Case Summary
| Case ID | 23F-H019-REL |
|---|---|
| Agency | ADRE |
| Tribunal | OAH |
| Decision Date | 2023-01-31 |
| Administrative Law Judge | Sondra J. Vanella |
| Outcome | The Administrative Law Judge dismissed the petition, finding that the Respondent HOA's Articles of Incorporation had been previously amended to be perpetual (1994, 1999) and that the CLRs automatically renew for an additional 25 years without requiring a homeowner vote, provided no modifications or changes are made. |
| Filing Fees Refunded | $500.00 |
| Civil Penalties | $0.00 |
Parties & Counsel
| Petitioner | Pamela McKinney | Counsel | — |
|---|---|---|---|
| Respondent | Valle Vista Property Owners Association | Counsel | Alan Meda |
Alleged Violations
Articles of Incorporation Article 8, Covenants, Limitations & Restrictions Article 19 Sec. A, Covenants, Limitations & Restrictions Article 19 Sec. B
Outcome Summary
The Administrative Law Judge dismissed the petition, finding that the Respondent HOA's Articles of Incorporation had been previously amended to be perpetual (1994, 1999) and that the CLRs automatically renew for an additional 25 years without requiring a homeowner vote, provided no modifications or changes are made.
Why this result: Petitioner failed to meet the burden of proof that Respondent violated the Articles of Incorporation or the CLRs, as the evidence showed the corporation's existence was perpetual and the CLRs' automatic renewal was permissible without a vote.
Key Issues & Findings
Expiration of HOA Charter and unlawful extension of CLRs by Board resolution without member vote
Petitioner alleged the HOA's charter and CLRs expired after 50 years (2022) and that the Board unlawfully extended the CLRs for 25 years via a resolution (Resolution/Memorandum of September 27, 2022) without the required vote of the co-owners. The ALJ found that the Articles of Incorporation were perpetually extended by amendments in 1994 and 1999, and the CLRs automatically renewed without a vote because no modifications were made.
Orders: Petitioner’s Petition is dismissed.
Filing fee: $500.00, Fee refunded: No
Disposition: petitioner_loss
- Articles of Incorporation (1972)
- Articles of Amendment (1994)
- Articles of Amendment (1999)
- CLRs Unit One (1972)
- Resolution 092722 (Sept 27, 2022)
Analytics Highlights
- A.R.S. § 32-2199
- A.R.S. § 32-2199.02(B)
- A.R.S. § 32-2199.04
- A.R.S. § 41-1092.07(G)(2)
- A.A.C. R2-19-119(A)
- A.A.C. R2-19-119(B)(1)
- A.R.S. § 41-1092.09
Related election workflow tool
Many HOA election disputes start with preventable workflow problems: unclear ballot language, separate-vote issues, quorum tracking, paper/online reconciliation, proxy handling, or incomplete records. HOABallot is a separate platform built to document the voting workflow from notice through certification.
Video Overview
Audio Overview
Decision Documents
23F-H019-REL Decision – 1030077.pdf
23F-H019-REL Decision – 1030077.pdf
This summary addresses the hearing proceedings, key arguments, and final decision of the legal case, drawing on the provided sources.
***
Concise Summary of Administrative Hearing: Pamela McKinney v. Valle Vista Property Owners Association
Key Facts and Proceedings
The administrative hearing was held on January 17, 2023 (Docket No. 23F-H 019- REL) before Administrative Law Judge (ALJ) Sondra J. Vanella. Petitioner Pamela McKinney appeared on her own behalf, alleging that the Valle Vista Property Owners Association (Respondent) violated community documents. The burden of proof rested upon the Petitioner to establish the alleged violations by a preponderance of the evidence.
The dispute centered on the Respondent's use of a Resolution/Memorandum of September 27, 2022 to extend the Declarations of Covenants, Limitations, and Restrictions (CLRs) for another 25 years without an approval vote from the Council of co-owners. The Petitioner, an owner in Unit One, contended that the Articles of Incorporation (the association charter) had expired after 50 years (in May 2022 for Unit One) and that the extension of the CLRs required a vote.
Main Issues and Legal Arguments
The core issue determined by the ALJ was whether the Respondent violated Article 8 of the Articles of Incorporation (AOI) and Article 19 of the CLRs by attempting to extend the CLRs via resolution without a member vote.
Petitioner's Key Arguments:
- AOI Expiration: Petitioner argued that the original AOI, dated 1972, specified a 25-year existence with the power of one renewal, meaning the charter expired after 50 years (in 2022). If the AOI expired, the association must form a new corporation.
- CLRs Require Vote for Extension: Petitioner asserted that while the CLRs provide for an automatic 25-year renewal, this renewal constitutes a change in duration, and thus requires the approval of 66 2/3% or more of the owners of record, as stated in the CLRs (Section 19(a) and (b)).
- Unlawful Amendments: McKinney testified she was unaware of any amendments extending the AOI and argued that even if they were recorded, they might be unlawful if done without the requisite member vote (which required 75% approval for amendments).
Respondent's Key Arguments:
- Perpetual Existence: Respondent successfully demonstrated that the Articles of Incorporation (AOI) had been officially amended twice—on November 18, 1994, and January 15, 1999—specifically to declare the duration of the corporation shall be perpetual.
- Automatic Renewal of CLRs: Respondent contended that the CLRs for all units automatically renew every 25 years without a vote. A vote is only required if the association attempts to make modifications or changes to the CLRs.
- Resolution Purpose: Respondent explained that the September 27, 2022 Resolution was simply recorded to reflect the automatic renewal of the CLRs and contained no amendments or modifications. Failure to renew would cause the loss of valuable common assets (valued at approximately $2.5 million).
Final Decision and Outcome
The ALJ issued the decision on January 31, 2023. The ALJ found that the Petitioner failed to meet her burden of proof by a preponderance of the evidence.
The legal conclusions were:
- The Respondent successfully established that the Articles of Incorporation had been amended in 1994 and 1999 to extend the duration perpetually.
- The automatic renewal of the CLRs does not constitute a modification/change that required a vote of the homeowners under the governing documents.
Therefore, the Respondent did not violate Article 8 of the AOI or Article 19 of the CLRs when it passed the resolution extending the CLRs.
The final order stated that the Petitioner's Petition was dismissed.
Questions
Question
If the CC&Rs (or CLRs) include an automatic renewal clause, does the HOA board require a homeowner vote to extend them?
Short Answer
No. If the documents allow for automatic renewal and no other changes are made, a vote is not required because renewal is not considered a modification.
Detailed Answer
The ALJ determined that if the governing documents provide for automatic renewal for specific periods (e.g., 25 years), the simple act of renewing does not constitute a 'change' or 'modification' that would trigger a voting requirement. A vote is generally only required if the text of the documents is actually being altered.
Alj Quote
Petitioner failed to establish by a preponderance of the evidence that any changes or modifications were made to the CLRs, and the Administrative Law Judge concludes that the automatic renewal of the CLRs does not constitute a modification/change that required a vote of the homeowners.
Legal Basis
Conclusion of Law 4
Topic Tags
- CC&R Renewal
- Voting Rights
- Governing Documents
Question
Who bears the burden of proof when a homeowner files a petition against their HOA?
Short Answer
The homeowner (Petitioner) bears the burden of proof to establish the violation.
Detailed Answer
In an administrative hearing, the person filing the complaint must prove their case. The HOA does not initially have to prove they are innocent; the homeowner must prove the HOA committed the violation.
Alj Quote
Petitioner bears the burden of proof to establish that Respondent committed the alleged violation by a preponderance of the evidence.
Legal Basis
Conclusion of Law 2; A.R.S. § 41-1092.07(G)(2)
Topic Tags
- Legal Procedure
- Burden of Proof
Question
What does 'preponderance of the evidence' mean in an HOA dispute?
Short Answer
It means the claim is 'more probably true than not.'
Detailed Answer
The standard is not 'beyond a reasonable doubt' (like in criminal court). Instead, it is based on the greater weight of the evidence, which must be sufficient to incline a fair mind to one side rather than the other.
Alj Quote
A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.
Legal Basis
Conclusion of Law 3
Topic Tags
- Legal Standards
- Evidence
Question
Can an HOA amend its Articles of Incorporation to exist perpetually if they originally had an expiration date?
Short Answer
Yes, an HOA can amend its Articles to extend its duration to be perpetual.
Detailed Answer
The decision upheld the validity of previous amendments where the HOA changed its corporate duration from a fixed term (e.g., 25 years) to 'perpetual.'
Alj Quote
Respondent amended its Articles of Incorporation, Section VIII, on November 18, 1994, and again on January 15, 1999, which extended the duration of the Articles of Incorporation perpetually.
Legal Basis
Findings of Fact 10-12; Conclusion of Law 4
Topic Tags
- Corporate Charter
- Amendments
- Articles of Incorporation
Question
Where can an Arizona homeowner file a dispute regarding violations of community documents?
Short Answer
A petition can be filed with the Arizona Department of Real Estate (ADRE).
Detailed Answer
Arizona law allows homeowners or associations to file a petition with the Department regarding violations of the documents or statutes regulating planned communities. These are then heard by the Office of Administrative Hearings.
Alj Quote
Arizona statute permits an owner or a planned community organization to file a petition with the Department for a hearing concerning violations of planned community documents or violations of statutes that regulate planned communities.
Legal Basis
Conclusion of Law 1; A.R.S. § 32-2199
Topic Tags
- Dispute Resolution
- ADRE
- Jurisdiction
Question
Does a lack of knowledge about old amendments invalidate them?
Short Answer
No. Even if a current homeowner was unaware of amendments filed decades ago, they are still binding if properly recorded.
Detailed Answer
In this case, the petitioner was unaware of amendments from 1994 and 1999 until the hearing, but the ALJ still relied on those documents to determine that the corporation had not expired.
Alj Quote
Petitioner was not aware of the 1994 and 1999 amendments to the Articles of Incorporation until hearing… The credible and probative evidence of record established that Respondent amended its Articles of Incorporation… which extended the duration of the Articles of Incorporation perpetually.
Legal Basis
Findings of Fact 13; Conclusion of Law 4
Topic Tags
- Record Keeping
- Constructive Notice
- Amendments
Case
- Docket No
- 23F-H019-REL
- Case Title
- Pamela McKinney v. Valle Vista Property Owners Association
- Decision Date
- 2023-01-31
- Alj Name
- Sondra J. Vanella
- Tribunal
- OAH
- Agency
- ADRE
Questions
Question
If the CC&Rs (or CLRs) include an automatic renewal clause, does the HOA board require a homeowner vote to extend them?
Short Answer
No. If the documents allow for automatic renewal and no other changes are made, a vote is not required because renewal is not considered a modification.
Detailed Answer
The ALJ determined that if the governing documents provide for automatic renewal for specific periods (e.g., 25 years), the simple act of renewing does not constitute a 'change' or 'modification' that would trigger a voting requirement. A vote is generally only required if the text of the documents is actually being altered.
Alj Quote
Petitioner failed to establish by a preponderance of the evidence that any changes or modifications were made to the CLRs, and the Administrative Law Judge concludes that the automatic renewal of the CLRs does not constitute a modification/change that required a vote of the homeowners.
Legal Basis
Conclusion of Law 4
Topic Tags
- CC&R Renewal
- Voting Rights
- Governing Documents
Question
Who bears the burden of proof when a homeowner files a petition against their HOA?
Short Answer
The homeowner (Petitioner) bears the burden of proof to establish the violation.
Detailed Answer
In an administrative hearing, the person filing the complaint must prove their case. The HOA does not initially have to prove they are innocent; the homeowner must prove the HOA committed the violation.
Alj Quote
Petitioner bears the burden of proof to establish that Respondent committed the alleged violation by a preponderance of the evidence.
Legal Basis
Conclusion of Law 2; A.R.S. § 41-1092.07(G)(2)
Topic Tags
- Legal Procedure
- Burden of Proof
Question
What does 'preponderance of the evidence' mean in an HOA dispute?
Short Answer
It means the claim is 'more probably true than not.'
Detailed Answer
The standard is not 'beyond a reasonable doubt' (like in criminal court). Instead, it is based on the greater weight of the evidence, which must be sufficient to incline a fair mind to one side rather than the other.
Alj Quote
A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.
Legal Basis
Conclusion of Law 3
Topic Tags
- Legal Standards
- Evidence
Question
Can an HOA amend its Articles of Incorporation to exist perpetually if they originally had an expiration date?
Short Answer
Yes, an HOA can amend its Articles to extend its duration to be perpetual.
Detailed Answer
The decision upheld the validity of previous amendments where the HOA changed its corporate duration from a fixed term (e.g., 25 years) to 'perpetual.'
Alj Quote
Respondent amended its Articles of Incorporation, Section VIII, on November 18, 1994, and again on January 15, 1999, which extended the duration of the Articles of Incorporation perpetually.
Legal Basis
Findings of Fact 10-12; Conclusion of Law 4
Topic Tags
- Corporate Charter
- Amendments
- Articles of Incorporation
Question
Where can an Arizona homeowner file a dispute regarding violations of community documents?
Short Answer
A petition can be filed with the Arizona Department of Real Estate (ADRE).
Detailed Answer
Arizona law allows homeowners or associations to file a petition with the Department regarding violations of the documents or statutes regulating planned communities. These are then heard by the Office of Administrative Hearings.
Alj Quote
Arizona statute permits an owner or a planned community organization to file a petition with the Department for a hearing concerning violations of planned community documents or violations of statutes that regulate planned communities.
Legal Basis
Conclusion of Law 1; A.R.S. § 32-2199
Topic Tags
- Dispute Resolution
- ADRE
- Jurisdiction
Question
Does a lack of knowledge about old amendments invalidate them?
Short Answer
No. Even if a current homeowner was unaware of amendments filed decades ago, they are still binding if properly recorded.
Detailed Answer
In this case, the petitioner was unaware of amendments from 1994 and 1999 until the hearing, but the ALJ still relied on those documents to determine that the corporation had not expired.
Alj Quote
Petitioner was not aware of the 1994 and 1999 amendments to the Articles of Incorporation until hearing… The credible and probative evidence of record established that Respondent amended its Articles of Incorporation… which extended the duration of the Articles of Incorporation perpetually.
Legal Basis
Findings of Fact 13; Conclusion of Law 4
Topic Tags
- Record Keeping
- Constructive Notice
- Amendments
Case
- Docket No
- 23F-H019-REL
- Case Title
- Pamela McKinney v. Valle Vista Property Owners Association
- Decision Date
- 2023-01-31
- Alj Name
- Sondra J. Vanella
- Tribunal
- OAH
- Agency
- ADRE
Case Participants
Petitioner Side
- Pamela McKinney (petitioner)
Appeared on her own behalf
Respondent Side
- Alan A. Meda (HOA attorney)
Burch & Cracchiolo
Represented Respondent Valle Vista Property Owners Association - Sharon Grossi (board member)
Valle Vista Property Owners Association
President of the Board; testified as a witness for Respondent - Rebecca Bankov (property manager)
Valle Vista Property Owners Association
Also referred to as Rebecca fan - Amy Wood (board member)
Valle Vista Property Owners Association
Secretary on the board - Thomas Noble (board member)
Valle Vista Property Owners Association
Former President of the Board (mentioned in communication) - Stan Andrews (board member)
Valle Vista Property Owners Association
Mentioned by Petitioner as a board member - Ray Rose (board member)
Valle Vista Property Owners Association
Recently resigned from the board
Neutral Parties
- Sondra J. Vanella (ALJ)
OAH
Administrative Law Judge - Jean Newman (CPA)
Independent auditor who prepared financial report
Other Participants
- Dennis Hope (Fire Chief)
Northern Arizona Fire District
External party cited in board communications regarding water shutoff threats