Tag Archives: conflict_of_interest

Marilyn J Fogelsong vs Park Townhouses Homeowners Association, INC

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Case Summary

Case ID 25F-H050-REL
Agency ADRE
Tribunal OAH
Decision Date 2025-08-05
Administrative Law Judge Nicole Robinson
Outcome loss
Filing Fees Refunded $2,000.00
Civil Penalties $0.00

Parties & Counsel

Petitioner Marilyn J. Fogelsong Counsel —
Respondent Park Townhouses Homeowners Association, INC. Counsel —

Alleged Violations

ARIZ. REV. STAT. § 33-1811
Paragraph 19 of the CC&Rs
ARIZ. REV. STAT. § 33-1804 (A) and (F)
ARIZ. REV. STAT. § 10-830(A)

Outcome Summary

Petitioner's petition was DENIED because Petitioner failed to meet her burden of proving by a preponderance of the evidence that Respondent committed the alleged violations, and the Tribunal lacked jurisdiction to enforce the alleged violation of ARIZ. REV. STAT. § 10-830(A).

Why this result: Petitioner failed to meet her burden of proof on all four issues. Issues 1, 2, and 3 lacked sufficient evidentiary support or statutory violation proof. Issue 4 was dismissed due to lack of OAH jurisdiction over ARS § 10-830.

Key Issues & Findings

The HOA failed to disclose conflicts-of-interest when hiring an HOA property manager to manage the HOA which is a violation of ARS 33-1811.

Petitioner alleged that the hiring of TRT (Tucson Realty & Trust Company, Management Services, LLC) as the HOA manager constituted an undisclosed conflict of interest because TRT also managed individual townhouses within the community.

Orders: N/A

Filing fee: $500.00, Fee refunded: No

Disposition: petitioner_loss

Cited:

  • ARIZ. REV. STAT. § 33-1811

The HOA has violated paragraph 19 of the CC&Rs by directing an HOA property manager to pursue an unsanctioned project for individual townhouses which is beyond the scope of HOA management for common areas.

The HOA manager solicited bids to paint the exteriors of all townhouses. Petitioner argued the HOA lacked authority to manage improvements for individual units, as Paragraph 19 limits HOA authority to common areas.

Orders: N/A

Filing fee: $500.00, Fee refunded: No

Disposition: petitioner_loss

Cited:

  • Paragraph 19 of the CC&Rs

The board has violated the open meeting laws of ARS 33-1804 (A) and (F) by holding a private board meeting without notice; failing to provide material information, minutes, financial statements, and a budget upon request; and by failing to communicate via the designated representative.

Petitioner alleged the HOA violated open meeting laws by failing to provide proper notice for meetings and failing to provide requested documentation (minutes, financial statements, etc.).

Orders: N/A

Filing fee: $500.00, Fee refunded: No

Disposition: petitioner_loss

Cited:

  • ARIZ. REV. STAT. § 33-1804

The board has violated ARS 10-830(A) by failing to act in good faith with the care an ordinarily prudent person in a like position would act by failing to perform their duties.

Petitioner alleged the board failed to perform required duties in a timely or prudent manner, including failing to elect officers, manage the bank account, check the post office box, and schedule a backflow test.

Orders: N/A

Filing fee: $500.00, Fee refunded: No

Disposition: petitioner_loss

Cited:

  • ARIZ. REV. STAT. § 10-830

Analytics Highlights

Topics: HOA Management, Conflict of Interest, Open Meeting Law, Jurisdiction, Planned Community, CC&Rs, Director Duty, Burden of Proof
Additional Citations:

  • ARIZ. REV. STAT. § 33-1811
  • ARIZ. REV. STAT. § 33-1804
  • ARIZ. REV. STAT. § 10-830
  • ARIZ. REV. STAT. § 32-2199
  • ARIZ. REV. STAT. § 41-1092
  • Tierra Ranchos Homeowners Ass’n v. Kitchukov, 216 Ariz. 195, 165 P.3d 173 (App. 2007)
  • Declaration of Covenants, Conditions and Restrictions for Park Association

Audio Overview

Decision Documents

25F-H050-REL Decision – 1336348.pdf

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25F-H050-REL Decision – 1348020.pdf

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25F-H050-REL Decision – 1380164.pdf

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25F-H050-REL Decision – 1384549.pdf

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25F-H050-REL Decision – 1384804.pdf

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25F-H050-REL Decision – 1393862.pdf

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Briefing Doc – 25F-H050-REL


Briefing Document: Fogelsong vs. Park Townhouses Homeowners Association (Docket No. 25F-H050-REL)

Executive Summary

This document synthesizes the proceedings and outcome of the legal dispute between Marilyn J. Fogelsong (“Petitioner”) and the Park Townhouses Homeowners Association, Inc. (“Respondent”). The case was adjudicated by the Arizona Office of Administrative Hearings (OAH).

The Petitioner, a co-owner of a unit in the eight-unit Park Townhouses community, filed a petition on or about March 31, 2025, alleging four distinct violations by the HOA board. These allegations included failure to disclose a conflict of interest in hiring an HOA manager, violating the community’s CC&Rs by pursuing projects for individual units, violating state open meeting laws, and failing to act in good faith as fiduciaries.

An evidentiary hearing was conducted on July 16, 2025, before Administrative Law Judge (ALJ) Nicole Robinson. The Respondent did not appear at the hearing, and the Petitioner provided sole testimony.

On August 5, 2025, the ALJ issued a decision denying the Petitioner’s petition in its entirety. The judge concluded that the Petitioner failed to meet her burden of proof by a preponderance of the evidence for three of the four issues. The fourth issue was dismissed on the grounds that the OAH lacked the jurisdiction to enforce the specific statute cited (A.R.S. § 10-830). A subsequent request for a rehearing filed by the Petitioner was rejected by the OAH as it was submitted to the incorrect office after the OAH’s jurisdiction had ended.

Case Overview

Case Number

25F-H050-REL

Adjudicating Body

Arizona Office of Administrative Hearings (OAH)

Administrative Law Judge

Nicole Robinson

Petitioner

Marilyn J. Fogelsong

Respondent

Park Townhouses Homeowners Association, Inc.

Subject Property

Park Townhouses, an 8-unit planned community in Tucson, AZ

Petition Filed

On or about March 31, 2025

Hearing Date

July 16, 2025

Decision Issued

August 5, 2025

Final Outcome

Petition DENIED

The Parties and Property

• Petitioner Marilyn J. Fogelsong: A partial owner of unit 2467 East 1st Street since April 2021, co-owning with her 39-year-old son who resides in the unit. Fogelsong previously served as the HOA board president for three years, with her last term ending in September 2024.

• Respondent Park Townhouses HOA: A planned community association for an eight-unit townhouse development in Tucson, Arizona. Each unit owner is responsible for their own structure and lot.

• The Property: The community consists of two buildings, each with four townhouses facing each other across a 20-foot wide common driveway.

Petitioner’s Allegations and Testimony

During the July 16, 2025 hearing, Ms. Fogelsong, representing herself, presented testimony on the four issues outlined in her petition. The HOA did not appear.

Issue #1: Conflict of Interest (A.R.S. § 33-1811)

The Petitioner alleged that the HOA failed to disclose conflicts of interest when hiring Tucson Realty & Trust Company (TRT) as the HOA property manager, rendering the contract void.

• Core Allegation: On February 17, 2025, the HOA board presented only one proposal—from TRT—and asked homeowners to approve the hire without disclosing pertinent conflicts.

• Identified Conflicts:

◦ TRT’s property management division manages two units within the community (2463 and 2467) owned by then-current board members Mark Schlang (Treasurer) and Gerald Schwarzenb[erger] (Secretary).

◦ Both the property management and HOA management divisions of TRT operate under the same broker, Deborah Garcia.

• History of Misconduct by TRT: The Petitioner testified to a history of issues with TRT that she believed constituted conflicts of interest:

◦ TRT collected parking violation fines from a tenant but failed to remit them to the HOA.

◦ TRT failed to provide tenant contact information to the HOA upon request, which is a violation of Arizona law.

◦ TRT’s attorney, BL Edmonson, sent a “cease and desist” letter to Fogelsong and then invoiced the HOA for the legal fees, which Fogelsong, as president at the time, rejected. The invoice was resubmitted to the HOA 18 months later.

Issue #2: CC&R Violation (Paragraph 19)

The Petitioner alleged the HOA violated Paragraph 19 of the Covenants, Conditions, and Restrictions (CC&Rs) by directing the HOA manager to pursue an “unsanctioned project for individual townhouses.”

• Core Allegation: The HOA manager (TRT) met with a painting company on March 31, 2025, to solicit bids for painting the exteriors of all townhouses. The Petitioner argued this action is beyond the scope of the HOA’s authority, which is limited to maintaining common areas.

• Supporting Evidence:

◦ The Petitioner cited a legal opinion she obtained from an HOA attorney, Jason Smith, which concluded that the HOA does not have the right to conduct repairs on individual units.

◦ She referenced a past incident where another homeowner, David Zinfeld, paid an assessment for awning wood repair “under protest” because the funds were being used for an individual unit, not a common area.

Issue #3: Open Meeting Law Violations (A.R.S. § 33-1804)

The Petitioner claimed the board violated Arizona’s open meeting laws through multiple actions.

• Secret Meeting: The board held a private meeting to approve TRT as the manager before the February 17, 2025, homeowners meeting where the vote occurred. No notice of this prior board meeting was given to homeowners.

• Failure to Provide Information: The Petitioner made multiple requests for documents that were ignored. She requested management proposals on February 4, 2025, and later requested minutes, financial statements, and property management agreements, none of which were provided.

• Disregarded Standing: In its written response to the petition, the HOA claimed the Petitioner lacked “sufficient standing” due to her “limited ownership stake,” a position the Petitioner refutes based on her recorded deed.

Issue #4: Failure to Act in Good Faith (A.R.S. § 10-830A)

The Petitioner alleged the board failed to perform its duties with the care an “ordinarily prudent person” would exercise.

• Dereliction of Duties:

◦ The board, elected in September 2024, waited 10 weeks to meet and elect officers.

◦ The board failed to take control of the HOA bank account until March 2025, approximately six months into its one-year term.

◦ It failed to schedule a required annual backflow test for the irrigation system, resulting in the water being shut off.

◦ It failed to replace a dead tree that was on the agenda for replacement in fall 2024.

◦ It failed to check the HOA’s post office box, leading to the return of dues checks from homeowners.

◦ It did not abate new graffiti for six weeks, at which point the Petitioner did so herself after receiving permission.

Respondent’s Position

Although the HOA was not present at the hearing, its positions were articulated in a five-page written response submitted to the Department of Real Estate on May 8, 2025, and were referenced during the hearing.

• Denial of Claims: The Respondent denied all of the Petitioner’s claims.

• Challenge to Standing: The HOA’s formal position was that Ms. Fogelsong lacked sufficient standing due to her “limited ownership stake.”

• Allegation of Ulterior Motive: The Respondent accused the Petitioner of a “calculated and systematic attempt to devalue the property and agitate the owners to possibly sell their respective units to Miss Fogong [sic] and her son at a below market value.” They claimed several owners could testify to her “repeated suggestions and solicitations to sell.”

• Claim of Non-cooperation: The HOA stated that the Petitioner had “not been fully cooperative in the transition process” regarding missing documentation after her term as president ended.

Administrative Law Judge’s Decision

On August 5, 2025, ALJ Nicole Robinson issued a decision denying the petition. The core finding was that the Petitioner failed to meet her burden of proving the violations by a preponderance of the evidence.

Findings on Each Issue

• Issue #1 (Conflict of Interest): No Violation Found. The ALJ concluded that the Petitioner failed to prove the hiring of TRT constituted a conflict of interest as defined by A.R.S. § 33-1811. The evidence showed that a prior management company (McElwain) also managed individual units while serving as the HOA manager, suggesting this was an established practice. The statute specifically addresses benefits to board members or their families, which was not sufficiently established by the evidence presented.

• Issue #2 (CC&R Violation): No Violation Found. The decision stated that the Petitioner failed to submit the entirety of the CC&Rs and Bylaws, providing only “snippets.” Without the complete governing documents, the tribunal could not definitively determine the scope of the HOA’s authority regarding projects on individual units. Furthermore, the evidence only showed that a bid was solicited for painting; there was no evidence that work was actually performed.

• Issue #3 (Open Meeting Law): No Violation Found. The ALJ found that the February 17, 2025, meeting was properly noticed via email. Regarding a March 5, 2025, email the Petitioner did not receive, the evidence showed her co-owner son did receive it, meaning the unit was properly notified. A December 2024 meeting was deemed emergent, for which the statute does not require prior notice.

• Issue #4 (Failure to Act in Good Faith): No Jurisdiction. The ALJ concluded that the Office of Administrative Hearings lacks jurisdiction to enforce A.R.S. § 10-830. The OAH’s authority is limited by statute to adjudicating violations of Title 33 (Planned Communities and Condominiums) and community documents, not Title 10 (Corporations and Associations).

Post-Decision Events

• On August 26, 2025, the Petitioner filed a request for a rehearing.

• On September 8, 2025, the OAH issued a Minute Entry stating that the request would not be considered because it was “inappropriately sent to the Office of Administrative Hearings.”

• The OAH’s jurisdiction over the matter had concluded with the August 5 decision. The Petitioner was advised to address any further requests to the Arizona Department of Real Estate.


Case Participants

Petitioner Side

  • Marilyn J. Fogelsong (petitioner)
    Park Townhouses HOA
    Represented herself; former HOA President/Treasurer
  • Levi Benjamin Lazarus (co-owner/son of petitioner)
    Park Townhouses HOA
    Co-owner of petitioner's unit
  • Jason Smith (HOA attorney)
    Consulted by petitioner regarding CC&R interpretation for unit repairs

Respondent Side

  • Gerald Schwarzenb (board member/Secretary)
    Park Townhouses HOA
    Current HOA board member; his unit managed by TRT
  • Mark Schlang (board member/Treasurer/architect)
    Park Townhouses HOA
    Current HOA board member; his unit managed by TRT
  • Deborah Garcia (broker/HOA manager)
    TRT Property Management
    Broker of TRT; homeowners voted to accept her as HOA manager
  • Andrew Viscara (HOA property manager)
    TRT Property Management
    TRT representative designated for Park Townhouses HOA management
  • Mary Lord Lr (property manager)
    TRT Property Management
    Property manager for unit 2465
  • B.L. Edmonson (attorney)
    TRT Property Management
    Wrote cease and desist letter to petitioner; billed HOA

Neutral Parties

  • Nicole Robinson (ALJ)
    OAH
  • Susan Nicolson (Commissioner)
    ADRE

Other Participants

  • David Zinfeld (homeowner/former Treasurer)
    Park Townhouses HOA
    Property owner; prior treasurer during self-managed period; paid assessment under protest
  • Ray Floyd (former board member)
    Park Townhouses HOA
    Served on board with petitioner during self-managed period
  • Sasha Flores (bank account signer)
    Park Townhouses HOA
    Wife of Rick Flores; co-signer on HOA bank account
  • Rick Flores (homeowner/delegate)
    Park Townhouses HOA
    Delegated authority to wife Sasha Flores for bank account deeds

Marilyn J Fogelsong

Posted on by

Case Summary

Case ID 25F-H050-REL
Agency ADRE
Tribunal OAH
Decision Date 2025-08-05
Administrative Law Judge Nicole Robinson
Outcome loss
Filing Fees Refunded $2,000.00
Civil Penalties $0.00

Parties & Counsel

Petitioner Marilyn J. Fogelsong Counsel —
Respondent Park Townhouses Homeowners Association, INC. Counsel —

Alleged Violations

ARIZ. REV. STAT. § 33-1811
Paragraph 19 of the CC&Rs
ARIZ. REV. STAT. § 33-1804 (A) and (F)
ARIZ. REV. STAT. § 10-830(A)

Outcome Summary

Petitioner's petition was DENIED because Petitioner failed to meet her burden of proving by a preponderance of the evidence that Respondent committed the alleged violations, and the Tribunal lacked jurisdiction to enforce the alleged violation of ARIZ. REV. STAT. § 10-830(A).

Why this result: Petitioner failed to meet her burden of proof on all four issues. Issues 1, 2, and 3 lacked sufficient evidentiary support or statutory violation proof. Issue 4 was dismissed due to lack of OAH jurisdiction over ARS § 10-830.

Key Issues & Findings

The HOA failed to disclose conflicts-of-interest when hiring an HOA property manager to manage the HOA which is a violation of ARS 33-1811.

Petitioner alleged that the hiring of TRT (Tucson Realty & Trust Company, Management Services, LLC) as the HOA manager constituted an undisclosed conflict of interest because TRT also managed individual townhouses within the community.

Orders: N/A

Filing fee: $500.00, Fee refunded: No

Disposition: petitioner_loss

Cited:

  • ARIZ. REV. STAT. § 33-1811

The HOA has violated paragraph 19 of the CC&Rs by directing an HOA property manager to pursue an unsanctioned project for individual townhouses which is beyond the scope of HOA management for common areas.

The HOA manager solicited bids to paint the exteriors of all townhouses. Petitioner argued the HOA lacked authority to manage improvements for individual units, as Paragraph 19 limits HOA authority to common areas.

Orders: N/A

Filing fee: $500.00, Fee refunded: No

Disposition: petitioner_loss

Cited:

  • Paragraph 19 of the CC&Rs

The board has violated the open meeting laws of ARS 33-1804 (A) and (F) by holding a private board meeting without notice; failing to provide material information, minutes, financial statements, and a budget upon request; and by failing to communicate via the designated representative.

Petitioner alleged the HOA violated open meeting laws by failing to provide proper notice for meetings and failing to provide requested documentation (minutes, financial statements, etc.).

Orders: N/A

Filing fee: $500.00, Fee refunded: No

Disposition: petitioner_loss

Cited:

  • ARIZ. REV. STAT. § 33-1804

The board has violated ARS 10-830(A) by failing to act in good faith with the care an ordinarily prudent person in a like position would act by failing to perform their duties.

Petitioner alleged the board failed to perform required duties in a timely or prudent manner, including failing to elect officers, manage the bank account, check the post office box, and schedule a backflow test.

Orders: N/A

Filing fee: $500.00, Fee refunded: No

Disposition: petitioner_loss

Cited:

  • ARIZ. REV. STAT. § 10-830

Analytics Highlights

Topics: HOA Management, Conflict of Interest, Open Meeting Law, Jurisdiction, Planned Community, CC&Rs, Director Duty, Burden of Proof
Additional Citations:

  • ARIZ. REV. STAT. § 33-1811
  • ARIZ. REV. STAT. § 33-1804
  • ARIZ. REV. STAT. § 10-830
  • ARIZ. REV. STAT. § 32-2199
  • ARIZ. REV. STAT. § 41-1092
  • Tierra Ranchos Homeowners Ass’n v. Kitchukov, 216 Ariz. 195, 165 P.3d 173 (App. 2007)
  • Declaration of Covenants, Conditions and Restrictions for Park Association

Marilyn J Fogelsong vs Park Townhouses Homeowners Association, INC.

Posted on by
Note: A Rehearing was requested for this case. The dashboard statistics reflect the final outcome of the rehearing process.

Case Summary

Case ID 25F-H050-REL
Agency ADRE
Tribunal OAH
Decision Date 2025-08-05
Administrative Law Judge Nicole Robinson
Outcome loss
Filing Fees Refunded $2,000.00
Civil Penalties $0.00

Parties & Counsel

Petitioner Marilyn J. Fogelsong Counsel —
Respondent Park Townhouses Homeowners Association, INC. Counsel —

Alleged Violations

ARIZ. REV. STAT. § 33-1811
Paragraph 19 of the CC&Rs
ARIZ. REV. STAT. § 33-1804 (A) and (F)
ARIZ. REV. STAT. § 10-830(A)

Outcome Summary

Petitioner's petition was DENIED because Petitioner failed to meet her burden of proving by a preponderance of the evidence that Respondent committed the alleged violations, and the Tribunal lacked jurisdiction to enforce the alleged violation of ARIZ. REV. STAT. § 10-830(A).

Why this result: Petitioner failed to meet her burden of proof on all four issues. Issues 1, 2, and 3 lacked sufficient evidentiary support or statutory violation proof. Issue 4 was dismissed due to lack of OAH jurisdiction over ARS § 10-830.

Key Issues & Findings

The HOA failed to disclose conflicts-of-interest when hiring an HOA property manager to manage the HOA which is a violation of ARS 33-1811.

Petitioner alleged that the hiring of TRT (Tucson Realty & Trust Company, Management Services, LLC) as the HOA manager constituted an undisclosed conflict of interest because TRT also managed individual townhouses within the community.

Orders: N/A

Filing fee: $500.00, Fee refunded: No

Disposition: petitioner_loss

Cited:

  • ARIZ. REV. STAT. § 33-1811

The HOA has violated paragraph 19 of the CC&Rs by directing an HOA property manager to pursue an unsanctioned project for individual townhouses which is beyond the scope of HOA management for common areas.

The HOA manager solicited bids to paint the exteriors of all townhouses. Petitioner argued the HOA lacked authority to manage improvements for individual units, as Paragraph 19 limits HOA authority to common areas.

Orders: N/A

Filing fee: $500.00, Fee refunded: No

Disposition: petitioner_loss

Cited:

  • Paragraph 19 of the CC&Rs

The board has violated the open meeting laws of ARS 33-1804 (A) and (F) by holding a private board meeting without notice; failing to provide material information, minutes, financial statements, and a budget upon request; and by failing to communicate via the designated representative.

Petitioner alleged the HOA violated open meeting laws by failing to provide proper notice for meetings and failing to provide requested documentation (minutes, financial statements, etc.).

Orders: N/A

Filing fee: $500.00, Fee refunded: No

Disposition: petitioner_loss

Cited:

  • ARIZ. REV. STAT. § 33-1804

The board has violated ARS 10-830(A) by failing to act in good faith with the care an ordinarily prudent person in a like position would act by failing to perform their duties.

Petitioner alleged the board failed to perform required duties in a timely or prudent manner, including failing to elect officers, manage the bank account, check the post office box, and schedule a backflow test.

Orders: N/A

Filing fee: $500.00, Fee refunded: No

Disposition: petitioner_loss

Cited:

  • ARIZ. REV. STAT. § 10-830

Analytics Highlights

Topics: HOA Management, Conflict of Interest, Open Meeting Law, Jurisdiction, Planned Community, CC&Rs, Director Duty, Burden of Proof
Additional Citations:

  • ARIZ. REV. STAT. § 33-1811
  • ARIZ. REV. STAT. § 33-1804
  • ARIZ. REV. STAT. § 10-830
  • ARIZ. REV. STAT. § 32-2199
  • ARIZ. REV. STAT. § 41-1092
  • Tierra Ranchos Homeowners Ass’n v. Kitchukov, 216 Ariz. 195, 165 P.3d 173 (App. 2007)
  • Declaration of Covenants, Conditions and Restrictions for Park Association

Richard E Jewell v. Casa Fiesta Townhouses Corp.

Posted on by

Case Summary

Case ID 22F-H2221005-REL
Agency ADRE
Tribunal OAH
Decision Date 2021-10-25
Administrative Law Judge Tammy L. Eigenheer
Outcome loss
Filing Fees Refunded $0.00
Civil Penalties $0.00

Parties & Counsel

Petitioner Richard E Jewell Counsel —
Respondent Casa Fiesta Townhouses Corp. Counsel Nicole Payne and Carlotta L. Turman

Alleged Violations

A.R.S. § 33-1811

Outcome Summary

The Petitioner's petition alleging the HOA violated conflict of interest statutes (A.R.S. § 33-1811) was dismissed because the Petitioner failed to sustain the burden of proof, as the conflict was deemed sufficiently disclosed prior to the board action.

Why this result: Petitioner failed to sustain the burden of proof on the alleged violation.

Key Issues & Findings

Board Member Conflict of Interest Disclosure

Petitioner alleged the HOA violated the statute regarding conflict of interest when the board hired the board president as a paid office assistant and the conflict was not disclosed by the president. The ALJ found that while the president did not disclose the conflict, the conflict was made known by another attendee prior to discussion and action, fulfilling the statutory purpose.

Orders: Petitioner’s petition be dismissed.

Filing fee: $0.00, Fee refunded: No

Disposition: respondent_win

Cited:

  • A.R.S. § 33-1811
  • A.R.S. § 33-1243(c)
  • A.R.S. Title 32, Ch. 20, Art. 11
  • Arizona Administrative Code R2-19-119
  • A.R.S. § 1-211(B)
  • Gutierrez v. Industrial Commission of Arizona, 226 Ariz. 395, 249 P.3d 1095 (2011)
  • State v. McFall, 103 Ariz. 234, 238, 439 P.2d 805, 809 (1968)
  • BLACK’S LAW DICTIONARY 1373 (10th ed. 2014)

Analytics Highlights

Topics: HOA governance, Conflict of interest, Statutory interpretation, Board voting
Additional Citations:

  • A.R.S. § 33-1811
  • A.R.S. § 33-1243(c)
  • A.R.S. Title 32, Ch. 20, Art. 11
  • Arizona Administrative Code R2-19-119
  • A.R.S. § 1-211(B)
  • Gutierrez v. Industrial Commission of Arizona, 226 Ariz. 395, 249 P.3d 1095 (2011)
  • State v. McFall, 103 Ariz. 234, 238, 439 P.2d 805, 809 (1968)
  • BLACK’S LAW DICTIONARY 1373 (10th ed. 2014)

Video Overview

Audio Overview

Decision Documents

22F-H2221005-REL Decision – 920344.pdf

Uploaded 2026-01-23T17:39:53 (89.3 KB)

Questions

Question

Can an HOA board member also be a paid employee of the association?

Short Answer

Yes, provided the conflict of interest is properly declared.

Detailed Answer

A board member can be hired for compensation, but they must declare the conflict of interest in an open meeting before the board discusses or acts on the issue. In this case, the Board President was hired as an office assistant.

Alj Quote

If any contract, decision or other action for compensation taken by or on behalf of the board of directors would benefit any member of the board of directors . . . , that member of the board of directors shall declare a conflict of interest for that issue.

Legal Basis

A.R.S. § 33-1811

Topic Tags

  • conflict of interest
  • board compensation
  • hiring

Question

Does a conflicted board member have to personally announce their own conflict of interest?

Short Answer

Not necessarily, as long as the members are made aware of the conflict.

Detailed Answer

The ALJ ruled that the purpose of the law is to ensure members are aware of conflicts. If the conflict is discussed and known to attendees, it does not matter if the specific board member was not the one to voice the disclosure.

Alj Quote

The purpose of A.R.S. § 33-1811 is to ensure that the members of a homeowners association are aware of all conflicts of interest prior to any discussion… not to require that a specific board member announce to those members that such a conflict of interest exists.

Legal Basis

A.R.S. § 33-1811

Topic Tags

  • conflict of interest
  • procedural requirements
  • meetings

Question

Can a board member vote on a contract that benefits them financially?

Short Answer

Yes, after declaring the conflict.

Detailed Answer

State law allows a board member to vote on an issue benefiting them, provided they have declared the conflict in an open meeting before discussion or action is taken.

Alj Quote

The member shall declare the conflict in an open meeting of the board before the board discusses or takes action on that issue and that member may then vote on that issue.

Legal Basis

A.R.S. § 33-1811

Topic Tags

  • voting rights
  • conflict of interest
  • board powers

Question

What is the burden of proof for a homeowner filing a complaint against their HOA?

Short Answer

Preponderance of the evidence.

Detailed Answer

The homeowner (petitioner) is responsible for proving their claim. They must show that their version of events is more likely true than not (the greater weight of the evidence).

Alj Quote

At an administrative hearing, the party asserting a claim, right, entitlement, or affirmative defense has the burden of proof, and the standard of proof on all issues in this matter is that of a preponderance of the evidence.

Legal Basis

Arizona Administrative Code R2-19-119

Topic Tags

  • legal standards
  • burden of proof
  • administrative hearing

Question

Which specific law covers conflict of interest for HOAs (Planned Communities) versus Condominiums?

Short Answer

A.R.S. § 33-1811 for HOAs; A.R.S. § 33-1243 for Condominiums.

Detailed Answer

It is important to cite the correct statute based on the type of community. The petitioner initially cited the condo statute (§ 33-1243) but had to correct it to the planned community statute (§ 33-1811).

Alj Quote

Petitioner indicated that he erroneously cited to A.R.S. § 33-1243(C) in his petition as that statute relates to condominium associations rather than homeowner associations. Rather, Petitioner should have referenced A.R.S. § 33-1811…

Legal Basis

A.R.S. § 33-1811

Topic Tags

  • statutes
  • jurisdiction
  • legal definitions

Question

Is a contract void if the technical requirements of declaring a conflict weren't perfectly followed?

Short Answer

Likely not, if the conflict was known and discussed.

Detailed Answer

Statutes are interpreted to produce sensible results. If the conflict was discussed at length and everyone was aware, a technical failure (like the wrong person announcing it) may not constitute a violation.

Alj Quote

The fact that Mr. Pavia was not the board member to disclose the conflict does not negate that the conflict was made known prior to any discussion and that the conflict was discussed at length during the board meeting prior to any vote.

Legal Basis

Case Law (Gutierrez v. Industrial Commission)

Topic Tags

  • contract validity
  • statutory interpretation
  • enforcement

Case

Docket No
22F-H2221005-REL
Case Title
Richard E Jewell vs. Casa Fiesta Townhouses Corp.
Decision Date
2021-10-25
Alj Name
Tammy L. Eigenheer
Tribunal
OAH
Agency
ADRE

Questions

Question

Can an HOA board member also be a paid employee of the association?

Short Answer

Yes, provided the conflict of interest is properly declared.

Detailed Answer

A board member can be hired for compensation, but they must declare the conflict of interest in an open meeting before the board discusses or acts on the issue. In this case, the Board President was hired as an office assistant.

Alj Quote

If any contract, decision or other action for compensation taken by or on behalf of the board of directors would benefit any member of the board of directors . . . , that member of the board of directors shall declare a conflict of interest for that issue.

Legal Basis

A.R.S. § 33-1811

Topic Tags

  • conflict of interest
  • board compensation
  • hiring

Question

Does a conflicted board member have to personally announce their own conflict of interest?

Short Answer

Not necessarily, as long as the members are made aware of the conflict.

Detailed Answer

The ALJ ruled that the purpose of the law is to ensure members are aware of conflicts. If the conflict is discussed and known to attendees, it does not matter if the specific board member was not the one to voice the disclosure.

Alj Quote

The purpose of A.R.S. § 33-1811 is to ensure that the members of a homeowners association are aware of all conflicts of interest prior to any discussion… not to require that a specific board member announce to those members that such a conflict of interest exists.

Legal Basis

A.R.S. § 33-1811

Topic Tags

  • conflict of interest
  • procedural requirements
  • meetings

Question

Can a board member vote on a contract that benefits them financially?

Short Answer

Yes, after declaring the conflict.

Detailed Answer

State law allows a board member to vote on an issue benefiting them, provided they have declared the conflict in an open meeting before discussion or action is taken.

Alj Quote

The member shall declare the conflict in an open meeting of the board before the board discusses or takes action on that issue and that member may then vote on that issue.

Legal Basis

A.R.S. § 33-1811

Topic Tags

  • voting rights
  • conflict of interest
  • board powers

Question

What is the burden of proof for a homeowner filing a complaint against their HOA?

Short Answer

Preponderance of the evidence.

Detailed Answer

The homeowner (petitioner) is responsible for proving their claim. They must show that their version of events is more likely true than not (the greater weight of the evidence).

Alj Quote

At an administrative hearing, the party asserting a claim, right, entitlement, or affirmative defense has the burden of proof, and the standard of proof on all issues in this matter is that of a preponderance of the evidence.

Legal Basis

Arizona Administrative Code R2-19-119

Topic Tags

  • legal standards
  • burden of proof
  • administrative hearing

Question

Which specific law covers conflict of interest for HOAs (Planned Communities) versus Condominiums?

Short Answer

A.R.S. § 33-1811 for HOAs; A.R.S. § 33-1243 for Condominiums.

Detailed Answer

It is important to cite the correct statute based on the type of community. The petitioner initially cited the condo statute (§ 33-1243) but had to correct it to the planned community statute (§ 33-1811).

Alj Quote

Petitioner indicated that he erroneously cited to A.R.S. § 33-1243(C) in his petition as that statute relates to condominium associations rather than homeowner associations. Rather, Petitioner should have referenced A.R.S. § 33-1811…

Legal Basis

A.R.S. § 33-1811

Topic Tags

  • statutes
  • jurisdiction
  • legal definitions

Question

Is a contract void if the technical requirements of declaring a conflict weren't perfectly followed?

Short Answer

Likely not, if the conflict was known and discussed.

Detailed Answer

Statutes are interpreted to produce sensible results. If the conflict was discussed at length and everyone was aware, a technical failure (like the wrong person announcing it) may not constitute a violation.

Alj Quote

The fact that Mr. Pavia was not the board member to disclose the conflict does not negate that the conflict was made known prior to any discussion and that the conflict was discussed at length during the board meeting prior to any vote.

Legal Basis

Case Law (Gutierrez v. Industrial Commission)

Topic Tags

  • contract validity
  • statutory interpretation
  • enforcement

Case

Docket No
22F-H2221005-REL
Case Title
Richard E Jewell vs. Casa Fiesta Townhouses Corp.
Decision Date
2021-10-25
Alj Name
Tammy L. Eigenheer
Tribunal
OAH
Agency
ADRE

Case Participants

Petitioner Side

  • Richard E Jewell (petitioner)
    Jewell Company Inc.

Respondent Side

  • Nicole Payne (respondent attorney)
    Carpenter Hazlewood Delgado & Bolen LLP
  • Carlotta L. Turman (respondent attorney)
    Carpenter Hazlewood Delgado & Bolen LLP
  • George Pavia (HOA board president/employee)
    Casa Fiesta Townhouses Corp.
    Subject of conflict of interest allegation

Neutral Parties

  • Tammy L. Eigenheer (ALJ)
    Office of Administrative Hearings
  • Louis Dettorre (ADRE Commissioner)
    Arizona Department of Real Estate
  • AHansen (ADRE staff)
    Arizona Department of Real Estate
    Recipient of transmission
  • djones (ADRE staff)
    Arizona Department of Real Estate
    Recipient of transmission
  • DGardner (ADRE staff)
    Arizona Department of Real Estate
    Recipient of transmission

Gregory L Smith v. Mountain Bridge Community Association

Posted on by

Case Summary

Case ID 21F-H2121037-REL
Agency ADRE
Tribunal OAH
Decision Date 2021-06-11
Administrative Law Judge Adam D. Stone
Outcome partial
Filing Fees Refunded $1,500.00
Civil Penalties $0.00

Parties & Counsel

Petitioner Gregory L. Smith Counsel —
Respondent Mountain Bridge Community Association Counsel Nicole Payne, Esq.

Alleged Violations

A.R.S. § 33-1811
CC&R Article 11.3.2

Outcome Summary

The Petitioner prevailed on the claim of violating CC&R Article 11.3.2 (failure to negotiate in good faith) but was denied relief on the claim of violating A.R.S. § 33-1811 (conflict of interest). Petitioner was ordered reimbursed $500.00 for the filing fee.

Why this result: Petitioner failed to prove the A.R.S. § 33-1811 violation because the statute was interpreted by the Tribunal to require the action to involve compensation.

Key Issues & Findings

Conflict of Interest Disclosure

Petitioner alleged the Respondent violated A.R.S. § 33-1811 because the HOA President failed to disclose a conflict of interest during the approval of his own flagpole. The Tribunal found the statute requires the decision to involve compensation, and Petitioner failed to meet the burden of proof.

Orders: Petition denied as to a violation of A.R.S. 33-1811. Tribunal declined to award a civil penalty.

Filing fee: $1,000.00, Fee refunded: No

Disposition: petitioner_loss

Cited:

  • A.R.S. § 33-1811

Failure to Negotiate Claim Resolution in Good Faith

Petitioner claimed Mountain Bridge failed to negotiate a resolution in good faith after he filed a claim notice. Mountain Bridge failed to communicate until approximately 35 days after the claim was noticed. The Tribunal found Respondent failed to negotiate in good faith.

Orders: Petitioner is deemed the prevailing party as to his claim of an Article 11 violation. Respondent must reimburse the $500.00 filing fee within 30 days. Tribunal declined to award a civil penalty.

Filing fee: $500.00, Fee refunded: Yes

Disposition: petitioner_win

Cited:

  • CC&R Article 11.3.2

Analytics Highlights

Topics: HOA, Conflict of Interest, Failure to Negotiate, Flagpole, Filing Fee
Additional Citations:

  • A.R.S. § 33-1811
  • A.R.S. § 32-2199(B)
  • A.R.S. § 41-1092.07(G)(2)
  • A.A.C. R2-19-119(A)
  • A.A.C. R2-19-119(B)(1)
  • A.A.C. R2-19-119(B)(2)
  • A.R.S. § 32-2199.02(B)
  • A.R.S. § 32-2199.04
  • A.R.S. § 41-1092.09

Video Overview

Audio Overview

Decision Documents

21F-H2121037-REL Decision – 887461.pdf

Uploaded 2026-01-23T17:36:47 (121.4 KB)

Questions

Question

Does a board member violate conflict of interest laws by voting on their own architectural request if no money is exchanged?

Short Answer

Likely not. The ALJ ruled that the conflict of interest statute (A.R.S. § 33-1811) applies specifically to decisions involving compensation.

Detailed Answer

The ALJ interpreted A.R.S. § 33-1811 narrowly. While acknowledging that abstaining from voting on one's own request is 'best practice,' the Judge determined that the phrase 'contract, decision or other action for compensation' implies that the decision must involve compensation to trigger the statutory violation. Since the architectural approval was not for compensation, the statute was not violated.

Alj Quote

However, the word “other” would indicate that the contract or decision would involve compensation. … Therefore, the Tribunal finds that Mr. Smith has not sustained his burden in demonstrating that Mountain Bridge violated A.R.S. § 33-1811.

Legal Basis

A.R.S. § 33-1811

Topic Tags

  • Conflict of Interest
  • Board Conduct
  • Architectural Review

Question

If the CC&Rs require the HOA to negotiate a dispute within a certain time, can they simply ignore it?

Short Answer

No. Ignoring a request for negotiation beyond the mandated timeframe can be considered a violation of the duty to negotiate in good faith.

Detailed Answer

In this case, the CC&Rs required the parties to make a reasonable effort to meet and confer. The HOA failed to communicate with the homeowner until 35 days after the claim was noticed (past the 30-day negotiation period). The ALJ found this lack of communication to be a violation of the specific CC&R article requiring good faith negotiation.

Alj Quote

The credible evidence presented demonstrated that Mountain Bridge, or its attorneys, did not communicate with Mr. Smith until October 13, 2020, approximately 35 days after the claim was noticed. … Therefore, the Tribunal finds that Mountain Bridge failed to negotiate in good faith and violated Article 11.3.2 of the CC&R’s.

Legal Basis

CC&R Article 11.3.2

Topic Tags

  • Dispute Resolution
  • Good Faith
  • HOA Obligations

Question

Can the HOA use the COVID-19 pandemic as a valid excuse for failing to communicate with me?

Short Answer

Not if they fail to send any updates. The HOA must at least inform the homeowner of potential delays.

Detailed Answer

The ALJ rejected the HOA's implicit defense that the pandemic justified the delay in communication. The ruling stated that even if the pandemic caused issues, the HOA had an obligation to at least inform the homeowner that delays were occurring. Total silence was not justified.

Alj Quote

While this dispute occurred during the COVID-19 pandemic, certainly communications could have been sent to Mr. Smith informing him there may be some delays in communication. However, there were none, and thus no valid justification for the Board not entering into negotiations with the Smiths.

Legal Basis

Administrative Discretion / Good Faith

Topic Tags

  • Communication
  • Delays
  • Good Faith

Question

Who is responsible for proving that the HOA violated the rules during a hearing?

Short Answer

The homeowner (Petitioner) bears the burden of proof.

Detailed Answer

The homeowner must prove their case by a 'preponderance of the evidence,' meaning they must show it is more likely than not that the violation occurred. The HOA does not have to disprove the claim initially; the burden starts with the homeowner.

Alj Quote

Petitioner bears the burden of proof to establish that Respondent violated CC&R § 3.1 by a preponderance of the evidence.

Legal Basis

A.R.S. § 41-1092.07(G)(2); A.A.C. R2-19-119(A)

Topic Tags

  • Legal Procedure
  • Burden of Proof
  • Evidence

Question

Can I claim the HOA violated a definition in the CC&Rs, such as 'Visible from Neighboring Property'?

Short Answer

No. You cannot violate a definition; you can only violate the rules that use the definition.

Detailed Answer

The homeowner argued the HOA violated the definition of 'Visible from Neighboring Property.' The ALJ ruled that a definition is descriptive and cannot be violated in and of itself. Violations must be tied to specific covenants or restrictions.

Alj Quote

Further, because “Visible from Neighboring Property” as mentioned in Article 1 is a definition, it is impossible for Mountain Bridge to violate the same.

Legal Basis

Contract Interpretation

Topic Tags

  • CC&R Interpretation
  • Definitions
  • Legal Standards

Question

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

Short Answer

Yes, if you prevail on a claim, the ALJ can order the HOA to reimburse your filing fee.

Detailed Answer

The ALJ deemed the homeowner the prevailing party regarding the 'failure to negotiate' claim (even though other claims were denied) and ordered the HOA to reimburse the $500.00 filing fee within 30 days.

Alj Quote

Thus, Petitioner is entitled to his filing fee of $500.00 and Respondent must reimburse the same with 30 days.

Legal Basis

Administrative Remedy

Topic Tags

  • Remedies
  • Fees
  • Reimbursement

Case

Docket No
21F-H2121037-REL
Case Title
Gregory L. Smith vs. Mountain Bridge Community Association
Decision Date
2021-06-11
Alj Name
Adam D. Stone
Tribunal
OAH
Agency
ADRE

Questions

Question

Does a board member violate conflict of interest laws by voting on their own architectural request if no money is exchanged?

Short Answer

Likely not. The ALJ ruled that the conflict of interest statute (A.R.S. § 33-1811) applies specifically to decisions involving compensation.

Detailed Answer

The ALJ interpreted A.R.S. § 33-1811 narrowly. While acknowledging that abstaining from voting on one's own request is 'best practice,' the Judge determined that the phrase 'contract, decision or other action for compensation' implies that the decision must involve compensation to trigger the statutory violation. Since the architectural approval was not for compensation, the statute was not violated.

Alj Quote

However, the word “other” would indicate that the contract or decision would involve compensation. … Therefore, the Tribunal finds that Mr. Smith has not sustained his burden in demonstrating that Mountain Bridge violated A.R.S. § 33-1811.

Legal Basis

A.R.S. § 33-1811

Topic Tags

  • Conflict of Interest
  • Board Conduct
  • Architectural Review

Question

If the CC&Rs require the HOA to negotiate a dispute within a certain time, can they simply ignore it?

Short Answer

No. Ignoring a request for negotiation beyond the mandated timeframe can be considered a violation of the duty to negotiate in good faith.

Detailed Answer

In this case, the CC&Rs required the parties to make a reasonable effort to meet and confer. The HOA failed to communicate with the homeowner until 35 days after the claim was noticed (past the 30-day negotiation period). The ALJ found this lack of communication to be a violation of the specific CC&R article requiring good faith negotiation.

Alj Quote

The credible evidence presented demonstrated that Mountain Bridge, or its attorneys, did not communicate with Mr. Smith until October 13, 2020, approximately 35 days after the claim was noticed. … Therefore, the Tribunal finds that Mountain Bridge failed to negotiate in good faith and violated Article 11.3.2 of the CC&R’s.

Legal Basis

CC&R Article 11.3.2

Topic Tags

  • Dispute Resolution
  • Good Faith
  • HOA Obligations

Question

Can the HOA use the COVID-19 pandemic as a valid excuse for failing to communicate with me?

Short Answer

Not if they fail to send any updates. The HOA must at least inform the homeowner of potential delays.

Detailed Answer

The ALJ rejected the HOA's implicit defense that the pandemic justified the delay in communication. The ruling stated that even if the pandemic caused issues, the HOA had an obligation to at least inform the homeowner that delays were occurring. Total silence was not justified.

Alj Quote

While this dispute occurred during the COVID-19 pandemic, certainly communications could have been sent to Mr. Smith informing him there may be some delays in communication. However, there were none, and thus no valid justification for the Board not entering into negotiations with the Smiths.

Legal Basis

Administrative Discretion / Good Faith

Topic Tags

  • Communication
  • Delays
  • Good Faith

Question

Who is responsible for proving that the HOA violated the rules during a hearing?

Short Answer

The homeowner (Petitioner) bears the burden of proof.

Detailed Answer

The homeowner must prove their case by a 'preponderance of the evidence,' meaning they must show it is more likely than not that the violation occurred. The HOA does not have to disprove the claim initially; the burden starts with the homeowner.

Alj Quote

Petitioner bears the burden of proof to establish that Respondent violated CC&R § 3.1 by a preponderance of the evidence.

Legal Basis

A.R.S. § 41-1092.07(G)(2); A.A.C. R2-19-119(A)

Topic Tags

  • Legal Procedure
  • Burden of Proof
  • Evidence

Question

Can I claim the HOA violated a definition in the CC&Rs, such as 'Visible from Neighboring Property'?

Short Answer

No. You cannot violate a definition; you can only violate the rules that use the definition.

Detailed Answer

The homeowner argued the HOA violated the definition of 'Visible from Neighboring Property.' The ALJ ruled that a definition is descriptive and cannot be violated in and of itself. Violations must be tied to specific covenants or restrictions.

Alj Quote

Further, because “Visible from Neighboring Property” as mentioned in Article 1 is a definition, it is impossible for Mountain Bridge to violate the same.

Legal Basis

Contract Interpretation

Topic Tags

  • CC&R Interpretation
  • Definitions
  • Legal Standards

Question

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

Short Answer

Yes, if you prevail on a claim, the ALJ can order the HOA to reimburse your filing fee.

Detailed Answer

The ALJ deemed the homeowner the prevailing party regarding the 'failure to negotiate' claim (even though other claims were denied) and ordered the HOA to reimburse the $500.00 filing fee within 30 days.

Alj Quote

Thus, Petitioner is entitled to his filing fee of $500.00 and Respondent must reimburse the same with 30 days.

Legal Basis

Administrative Remedy

Topic Tags

  • Remedies
  • Fees
  • Reimbursement

Case

Docket No
21F-H2121037-REL
Case Title
Gregory L. Smith vs. Mountain Bridge Community Association
Decision Date
2021-06-11
Alj Name
Adam D. Stone
Tribunal
OAH
Agency
ADRE

Case Participants

Petitioner Side

  • Gregory L. Smith (petitioner)
    Appeared on his own behalf
  • Christa Smith (witness)
    Called by Petitioner

Respondent Side

  • Nicole Payne (HOA attorney)
    Carpenter Hazlewood
    Appeared on behalf of Respondent
  • Amber Martin (community manager)
    Mountain Bridge Community Association
    Also testified as a witness
  • Jim Rayment (ARC Chair)
    Mountain Bridge Community Association
    Approved the flagpole; also testified as a witness
  • Mr. Riggs (HOA President)
    Mountain Bridge Community Association
    Petitioner's backyard neighbor

Neutral Parties

  • Adam D. Stone (ALJ)
    OAH
    Administrative Law Judge
  • Judy Lowe (Commissioner)
    Arizona Department of Real Estate
    Recipient of decision transmission

Rick & Lisa Holly v. La Barranca II Homeowners Association

Posted on by

Case Summary

Case ID 20F-H2019020-REL
Agency ADRE
Tribunal OAH
Decision Date 2020-02-14
Administrative Law Judge Diane Mihalsky
Outcome loss
Filing Fees Refunded $0.00
Civil Penalties $0.00

Parties & Counsel

Petitioner Rick and Lisa Holly Counsel Kevin P. Nelson, Esq.
Respondent La Barranca II Homeowners Association Counsel Edward D. O’Brien, Esq.

Alleged Violations

A.R.S. § 33-1817(B); CC&R Article 11.2.5
A.R.S. § 33-1811; CC&R Article 4.7
A.R.S. § 33-1803; CC&Rs Articles 11.3 and 12

Outcome Summary

The Administrative Law Judge dismissed the petition, finding that the Petitioners failed to establish by a preponderance of the evidence that the Respondent Homeowners Association violated A.R.S. §§ 33-1803, 33-1811, or 33-1817, or any of the cited CC&R provisions concerning intentional construction delay, conflict of interest, or retaliatory fines.

Why this result: Petitioners failed to meet the burden of proof (preponderance of the evidence) on all three issues alleged in the petition.

Key Issues & Findings

Intentional delay of construction

Petitioners alleged that Respondent intentionally delayed the approval and construction of their new home for over eleven months.

Orders: Petition dismissed.

Filing fee: $0.00, Fee refunded: No

Disposition: petitioner_loss

Cited:

  • A.R.S. § 33-1817(B)
  • CC&R Article 11.2.5

Conflict of interest

Petitioners alleged that a Board Vice President and Secretary (who owned lots adjacent to Petitioners') were blocking approval of the home due to a conflict of interest.

Orders: Petition dismissed.

Filing fee: $0.00, Fee refunded: No

Disposition: petitioner_loss

Cited:

  • A.R.S. § 33-1811
  • CC&R Article 4.7

Retaliatory fines

Petitioners alleged fear of prospective retaliatory imposition of fines.

Orders: Petition dismissed.

Filing fee: $0.00, Fee refunded: No

Disposition: petitioner_loss

Cited:

  • A.R.S. § 33-1803(B)
  • CC&R Article 11.3
  • CC&R Article 12

Analytics Highlights

Topics: HOA, Planned Communities Act, Architectural Review Committee (ARC), Construction Delay, Conflict of Interest, Retaliatory Fines
Additional Citations:

  • A.R.S. § 33-1803
  • A.R.S. § 33-1803(B)
  • A.R.S. § 33-1811
  • A.R.S. § 33-1817
  • A.R.S. § 33-1817(B)
  • A.R.S. § 32-2199(B)
  • A.R.S. § 41-1092.07(G)(2)
  • A.A.C. R2-19-119(A)
  • A.A.C. R2-19-119(B)(1)
  • A.A.C. R2-19-119(B)(2)
  • CC&R Article 4.7
  • CC&R Article 11.2.5
  • CC&R Article 11.3
  • CC&R Article 12

Video Overview

Audio Overview

Decision Documents

20F-H2019020-REL Decision – 769746.pdf

Uploaded 2026-01-23T17:30:42 (191.2 KB)

Questions

Question

Does a board member have a conflict of interest just because they own a lot next to mine?

Short Answer

No. Owning a neighboring lot does not automatically create a conflict of interest or imply bias.

Detailed Answer

The ALJ reasoned that in planned communities, especially smaller ones, board and committee members will inevitably have to regulate their neighbors. Without evidence of actual animus or discriminatory intent, simply owning a contiguous lot is not a conflict of interest that prevents a member from voting on architectural plans.

Alj Quote

In any homeowners’ association, but especially In a small development having only 71 lots, the persons who volunteer to serve on homeowners’ associations’ boards and ARCs will necessarily be regulating their neighbors.

Legal Basis

A.R.S. § 33-1811

Topic Tags

  • Conflict of Interest
  • Board of Directors
  • Neighbors

Question

Is the Architectural Review Committee (ARC) required to help me design my home to meet the guidelines?

Short Answer

No. The ARC's role is to review submitted plans for compliance, not to assist in the design process.

Detailed Answer

While an ARC might offer guidance, the decision clarifies that their official duty is strictly to review plans against the governing documents. They are not obligated to help owners or builders design compliant structures.

Alj Quote

It is not ARC’s job to help an owner design a home that complies with Respondent’s Guidelines, only to review plans that are submitted for compliance.

Legal Basis

CC&Rs Article 11

Topic Tags

  • Architectural Review
  • Design Guidelines
  • HOA Obligations

Question

Can I file a complaint against my HOA because I am afraid they might fine me in the future?

Short Answer

No. You cannot base a legal complaint on the speculation of future retaliatory fines.

Detailed Answer

The Administrative Law Judge ruled that a petition cannot rely on fear of potential future actions. Unless the HOA has actually assessed a fine or penalty, a claim regarding retaliatory fines is considered speculative and will be dismissed.

Alj Quote

Any prospective prohibition on fines would be based on nothing but speculation. . . . Petitioners have not established that Respondent violated A.R.S. § 33-1803(B) or Articles 11.3 or 12 by assessing retaliatory fines or penalties against Petitioners.

Legal Basis

A.R.S. § 33-1803(B)

Topic Tags

  • Fines
  • Retaliation
  • Dispute Resolution

Question

Who has to prove that the HOA violated the rules in a hearing?

Short Answer

The homeowner (Petitioner) bears the burden of proof.

Detailed Answer

In an administrative hearing, the homeowner filing the petition must prove that the HOA violated the statutes or CC&Rs. The standard of proof is a 'preponderance of the evidence,' meaning the homeowner must show it is more likely than not that the violation occurred.

Alj Quote

Petitioners bear the burden of proof to establish that Respondent violated the Act or Respondent’s CC&Rs by a preponderance of the evidence.

Legal Basis

A.R.S. § 41-1092.07(G)(2)

Topic Tags

  • Legal Standards
  • Burden of Proof
  • Hearings

Question

Is the HOA responsible for delays if my builder doesn't understand the design guidelines?

Short Answer

No. The HOA is not liable for delays caused by a builder's failure to submit compliant plans.

Detailed Answer

If an HOA's architectural committee is reasonably responsive to submissions, they are not at fault for construction delays resulting from a contractor's misunderstanding of the design rules or failure to meet requirements.

Alj Quote

On this record, it appears that Hoamco and the ARC were reasonably responsive . . . and that any delay in construction appears more likely based on Brilar principal’s imperfect understanding of the Guidelines’ requirements.

Legal Basis

A.R.S. § 33-1817(B)

Topic Tags

  • Architectural Review
  • Construction Delays
  • Vendor Issues

Question

Can I rely on my contractor's timeline estimates for when the HOA will approve my plans?

Short Answer

No. You should rely on the timelines specified in the CC&Rs and statutes, not third-party estimates.

Detailed Answer

The ALJ noted that a homeowner's expectations based on their builder's estimates are not binding on the HOA. The official governing documents determine the procedural timeline, and reliance on outside estimates does not constitute a violation by the HOA.

Alj Quote

Mrs. Holly candidly testified that Petiitoners’ expectations about how long it would take to build their house was based on Brilar’s principles’ estimates, not anything in statutes or Respondent’s CC&Rs . . .

Legal Basis

N/A

Topic Tags

  • Timelines
  • Construction
  • Expectations

Question

Can the HOA charge a fee for reviewing architectural plans?

Short Answer

Yes, if the CC&Rs allow for it.

Detailed Answer

The decision affirms that CC&Rs can grant the Architectural Review Committee the power to assess reasonable fees in connection with the review of plans.

Alj Quote

Article 11.3 of Respondent’s CC&Rs concerns general provisions for the ARC, including that it may assess reasonable fees in connection with its review of plans . . .

Legal Basis

CC&Rs Article 11.3

Topic Tags

  • Fees
  • Architectural Review
  • CC&Rs

Case

Docket No
20F-H2019020-REL
Case Title
Rick and Lisa Holly vs. La Barranca II Homeowners Association
Decision Date
2020-02-14
Alj Name
Diane Mihalsky
Tribunal
OAH
Agency
ADRE

Questions

Question

Does a board member have a conflict of interest just because they own a lot next to mine?

Short Answer

No. Owning a neighboring lot does not automatically create a conflict of interest or imply bias.

Detailed Answer

The ALJ reasoned that in planned communities, especially smaller ones, board and committee members will inevitably have to regulate their neighbors. Without evidence of actual animus or discriminatory intent, simply owning a contiguous lot is not a conflict of interest that prevents a member from voting on architectural plans.

Alj Quote

In any homeowners’ association, but especially In a small development having only 71 lots, the persons who volunteer to serve on homeowners’ associations’ boards and ARCs will necessarily be regulating their neighbors.

Legal Basis

A.R.S. § 33-1811

Topic Tags

  • Conflict of Interest
  • Board of Directors
  • Neighbors

Question

Is the Architectural Review Committee (ARC) required to help me design my home to meet the guidelines?

Short Answer

No. The ARC's role is to review submitted plans for compliance, not to assist in the design process.

Detailed Answer

While an ARC might offer guidance, the decision clarifies that their official duty is strictly to review plans against the governing documents. They are not obligated to help owners or builders design compliant structures.

Alj Quote

It is not ARC’s job to help an owner design a home that complies with Respondent’s Guidelines, only to review plans that are submitted for compliance.

Legal Basis

CC&Rs Article 11

Topic Tags

  • Architectural Review
  • Design Guidelines
  • HOA Obligations

Question

Can I file a complaint against my HOA because I am afraid they might fine me in the future?

Short Answer

No. You cannot base a legal complaint on the speculation of future retaliatory fines.

Detailed Answer

The Administrative Law Judge ruled that a petition cannot rely on fear of potential future actions. Unless the HOA has actually assessed a fine or penalty, a claim regarding retaliatory fines is considered speculative and will be dismissed.

Alj Quote

Any prospective prohibition on fines would be based on nothing but speculation. . . . Petitioners have not established that Respondent violated A.R.S. § 33-1803(B) or Articles 11.3 or 12 by assessing retaliatory fines or penalties against Petitioners.

Legal Basis

A.R.S. § 33-1803(B)

Topic Tags

  • Fines
  • Retaliation
  • Dispute Resolution

Question

Who has to prove that the HOA violated the rules in a hearing?

Short Answer

The homeowner (Petitioner) bears the burden of proof.

Detailed Answer

In an administrative hearing, the homeowner filing the petition must prove that the HOA violated the statutes or CC&Rs. The standard of proof is a 'preponderance of the evidence,' meaning the homeowner must show it is more likely than not that the violation occurred.

Alj Quote

Petitioners bear the burden of proof to establish that Respondent violated the Act or Respondent’s CC&Rs by a preponderance of the evidence.

Legal Basis

A.R.S. § 41-1092.07(G)(2)

Topic Tags

  • Legal Standards
  • Burden of Proof
  • Hearings

Question

Is the HOA responsible for delays if my builder doesn't understand the design guidelines?

Short Answer

No. The HOA is not liable for delays caused by a builder's failure to submit compliant plans.

Detailed Answer

If an HOA's architectural committee is reasonably responsive to submissions, they are not at fault for construction delays resulting from a contractor's misunderstanding of the design rules or failure to meet requirements.

Alj Quote

On this record, it appears that Hoamco and the ARC were reasonably responsive . . . and that any delay in construction appears more likely based on Brilar principal’s imperfect understanding of the Guidelines’ requirements.

Legal Basis

A.R.S. § 33-1817(B)

Topic Tags

  • Architectural Review
  • Construction Delays
  • Vendor Issues

Question

Can I rely on my contractor's timeline estimates for when the HOA will approve my plans?

Short Answer

No. You should rely on the timelines specified in the CC&Rs and statutes, not third-party estimates.

Detailed Answer

The ALJ noted that a homeowner's expectations based on their builder's estimates are not binding on the HOA. The official governing documents determine the procedural timeline, and reliance on outside estimates does not constitute a violation by the HOA.

Alj Quote

Mrs. Holly candidly testified that Petiitoners’ expectations about how long it would take to build their house was based on Brilar’s principles’ estimates, not anything in statutes or Respondent’s CC&Rs . . .

Legal Basis

N/A

Topic Tags

  • Timelines
  • Construction
  • Expectations

Question

Can the HOA charge a fee for reviewing architectural plans?

Short Answer

Yes, if the CC&Rs allow for it.

Detailed Answer

The decision affirms that CC&Rs can grant the Architectural Review Committee the power to assess reasonable fees in connection with the review of plans.

Alj Quote

Article 11.3 of Respondent’s CC&Rs concerns general provisions for the ARC, including that it may assess reasonable fees in connection with its review of plans . . .

Legal Basis

CC&Rs Article 11.3

Topic Tags

  • Fees
  • Architectural Review
  • CC&Rs

Case

Docket No
20F-H2019020-REL
Case Title
Rick and Lisa Holly vs. La Barranca II Homeowners Association
Decision Date
2020-02-14
Alj Name
Diane Mihalsky
Tribunal
OAH
Agency
ADRE

Case Participants

Petitioner Side

  • Rick Holly (petitioner)
    La Barranca II Homeowners Association Member
  • Lisa Holly (petitioner)
    La Barranca II Homeowners Association Member
    Also referred to as Mrs. Holly
  • Kevin P. Nelson (petitioner attorney)
    Tiffany & Bosco
  • Brian Bracken (witness/contractor's principal)
    Brilar Homes, LLC
    Petitioners' general contractor
  • Larry E. Smith (witness/contractor's principal)
    Brilar Homes, LLC
    Petitioners' general contractor

Respondent Side

  • La Barranca II Homeowners Association (respondent)
    HOA party
  • Edward D. O’Brien (HOA attorney)
    Carpenter, Hazlewood, Delgado & Bolen, LLP
  • Alexia Firehawk (HOA attorney)
    Carpenter, Hazlewood, Delgado & Bolen, LLP
  • William Bohan (HOA board member/ARC member/witness)
    La Barranca II Homeowners Association
    Board Vice President
  • Nancy Williams (HOA board member/ARC member)
    La Barranca II Homeowners Association
    Board Secretary
  • Luke Hyde (property manager staff)
    Hoamco
    Architectural Department Manager
  • Josh Hall (property manager staff)
    Hoamco
    Architectural Department Staff
  • Neil True (architect consultant)
    Hoamco/ARC Consultant
    Consultant architect reviewing plans

Neutral Parties

  • Diane Mihalsky (ALJ)
    OAH
  • John Davis (fire marshall)
    Sedona District Fire Marshall
    Consulted by HOA regarding dumpster placement
  • Judy Lowe (ADRE Commissioner)
    Arizona Department of Real Estate

Rick & Lisa Holly v. La Barranca II Homeowners Association

Posted on by

Case Summary

Case ID 20F-H2019020-REL
Agency ADRE
Tribunal OAH
Decision Date 2020-02-14
Administrative Law Judge Diane Mihalsky
Outcome loss
Filing Fees Refunded $0.00
Civil Penalties $0.00

Parties & Counsel

Petitioner Rick and Lisa Holly Counsel Kevin P. Nelson, Esq.
Respondent La Barranca II Homeowners Association Counsel Edward D. O’Brien, Esq.

Alleged Violations

A.R.S. § 33-1817(B); CC&R Article 11.2.5
A.R.S. § 33-1811; CC&R Article 4.7
A.R.S. § 33-1803; CC&Rs Articles 11.3 and 12

Outcome Summary

The Administrative Law Judge dismissed the petition, finding that the Petitioners failed to establish by a preponderance of the evidence that the Respondent Homeowners Association violated A.R.S. §§ 33-1803, 33-1811, or 33-1817, or any of the cited CC&R provisions concerning intentional construction delay, conflict of interest, or retaliatory fines.

Why this result: Petitioners failed to meet the burden of proof (preponderance of the evidence) on all three issues alleged in the petition.

Key Issues & Findings

Intentional delay of construction

Petitioners alleged that Respondent intentionally delayed the approval and construction of their new home for over eleven months.

Orders: Petition dismissed.

Filing fee: $0.00, Fee refunded: No

Disposition: petitioner_loss

Cited:

  • A.R.S. § 33-1817(B)
  • CC&R Article 11.2.5

Conflict of interest

Petitioners alleged that a Board Vice President and Secretary (who owned lots adjacent to Petitioners') were blocking approval of the home due to a conflict of interest.

Orders: Petition dismissed.

Filing fee: $0.00, Fee refunded: No

Disposition: petitioner_loss

Cited:

  • A.R.S. § 33-1811
  • CC&R Article 4.7

Retaliatory fines

Petitioners alleged fear of prospective retaliatory imposition of fines.

Orders: Petition dismissed.

Filing fee: $0.00, Fee refunded: No

Disposition: petitioner_loss

Cited:

  • A.R.S. § 33-1803(B)
  • CC&R Article 11.3
  • CC&R Article 12

Analytics Highlights

Topics: HOA, Planned Communities Act, Architectural Review Committee (ARC), Construction Delay, Conflict of Interest, Retaliatory Fines
Additional Citations:

  • A.R.S. § 33-1803
  • A.R.S. § 33-1803(B)
  • A.R.S. § 33-1811
  • A.R.S. § 33-1817
  • A.R.S. § 33-1817(B)
  • A.R.S. § 32-2199(B)
  • A.R.S. § 41-1092.07(G)(2)
  • A.A.C. R2-19-119(A)
  • A.A.C. R2-19-119(B)(1)
  • A.A.C. R2-19-119(B)(2)
  • CC&R Article 4.7
  • CC&R Article 11.2.5
  • CC&R Article 11.3
  • CC&R Article 12

Video Overview

Audio Overview

Decision Documents

20F-H2019020-REL Decision – 769746.pdf

Uploaded 2025-10-09T03:34:41 (191.2 KB)





Briefing Doc – 20F-H2019020-REL


{
“case”: {
“docket_no”: “20F-H2019020-REL”,
“case_title”: “Rick and Lisa Holly, Petitioners, vs. La Barranca II Homeowners Association, Respondent.”,
“decision_date”: “February 14, 2020”,
“tribunal”: “OAH”,
“agency”: “ADRE”
},
“individuals”: [
{
“name”: “Rick Holly”,
“role”: “petitioner”,
“side”: “petitioner”,
“affiliation”: “La Barranca II Homeowners Association Member”,
“notes”: null
},
{
“name”: “Lisa Holly”,
“role”: “petitioner”,
“side”: “petitioner”,
“affiliation”: “La Barranca II Homeowners Association Member”,
“notes”: “Also referred to as Mrs. Holly”
},
{
“name”: “La Barranca II Homeowners Association”,
“role”: “respondent”,
“side”: “respondent”,
“affiliation”: null,
“notes”: “HOA party”
},
{
“name”: “Kevin P. Nelson”,
“role”: “petitioner attorney”,
“side”: “petitioner”,
“affiliation”: “Tiffany & Bosco”,
“notes”: null
},
{
“name”: “Edward D. O\u2019Brien”,
“role”: “HOA attorney”,
“side”: “respondent”,
“affiliation”: “Carpenter, Hazlewood, Delgado & Bolen, LLP”,
“notes”: null
},
{
“name”: “Alexia Firehawk”,
“role”: “HOA attorney”,
“side”: “respondent”,
“affiliation”: “Carpenter, Hazlewood, Delgado & Bolen, LLP”,
“notes”: null
},
{
“name”: “Diane Mihalsky”,
“role”: “ALJ”,
“side”: “neutral”,
“affiliation”: “OAH”,
“notes”: null
},
{
“name”: “William Bohan”,
“role”: “HOA board member/ARC member/witness”,
“side”: “respondent”,
“affiliation”: “La Barranca II Homeowners Association”,
“notes”: “Board Vice President”
},
{
“name”: “Nancy Williams”,
“role”: “HOA board member/ARC member”,
“side”: “respondent”,
“affiliation”: “La Barranca II Homeowners Association”,
“notes”: “Board Secretary”
},
{
“name”: “Brian Bracken”,
“role”: “witness/contractor’s principal”,
“side”: “petitioner”,
“affiliation”: “Brilar Homes, LLC”,
“notes”: “Petitioners’ general contractor”
},
{
“name”: “Larry E. Smith”,
“role”: “witness/contractor’s principal”,
“side”: “petitioner”,
“affiliation”: “Brilar Homes, LLC”,
“notes”: “Petitioners’ general contractor”
},
{
“name”: “Luke Hyde”,
“role”: “property manager staff”,
“side”: “respondent”,
“affiliation”: “Hoamco”,
“notes”: “Architectural Department Manager”
},
{
“name”: “Josh Hall”,
“role”: “property manager staff”,
“side”: “respondent”,
“affiliation”: “Hoamco”,
“notes”: “Architectural Department Staff”
},
{
“name”: “Neil True”,
“role”: “architect consultant”,
“side”: “respondent”,
“affiliation”: “Hoamco/ARC Consultant”,
“notes”: “Consultant architect reviewing plans”
},
{
“name”: “John Davis”,
“role”: “fire marshall”,
“side”: “neutral”,
“affiliation”: “Sedona District Fire Marshall”,
“notes”: “Consulted by HOA regarding dumpster placement”
},
{
“name”: “Judy Lowe”,
“role”: “ADRE Commissioner”,
“side”: “neutral”,
“affiliation”: “Arizona Department of Real Estate”,
“notes”: null
}
]
}


Case Participants

Petitioner Side

  • Rick Holly (petitioner)
    La Barranca II Homeowners Association Member
  • Lisa Holly (petitioner)
    La Barranca II Homeowners Association Member
    Also referred to as Mrs. Holly
  • Kevin P. Nelson (petitioner attorney)
    Tiffany & Bosco
  • Brian Bracken (witness/contractor's principal)
    Brilar Homes, LLC
    Petitioners' general contractor
  • Larry E. Smith (witness/contractor's principal)
    Brilar Homes, LLC
    Petitioners' general contractor

Respondent Side

  • La Barranca II Homeowners Association (respondent)
    HOA party
  • Edward D. O’Brien (HOA attorney)
    Carpenter, Hazlewood, Delgado & Bolen, LLP
  • Alexia Firehawk (HOA attorney)
    Carpenter, Hazlewood, Delgado & Bolen, LLP
  • William Bohan (HOA board member/ARC member/witness)
    La Barranca II Homeowners Association
    Board Vice President
  • Nancy Williams (HOA board member/ARC member)
    La Barranca II Homeowners Association
    Board Secretary
  • Luke Hyde (property manager staff)
    Hoamco
    Architectural Department Manager
  • Josh Hall (property manager staff)
    Hoamco
    Architectural Department Staff
  • Neil True (architect consultant)
    Hoamco/ARC Consultant
    Consultant architect reviewing plans

Neutral Parties

  • Diane Mihalsky (ALJ)
    OAH
  • John Davis (fire marshall)
    Sedona District Fire Marshall
    Consulted by HOA regarding dumpster placement
  • Judy Lowe (ADRE Commissioner)
    Arizona Department of Real Estate

Mark Virden vs. Lakeside Ski Village HOA

Posted on by

Case Summary

Case ID 17F-H1717027-REL
Agency ADRE
Tribunal OAH
Decision Date 2017-06-27
Administrative Law Judge Tammy L. Eigenheer
Outcome loss
Filing Fees Refunded $500.00
Civil Penalties $0.00

Parties & Counsel

Petitioner Mark Virden Counsel —
Respondent Lakeside Ski Village HOA Counsel Stewart F. Salwin

Alleged Violations

A.R.S. § 33-1811

Outcome Summary

The petition was denied because the Tribunal found that the HOA's Architectural Committee had the authority to approve the internet tower under the governing documents (CC&Rs) without requiring ratification or disclosure of potential conflicts to the members acting as the board, thus avoiding a violation of A.R.S. § 33-1811 in this instance.

Why this result: The decision to approve the tower was made by the Architectural Committee, which had independent authority under the CC&Rs. Therefore, the requirements of A.R.S. § 33-1811 regarding disclosure of compensation to the members acting as the board were found not to apply to the Committee's action.

Key Issues & Findings

Board of Directors, Contracts, and Conflicts

Petitioner alleged that the HOA violated A.R.S. § 33-1811 when it allowed the construction of an internet service tower after a board member's spouse paid the upfront fee in exchange for permanent free service (compensation). Petitioner argued this compensation required disclosure in an open meeting of the board before approval, which did not occur.

Orders: Petitioner's petition is denied.

Filing fee: $500.00, Fee refunded: No

Disposition: respondent_win

Cited:

  • A.R.S. § 33-1811
  • A.R.S. § 32-2199 et seq.
  • A.A.C. R2-19-119
  • A.R.S. § 33-1804

Analytics Highlights

Topics: conflict_of_interest, architectural_committee, board_authority, internet_tower, compensation, CC&Rs
Additional Citations:

  • A.R.S. § 33-1811
  • A.R.S. § 32-2199 et seq.
  • A.A.C. R2-19-119
  • A.R.S. § 33-1804

Video Overview

Audio Overview

Decision Documents

17F-H1717027-REL Decision – 571928.pdf

Uploaded 2026-01-23T17:19:48 (82.2 KB)

17F-H1717027-REL Decision – 575046.pdf

Uploaded 2026-01-23T17:19:52 (736.4 KB)





Briefing Doc – 17F-H1717027-REL


Briefing: Virden v. Lakeside Ski Village HOA (Case No. 17F-H1717027-REL)

Executive Summary

This briefing document outlines the legal dispute between homeowner Mark Virden (Petitioner) and the Lakeside Ski Village Homeowners Association (Respondent) concerning the construction of an internet service tower on HOA common property. The Petitioner alleged a violation of Arizona’s conflict of interest statute (A.R.S. § 33-1811), asserting that HOA officials received undisclosed compensation—lifelong free internet service—in exchange for approving the tower.

The case culminated in a definitive ruling against the Petitioner. An Administrative Law Judge (ALJ) denied the petition, a decision that was subsequently adopted and finalized by the Commissioner of the Arizona Department of Real Estate. The core of the ruling rested on the HOA’s unique governance structure. The decision to approve the tower was made not by the general “board of directors” (in this HOA, the members act as the board), but by the Architectural Committee, which was vested with independent authority to do so by the HOA’s governing documents (CC&Rs). Consequently, the ALJ concluded that the state law requiring conflict of interest disclosures before the board was not applicable to the committee’s action, rendering the Petitioner’s central argument invalid. The approval of the tower was deemed proper under the HOA’s governing rules.

Case Overview

Entity

Name / Description

Case Number

17F-H1717027-REL

Petitioner

Mark Virden

Respondent

Lakeside Ski Village HOA

Presiding ALJ

Tammy L. Eigenheer

Adjudicating Body

Arizona Office of Administrative Hearings

Final Authority

Commissioner, Arizona Department of Real Estate

Timeline of Key Events

• Circa 2017: The internet company AireBeam approached the HOA to install a service tower but did not secure enough subscribers to fund the project.

• Circa 2017: Lou Talarico, husband of an Architectural Committee member, offered to pay the tower’s upfront cost in exchange for free service for himself and HOA Vice President Carl Rygg. The Architectural Committee subsequently approved construction.

• March 23, 2017: Mark Virden filed a petition with the Arizona Department of Real Estate, alleging a conflict of interest violation.

• June 7, 2017: A hearing was held at the Office of Administrative Hearings.

• June 27, 2017: ALJ Tammy L. Eigenheer issued a decision denying the Petitioner’s petition.

• July 10, 2017: The Commissioner of the Department of Real Estate issued a Final Order adopting the ALJ’s decision.

Petitioner’s Allegations and Arguments

The petition filed by Mark Virden centered on a violation of A.R.S. § 33-1811, which governs contracts and conflicts of interest for HOA boards of directors.

Primary Allegation: Undisclosed Conflict of Interest

The Petitioner alleged that the HOA violated state law by failing to disclose a conflict of interest related to the tower’s approval.

• The Conflict: Susan Talarico, a licensed realtor serving on the Architectural Committee, had a conflict because her husband, Lou Talarico, paid an upfront fee to the tower company. In exchange for this payment, the Talaricos and HOA Vice President Carl Rygg were to receive free internet service for as long as the tower remained operational.

• The Alleged Violation: According to the petition, this arrangement constituted compensation that should have been formally declared in an open meeting before any action was taken, as required by law. The petition states: “This law states that if a member of the board is receiving compensation, and has not declared that conflict in advance, then any contract entered into in violation of this law is void and unenforceable!”

• Perceived Inadequate Compensation: The Petitioner claimed the value of the free service far exceeded the cash contribution, stating, “…their contribution would only pay the equivalent of about 1-2 years of service for the two households.”

• Lack of Transparency: The petition alleges a refusal by the involved board members to provide details of their arrangement. When asked about the compensation, the Vice President reportedly stated, “it’s none of your business.”

Secondary Argument

The Petitioner alternatively argued that the Architectural Committee exceeded its authority. Because the tower could provide service to individuals outside the HOA, it was not exclusively “for the benefit of all or portions” of the HOA, as stipulated by the governing documents.

Personal Grievance

The petition notes a direct personal impact on the Petitioner, stating that the tower was constructed within 150 feet of his front door and that he found it to be “a huge eye sore.”

Respondent’s Governance and Authority

The Lakeside Ski Village HOA’s defense rested on its specific governing documents and organizational structure, which were found to be central to the case’s outcome.

• Unconventional Board Structure: The HOA does not have a traditional, separate board of directors. Its Bylaws stipulate that “The affairs of the Association will be managed by the Members, who by the Association’s Articles of Organization are authorized to exercise all powers normally exercised by a board of directors.”

• Delegated Authority to Architectural Committee: The HOA’s Declaration of Covenants, Conditions, Restrictions and Easements (CC&Rs) grants specific and independent power to its Architectural Committee. The CC&Rs state: “The Architectural Committee may permit one or more aerial satellite dishes or satellite communication systems, and/or other apparatus and equipment for an antenna or cable system for the benefit of all or portions of the Project.”

This structure meant that the authority to approve the tower resided with the committee, not the general membership acting as a board.

Adjudication and Final Ruling

The dispute was adjudicated by the Office of Administrative Hearings, with the final decision adopted by the Department of Real Estate. The Petitioner’s claims were ultimately rejected.

Administrative Law Judge’s Decision

The ALJ’s decision, issued on June 27, 2017, denied the petition based on the following legal rationale:

• Architectural Committee’s Authority Was Dispositive: The ALJ found that the CC&Rs explicitly empowered the Architectural Committee to approve the communication tower. Crucially, the decision established that “Nothing in the CC&Rs requires that the Architectural Committee’s decision must be ratified by the members acting as a board.”

• Conflict of Interest Law Not Applicable: A.R.S. § 33-1811 applies to actions and decisions taken “by or on behalf of the board of directors.” Because the Architectural Committee acted under its own authority granted by the CC&Rs, its decision was not an action of the “board” as defined by the statute.

• Conclusion on Disclosure: The ALJ concluded that even if the free internet service was considered compensation (assuming arguendo), the arrangement “did not have to be disclosed to the members acting as a board.”

• Rejection of Secondary Argument: The ALJ dismissed the argument that the tower did not benefit the HOA, noting that the CC&R language “does not require that the satellite dish or other system may benefit exclusively all or portions of the HOA.”

The final conclusion of the tribunal was that “the Architectural Committee’s approval of the AireBeam tower was proper under Respondent’s governing documents.”

Final Order of the Department of Real Estate

On July 10, 2017, Judy Lowe, Commissioner of the Department of Real Estate, issued a Final Order that formally adopted the ALJ’s decision.

• Outcome: The Petitioner’s petition was officially denied.

• Binding Nature: The Order is binding on the parties and represents a final administrative action.

• Avenues for Appeal: The Order noted that a party may request a rehearing within 30 days for specific causes, such as procedural irregularity, newly discovered evidence, or an arbitrary or capricious decision. Furthermore, a party may appeal the final administrative decision by filing a complaint for judicial review.






Study Guide – 17F-H1717027-REL


Study Guide: Virden v. Lakeside Ski Village HOA

This guide provides a comprehensive review of the administrative case between Petitioner Mark Virden and Respondent Lakeside Ski Village HOA, concerning the construction of an internet service tower. It includes a quiz with an answer key to test factual recall, essay questions for deeper analysis, and a glossary of key terms found in the legal documents.

——————————————————————————–

Short-Answer Quiz

Instructions: Answer the following ten questions in 2-3 sentences each, based on the provided source documents.

1. Who were the primary parties involved in this case, and what was the central dispute?

2. What specific Arizona Revised Statute did the Petitioner allege was violated, and what does this statute govern?

3. Describe the unique governance structure of the Lakeside Ski Village HOA as noted in the hearing’s findings of fact.

4. What was the arrangement between AireBeam, Lou Talarico, and Carl Rygg that led to the construction of the internet tower?

5. According to the HOA’s governing documents (CC&Rs), what specific authority was granted to its Architectural Committee?

6. On what key legal basis did the Administrative Law Judge reject the Petitioner’s claim of a conflict of interest violation?

7. What was the Petitioner’s alternative argument regarding the tower not being for the “benefit of all or portions” of the HOA, and how did the Judge rule on it?

8. Define the “preponderance of the evidence” standard and identify which party had the burden of meeting this standard.

9. What was the final outcome of Mark Virden’s petition, as determined by the Administrative Law Judge and subsequently adopted?

10. After the Final Order was issued on July 10, 2017, what were the potential next steps for a party wishing to challenge the decision?

——————————————————————————–

Answer Key

1. The primary parties were Mark Virden (Petitioner) and the Lakeside Ski Village HOA (Respondent). The central dispute was Virden’s allegation that the HOA improperly allowed the construction of an internet service tower on common property due to an undisclosed conflict of interest involving board members.

2. The Petitioner alleged a violation of A.R.S. § 33-1811. This statute governs contracts and conflicts of interest for an HOA’s board of directors, requiring a board member to declare a conflict in an open meeting if a decision would benefit them or a close family member.

3. The Lakeside Ski Village HOA does not have a traditional board of directors. Instead, its Bylaws state that the affairs of the Association are managed directly by the members, who are authorized to exercise all powers normally held by a board.

4. After the HOA failed to secure enough subscribers for AireBeam to build the tower, Lou Talarico offered to pay the upfront cost. In exchange for his payment, AireBeam agreed to provide free internet service to Mr. Talarico and HOA Vice President Carl Rygg for as long as the tower was operational.

5. The HOA’s Declaration of Covenants, Conditions, Restrictions and Easements (CC&Rs) grants the Architectural Committee the authority to “permit one or more aerial satellite dishes or satellite communication systems, and/or other apparatus and equipment for an antenna or cable system for the benefit of all or portions of the Project.”

6. The Judge rejected the claim because the HOA’s CC&Rs empowered the Architectural Committee to approve the tower directly, without needing ratification from the members acting as a board. Therefore, the disclosure requirements of A.R.S. § 33-1811, which apply to actions taken “by or on behalf of the board of directors,” were not applicable to the Committee’s decision.

7. The Petitioner argued that because people outside the HOA could subscribe to the service, the tower was not for the “benefit of all or portions” of the HOA, meaning the Architectural Committee exceeded its authority. The Judge ruled that the language of the CC&Rs does not require that the system exclusively benefit the HOA.

8. “Preponderance of the evidence” is defined as evidence that is more convincing and shows that the fact sought to be proved is more probable than not. In this proceeding, the Petitioner, Mark Virden, bore the burden of proving his allegations by this standard.

9. The Administrative Law Judge ordered that the Petitioner’s petition be denied, concluding that the Architectural Committee’s approval of the tower was proper. This decision was adopted by the Commissioner of the Department of Real Estate, making it the Final Order.

10. A dissatisfied party could request a rehearing within thirty (30) days for specific causes, such as procedural irregularity, misconduct, or newly discovered evidence. Alternatively, a party could appeal the final administrative decision by filing a complaint for judicial review in court.

——————————————————————————–

Essay Questions

Instructions: The following questions are designed for longer, more analytical responses. Do not provide answers.

1. Analyze the central conflict between the requirements of A.R.S. § 33-1811, which governs board actions, and the specific powers granted to the Architectural Committee in the Lakeside Ski Village HOA’s CC&Rs. Explain in detail how this conflict, and its interpretation by the Judge, determined the outcome of the case.

2. Discuss the concept of “conflict of interest” as presented in the Petitioner’s complaint. Evaluate whether the actions of the Talaricos and Carl Rygg constituted a conflict of interest, and explain why the Administrative Law Judge’s decision did not ultimately hinge on this point, referencing the use of the term arguendo in the Conclusions of Law.

3. Explain the procedural journey of this case, from the initial petition filing on or about March 23, 2017, to the Final Order issued on July 10, 2017. Identify the key bodies and officials involved at each stage (e.g., Department of Real Estate, Office of Administrative Hearings, Administrative Law Judge, Commissioner).

4. The Petitioner’s complaint details his frustration with a perceived lack of transparency from board members regarding their compensation agreement with AireBeam. Despite these ethical concerns, the petition failed. Based on the “Conclusions of Law,” explain the legal reasoning that rendered the Petitioner’s arguments about transparency and fairness insufficient to prove a violation under the cited statute.

5. The Final Order outlines eight specific causes for which a rehearing or review could be granted. Choose two of these causes (e.g., “The findings of fact or decision is arbitrary, capricious, or an abuse of discretion,” or “Newly discovered material evidence that could not with reasonable diligence have been discovered and produced at the original hearing”) and construct a hypothetical argument that Mark Virden could have made for a rehearing based on them, using the facts presented in the case documents.

——————————————————————————–

Glossary of Key Terms

Definition

Administrative Law Judge (ALJ)

The official who presides over the administrative hearing, reviews evidence, makes findings of fact, draws conclusions of law, and issues a decision. In this case, Tammy L. Eigenheer.

A.R.S. (Arizona Revised Statutes)

The collection of all the laws passed by the Arizona legislature. The statute at the center of this case was A.R.S. § 33-1811.

Arguendo

A Latin term meaning “for the sake of argument.” The Judge used this to temporarily accept a point as true (that the free service was compensation) in order to show that even if it were true, the Petitioner’s argument would still fail on other legal grounds.

An acronym for Declaration of Covenants, Conditions, Restrictions and Easements. These are the governing legal documents that establish the rules and operational framework for a homeowners association.

Common Area

Property within the HOA, such as land for a community tower, that is owned and shared by all members of the association.

Department of Real Estate

The Arizona state agency that has jurisdiction to hear certain disputes between property owners and their homeowners associations.

HOA (Homeowners Association)

An organization in a planned community or subdivision that creates and enforces rules for the properties within its jurisdiction. In this case, the Lakeside Ski Village HOA.

Petitioner

The party who initiates a legal action by filing a petition. In this case, Mark Virden.

Preponderance of the Evidence

The standard of proof required in this administrative hearing. It means the evidence presented must be of greater weight or more convincing than the opposing evidence, showing a fact is more probable than not.

Respondent

The party against whom a petition is filed and who must respond to the allegations. In this case, the Lakeside Ski Village HOA.






Blog Post – 17F-H1717027-REL


How Two HOA Insiders Got Free Internet For Life—And Why the Law Couldn’t Stop Them

Introduction: The Rules Aren’t Always What They Seem

For many homeowners, the relationship with their Homeowner Association (HOA) is built on a simple assumption: while the rules can be strict, they exist to protect the community from abuses of power. We trust that state laws and an HOA’s own documents prevent board members from using their position for personal enrichment. The concept of a “conflict of interest” seems straightforward—board members can’t vote on deals that benefit themselves or their families.

But what if a deal that looks like a textbook conflict of interest was found to be perfectly legal? This is the cautionary tale of Mark Virden v. Lakeside Ski Village HOA, a shocking case from Arizona that turns our assumptions on their head. It’s a story where insiders secured a deal for free lifetime internet service, and despite a homeowner’s legitimate outrage, the law was powerless to stop them. The case wasn’t decided on fairness or ethics, but on the fine print buried in the HOA’s governing documents.

This case is a crucial lesson for every homeowner. It reveals how seemingly innocuous clauses can be weaponized to bypass transparency laws, effectively legalizing what would otherwise be considered a blatant conflict of interest. It demonstrates that in the world of community associations, power doesn’t always reside where you think it does, and the only thing protecting you is a deep understanding of your own community’s rules.

Takeaway 1: A Committee’s Power Can Sidestep Conflict-of-Interest Laws

The petitioner’s argument was simple and seemed like a slam dunk. An internet company needed to build a service tower on HOA common property but lacked enough subscribers to fund it. Lou Talarico, whose wife Susan was on the HOA’s Architectural Committee, offered to pay the upfront installation costs. In exchange, Mr. Talarico and the HOA’s Vice President, Carl Rygg, would receive free internet service for life.

This arrangement reeks of a conflict of interest, and on its face, appears to be a direct violation of Arizona’s statute (A.R.S. § 33-1811). The law requires that if an action “taken by or on behalf of the board of directors” would benefit a board member’s spouse, the conflict must be declared in an open meeting. Here, no such declaration was made.

But here is the stunning legal twist: the Administrative Law Judge found that the decision to approve the tower was made not by the “board,” but exclusively by the “Architectural Committee.” The HOA’s governing documents explicitly granted this committee the power to approve communication systems. Because the state’s conflict-of-interest law applies specifically to actions taken by the board, it had no jurisdiction over a decision made independently by the committee. In essence, the state law was watching the front door (the board), but the HOA’s documents gave the Architectural Committee a back door—one with no legal supervision for conflicts of interest. This technicality meant the deal, and the conflict of interest at its core, was entirely proper under the law.

Takeaway 2: An HOA ‘Board’ Might Not Be a Board at All

The second critical fact that enabled this outcome was the highly unusual structure of the Lakeside Ski Village HOA itself. The judge noted that the association “does not have a traditional Board.” Instead, all the members collectively act as the board.

The HOA’s Bylaws lay out this unique governance model:

“[t]he affairs of the Association will be managed by the Members, who by the Association’s Articles of Organization are authorized to exercise all powers normally exercised by a board of directors.”

This structure is fundamentally important. State laws governing HOAs are written with a traditional model in mind—a small group of elected directors making decisions for the community. But at Lakeside Ski Village, the power of the “members acting as a board” was limited by specific authority delegated to other entities, most notably the Architectural Committee. This decentralized structure created a loophole the state’s conflict-of-interest law was not designed to close.

The lesson for homeowners is that you can never assume all HOAs are structured alike. The very definition of the “board” and the scope of its power can be radically different from one community to another. Here, that unique structure was the key that unlocked the committee’s unchecked power.

Takeaway 3: The Fine Print Is All That Matters

Ultimately, this entire dispute was decided not by broad principles of transparency or fiduciary duty, but by specific phrases written in the HOA’s founding documents years ago. The petitioner, Mark Virden, expressed understandable outrage that the insiders involved refused to be transparent.

He recounted a particularly telling exchange with the association’s Vice President when he asked about the terms of the internet deal:

When we initially asked the VP what their compensation was, he stated “it’s none of your business”.

While this response would infuriate any homeowner, the court’s final decision effectively proved it right. Because the Architectural Committee was acting within its sole authority, the details of its agreement were not subject to the disclosure rules that govern the board. The response, “it’s none of your business,” turned out to be legally correct.

The petitioner’s frustration was compounded by the professional background of the committee member at the center of the conflict. In his filing, he wrote: “To make things worse, the board member whose spouse paid the upfront fee to the tower company is a licensed realtor, Susan Talarico. If anyone should understand the fiduciary responsibility to owners of a HOA, it’s a realtor serving on a Board of that HOA.” His belief that a real estate professional should have known better underscores the feeling of betrayal.

And in a final, dramatic turn that reinforces the theme of insiders benefiting, the petitioner noted what happened after the deal was done: “She has since resigned but her husband has taken her place on the board.” This illustrates the most vital lesson of all: your sense of what is “fair” is legally irrelevant if the governing documents allow for a specific action. The CC&Rs and Bylaws are the ultimate source of truth and power in any HOA dispute.

Conclusion: Are You Sure You Know Your Rules?

The case of Virden v. Lakeside Ski Village HOA serves as a stark reminder that HOA governance is a world of legal technicalities, where the written word of the founding documents is supreme. It shows how specific, delegated authority can create outcomes that defy the spirit, if not the letter, of the law. What appears to be a clear-cut case of self-dealing can be rendered perfectly permissible by a few key sentences in the bylaws or CC&Rs.

This case was decided on the specific authority granted to a single committee—do you know which committees in your HOA have the power to make decisions without board approval?


Case Participants

Petitioner Side

  • Mark Virden (petitioner)

Respondent Side

  • Stewart F. Salwin (attorney)
    Lakeside Ski Village HOA
  • Susan Talarico (board member)
    Lakeside Ski Village HOA
    Licensed realtor; spouse of Lou Talarico; resigned but husband took her place on the board
  • Lou Talarico (board member)
    Lakeside Ski Village HOA
    Spouse of Susan Talarico; paid upfront tower cost; received free internet service; referred to as Treasurer in petition excerpt
  • Carl Rygg (board member)
    Lakeside Ski Village HOA
    Vice President; received free internet service
  • Emmett Mitchell (board member)
    Lakeside Ski Village HOA
    President

Neutral Parties

  • Tammy L. Eigenheer (ALJ)
    Office of Administrative Hearings
  • Judy Lowe (Commissioner)
    Arizona Department of Real Estate
  • Abby Hansen (HOA Coordinator)
    Addressee for rehearing requests

Mark Virden vs. Lakeside Ski Village HOA

Posted on by

Case Summary

Case ID 17F-H1717027-REL
Agency ADRE
Tribunal OAH
Decision Date 2017-06-27
Administrative Law Judge Tammy L. Eigenheer
Outcome loss
Filing Fees Refunded $500.00
Civil Penalties $0.00

Parties & Counsel

Petitioner Mark Virden Counsel —
Respondent Lakeside Ski Village HOA Counsel Stewart F. Salwin

Alleged Violations

A.R.S. § 33-1811

Outcome Summary

The petition was denied because the Tribunal found that the HOA's Architectural Committee had the authority to approve the internet tower under the governing documents (CC&Rs) without requiring ratification or disclosure of potential conflicts to the members acting as the board, thus avoiding a violation of A.R.S. § 33-1811 in this instance.

Why this result: The decision to approve the tower was made by the Architectural Committee, which had independent authority under the CC&Rs. Therefore, the requirements of A.R.S. § 33-1811 regarding disclosure of compensation to the members acting as the board were found not to apply to the Committee's action.

Key Issues & Findings

Board of Directors, Contracts, and Conflicts

Petitioner alleged that the HOA violated A.R.S. § 33-1811 when it allowed the construction of an internet service tower after a board member's spouse paid the upfront fee in exchange for permanent free service (compensation). Petitioner argued this compensation required disclosure in an open meeting of the board before approval, which did not occur.

Orders: Petitioner's petition is denied.

Filing fee: $500.00, Fee refunded: No

Disposition: respondent_win

Cited:

  • A.R.S. § 33-1811
  • A.R.S. § 32-2199 et seq.
  • A.A.C. R2-19-119
  • A.R.S. § 33-1804

Analytics Highlights

Topics: conflict_of_interest, architectural_committee, board_authority, internet_tower, compensation, CC&Rs
Additional Citations:

  • A.R.S. § 33-1811
  • A.R.S. § 32-2199 et seq.
  • A.A.C. R2-19-119
  • A.R.S. § 33-1804

Audio Overview

Decision Documents

17F-H1717027-REL Decision – 571928.pdf

Uploaded 2025-10-08T06:57:42 (82.2 KB)

17F-H1717027-REL Decision – 575046.pdf

Uploaded 2025-10-08T06:57:42 (736.4 KB)





Briefing Doc – 17F-H1717027-REL


Briefing: Virden v. Lakeside Ski Village HOA (Case No. 17F-H1717027-REL)

Executive Summary

This briefing document outlines the legal dispute between homeowner Mark Virden (Petitioner) and the Lakeside Ski Village Homeowners Association (Respondent) concerning the construction of an internet service tower on HOA common property. The Petitioner alleged a violation of Arizona’s conflict of interest statute (A.R.S. § 33-1811), asserting that HOA officials received undisclosed compensation—lifelong free internet service—in exchange for approving the tower.

The case culminated in a definitive ruling against the Petitioner. An Administrative Law Judge (ALJ) denied the petition, a decision that was subsequently adopted and finalized by the Commissioner of the Arizona Department of Real Estate. The core of the ruling rested on the HOA’s unique governance structure. The decision to approve the tower was made not by the general “board of directors” (in this HOA, the members act as the board), but by the Architectural Committee, which was vested with independent authority to do so by the HOA’s governing documents (CC&Rs). Consequently, the ALJ concluded that the state law requiring conflict of interest disclosures before the board was not applicable to the committee’s action, rendering the Petitioner’s central argument invalid. The approval of the tower was deemed proper under the HOA’s governing rules.

Case Overview

Entity

Name / Description

Case Number

17F-H1717027-REL

Petitioner

Mark Virden

Respondent

Lakeside Ski Village HOA

Presiding ALJ

Tammy L. Eigenheer

Adjudicating Body

Arizona Office of Administrative Hearings

Final Authority

Commissioner, Arizona Department of Real Estate

Timeline of Key Events

• Circa 2017: The internet company AireBeam approached the HOA to install a service tower but did not secure enough subscribers to fund the project.

• Circa 2017: Lou Talarico, husband of an Architectural Committee member, offered to pay the tower’s upfront cost in exchange for free service for himself and HOA Vice President Carl Rygg. The Architectural Committee subsequently approved construction.

• March 23, 2017: Mark Virden filed a petition with the Arizona Department of Real Estate, alleging a conflict of interest violation.

• June 7, 2017: A hearing was held at the Office of Administrative Hearings.

• June 27, 2017: ALJ Tammy L. Eigenheer issued a decision denying the Petitioner’s petition.

• July 10, 2017: The Commissioner of the Department of Real Estate issued a Final Order adopting the ALJ’s decision.

Petitioner’s Allegations and Arguments

The petition filed by Mark Virden centered on a violation of A.R.S. § 33-1811, which governs contracts and conflicts of interest for HOA boards of directors.

Primary Allegation: Undisclosed Conflict of Interest

The Petitioner alleged that the HOA violated state law by failing to disclose a conflict of interest related to the tower’s approval.

• The Conflict: Susan Talarico, a licensed realtor serving on the Architectural Committee, had a conflict because her husband, Lou Talarico, paid an upfront fee to the tower company. In exchange for this payment, the Talaricos and HOA Vice President Carl Rygg were to receive free internet service for as long as the tower remained operational.

• The Alleged Violation: According to the petition, this arrangement constituted compensation that should have been formally declared in an open meeting before any action was taken, as required by law. The petition states: “This law states that if a member of the board is receiving compensation, and has not declared that conflict in advance, then any contract entered into in violation of this law is void and unenforceable!”

• Perceived Inadequate Compensation: The Petitioner claimed the value of the free service far exceeded the cash contribution, stating, “…their contribution would only pay the equivalent of about 1-2 years of service for the two households.”

• Lack of Transparency: The petition alleges a refusal by the involved board members to provide details of their arrangement. When asked about the compensation, the Vice President reportedly stated, “it’s none of your business.”

Secondary Argument

The Petitioner alternatively argued that the Architectural Committee exceeded its authority. Because the tower could provide service to individuals outside the HOA, it was not exclusively “for the benefit of all or portions” of the HOA, as stipulated by the governing documents.

Personal Grievance

The petition notes a direct personal impact on the Petitioner, stating that the tower was constructed within 150 feet of his front door and that he found it to be “a huge eye sore.”

Respondent’s Governance and Authority

The Lakeside Ski Village HOA’s defense rested on its specific governing documents and organizational structure, which were found to be central to the case’s outcome.

• Unconventional Board Structure: The HOA does not have a traditional, separate board of directors. Its Bylaws stipulate that “The affairs of the Association will be managed by the Members, who by the Association’s Articles of Organization are authorized to exercise all powers normally exercised by a board of directors.”

• Delegated Authority to Architectural Committee: The HOA’s Declaration of Covenants, Conditions, Restrictions and Easements (CC&Rs) grants specific and independent power to its Architectural Committee. The CC&Rs state: “The Architectural Committee may permit one or more aerial satellite dishes or satellite communication systems, and/or other apparatus and equipment for an antenna or cable system for the benefit of all or portions of the Project.”

This structure meant that the authority to approve the tower resided with the committee, not the general membership acting as a board.

Adjudication and Final Ruling

The dispute was adjudicated by the Office of Administrative Hearings, with the final decision adopted by the Department of Real Estate. The Petitioner’s claims were ultimately rejected.

Administrative Law Judge’s Decision

The ALJ’s decision, issued on June 27, 2017, denied the petition based on the following legal rationale:

• Architectural Committee’s Authority Was Dispositive: The ALJ found that the CC&Rs explicitly empowered the Architectural Committee to approve the communication tower. Crucially, the decision established that “Nothing in the CC&Rs requires that the Architectural Committee’s decision must be ratified by the members acting as a board.”

• Conflict of Interest Law Not Applicable: A.R.S. § 33-1811 applies to actions and decisions taken “by or on behalf of the board of directors.” Because the Architectural Committee acted under its own authority granted by the CC&Rs, its decision was not an action of the “board” as defined by the statute.

• Conclusion on Disclosure: The ALJ concluded that even if the free internet service was considered compensation (assuming arguendo), the arrangement “did not have to be disclosed to the members acting as a board.”

• Rejection of Secondary Argument: The ALJ dismissed the argument that the tower did not benefit the HOA, noting that the CC&R language “does not require that the satellite dish or other system may benefit exclusively all or portions of the HOA.”

The final conclusion of the tribunal was that “the Architectural Committee’s approval of the AireBeam tower was proper under Respondent’s governing documents.”

Final Order of the Department of Real Estate

On July 10, 2017, Judy Lowe, Commissioner of the Department of Real Estate, issued a Final Order that formally adopted the ALJ’s decision.

• Outcome: The Petitioner’s petition was officially denied.

• Binding Nature: The Order is binding on the parties and represents a final administrative action.

• Avenues for Appeal: The Order noted that a party may request a rehearing within 30 days for specific causes, such as procedural irregularity, newly discovered evidence, or an arbitrary or capricious decision. Furthermore, a party may appeal the final administrative decision by filing a complaint for judicial review.


Mark Virden vs. Lakeside Ski Village HOA

Posted on by

Case Summary

Case ID 17F-H1717027-REL
Agency ADRE
Tribunal OAH
Decision Date 2017-06-27
Administrative Law Judge Tammy L. Eigenheer
Outcome loss
Filing Fees Refunded $500.00
Civil Penalties $0.00

Parties & Counsel

Petitioner Mark Virden Counsel —
Respondent Lakeside Ski Village HOA Counsel Stewart F. Salwin

Alleged Violations

A.R.S. § 33-1811

Outcome Summary

The petition was denied because the Tribunal found that the HOA's Architectural Committee had the authority to approve the internet tower under the governing documents (CC&Rs) without requiring ratification or disclosure of potential conflicts to the members acting as the board, thus avoiding a violation of A.R.S. § 33-1811 in this instance.

Why this result: The decision to approve the tower was made by the Architectural Committee, which had independent authority under the CC&Rs. Therefore, the requirements of A.R.S. § 33-1811 regarding disclosure of compensation to the members acting as the board were found not to apply to the Committee's action.

Key Issues & Findings

Board of Directors, Contracts, and Conflicts

Petitioner alleged that the HOA violated A.R.S. § 33-1811 when it allowed the construction of an internet service tower after a board member's spouse paid the upfront fee in exchange for permanent free service (compensation). Petitioner argued this compensation required disclosure in an open meeting of the board before approval, which did not occur.

Orders: Petitioner's petition is denied.

Filing fee: $500.00, Fee refunded: No

Disposition: respondent_win

Cited:

  • A.R.S. § 33-1811
  • A.R.S. § 32-2199 et seq.
  • A.A.C. R2-19-119
  • A.R.S. § 33-1804

Analytics Highlights

Topics: conflict_of_interest, architectural_committee, board_authority, internet_tower, compensation, CC&Rs
Additional Citations:

  • A.R.S. § 33-1811
  • A.R.S. § 32-2199 et seq.
  • A.A.C. R2-19-119
  • A.R.S. § 33-1804

Audio Overview

Decision Documents

17F-H1717027-REL Decision – 571928.pdf

Uploaded 2025-10-08T07:01:55 (82.2 KB)

17F-H1717027-REL Decision – 575046.pdf

Uploaded 2025-10-08T07:01:56 (736.4 KB)





Briefing Doc – 17F-H1717027-REL


Briefing: Virden v. Lakeside Ski Village HOA (Case No. 17F-H1717027-REL)

Executive Summary

This briefing document outlines the legal dispute between homeowner Mark Virden (Petitioner) and the Lakeside Ski Village Homeowners Association (Respondent) concerning the construction of an internet service tower on HOA common property. The Petitioner alleged a violation of Arizona’s conflict of interest statute (A.R.S. § 33-1811), asserting that HOA officials received undisclosed compensation—lifelong free internet service—in exchange for approving the tower.

The case culminated in a definitive ruling against the Petitioner. An Administrative Law Judge (ALJ) denied the petition, a decision that was subsequently adopted and finalized by the Commissioner of the Arizona Department of Real Estate. The core of the ruling rested on the HOA’s unique governance structure. The decision to approve the tower was made not by the general “board of directors” (in this HOA, the members act as the board), but by the Architectural Committee, which was vested with independent authority to do so by the HOA’s governing documents (CC&Rs). Consequently, the ALJ concluded that the state law requiring conflict of interest disclosures before the board was not applicable to the committee’s action, rendering the Petitioner’s central argument invalid. The approval of the tower was deemed proper under the HOA’s governing rules.

Case Overview

Entity

Name / Description

Case Number

17F-H1717027-REL

Petitioner

Mark Virden

Respondent

Lakeside Ski Village HOA

Presiding ALJ

Tammy L. Eigenheer

Adjudicating Body

Arizona Office of Administrative Hearings

Final Authority

Commissioner, Arizona Department of Real Estate

Timeline of Key Events

• Circa 2017: The internet company AireBeam approached the HOA to install a service tower but did not secure enough subscribers to fund the project.

• Circa 2017: Lou Talarico, husband of an Architectural Committee member, offered to pay the tower’s upfront cost in exchange for free service for himself and HOA Vice President Carl Rygg. The Architectural Committee subsequently approved construction.

• March 23, 2017: Mark Virden filed a petition with the Arizona Department of Real Estate, alleging a conflict of interest violation.

• June 7, 2017: A hearing was held at the Office of Administrative Hearings.

• June 27, 2017: ALJ Tammy L. Eigenheer issued a decision denying the Petitioner’s petition.

• July 10, 2017: The Commissioner of the Department of Real Estate issued a Final Order adopting the ALJ’s decision.

Petitioner’s Allegations and Arguments

The petition filed by Mark Virden centered on a violation of A.R.S. § 33-1811, which governs contracts and conflicts of interest for HOA boards of directors.

Primary Allegation: Undisclosed Conflict of Interest

The Petitioner alleged that the HOA violated state law by failing to disclose a conflict of interest related to the tower’s approval.

• The Conflict: Susan Talarico, a licensed realtor serving on the Architectural Committee, had a conflict because her husband, Lou Talarico, paid an upfront fee to the tower company. In exchange for this payment, the Talaricos and HOA Vice President Carl Rygg were to receive free internet service for as long as the tower remained operational.

• The Alleged Violation: According to the petition, this arrangement constituted compensation that should have been formally declared in an open meeting before any action was taken, as required by law. The petition states: “This law states that if a member of the board is receiving compensation, and has not declared that conflict in advance, then any contract entered into in violation of this law is void and unenforceable!”

• Perceived Inadequate Compensation: The Petitioner claimed the value of the free service far exceeded the cash contribution, stating, “…their contribution would only pay the equivalent of about 1-2 years of service for the two households.”

• Lack of Transparency: The petition alleges a refusal by the involved board members to provide details of their arrangement. When asked about the compensation, the Vice President reportedly stated, “it’s none of your business.”

Secondary Argument

The Petitioner alternatively argued that the Architectural Committee exceeded its authority. Because the tower could provide service to individuals outside the HOA, it was not exclusively “for the benefit of all or portions” of the HOA, as stipulated by the governing documents.

Personal Grievance

The petition notes a direct personal impact on the Petitioner, stating that the tower was constructed within 150 feet of his front door and that he found it to be “a huge eye sore.”

Respondent’s Governance and Authority

The Lakeside Ski Village HOA’s defense rested on its specific governing documents and organizational structure, which were found to be central to the case’s outcome.

• Unconventional Board Structure: The HOA does not have a traditional, separate board of directors. Its Bylaws stipulate that “The affairs of the Association will be managed by the Members, who by the Association’s Articles of Organization are authorized to exercise all powers normally exercised by a board of directors.”

• Delegated Authority to Architectural Committee: The HOA’s Declaration of Covenants, Conditions, Restrictions and Easements (CC&Rs) grants specific and independent power to its Architectural Committee. The CC&Rs state: “The Architectural Committee may permit one or more aerial satellite dishes or satellite communication systems, and/or other apparatus and equipment for an antenna or cable system for the benefit of all or portions of the Project.”

This structure meant that the authority to approve the tower resided with the committee, not the general membership acting as a board.

Adjudication and Final Ruling

The dispute was adjudicated by the Office of Administrative Hearings, with the final decision adopted by the Department of Real Estate. The Petitioner’s claims were ultimately rejected.

Administrative Law Judge’s Decision

The ALJ’s decision, issued on June 27, 2017, denied the petition based on the following legal rationale:

• Architectural Committee’s Authority Was Dispositive: The ALJ found that the CC&Rs explicitly empowered the Architectural Committee to approve the communication tower. Crucially, the decision established that “Nothing in the CC&Rs requires that the Architectural Committee’s decision must be ratified by the members acting as a board.”

• Conflict of Interest Law Not Applicable: A.R.S. § 33-1811 applies to actions and decisions taken “by or on behalf of the board of directors.” Because the Architectural Committee acted under its own authority granted by the CC&Rs, its decision was not an action of the “board” as defined by the statute.

• Conclusion on Disclosure: The ALJ concluded that even if the free internet service was considered compensation (assuming arguendo), the arrangement “did not have to be disclosed to the members acting as a board.”

• Rejection of Secondary Argument: The ALJ dismissed the argument that the tower did not benefit the HOA, noting that the CC&R language “does not require that the satellite dish or other system may benefit exclusively all or portions of the HOA.”

The final conclusion of the tribunal was that “the Architectural Committee’s approval of the AireBeam tower was proper under Respondent’s governing documents.”

Final Order of the Department of Real Estate

On July 10, 2017, Judy Lowe, Commissioner of the Department of Real Estate, issued a Final Order that formally adopted the ALJ’s decision.

• Outcome: The Petitioner’s petition was officially denied.

• Binding Nature: The Order is binding on the parties and represents a final administrative action.

• Avenues for Appeal: The Order noted that a party may request a rehearing within 30 days for specific causes, such as procedural irregularity, newly discovered evidence, or an arbitrary or capricious decision. Furthermore, a party may appeal the final administrative decision by filing a complaint for judicial review.