Tag Archives: Condominium Association

This summary details the hearing proceedings, key arguments, and final decision in the matter of Victoria Whitaker (Petitioner) versus Villas at Sunland Condominium Association (Respondent). The hearing took place on February 3, 2023, before Administrative Law Judge (ALJ) Jenna Clark.

Key Facts and Procedural History

The case centered on a dispute over damage to a semi-common element: a carport shared by Petitioner's unit (Unit 16) and an adjacent unit. The damage was observed prior to the Petitioner's purchase of the unit on June 13, 2022. Although the Petitioner received a $20,000 reduction in the purchase price due to the outstanding issue, she denied accepting responsibility for the repair.

On July 18, 2022, after the sale, the Association issued a Notice of Violation to the Petitioner, requiring her to repair the carport ceiling.

A key procedural point addressed at the start of the hearing was the deficient Notice of Hearing, which incorrectly cited the Planned Communities Act (ARS § 33-1803) instead of the correct statute for condominiums. All parties stipulated to amend the governing statute for the dispute to ARS § 33-1242(D), which regulates due process in condominium enforcement actions.

Main Issues and Arguments

Petitioner's Argument:

The Petitioner alleged that the Association failed to follow due process under ARS § 33-1242. She argued that the violation should not have been enforced against her, as the damage occurred before her purchase and the violation was not properly investigated by management. The Association's claim that the damage was caused by the prior owner's tenant relied solely on "hearsay" (a neighbor's phone call), and no further investigation or expert assessment was conducted. She also claimed that the subsequent hearing held by the Board on October 5, 2022, was unfair because the Board had already made its decision.

Respondent's Argument:

The Association contended that they fully complied with ARS § 33-1242, providing notice and affording the Petitioner a hearing before the Board prior to taking any enforcement action (such as imposing fines). The core legal argument focused on the Petitioner’s failure to adhere to statutory requirements: ARS § 33-1242(B) requires a unit owner to provide a written response to a violation notice by certified mail within 21 days to "trigger" the subsequent due process provisions. The Petitioner admitted sending her contestation via email, not certified mail. The Association argued that because the Petitioner did not follow the statutory procedure, they cannot be found in violation of the statute's subsequent timing requirements.

Final Decision and Outcome

The ALJ concluded that the Tribunal’s jurisdiction was narrowly limited to determining whether the Association violated ARS § 33-1242, not to decide who was responsible for the damage or whether the Board's determination was correct.

The ALJ found that Petitioner bore the burden of proving the statutory violation by a preponderance of the evidence. The record established that Petitioner did not follow the statutory requirements of ARS § 33-1242 (certified mail) necessary to "trigger" any protected due process rights. Despite this procedural failure, the Association still apprised her of her rights and afforded her a hearing.

Based on the evidence, the ALJ concluded that no violation of ARS § 33-1242 was established.

Outcome: Petitioner’s petition was denied. The Association was not required to reimburse the Petitioner’s filing fee.

This decision arises from the administrative hearing in the matter of *Jeffrey D Points v. Olive 66 Condominium Association*. The hearing, held on August 19, 2021, before Administrative Law Judge Tammy L. Eigenheer, addressed allegations that the Olive 66 Condominium Association (Respondent) violated Arizona statutes concerning document availability and open meetings.

Key Facts and Legal Framework

The Respondent is a condominium unit owners’ association located in Phoenix, Arizona. The Petitioner, Jeffrey D. Points, alleged violations, initially citing homeowner association (HOA) statutes (A.R.S. §§ 33-1804 and 33-1805). Due to the Respondent’s status, the legal focus shifted to the corresponding condominium statutes: A.R.S. § 33-1248 (meetings) and A.R.S. § 33-1258 (records). Petitioner bore the burden of proving violations by a preponderance of the evidence.

Main Issues and Arguments

The dispute centered on two key issues:

1. Improper Executive Session (A.R.S. § 33-1248): Petitioner challenged the use of a closed session during the March 25, 2021, Board Meeting, specifically regarding the Landscaping Bid Review. The statute allows meetings to be closed for matters relating to the job performance of or specific complaints against an individual employee of a contractor. Respondent’s witness testified that the review addressed specific performance issues with a landscaping company employee.
2. Failure to Produce Documents (A.R.S. § 33-1258): Petitioner made numerous requests for association records, including invoices and 1099s. The statute requires financial and other non-privileged records to be made reasonably available within ten business days of a request. Petitioner also asserted a right to examine *all* association documents in person at the office. Respondent argued that allowing unlimited in-person review was unduly burdensome due to the need to remove confidential documents and ongoing COVID-19 concerns.

Legal Conclusions and Outcome

The Administrative Law Judge (ALJ) reached the following conclusions of law:

• Closed Session (A.R.S. § 33-1248): The ALJ found that the Respondent properly considered the landscaping issue in executive session because it fell under the statutory exception concerning the job performance of an individual contractor employee. Petitioner failed to establish that the meeting notice was improper or that the executive session violated A.R.S. § 33-1248.
• Document Production (A.R.S. § 33-1258): The ALJ rejected Petitioner’s assertion of a right to examine all documents in person. However, Respondent’s counsel acknowledged that certain requested 2021 invoices were in existence at the time of the request but were not provided to the Petitioner within the required 10-day statutory period. This failure constituted a violation of A.R.S. § 33-1258.

The Final Decision

The Petitioner’s petition was affirmed in part and denied in part. Although a violation of the document production statute (A.R.S. § 33-1258) was established, the ALJ found that no civil penalty was appropriate.

The Order required the following remedy:

1. Respondent must reimburse Petitioner $500.00 of the filing fee for the issue on which the Petitioner prevailed.
2. Respondent is directed to comply with the requirements of A.R.S. § 33-1258 going forward.

This summary details the administrative hearing proceedings in the matter of *Thomas A & Jade Bossert vs. Silverbell West Association, Inc.*

Case Summary: Bossert v. Silverbell West Association, Inc.

Key Facts and Parties

The Petitioner, Thomas A. and Jade Bossert, are owners of a condominium unit and members of the Silverbell West Association, Inc. (Respondent). The dispute was heard by Administrative Law Judge Adam D. Stone in the Office of Administrative Hearings (OAH). The evidentiary hearing took place on March 18, 2021.

Main Issues

The Petitioner filed a two-issue petition alleging the Association committed statutory violations:

1. Failure to Disclose Records: Violating ARIZ. REV. STAT. § 33-1258(A) by failing to make financial and other records reasonably available for examination.
2. Failure to Complete Financials: Violating ARIZ. REV. STAT. § 33-1243(J) by failing to complete an annual financial audit, review, or compilation within 180 days after the end of the 2018 and 2019 fiscal years.

Hearing Proceedings and Key Arguments

Petitioner testified that initial documents received following a June 2020 request were disorganized and incomplete. A subsequent request in July 2020 for specific missing items, including bank statements and cash journals, was never fulfilled. A bookkeeping expert testified that the records presented were disorganized, likely missing documents, and insufficient for making accurate 2018 and 2019 reports.

The Board President testified that they believed the initial request was met based on records held by the former Treasurer, Mr. Molley, but admitted the follow-up request was likely ignored. The tribunal found that Mr. Molley was "largely the one to blame" for unacceptable record-keeping, but also criticized the current Board President for failing to take a more active role in obtaining easily available bank statements.

Legal Conclusions and Outcome

The Administrative Law Judge found that the Petitioner had sustained the burden of proving that the Association committed two specific violations:

1. Violation of ARIZ. REV. STAT. § 33-1258(A) (Records Disclosure): The Respondent violated the statute insofar as they failed to produce bank account statements and check copies. The fact that these records had still not been turned over was deemed "inexcusable".
2. Violation of ARIZ. REV. STAT. § 33-1243(J) (Financial Compilation): The Respondent violated the statute by failing to complete the 2019 financial compilation.

• *Note:* The tribunal found Petitioner did *not* meet the burden of proof regarding the 2018 financial report, as Petitioner (who was Board President at the time) could have taken more aggressive measures to secure the necessary documentation.

Final Decision

The Administrative Law Judge declined to impose a civil penalty, noting that the Board had subsequently taken steps to ensure better future record keeping.

The Petitioner was deemed the prevailing party and the Association (Respondent) was ordered to reimburse the Petitioner's filing fees of $1,000.00 within 30 days.

Administrative Hearing Briefing: Tomisak v. Arrowhead Lakes Condominium Association

Executive Summary

This briefing document outlines the findings and decision in the case of Robert Tomisak versus the Arrowhead Lakes Condominium Association (Case No. 20F-H2020055-REL), heard in the Office of Administrative Hearings. The petitioner, Mr. Tomisak, alleged that the Association violated its governing documents and Arizona state law by refusing his request for an owner roster that included member email addresses. The Association countered that email addresses constitute protected personal information and, more critically, that a membership register containing such information no longer exists.

The Administrative Law Judge ultimately dismissed the petition. The decision did not hinge on whether email addresses are “personal records” under the law. Instead, the ruling was based on the factual determination that the Association cannot be compelled to produce a document that it does not maintain. Since the Association had ceased including email addresses in its Membership Register in 2018, the judge concluded that the petitioner had no right to a non-existent record and had failed to meet the burden of proof required to show a violation.

I. Case Overview

Case Name

Robert Tomisak v. Arrowhead Lakes Condominium Association

Case Number

20F-H2020055-REL

Office of Administrative Hearings

Administrative Law Judge

Sondra J. Vanella

Petitioner

Robert Tomisak, Owner of Unit 1902 (Appeared on his own behalf)

Respondent

Arrowhead Lakes Condominium Association (Represented by Property Manager Terri Troy)

Hearing Date

July 9, 2020

Decision Date

July 17, 2020

II. Petitioner’s Allegations

On April 15, 2020, Robert Tomisak filed a single-issue petition alleging that the Arrowhead Lakes Condominium Association had violated its own governing documents and Arizona state law. The core of the complaint was the Association’s refusal to fulfill his March 11, 2020, email request “to provide access to the membership register” containing owner email addresses.

Mr. Tomisak specifically cited violations of the following provisions:

• Covenants, Conditions, and Restrictions (CC&Rs): Article 11, Section 4.8

• Bylaws: Article 10.3

• Arizona Revised Statutes (A.R.S.): § 33-1258

III. Respondent’s Position and Defense

The Association, through its property management company AS&A Property Management, Inc., and represented by Property Manager Terri Troy, denied all allegations. The defense rested on two key arguments:

1. Privacy Exemption: The Association contended that members’ email addresses are “personal records” and therefore exempt from disclosure under A.R.S. § 33-1258(B)(4), which protects the “personal, health or financial records of an individual member.”

2. Non-Existence of the Record: Ms. Troy testified that while the Association would readily provide the official Membership Register (containing names and addresses), this document no longer includes email addresses. This practice of excluding emails from the register began in 2018.

IV. Key Evidence and Testimony

The March 11, 2020 Email Exchange

The dispute originated with a direct email exchange between the petitioner and the property manager.

• Petitioner’s Request (7:33 a.m.): Mr. Tomisak sent an email with the subject line “Owner Roster” stating:

• Respondent’s Denial (8:23 a.m.): Ms. Troy responded with a direct refusal, citing the statutory exemption for personal information:

Hearing Testimony

During the July 9, 2020 hearing, both parties presented their arguments:

• Robert Tomisak (Petitioner): Acknowledged that he already had access to member mailing addresses but specifically required their email addresses. He argued that email addresses are not “personal information” and cited “the internet” and “California case law” as authority for this position.

• Terri Troy (Respondent): Reiterated the Association’s willingness to provide the existing Membership Register, which contains names, addresses, and unit numbers. She explained that email addresses had been removed from this register starting in 2018 and that her refusal was based on the belief that emails are protected “personal records” under A.R.S. § 33-1258(B)(4).

The Administrative Law Judge noted that neither party cited “any relevant or persuasive legal authority” to formally define “personal records” as used in the statute.

V. Legal Framework and Governing Documents

The case centered on the interpretation of three key provisions granting members access to Association records.

Document

Section

Key Provision

11.4.8

“The Association shall make available to Owners… current copies of the Declaration, Articles, Bylaws, rules of the Association and the books, records, and financial statements of the Association.”

Bylaws

“The membership register… shall be made available for inspection and copying by Members of the Association… for a purpose reasonably related to their interests as Members…”

A.R.S.

§ 33-1258(A)

“all financial and other records of the association shall be made reasonably available for examination by any member…”

A.R.S.

§ 33-1258(B)(4)

“Books and records… may be withheld from disclosure to the extent that the portion withheld relates to… Personal, health or financial records of an individual member of the association…”

VI. Administrative Law Judge’s Findings and Order

Burden of Proof

The judge established that the petitioner, Mr. Tomisak, bore the burden of proof to demonstrate by a “preponderance of the evidence” that the Association had committed the alleged violations. A preponderance of evidence is defined as that which is sufficient to “incline a fair and impartial mind to one side of the issue rather than the other.”

Central Conclusion

The judge’s ruling was not based on the privacy argument regarding whether email addresses are “personal records.” Instead, the decision was grounded in a more fundamental point of fact regarding the existence of the requested document. The judge’s decisive conclusion of law stated:

While Petitioner has the right to enforce the requirements of the above provisions, Petitioner does not have the right to a record that does not exist, i.e., a Membership Register containing email addresses. Further, there is no requirement in the above provisions that Respondent has an obligation to create such a document.

Final Ruling

Based on this central finding, the judge held that Mr. Tomisak failed to meet his burden of proof and did not establish that the Association had violated its CC&Rs, its Bylaws, or A.R.S. § 33-1158.

IT IS ORDERED that no action is required of Respondent in this matter and that the petition is dismissed. The order is binding unless a rehearing is requested within 30 days of its service.

Briefing Document: Bischoff v. Country Hills West Condominium Association

Executive Summary

This document synthesizes the findings and decision in the case of Donna M. Bischoff v. Country Hills West Condominium Association, Inc. (No. 20F-H2019033-REL), heard by the Arizona Office of Administrative Hearings. The Administrative Law Judge found entirely in favor of the Petitioner, Donna M. Bischoff, concluding that the Respondent, Country Hills West Condominium Association (“the Association”), committed multiple violations of Arizona state statutes and its own governing documents.

The core violations upheld by the court are:

1. Failure to Hold a Required Annual Meeting: The Association violated A.R.S. § 33-1248(B) by failing to hold its required annual meeting within the 2019 calendar year, repeatedly postponing it until January 2020.

2. Failure to Provide Election Records: The Association violated A.R.S. § 33-1250(C) by failing to provide the Petitioner with complete election materials for inspection, including ballots, envelopes, and sign-in sheets from the October 2018 election.

3. Improper Prohibition of Write-In Ballots: The Association violated Article 3, Section 2 of its Bylaws by unilaterally prohibiting write-in ballots for the 2019 election, despite its governing documents being silent on the issue.

As a result, the Association was ordered to provide the requested documents to the Petitioner within ten days and to reimburse her $1,500 filing fee within thirty days. The decision underscores the legal obligation of homeowners’ associations to adhere strictly to statutory requirements for meetings, elections, and record transparency.

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I. Case Overview

The dispute was adjudicated by the Office of Administrative Hearings following a petition filed by homeowner Donna M. Bischoff with the Arizona Department of Real Estate on December 11, 2019.

Case Detail

Information

Case Name

Donna M Bischoff, Petitioner, v. Country Hills West Condominium Association, Inc., Respondent

Case Number

20F-H2019033-REL

Adjudicator

Administrative Law Judge Antara Nath Rivera

Hearing Date

March 10, 2020

Decision Date

March 30, 2020

Petitioner Representative

Donna M. Bischoff (on her own behalf)

Respondent Representative

Doug Meyer, President and Director

II. Petitioner’s Allegations

The Petitioner, Donna M. Bischoff, asserted that the Country Hills West Condominium Association committed violations of state law and its own governing documents. The specific allegations were:

• Violation of A.R.S. § 33-1248(B): Failure to hold the mandatory annual unit owners’ association meeting within the 2019 calendar year.

• Violation of A.R.S. § 33-1250(C): Failure to make election materials, including ballots and related items, available for inspection by a unit owner.

• Violation of Bylaws Article 3, Section 2: Improperly invalidating election ballots by prohibiting write-in candidates without any authority from the governing documents.

The Petitioner bore the burden of proof to establish these violations by a “preponderance of the evidence,” defined as “such proof as convinces the trier of fact that the contention is more probably true than not.”

III. Core Issues and Factual Findings

The hearing established several key facts that formed the basis of the Judge’s decision. The testimony from both Ms. Bischoff and the Association’s President, Doug Meyer, was central to these findings.

A. Failure to Hold the 2019 Annual Meeting

• Timeline of Events: The Association’s required annual meeting for 2019 was initially scheduled for November 20, 2019. It was subsequently postponed three times: first to December 19, 2019; then to December 30, 2019; and ultimately held on January 24, 2020.

• Respondent’s Justification: Mr. Meyer testified that the postponements were necessary because write-in candidates appeared on the ballot, which the board had prohibited. He stated that the board “needed time to reprint the ballot and mail them out.”

• Conclusion of Law: The evidence was undisputed that no annual meeting took place during the 2019 calendar year. The Judge concluded that by postponing the meeting into the following year, the Association was in direct violation of A.R.S. § 33-1248(B), which mandates that “A meeting of the unit owners’ association shall be held at least once each year.”

B. Denial of Access to Election Records

• Petitioner’s Request: In October 2018, Ms. Bischoff requested to see the election results from the October 2018 meeting, specifically seeking to know which units had voted.

• Respondent’s Response: The Association initially did not provide the results. A few weeks prior to the March 2020 hearing, it supplied Ms. Bischoff with vote tallies and a list of unit members who voted. However, it failed to provide the full scope of required materials.

• Missing Documentation: The Association did not provide the “ballots, envelopes, related materials, and sign-in sheets” as mandated by statute for inspection.

• Respondent’s Justification: Mr. Meyer argued that no election actually occurred at the October 18, 2018, meeting because there was no quorum. He further made the admission that the Association had not achieved a quorum for any meeting in the preceding 20 years. He claimed that without an election, there was no obligation to publish ballots.

• Conclusion of Law: The Judge found that the Association violated A.R.S. § 33-1250(C). The statute requires that “Ballots, envelopes and related materials… shall be retained… and made available for unit owner inspection for at least one year.” The partial and delayed provision of records was insufficient to meet this legal requirement.

C. Improper Prohibition of Write-In Ballots

• The Dispute: The November 20, 2019, meeting was cancelled because some ballots contained write-in candidates. The board of directors informed members that write-in ballots were prohibited and would be “thrown out.”

• Petitioner’s Argument: Ms. Bischoff argued that the board could not “choose how to interpret a silent document.” She pointed out that the Bylaws and Articles of Incorporation do not prohibit write-in ballots and that the same board had allowed them in a 2017 election.

• Respondent’s Position: Mr. Meyer acknowledged that the Bylaws were silent on the issue but stated the Association needed to “figure out how to handle” them. A membership meeting to discuss the issue was held on December 30, 2019, but failed to achieve a quorum.

• Conclusion of Law: The Judge determined that the Association violated its own Bylaws. The decision states, “absent any clear language in the A.R.S. or the Bylaws prohibiting write in ballots, Respondent failed to show how the ballots were invalid.” The board’s unilateral prohibition was therefore found to be improper.

IV. Legal Conclusions and Final Order

The Administrative Law Judge upheld the petition on all issues, finding that the Petitioner had successfully proven her case by a preponderance of the evidence.

Final Order:

Based on the foregoing conclusions, IT IS ORDERED that:

1. The Petition filed by Donna M. Bischoff is upheld on all issues.

2. The Petitioner is deemed the prevailing party in the matter.

3. The Respondent must supply the Petitioner with the relevant election documents pursuant to A.R.S. § 33-1250(C) within ten (10) days of the Order.

4. The Respondent must pay the Petitioner’s filing fee of $1,500.00 directly to the Petitioner within thirty (30) days of the Order.

5. No Civil Penalty is found to be appropriate in this matter.

The Order is binding on the parties unless a request for rehearing is filed with the Commissioner of the Department of Real Estate within 30 days of the service of the Order.

Administrative Hearing Briefing: Carr v. Sunset Plaza Condo Association

Executive Summary

This briefing document analyzes the Administrative Law Judge’s decision in the case of David B. Carr versus the Sunset Plaza Condo Association (Case No. 18F-H1817003-REL). The central conflict involved a petition filed by Mr. Carr, a condominium owner, alleging that the Association’s Board of Management violated Arizona’s open meeting law and engaged in financial mismanagement.

The final ruling was a partial victory for the petitioner. The judge found that Sunset Plaza violated Ariz. Rev. Stat. § 33-1248 by failing to provide members with proper notice of board meetings where decisions were made to hire Kinney Management Services and the Mulcahy Law Firm. The Association admitted to this failure, citing a misunderstanding of the law, and pledged future compliance. As the prevailing party on this specific issue, Mr. Carr was awarded reimbursement for his $500 filing fee.

However, the judge dismissed all of Mr. Carr’s other allegations. The claim that a meeting to hire Osselaer Management Company violated the open meeting law was rejected, as the judge deemed it a valid emergency meeting exempt from notice requirements. Furthermore, Mr. Carr’s claims of financial mismanagement and inaccurate record-keeping in violation of the Association’s bylaws were not substantiated. The judge accepted the Association’s defense that alleged financial discrepancies stemmed from a change in accounting practices by a new management company, not from an actual deficit. No civil penalty was imposed on the Association.

I. Case Overview

• Case Number: 18F-H1817003-REL

• Forum: Office of Administrative Hearings, Phoenix, Arizona

• Petitioner: David B. Carr

• Respondent: Sunset Plaza Condo Association

• Administrative Law Judge: Velva Moses-Thompson

• Hearing Date: November 21, 2017

• Decision Date: November 22, 2017

• Core Dispute: A petition filed by a condo owner alleging the association’s board violated state statutes and its own bylaws concerning open meetings, financial record-keeping, and the execution of contracts.

II. Petitioner’s Allegations (David B. Carr)

On August 14, 2017, Mr. Carr filed a petition outlining two primary grievances against the Sunset Plaza Condo Association.

A. Violation of Open Meeting Law (Ariz. Rev. Stat. § 33-1248)

Mr. Carr alleged that the Association’s Board of Management took official action without holding properly authorized and noticed board meetings. This resulted in unapproved contracts and expenditures.

Direct Quotation from Petition:

“SUNSET PLAZA CONDOMINIUM ASSOCIATION BOARD OF MANAGEMENT TAKES ACTION WITHOUT HOLDING AUTHORIZED BOARD MEETING IN VIOLATION OF AZ STATUTE 33-1248. THESE UNAUTHORIZED MEETINGS HAVE RESULTED IN CONTRACTS WITH MANAGEMENT FIRMS AND ATTORNEYS. THESE CONTRACTS HAVE RESULTED IN EXPENSES NOT APPROVED OR REVIEWED BY CONDO OWNERS.”

• Specific Contracts Cited:

◦ Kinney Management (October 2016)

◦ Osselaer Real Estate (September 2016)

◦ Mulcahy Law Firm (May 2016)

• Requested Remedy: Cancellation of all contracts entered into without a properly called board meeting and personal repayment of all related expenditures by the signatory.

B. Violation of Bylaws and Financial Mismanagement (Article XI)

Mr. Carr contended that the Association violated Article XI of its bylaws, which requires it to “keep correct and complete books and records of account.” He identified specific financial discrepancies based on his analysis of the Association’s financial statements.

• Alleged Reserve Fund Discrepancy: Mr. Carr claimed an “unexplained reserve deficit of $10,295.09” based on the following figures, noting there were no reported reserve expenses in 2016.

Financial Statement Item

Amount

2015 Year-End Reserve Equity

$10,295.09

2016 Income Statement Reserve Deposit

$9,180.00

2016 Year-End Balance Sheet Reserve Total

$2,295.44

• Additional Discrepancies:

◦ The 2016 year-end balance sheet failed to identify prior and current year operating equity.

◦ An “expanded 2016 balance sheet” calculation revealed a discrepancy of $2,808.42.

• Requested Remedy: A formal audit of the 2016 and 2017 financial statements and improved future reporting to identify reserve balances and homeowner equity.

III. Respondent’s Defense (Sunset Plaza Condo Association)

The Association, represented by Paige Marks, Esq., and through the testimony of board member Marilyn Gelroth, presented a defense against both allegations.

A. Response to Open Meeting Allegations

• Admission: The Association conceded that it “did not provide notice of its board meetings when it decided to hire Kinney and the Mulcahy firm.”

• Justification: This failure was attributed to the board’s misunderstanding of the open meeting law. The Association represented to the judge that it would abide by the law in the future.

• Emergency Meeting Exemption: The Association argued that the decision to hire Osselaer Management was made at a valid emergency board meeting on September 21, 2016.

◦ Timeline of Events: Kinney Management Services retracted its offer to manage the property on September 15, 2016, after receiving notice of a complaint Mr. Carr had filed against them with the Attorney General’s Office.

◦ Urgency: This retraction created an urgent need for a new management company. Ms. Gelroth testified that the board “needed to move quickly because members needed to know where to send payments.” This situation, they argued, constituted an emergency under the law.

B. Response to Financial Allegations

• Flawed Comparison: The Association contended that Mr. Carr’s financial analysis was fundamentally flawed because he “erroneously compared Sunset Plaza’s 2015 year end balance statement to its 2016 income statement,” which are two different types of financial records.

• Change in Accounting Methods: The primary reason for the apparent discrepancies was a change in how financial data was categorized.

◦ The previous management company, Kolby, separated reserve amounts in its financial statements.

◦ The new management company, Osselaer, “does not separate reserve amounts” and is not required by law to do so. This difference in reporting style accounted for the changes Mr. Carr identified as a deficit.

IV. Administrative Law Judge’s Decision and Rationale

The judge, Velva Moses-Thompson, found Ms. Gelroth’s testimony credible and issued a split decision, upholding one of Mr. Carr’s claims while dismissing the other.

A. Finding on Financial Mismanagement Allegation

Conclusion: Petition Dismissed The judge ruled that Mr. Carr “failed to establish by a preponderance of the evidence that Sunset Plaza violated Article XI of Sunset Plaza’s Bylaws.” The Association’s explanation regarding the different accounting methods used by Kolby and Osselaer, and the flawed comparison of financial documents, was accepted as a valid defense.

B. Finding on Open Meeting Law Allegations

Conclusion: Partial Violation Confirmed

• Hiring of Osselaer Management (No Violation): The judge concluded that Sunset Plaza did not violate Ariz. Rev. Stat. § 33-1248 in this instance. The decision was made at a legitimate emergency board meeting, which exempts the board from the 48-hour notice requirement. The minutes of the meeting stated the reason for the emergency.

• Hiring of Kinney Management and Mulcahy Law Firm (Violation Confirmed): The judge found that Mr. Carr “established by preponderance of the evidence that Sunset Plaza violated Ariz. Rev. Stat. 33-1248” when it decided to hire these two firms. The Association did not dispute that it failed to inform members of these board meetings, which was a key factor in the ruling.

C. Final Order

Based on the findings and conclusions of law, the judge issued the following order:

1. Prevailing Party: Petitioner David B. Carr is deemed the prevailing party solely with regard to the violation of Ariz. Rev. Stat. § 33-1248.

2. Reimbursement: Sunset Plaza is ordered to pay Mr. Carr his filing fee of $500.00 within thirty (30) days of the order.

3. Dismissal: All other aspects of Mr. Carr’s petition are dismissed.

4. Penalty: No Civil Penalty is found to be appropriate in the matter.

Briefing Document: Sopatyk v. The Lakeshore Village Condominium Association, Inc.

Executive Summary

This document synthesizes the legal proceedings and outcomes of the case Brian Sopatyk v. The Lakeshore Village Condominium Association, Inc. (Case No. 17F-H1716004-REL), adjudicated by the Arizona Office of Administrative Hearings. The core of the dispute was Petitioner Brian Sopatyk’s allegation that the Respondent Condominium Association violated Arizona Revised Statute (A.R.S.) § 33-1260 by charging a $660 “transfer fee” upon the sale of a condominium unit, which exceeded the statutory maximum of $400 for resale disclosure services.

The Association’s defense centered on the argument that the $660 charge was not a disclosure fee but a separate “working capital fee” authorized by its Covenants, Conditions, and Restrictions (CC&Rs). The Association contended that this fee had been erroneously mislabeled as a “transfer fee” due to a clerical error inherited by its current manager. The actual statutory fee for disclosure documents, the Association argued, was a separate $30 charge paid by the seller.

After an initial hearing in November 2016 and a subsequent re-hearing in June 2017, the Administrative Law Judge consistently found that Mr. Sopatyk failed to prove the alleged violation by a preponderance of the evidence. The court concluded that the evidence supported the Association’s claim of a mislabeled working capital fee. Consequently, Mr. Sopatyk’s petition was dismissed on both occasions, and the Association was deemed the prevailing party.

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Case Overview

Parties and Jurisdiction

Representation

Petitioner

Brian Sopatyk

On his own behalf (Initial Hearing); Nathan Andrews, Esq. & Jill Kennedy, Esq. (Re-Hearing)

Respondent

The Lakeshore Village Condominium Association, Inc.

Bradley R. Jardine, Esq. (Both Hearings)

Jurisdiction

Arizona Department of Real Estate (ADRE)

Authority under A.R.S. Title 32, Ch. 20, Art. 11.

Adjudicator

Administrative Law Judge (ALJ) Thomas Shedden

Office of Administrative Hearings, Phoenix, AZ

Core Allegation and Governing Statute

• Allegation: Brian Sopatyk alleged that The Lakeshore Village Condominium Association violated A.R.S. § 33-1260 by charging fees exceeding the statutory maximum for resale disclosure services. Specifically, a $660 fee labeled as a “transfer fee” was charged when he purchased his unit.

• Petitioner’s Request: Mr. Sopatyk sought an order for the Association to comply with the statute, issue refunds to all who paid fees in excess of the maximum, and for a civil penalty to be imposed.

• Governing Statute: A.R.S. § 33-1260 stipulates that a condominium association “may charge the unit owner a fee of no more than an aggregate of four hundred dollars to compensate the association for the costs incurred in the preparation of a statement or other documents furnished… for purposes of resale disclosure, lien estoppel and any other services related to the transfer or use of the property.” The statute explicitly forbids charging any other fees for these services except as authorized.

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Chronology of Legal Proceedings

March 2, 2015

The Association issues a “Disclosure Form” for Mr. Sopatyk’s purchase, listing a $660 transfer fee and a $30 statement fee.

May 18, 2016

The Association’s Board of Directors meets to address Mr. Sopatyk’s claim. They conclude the $660 fee was a mislabeled working capital fee and direct corrective accounting.

August 9, 2016

Mr. Sopatyk files a petition with the Arizona Department of Real Estate.

November 14, 2016

The initial hearing is conducted before ALJ Thomas Shedden.

November 29, 2016

ALJ Shedden issues a decision dismissing Mr. Sopatyk’s petition.

December 13, 2016

The ADRE Commissioner, Judy Lowe, adopts the ALJ’s decision, issuing a Final Order dismissing the case.

February 7, 2017

A Notice of Re-Hearing is issued after Mr. Sopatyk requests one.

June 9, 2017

A re-hearing is conducted before ALJ Thomas Shedden.

June 26, 2017

ALJ Shedden issues a new decision, again dismissing Mr. Sopatyk’s petition.

August 1, 2017

The deadline passes for the ADRE to accept, reject, or modify the ALJ’s re-hearing decision. No action is taken.

August 10, 2017

The Office of Administrative Hearings certifies the ALJ’s decision from the re-hearing as the final administrative decision in the matter.

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Analysis of Arguments and Evidence

Petitioner’s Position (Brian Sopatyk)

• Primary Argument: The Association’s own documents, specifically the Disclosure Form and the HUD-1 settlement statement, explicitly labeled the $660 charge as a “Transfer Fee.” This amount is a prima facie violation of the $400 statutory cap in A.R.S. § 33-1260.

• Evidence Presented:

◦ March 2, 2015 Disclosure Form: Showed a required payment of a $660 “transfer fee” and a $30 “statement fee.”

◦ HUD-1 Settlement Statement: Documented that the $660 Transfer Fee was paid to the Association, with $330 paid from the Borrower’s (Sopatyk’s) funds and $330 from the Seller’s funds. It also showed the Seller paid a separate $30 Resale Statement Fee.

• Contradictory Testimony: In his sworn petition, Mr. Sopatyk stated the $660 fee was “split between the seller and the buyer.” However, during the re-hearing, he testified that he had “in fact paid the entire $660 as part of the negotiated price of the unit.” The ALJ noted this discrepancy, stating “either Mr. Sopatyk’s sworn statement or his testimony must be false.”

Respondent’s Position (The Lakeshore Village Condo. Association)

• Primary Argument: The $660 fee was not for resale disclosure services but was a working capital fee authorized by the Association’s CC&Rs. The “transfer fee” label was a historical clerical error that the Board had since identified and corrected.

• Evidence and Testimony:

◦ CC&R Section 8.13 (“Transfer Fee and Working Capital Fund”): This provision authorizes the Association to assess each new owner a fee of “at least twice the average monthly assessment” to be deposited into the working capital fund (referred to as the Reserve Fund). The monthly assessment was $328.83, making the $660 fee consistent with this rule.

◦ Testimony of Amy Telnes (Association Manager): Ms. Telnes testified that when she became manager, she was incorrectly informed that the working capital fee was the transfer fee. She affirmed that the $660 fee was deposited into the Association’s reserve fund and that the separate $30 fee was the one charged pursuant to A.R.S. § 33-1260.

◦ May 18, 2016 Board Meeting Minutes: These minutes, entered into evidence, documented the Board’s conclusion that it was collecting a working capital contribution but “erroneously calling it a transfer fee.” The Board directed Ms. Telnes to perform an accounting and transfer all such fees collected after October 1, 2013, to the Reserve Account. The minutes also show the Board voted to change its fee structure moving forward to a single $400 fee to avoid future confusion.

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Judicial Findings and Final Disposition

Standard and Burden of Proof

Across both hearings, the ALJ established that the standard of proof was a preponderance of the evidence, defined as evidence with “the most convincing force” that is “sufficient to incline a fair and impartial mind to one side of the issue rather than the other.” The burden of proof rested entirely on the petitioner, Mr. Sopatyk, to demonstrate that a violation had occurred.

Initial Hearing Decision (November 29, 2016)

• Findings of Fact: The ALJ found that the Association was charging a $660 working capital fee in accordance with its CC&Rs but had been mislabeling it. It was also charging a separate $30 document preparation fee.

• Conclusion of Law: Mr. Sopatyk did not show by a preponderance of the evidence that the Association violated A.R.S. § 33-1260.

• Order: The petition was dismissed, and the decision was adopted as final by the ADRE Commissioner on December 13, 2016.

Re-Hearing Decision (June 26, 2017)

• Findings of Fact: The re-hearing produced more detailed findings but led to the same conclusion. The ALJ found that the Association had authority under its CC&Rs to collect the $660 working capital fee and that the statutory disclosure statute did not apply to this charge. The fee applicable to the statute was the $30 charge paid by the seller.

• Conclusion of Law: The ALJ reiterated that Mr. Sopatyk failed to meet his burden of proof. The Association’s argument that the claim should fail because Sopatyk did not personally pay over $400 was deemed “not persuasive,” as the statute applies to all violations regardless of particularized harm.

• Order: The petition was again ordered to be dismissed.

Final Administrative Disposition

The ADRE took no action to modify or reject the ALJ’s re-hearing decision by the statutory deadline of August 1, 2017. As a result, the Office of Administrative Hearings certified the June 26, 2017 decision as the final administrative decision on August 10, 2017, concluding the matter in favor of the Respondent Association.