using the governance challenges at The Village at Rio Paseo as a case study, we can distill five critical lessons in fiduciary duty, administrative forensics, and the high cost of failing to bridge the “professionalism gap.”

2. The Digital Professionalism Gap: A Failure of Deliberate Governance

The transition to digital board meetings has birthed a dangerous informality. Because directors join from their living rooms, there is a tendency to treat official proceedings with the casualness of a family Zoom call. However, a domestic environment does not relax a director’s fiduciary obligations.

In December 2020, Charlotte Morgan, President of the Rio Paseo board, issued a formal verbal warning to a fellow director, Michelle, regarding her conduct during a recorded session. This was not merely a breach of etiquette; it was a failure to maintain a record of deliberate governance. Michelle was cited for muting her audio to engage in private household discussions and texting on camera. Most critically, these distractions led her to miss a key vote on the Reserve Study proposal and caused her to repeatedly interrupt other speakers, including a specific individual named Sean.

“The members expect the Board of Directors to focus on the meeting and be fully engaged as items on the agenda are discussed.”

The professionalism gap also surfaced as condescension during technical discussions regarding parking—a bridge to the community’s larger infrastructure challenges. For a senior consultant, this behavior represents a “Code of Conduct” violation that risks financial penalties for the individual director and potential liability for the Association. When a board operates without decorum, it risks making uninformed decisions that jeopardize the community’s legal standing.

3. The Legal Nuance of “Reasonable”: The Interactive Process as a Safe Harbor

Navigating the federal Fair Housing Act (FHA) is a high-stakes exercise in statutory compliance. Boards often view “Reasonable Accommodations” as an erosion of their authority, but the joint statements from HUD and the DOJ reveal a different perspective: the “Interactive Process” is actually a safe harbor for the board.

Three critical takeaways define this legal landscape:

1. Legal Equivalence: Under federal law, “disability” and “handicap” are legally interchangeable. The FHA protects individuals with physical or mental impairments that substantially limit major life activities.

2. Individualized Assessment vs. Stereotype: A board cannot exclude a resident based on a “direct threat” if that threat is rooted in fear or speculation. Any exclusion must be supported by reliable objective evidence (e.g., recent overt acts) and an assessment of whether an accommodation can mitigate that threat.

3. The Interactive Process: This is the legal pivot point. When a resident requests an exception to a “no pets” policy for an assistance animal, the board must engage in a documented dialogue. This process allows the board to find solutions that avoid “undue financial and administrative burdens.”

The ultimate factor is the “nexus”—the identifiable relationship between the disability and the requested change. By focusing on the nexus, boards can avoid HUD complaints while maintaining the integrity of their governing documents.

4. The Infrastructure Trap: Developer Legacies and Fire Safety

HOA boards are frequently left to play the “villain” in enforcement scenarios that are actually the result of developer-designed infrastructure. At Rio Paseo, the conflict between resident convenience and municipal safety code reached a head over visitor parking.

Correspondence from the Goodyear Fire Marshal, Michael Brune, clarified the technical reality: any street 26 feet wide or less—specifically measured from face of curb to face of curb—must prohibit parking on both sides to serve as a “fire apparatus access road.” At Rio Paseo, the main loop was exactly 26 feet wide, and common drives were 25 feet wide.

This is the infrastructure trap: the HOA can be cited for fire code violations even on private streets. The burden of enforcement shifts from the city to the Association. While residents may clamor for street parking, the board’s fiduciary duty to ensure emergency vehicle access overrides resident convenience. Failure to enforce these restrictions isn’t just a neighborly dispute; it is a liability risk that could lead to the loss of hazard insurance coverage.

5. Financial Forensics: The High Cost of Management Transitions

A transition between management companies—in this case, moving from the previous entity, Americanade (managed by “Sam”), to AAM—often exposes significant fiduciary dereliction. The audit process at Rio Paseo revealed a series of administrative “messes” that carried a heavy price tag.

The forensic discovery included:

Utility Mismanagement: The Association discovered it had paid over $7,000 in electricity bills for two private units. The previous manager had mislabeled these private accounts as “streetlights,” and a lack of board oversight allowed these invoices to be paid without review.

The “Value vs. Price” Dilemma: During the search for a new Reserve Study, the board faced a bid from ARS for $1,400. However, the Association’s budget analyst, Ann Salas, recommended against them, noting their previous work contained “too many errors and missing components.” The board opted for the $2,230 bid from Association Reserves, choosing capital reserve health over a lower price point.

Contract Redundancy: Discovered confusion over fire monitoring and backflow inspection contracts led to fears of double-billing and lapsed certifications.

The human impact of these discoveries was stark: resident assessments rose from $236 to $310 to stabilize the budget. As Michelle reflected during the transition:

“It’s going to be a learning experience on what a mess this association is in.”

The lesson for any board is clear: total delegation to a management company is not a substitute for oversight. Boards must perform their own regular audits of invoices and contracts to prevent systemic financial leakage.

6. Conclusion: The Fiduciary Future

Successful community governance requires a delicate balance between “passion” and “process.” As the Village at Rio Paseo demonstrates, the long-term health of a community depends on transparency, technical rigor, and a proactive approach to statutory compliance. When a board prioritizes the “process” of governance—adhering to a strict Code of Conduct and performing financial due diligence—it protects the property values and peace of mind of every stakeholder.

In a community where every neighbor is a stakeholder, is your board operating as a professional entity or just a group of people in a Zoom room?

Case Participants

Petitioner Side

  • Michele Beauchamp (petitioner)
    Homeowner
    Homeowner at The Villages at Rio Paseo.

Respondent Side

  • Madeline Gegg (attorney)
    Mulcahy Law Firm, P.C.
    Represented the Respondent Association.
  • The Villages at Rio Paseo Condominium Association (respondent)
    HOA
    Respondent Association.

Neutral Parties

  • Samuel Fox (ALJ)
    Office of Administrative Hearings
    Administrative Law Judge.

Brian & Rosalie Gordon v. Tucson Estate No. Two Owner’s Association

Case Summary

Case ID 24F-H043-REL
Agency ADRE
Tribunal OAH
Decision Date 2024-07-10
Administrative Law Judge Samuel Fox
Outcome Petitioners were deemed the prevailing party regarding Petition Issues 1 and 4, and Respondent was deemed the prevailing party regarding Issues 2 and 3. Respondent was ordered to pay Petitioners $1,000.00 of the filing fee. Respondent was also directed to comply with Community Documents and A.R.S. § 33-1805 going forward. No Civil Penalty was levied.
Filing Fees Refunded $2,000.00
Civil Penalties $0.00

Parties & Counsel

Petitioner Brian Gordon and Rosalie Gordon Counsel
Respondent Tucson Estate No. Two Owner's Association Counsel Jason Smith

Alleged Violations

Bylaws Article 10; Finance Committee rules
A.R.S. § 33-1805; Bylaws Article 10
A.R.S. § 33-1805; Bylaws Article 10
A.R.S. § 33-1805; Bylaws Article 10

Outcome Summary

Petitioners were deemed the prevailing party regarding Petition Issues 1 and 4, and Respondent was deemed the prevailing party regarding Issues 2 and 3. Respondent was ordered to pay Petitioners $1,000.00 of the filing fee. Respondent was also directed to comply with Community Documents and A.R.S. § 33-1805 going forward. No Civil Penalty was levied.

Why this result: Petitioners failed to meet the burden of proof for Complaints 2 and 3, establishing that Respondent violated A.R.S. § 33-1805 or failed to abide by Community Documents, because Respondent provided all available records or offered additional reports.

Key Issues & Findings

Violation of Community Documents by not recording and making available the minutes of all Finance Committee Meetings held in 2023.

Petitioners requested minutes for five 2023 Finance Committee Meetings. The Committee rules required minutes of its meetings as a permanent record of its actions. The Respondent failed to record meeting minutes as required.

Orders: Respondent directed to comply with the requirements of its Community Documents going forward.

Filing fee: $500.00, Fee refunded: Yes

Disposition: petitioner_win

Cited:

  • A.R.S. § 33-1805
  • A.R.S. § 10-11601
  • Bylaws Article 10

Violation by not keeping and making financial and other HOA business documentation (Budget Working Papers) available for review.

Petitioners requested copies of Budget Working Papers. Respondent provided all available documents (unapproved budget, general ledger, and draft), maintaining only one version of a proprietary spreadsheet. Petitioners failed to meet their burden to prove Respondent did not make records available.

Filing fee: $500.00, Fee refunded: No

Disposition: respondent_win

Cited:

  • A.R.S. § 33-1805
  • A.R.S. § 10-11601
  • Bylaws Article 10

Violation by not keeping and making financial and other HOA business documentation (Accounts Payable journal with GL detail) available for review.

Petitioners requested Accounts Payable journal/reports multiple times. Respondent provided copies of available accounts payable reports (check receipts and general ledger). When Respondent later identified an additional detailed report available for purchase, Petitioners refused it.

Filing fee: $500.00, Fee refunded: No

Disposition: respondent_win

Cited:

  • A.R.S. § 33-1805
  • A.R.S. § 10-11601
  • Bylaws Article 10

Violation by not keeping and making financial and other HOA business documentation (IRS Tax filings and backup documentation) available for review.

Petitioners requested IRS Tax filings. Respondent initially provided only photocopies of two pages of the 1120-h form, missing schedules and backup documentation. Respondent failed to provide full tax returns or backup documentation in a timely manner (within ten business days).

Orders: Respondent is directed to comply with the requirements of A.R.S. § 33-1805 going forward.

Filing fee: $500.00, Fee refunded: Yes

Disposition: petitioner_win

Cited:

  • A.R.S. § 33-1805
  • A.R.S. § 10-11601
  • Bylaws Article 10

Analytics Highlights

Topics: HOA records dispute, Finance Committee minutes, budget working papers, accounts payable journal, IRS tax filings, record retention, A.R.S. § 33-1805 violation
Additional Citations:

  • A.R.S. § 33-1805
  • A.R.S. § 10-11601
  • Bylaws Article 10
  • A.R.S. § 32-2199.02

Video Overview

Audio Overview

Decision Documents

24F-H043-REL Decision – 1176916.pdf

Uploaded 2026-04-24T12:23:58 (53.5 KB)

24F-H043-REL Decision – 1198119.pdf

Uploaded 2026-04-24T12:24:02 (203.0 KB)

24F-H043-REL Decision – 1200350.pdf

Uploaded 2026-04-24T12:24:06 (37.2 KB)

This case involves a records dispute between Petitioners Brian and Rosalie Gordon (members) and the Tucson Estate No. Two Owner's Association (Respondent/HOA), heard by Administrative Law Judge (ALJ) Samuel Fox at the Office of Administrative Hearings (OAH) on June 21, 2024. The OAH's authority is limited to adjudicating alleged violations of the Arizona Planned Community Statutes (A.R.S. Title 33, Chapter 16) and the HOA's Community Documents.

Key Facts and Main Issues

The Petitioners filed a four-issue complaint alleging the Respondent violated A.R.S. § 33-1805 (requiring records to be made available for examination) and the HOA's Bylaws, primarily by failing to provide specific financial documentation requested in 2022 and 2023.

The four contested issues were:

  1. Finance Committee Minutes: Failure to record and make available minutes of 2023 Finance Committee Meetings.
  2. Budget Working Papers: Refusal to provide copies of draft budget working papers.
  3. Accounts Payable (AP) Journal: Failure to provide AP journals with General Ledger (GL) detail.
  4. Tax Filings Backup: Provision of incomplete IRS tax filings (just two pages of the 1120-h form) and lack of supporting backup documentation.

Key Arguments During the Hearing

Petitioners' Position: The Gordons argued that all financial and other records must be made reasonably available for examination by any member under A.R.S. § 33-1805. They contended that the HOA’s own Finance Committee policy required minutes of all its meetings as a permanent record of its "actions". They also claimed that essential documents (budget working papers, AP detail, and full tax backups) either existed and were being withheld, or should have been maintained by the HOA according to policy, even if created by its vendor, AAM.

Respondent's Position: The HOA, represented by Jason Smith, argued that the OAH’s jurisdiction is narrow. They maintained that they provided every document they possessed. For the minutes, they argued the Finance Committee is purely advisory, does not take corporate "action," and therefore minutes are not required. For the budget documents (Issue 2) and AP journal (Issue 3), the HOA claimed that the requested specific documents did not exist (as the budget utilized a single constantly updated spreadsheet, and the AP detail was handled by a third party not required to generate a specific report for the HOA). The HOA stressed that they are not required to create or reorganize information to satisfy a homeowner's request.

Final Decision and Outcome

The ALJ issued a decision on July 10, 2024, finding that the Petitioners prevailed on Issues 1 and 4, while the Respondent prevailed on Issues 2 and 3.

Legal Conclusions:

  • Issue 1 (Finance Minutes): VIOLATION FOUND. The HOA failed to abide by its Community Documents. Although the Finance Committee is advisory, its rules established that its activities (advising, reviewing, making recommendations) constituted "actions" for which minutes were required to be kept.
  • Issue 4 (Tax Filings Backup): VIOLATION FOUND. The HOA violated A.R.S. § 33-1805 because the preponderance of evidence showed Petitioners did not receive the complete tax returns or backup documentation in a timely manner (within the required ten business days of their October requests), even though the records were eventually available or accessible through the HOA’s agents.
  • Issues 2 & 3 (Working Papers & AP Journal): NO VIOLATION FOUND. The ALJ concluded that the Petitioners failed to meet their burden of proof, noting that A.R.S. § 33-1805 and the Bylaws do not require the HOA to create documents that it does not possess in response to a request. Respondent was found to have provided all available records related to these complaints.

Order:

The Respondent was ordered to comply with its Community Documents and the requirements of A.R.S. § 33-1805 going forward. The

Questions

Question

Is my HOA required to keep minutes for advisory committees?

Short Answer

Yes, if the community documents (like a committee charter or policy) state that minutes must be kept.

Detailed Answer

Even if an HOA argues a committee is only 'advisory' and doesn't take 'actions,' the ALJ ruled that activities like advising, reviewing, and recommending constitute 'actions' within the scope of the committee's duties. Therefore, if the committee's rules say minutes must be kept, failing to do so violates the community documents.

Alj Quote

When the Committee advised, assisted, reviewed, analyzed, recommended, or otherwise took action within the parameters of its Responsibilities and Duties, that was an 'action' by the Committee as established by the Board.

Legal Basis

Community Documents / Bylaws

Topic Tags

  • meeting minutes
  • committees
  • record keeping

Question

Can I demand that the HOA create a specific report to answer my financial questions?

Short Answer

No, the HOA is not required to create new documents that do not already exist.

Detailed Answer

The law requires the HOA to make existing records available for examination. It does not compel the HOA to generate new reports, compile data in a specific format, or create documents they do not currently possess to satisfy a homeowner's request.

Alj Quote

It does not require Respondent to provide documents that it does not have nor does it require Respondent to create documents in response to a request.

Legal Basis

A.R.S. § 33-1805

Topic Tags

  • financial records
  • document creation
  • requests

Question

If the management company holds the records, can the HOA claim they don't have them?

Short Answer

No, records held by the management company are considered to be in the HOA's custody.

Detailed Answer

The ALJ explicitly ruled that documents in the custody of the management agent (e.g., AAM) are legally in the custody of the HOA. The HOA is obligated to provide them to members upon request.

Alj Quote

Documents in the custody of AAM are in the custody of Respondent, and Respondent is obligated to provide them to members under A.R.S. § 33-1805.

Legal Basis

A.R.S. § 33-1805

Topic Tags

  • management company
  • record custody
  • access to records

Question

Are personal notes taken by committee members considered official HOA records?

Short Answer

No, personal notes or drafts on personal devices are generally not HOA records.

Detailed Answer

The ALJ found that notes, drafts, edits, or comments made by committee members on their personal versions of documents were not records of the Association if the Association did not collect, track, or record them.

Alj Quote

Any notes, drafts, edits, or comments that committee members made on their personal versions were not records of Respondent, which did not collect, track, or record the committee members’ individual notes.

Legal Basis

A.R.S. § 33-1805

Topic Tags

  • personal notes
  • official records
  • committees

Question

Does the HOA have to provide previous drafts of a budget or 'working papers'?

Short Answer

Only if they actually kept them. If they overwrite the file, they don't have to produce previous versions.

Detailed Answer

In this case, the HOA used a single spreadsheet that was updated and overwritten as the budget process moved forward. The ALJ ruled that since the HOA did not maintain multiple versions, they were not required to produce previous drafts they no longer possessed.

Alj Quote

Respondent only maintained one version of the spreadsheet, and when changes were made, the spreadsheet was updated… Petitioners failed to meet their burden to support that Respondent did not make records available for review.

Legal Basis

A.R.S. § 33-1805

Topic Tags

  • budget
  • draft documents
  • record retention

Question

Is providing the first two pages of a tax return sufficient to fulfill a records request?

Short Answer

No, the HOA must provide the complete tax return and backup documentation.

Detailed Answer

The ALJ found the HOA in violation for providing only the first two pages of Form 1120-H. The homeowner was entitled to the complete tax form and the backup documentation (which the management company or CPA had access to) within 10 days.

Alj Quote

The preponderance of the evidence establishes that Petitioners did not receive full copies of Respondent’s tax returns or backup documentation for the tax returns within ten days of their respective October requests.

Legal Basis

A.R.S. § 33-1805

Topic Tags

  • tax returns
  • financial records
  • transparency

Question

Can the ALJ enforce IRS regulations or the Nonprofit Corporation Act during this hearing?

Short Answer

No, the ALJ's jurisdiction is limited to Planned Community statutes and Community Documents.

Detailed Answer

The Administrative Law Judge explicitly stated that the tribunal is not authorized to adjudicate complaints arising from the Arizona Nonprofit Corporations Act or IRS regulations, only Title 33 (Planned Communities) and the specific HOA documents.

Alj Quote

This Tribunal is not authorized to adjudicate complaints arising from the Arizona Nonprofit Corporations Act, Internal Revenue Service regulations, or other laws or regulations.

Legal Basis

A.R.S. § 32-2199

Topic Tags

  • jurisdiction
  • legal authority
  • IRS
  • nonprofit act

Question

If I win my hearing against the HOA, can I get my filing fee back?

Short Answer

Yes, the ALJ has the discretion to order the HOA to reimburse the filing fee.

Detailed Answer

In this case, because the homeowners prevailed on two of their four issues, the ALJ ordered the HOA to pay the homeowners $1,000.00 (half of the $2,000 filing fee).

Alj Quote

IT IS ORDERED that Respondent pay Petitioners the filing fee of $1,000.00, to be paid directly to Petitioners within thirty (30) days of this Order.

Legal Basis

A.R.S. § 32-2199.02

Topic Tags

  • filing fees
  • penalties
  • reimbursement

Case

Docket No
24F-H043-REL
Case Title
Brian Gordon and Rosalie Gordon v. Tucson Estate No. Two Owner's Association
Decision Date
2024-07-10
Alj Name
Samuel Fox
Tribunal
OAH
Agency
ADRE

Questions

Question

Is my HOA required to keep minutes for advisory committees?

Short Answer

Yes, if the community documents (like a committee charter or policy) state that minutes must be kept.

Detailed Answer

Even if an HOA argues a committee is only 'advisory' and doesn't take 'actions,' the ALJ ruled that activities like advising, reviewing, and recommending constitute 'actions' within the scope of the committee's duties. Therefore, if the committee's rules say minutes must be kept, failing to do so violates the community documents.

Alj Quote

When the Committee advised, assisted, reviewed, analyzed, recommended, or otherwise took action within the parameters of its Responsibilities and Duties, that was an 'action' by the Committee as established by the Board.

Legal Basis

Community Documents / Bylaws

Topic Tags

  • meeting minutes
  • committees
  • record keeping

Question

Can I demand that the HOA create a specific report to answer my financial questions?

Short Answer

No, the HOA is not required to create new documents that do not already exist.

Detailed Answer

The law requires the HOA to make existing records available for examination. It does not compel the HOA to generate new reports, compile data in a specific format, or create documents they do not currently possess to satisfy a homeowner's request.

Alj Quote

It does not require Respondent to provide documents that it does not have nor does it require Respondent to create documents in response to a request.

Legal Basis

A.R.S. § 33-1805

Topic Tags

  • financial records
  • document creation
  • requests

Question

If the management company holds the records, can the HOA claim they don't have them?

Short Answer

No, records held by the management company are considered to be in the HOA's custody.

Detailed Answer

The ALJ explicitly ruled that documents in the custody of the management agent (e.g., AAM) are legally in the custody of the HOA. The HOA is obligated to provide them to members upon request.

Alj Quote

Documents in the custody of AAM are in the custody of Respondent, and Respondent is obligated to provide them to members under A.R.S. § 33-1805.

Legal Basis

A.R.S. § 33-1805

Topic Tags

  • management company
  • record custody
  • access to records

Question

Are personal notes taken by committee members considered official HOA records?

Short Answer

No, personal notes or drafts on personal devices are generally not HOA records.

Detailed Answer

The ALJ found that notes, drafts, edits, or comments made by committee members on their personal versions of documents were not records of the Association if the Association did not collect, track, or record them.

Alj Quote

Any notes, drafts, edits, or comments that committee members made on their personal versions were not records of Respondent, which did not collect, track, or record the committee members’ individual notes.

Legal Basis

A.R.S. § 33-1805

Topic Tags

  • personal notes
  • official records
  • committees

Question

Does the HOA have to provide previous drafts of a budget or 'working papers'?

Short Answer

Only if they actually kept them. If they overwrite the file, they don't have to produce previous versions.

Detailed Answer

In this case, the HOA used a single spreadsheet that was updated and overwritten as the budget process moved forward. The ALJ ruled that since the HOA did not maintain multiple versions, they were not required to produce previous drafts they no longer possessed.

Alj Quote

Respondent only maintained one version of the spreadsheet, and when changes were made, the spreadsheet was updated… Petitioners failed to meet their burden to support that Respondent did not make records available for review.

Legal Basis

A.R.S. § 33-1805

Topic Tags

  • budget
  • draft documents
  • record retention

Question

Is providing the first two pages of a tax return sufficient to fulfill a records request?

Short Answer

No, the HOA must provide the complete tax return and backup documentation.

Detailed Answer

The ALJ found the HOA in violation for providing only the first two pages of Form 1120-H. The homeowner was entitled to the complete tax form and the backup documentation (which the management company or CPA had access to) within 10 days.

Alj Quote

The preponderance of the evidence establishes that Petitioners did not receive full copies of Respondent’s tax returns or backup documentation for the tax returns within ten days of their respective October requests.

Legal Basis

A.R.S. § 33-1805

Topic Tags

  • tax returns
  • financial records
  • transparency

Question

Can the ALJ enforce IRS regulations or the Nonprofit Corporation Act during this hearing?

Short Answer

No, the ALJ's jurisdiction is limited to Planned Community statutes and Community Documents.

Detailed Answer

The Administrative Law Judge explicitly stated that the tribunal is not authorized to adjudicate complaints arising from the Arizona Nonprofit Corporations Act or IRS regulations, only Title 33 (Planned Communities) and the specific HOA documents.

Alj Quote

This Tribunal is not authorized to adjudicate complaints arising from the Arizona Nonprofit Corporations Act, Internal Revenue Service regulations, or other laws or regulations.

Legal Basis

A.R.S. § 32-2199

Topic Tags

  • jurisdiction
  • legal authority
  • IRS
  • nonprofit act

Question

If I win my hearing against the HOA, can I get my filing fee back?

Short Answer

Yes, the ALJ has the discretion to order the HOA to reimburse the filing fee.

Detailed Answer

In this case, because the homeowners prevailed on two of their four issues, the ALJ ordered the HOA to pay the homeowners $1,000.00 (half of the $2,000 filing fee).

Alj Quote

IT IS ORDERED that Respondent pay Petitioners the filing fee of $1,000.00, to be paid directly to Petitioners within thirty (30) days of this Order.

Legal Basis

A.R.S. § 32-2199.02

Topic Tags

  • filing fees
  • penalties
  • reimbursement

Case

Docket No
24F-H043-REL
Case Title
Brian Gordon and Rosalie Gordon v. Tucson Estate No. Two Owner's Association
Decision Date
2024-07-10
Alj Name
Samuel Fox
Tribunal
OAH
Agency
ADRE

Case Participants

Petitioner Side

  • Brian Gordon (petitioner)
  • Rosalie Gordon (petitioner)
  • James Tilly (witness)
    Member of Respondent who testified.
  • Leonard Vidovic (witness)
    Also referred to as Leonard Judbec.

Respondent Side

  • Jason E. Smith (HOA attorney)
    SMITH & WAMSLEY, PLLC
  • Sean K. Moynihan (attorney)
    Smith & Wamsley, PLLC
  • Mandy Bates (property manager)
    Associated Asset Management
    Community Manager for Tucson Estates No. Two Owner's Association.
  • Trudy Peterson (finance chair)
    Treasurer and Finance Chair.
  • Rose Spank (board member)
    HOA President in 2012.
  • Janelle Richmond (board member)
    HOA Secretary in 2012.
  • Sharon Matthews (AAM staff)
    AAM
    Referenced in emails regarding accounting procedures (also referred to as Karen Matthews).

Neutral Parties

  • Samuel Fox (ALJ)
    OAH
    Administrative Law Judge for the decision and hearing.
  • Sondra J. Vanella (ALJ)
    OAH
    Signed the initial Order Setting Hearing.
  • Susan Nicolson (ADRE Commissioner)
    Arizona Department of Real Estate
  • vnunez (ADRE staff)
    Arizona Department of Real Estate
    Listed on transmission/service list.
  • djones (ADRE staff)
    Arizona Department of Real Estate
    Listed on transmission/service list.
  • labril (ADRE staff)
    Arizona Department of Real Estate
    Listed on transmission/service list.
  • mneat (ADRE staff)
    Arizona Department of Real Estate
    Listed on transmission/service list.
  • lrecchia (ADRE staff)
    Arizona Department of Real Estate
    Listed on transmission/service list.
  • gosborn (ADRE staff)
    Arizona Department of Real Estate
    Listed on transmission/service list.