Note: A Rehearing was requested for this case. The dashboard statistics reflect the final outcome of the rehearing process.
Case Summary
| Case ID |
19F-H1918033-REL-RHG |
| Agency |
ADRE |
| Tribunal |
OAH |
| Decision Date |
2020-04-01 |
| Administrative Law Judge |
Kay Abramsohn |
| Outcome |
total |
| Filing Fees Refunded |
$500.00 |
| Civil Penalties |
$0.00 |
Parties & Counsel
| Petitioner |
Steven D. Stienstra |
Counsel |
— |
| Respondent |
Cedar Ridge Homeowners Association |
Counsel |
Michelle Molinario, Diana J. Elston, Keith D. Collett |
Alleged Violations
A.R.S. § 33-1806.01; CC&Rs Section 1.1; CC&Rs Section 18
Outcome Summary
The Petitioner was the prevailing party. The ALJ affirmed that the HOA violated its CC&Rs regarding enforcement procedures, particularly by failing to adhere to Section 18 requirements and incorrectly applying Section 1.1 against the owner, rendering the legal fee demands improper. The HOA was ordered to reimburse the Petitioner the $500.00 filing fee,.
Why this result: The HOA failed to follow the explicit due process requirements (written notice and 30 days to appear) mandated by CC&Rs Section 18 for enforcement against the owner, and incorrectly relied on Section 1.1 to justify its demand for unauthorized flat fees,,,,.
Key Issues & Findings
HOA enforcement action regarding CC&R violations and asserted legal fees
Petitioner challenged the HOA's enforcement actions regarding short-term rentals and leasing less than the entire lot. The ALJ found the HOA proceeded inappropriately under Section 1.1 (intended for action against occupants on the owner's behalf) and failed to follow the mandatory enforcement requirements of Section 18, thus violating its own CC&Rs. Consequently, the asserted legal fees were not assigned to Petitioner,,,.
Orders: The Petition was granted. The HOA was ordered to reimburse the Petitioner the $500.00 filing fee,. The asserted legal fees of $1,500 and $2,600 sought by the HOA were determined not to be assignable to the Petitioner,.
Filing fee: $500.00, Fee refunded: Yes
Disposition: petitioner_win
Cited:
- A.R.S. § 33-1806.01
- CC&Rs Section 1.1
- CC&Rs Section 18
Analytics Highlights
Topics: HOA Enforcement, CC&R Violation, Legal Fees, Due Process, Rental Restriction
Additional Citations:
- A.R.S. § 33-1806.01
- CC&Rs Section 1.1
- CC&Rs Section 18
- A.R.S. § 10-3830
Decision Documents
19F-H1918033-REL-RHG Decision – 779896.pdf
Uploaded 2026-01-23T17:27:52 (210.6 KB)
19F-H1918033-REL-RHG Decision – ../19F-H1918033-REL/753362.pdf
Uploaded 2026-01-23T17:27:56 (169.0 KB)
Briefing Doc – 19F-H1918033-REL-RHG
Briefing Document: Stienstra v. Cedar Ridge Homeowners Association
Executive Summary
This document synthesizes two Administrative Law Judge (ALJ) decisions concerning a dispute between homeowner Steven D. Stienstra (Petitioner) and the Cedar Ridge Homeowners Association (HOA/Respondent). The core conflict centered on the HOA’s enforcement actions and subsequent demand for attorney’s fees related to alleged violations of Covenants, Conditions, and Restrictions (CC&Rs) prohibiting short-term rentals.
The ALJ ultimately ruled in favor of the Petitioner in both the initial hearing and a subsequent rehearing. The decisions established that the HOA violated its own CC&Rs by employing an incorrect and unreasonable enforcement procedure. Specifically, the HOA misapplied Section 1.1 of the CC&Rs, which governs an owner’s failure to take action against a non-compliant tenant, instead of following the prescribed due process for owner violations outlined in Section 18. Consequently, the ALJ concluded that the attorney’s fees demanded by the HOA were not assignable to the Petitioner. The final order required the HOA to reimburse the Petitioner’s $500 filing fee, affirming that the HOA’s actions, including a series of escalating cease and desist letters, were procedurally flawed and unreasonable given the circumstances.
Case Overview and Core Dispute
The case, No. 19F-H1918033-REL, involved a petition filed by Steven D. Stienstra in November 2018 with the Arizona Department of Real Estate. Mr. Stienstra alleged that the Cedar Ridge Homeowners Association, a voluntary board in Sedona, Arizona, violated A.R.S. § 33-1806.01 and Sections 1.1 and 18 of its own CC&Rs.
The dispute originated from short-term rental activity at Mr. Stienstra’s property, which he purchased in August 2017. While the Petitioner admitted to the initial violations, he contended that he ceased the activity immediately after a phone call from the HOA President in April 2018. Despite his assurances, the HOA, acting on legal advice, pursued enforcement through a series of cease and desist letters, culminating in a demand for $2,600 in attorney’s fees.
The central issue before the Office of Administrative Hearings was whether the HOA’s enforcement process was proper under its governing documents and, consequently, whether Mr. Stienstra was liable for the legal fees incurred by the HOA.
Chronology of the Dispute
Details
Aug 2017
Property Purchase
Steven D. Stienstra purchases the residence. He acknowledges the CC&R restrictions on short-term rentals.
Jan-Apr 2018
Rental Activity
Stienstra’s son uses VRBO to manage stays for friends and family, which expands to produce some revenue from rentals of less than 30 days.
Apr 3, 2018
Motor Home Incident
HOA Secretary Vic Burolla calls Stienstra about a motor home parked in the driveway, a separate CC&R violation.
April 2018
Ferguson’s Phone Call
HOA President Bill Ferguson calls Stienstra about the short-term rentals. Recollections vary, but Stienstra claims he agreed to cease the activity. Ferguson’s impression was that Stienstra was not going to stop.
Apr 26, 2018
HOA Retains Counsel
The first noted contact between the HOA and its law firm occurs after the phone call with Stienstra.
May 11, 2018
First Cease & Desist Letter
The HOA’s attorney sends a letter demanding Stienstra cease all rentals of less than 30 days and rentals of less than the entire property within ten days, threatening a lawsuit under Section 1.1 of the CC&Rs.
June 1, 2018
Second Cease & Desist Letter
The HOA rejects Stienstra’s explanation of compliance. The letter demands payment of $1,500.00 by July 2, 2018, described as a “flat amount to resolve the matter.”
June 17, 2018
Third Cease & Desist Letter
Citing a new Facebook Marketplace post by Stienstra’s son (offering to lease bedrooms separately), the HOA sends another letter. The demand for attorney’s fees increases to $2,600.00.
Sep 4, 2018
Informal Meeting
At Stienstra’s request, three HOA board members meet with him in an unofficial capacity to discuss the dispute. The meeting transcript reflects a tense relationship.
Nov 2018
Petition Filed
Stienstra files his petition with the Arizona Department of Real Estate.
Oct 7, 2019
Initial Hearing
The Office of Administrative Hearings conducts a hearing on the matter.
Nov 15, 2019
Initial Decision
ALJ Kay Abramsohn issues a decision finding the HOA violated its CC&Rs and grants Stienstra’s petition.
Dec 19, 2019
Rehearing Request
The HOA requests a rehearing, arguing the ALJ’s decision was “arbitrary, capricious, and an abuse of discretion.”
Mar 12, 2020
Rehearing
A rehearing is conducted where the HOA introduces new arguments, including that its board acted in good faith on legal advice.
Apr 1, 2020
Rehearing Decision
The ALJ issues a final decision affirming the original order, finding Stienstra to be the prevailing party and ordering the HOA to reimburse his $500 filing fee.
Analysis of Arguments and Evidence
Petitioner’s Position (Steven D. Stienstra)
• Compliance: Stienstra argued that he and his son ceased all short-term rental activity immediately following the April 2018 phone call from HOA President Bill Ferguson.
• Improper Procedure: The core of his argument was that the HOA failed to follow the enforcement procedures mandated by Section 18 of the CC&Rs. This section requires the Board to provide written notice of a breach, a 30-day period for the owner to appear before the Board, and a reasonable time (up to 60 days) to remedy the breach before levying fines.
• Misapplication of CC&Rs: Stienstra contended the HOA incorrectly proceeded under Section 1.1, which he argued applies to an owner’s failure to take legal action against a non-compliant tenant, not direct violations by the owner themselves.
• Unjustified Fees: Because the HOA did not provide due process and followed an improper enforcement path, Stienstra argued he should be released from any liability for the attorney’s fees the HOA incurred.
Respondent’s Position (Cedar Ridge HOA)
• Reasonable Belief of Violation: The HOA argued it had reason to believe violations were ongoing. It cited the continued presence of a VRBO listing (which Stienstra’s son claimed was inactive for booking) and observations of “multiple cars parked there daily” as evidence.
• Reliance on Legal Counsel: The HOA maintained that its actions were reasonable because it sought and followed the advice of its attorney. At the rehearing, it cited A.R.S. § 10-3830, arguing it discharged its duties in good faith.
• Discretion in Enforcement: The Board believed it had the discretion to enforce the CC&Rs under either Section 1.1 or Section 18. Board Secretary Vic Burolla testified at the rehearing that Section 1.1 was chosen because it “seemed more expeditious, to be able to collect” legal fees.
• “Unclean Hands” Doctrine: At the rehearing, the HOA argued for the first time that because Stienstra had admittedly violated the CC&Rs initially, he had “unclean hands” and was not entitled to seek relief regarding the HOA’s subsequent actions.
Key Evidence Presented
• CC&Rs: The text of Section 1.1 (“Leasing”) and Section 18 (“Enforcement of Covenants”) were central to the case.
• Cease & Desist Letters: The series of three letters from the HOA’s attorney documented the escalating demands and the HOA’s legal strategy.
• Testimony of Board Members: Testimony from Bill Ferguson and Vic Burolla provided insight into the Board’s decision-making process, including their impression of the April 2018 phone call and their justification for hiring an attorney. Vic Burolla provided conflicting testimony, stating in the initial hearing he was “not aware of any specific instructions in the CC&Rs” for notifications, but stating in the rehearing that the Board had discussed the benefits of proceeding under either Section 1.1 or Section 18.
• VRBO and Facebook Listings: Printouts of the online rental listings were used as evidence by the HOA to demonstrate ongoing or attempted violations.
• Meeting Transcript: A transcript of the informal September 4, 2018 meeting revealed the “tense relationship” and communication breakdown between the parties. When asked who was in the house if not tenants, Stienstra replied, “It’s not anybody’s business who’s in our house, really.”
Administrative Law Judge’s Findings and Rulings
The ALJ’s conclusions were consistent across both the initial decision and the rehearing decision, ultimately finding that the Petitioner had proven his case by a preponderance of the evidence.
Interpretation of Governing CC&Rs
• Section 1.1 vs. Section 18: The ALJ decisively concluded that the two sections govern different circumstances.
◦ Section 1.1 applies when an occupant or lessee violates the CC&Rs. It requires the owner to take legal action against that occupant within 10 days of a written demand from the Board. If the owner fails, the Board may act “on behalf of such owner against owner’s occupant.” The ALJ found these were “not the circumstances in this case.”
◦ Section 1.8 is the proper procedure for violations committed directly by the owner. It provides a clear due process framework: written notice, an opportunity to be heard by the Board, and a period to cure the breach.
• Conclusion: The ALJ ruled that the “appropriate action that was required to be taken by Respondent was set forth in Section 18 of the CC&Rs.” By using Section 1.1, the HOA committed a procedural violation.
Assessment of HOA Enforcement Actions
• Verbal Warning: The ALJ characterized the April 2018 phone call from Mr. Ferguson as “appropriate in the nature of education” but clarified it “is not an ‘enforcement’ action under the CC&Rs.”
• Unreasonable Continuation: The Judge found the HOA’s continued actions after the May 11 letter to be unreasonable. The decision notes that the HOA’s characterization of Stienstra “intentionally” continuing to violate the CC&Rs “simply demonstrates that the Board members did not and were not going to believe Petitioner or his son no matter what information they provided.”
• Distrust: The decision highlights the Board’s fundamental distrust, quoting Mr. Burolla’s testimony that even if the HOA had called to clarify the situation, “there’s no reason to suspect we would have been told the truth.”
Ruling on Attorney’s Fees
• Not Assignable to Petitioner: Because the HOA violated its own CC&Rs by following an improper enforcement procedure, the ALJ ruled that the “asserted legal fees are not assigned to Petitioner.”
• Improper Demand: The ALJ specifically analyzed the demand in the June 1, 2018 letter for “$1,500.00… authorized by the Board as a flat amount to resolve the matter.” The ruling states this amount “could only be looked at as either a settlement offer or as some sort of fine, which is not authorized under Section 1.1 but only under Section 18.” It was not a legitimate accounting of actual fees incurred as permitted by the CC&Rs.
• No Expenses Incurred Under Section 1.1: The Judge found that since Stienstra took action to stop the leasing, no legal action by the HOA “on behalf of the owner against the occupant” was required. Therefore, no expenses were actually incurred pursuant to the parameters of Section 1.1.
Final Decisions and Order
• Initial Decision (Nov 15, 2019): The petition was granted, and the HOA was ordered to reimburse Mr. Stienstra the $500.00 filing fee.
• Rehearing Decision (Apr 1, 2020): The ALJ affirmed the original order. The HOA’s new arguments regarding “good faith” and “unclean hands” did not alter the core finding of procedural failure. The final order declared the Petitioner the prevailing party and re-stated the requirement for the HOA to reimburse the filing fee.
Study Guide – 19F-H1918033-REL-RHG
Study Guide: Stienstra v. Cedar Ridge Homeowners Association
This study guide provides a comprehensive review of the administrative hearing and rehearing decisions in the case between petitioner Steven D. Stienstra and respondent Cedar Ridge Homeowners Association. It includes a short-answer quiz with an answer key, a series of essay questions for deeper analysis, and a glossary of key terms found in the legal decisions.
Short-Answer Quiz
Instructions: Answer the following questions in two to three complete sentences, drawing exclusively from the information provided in the case documents.
1. Who were the primary parties in this case, and what was the central issue that prompted the administrative hearing?
2. What specific violations of the CC&Rs did the homeowner, Steven Stienstra, or his son commit that initiated the dispute?
3. Describe the initial action taken by HOA President Bill Ferguson in April 2018 and explain why the Administrative Law Judge did not consider it a formal enforcement action.
4. The HOA’s attorneys sent three Cease & Desist letters. What was the primary demand of the first letter, and what financial demands were added in the second and third letters?
5. What were the two key sections of the CC&Rs at the center of the dispute, and what did each section generally govern?
6. Why did the Administrative Law Judge (ALJ) conclude that the HOA’s decision to proceed under Section 1.1 of the CC&Rs was inappropriate for the violations committed by the owner?
7. According to the ALJ’s decision, what specific procedural steps should the HOA have followed under Section 18 of the CC&Rs to properly enforce the covenants against an owner?
8. On what grounds did the Cedar Ridge HOA request a rehearing after the initial decision was issued in favor of the petitioner?
9. During the rehearing, the HOA introduced an “unclean hands” argument. What did this argument claim, and how did the ALJ respond to it?
10. What was the final, binding outcome of this case after the rehearing, including the ruling on attorney’s fees and the petitioner’s filing fee?
——————————————————————————–
Quiz Answer Key
1. The primary parties were the Petitioner, homeowner Steven D. Stienstra, and the Respondent, Cedar Ridge Homeowners Association (HOA). While the dispute began over rental violations, the central issue at the hearing was the liability for legal fees the HOA incurred and asserted were owed by the Petitioner.
2. The Petitioner’s son violated Section 1.1 of the CC&Rs by listing the property on VRBO for short-term rentals (less than 30 consecutive days) and producing revenue from January to April 2018. He also later posted on Facebook Marketplace offering to rent separate units within the home, which violated the rule requiring the lease of an “owner’s entire lot.”
3. HOA President Bill Ferguson made a phone call to Mr. Stienstra in April 2018 to bring the short-term rental violations to his attention. The ALJ characterized this as a “courtesy or informational call” and not a formal enforcement action because it did not comply with the written notice procedures required by either Section 1.1 or Section 18 of the CC&Rs.
4. The first letter (May 11, 2018) demanded that Stienstra cease all rentals of less than 30 days. The second letter (June 1, 2018) added a demand for $1,500 in attorney’s fees, and the third letter (June 17, 2018) increased this demand to $2,600.
5. The key sections were Section 1.1 and Section 18. Section 1.1 governed leasing requirements (e.g., minimum 30-day term) and detailed a process for an owner to take action against a non-compliant tenant (occupant). Section 18, titled “Enforcement of Covenants,” provided the formal process for the HOA Board to take action against a non-compliant owner.
6. The ALJ concluded that Section 1.1 was inappropriate because its enforcement mechanism empowers the HOA to act “on behalf of such owner against owner’s occupant” if the owner fails to do so. In this case, the HOA was taking direct action against the owner (Stienstra) for his own violations, a scenario that the ALJ determined was governed by Section 18.
7. Under Section 18, the HOA was required to notify the owner “in writing of the breach,” provide the owner 30 days to appear before the Board to respond, and then grant a reasonable time period (not to exceed 60 days) to remedy the breach before it could levy a fine.
8. The HOA requested a rehearing on the grounds that the ALJ’s decision was “arbitrary, capricious, and an abuse of discretion, and was not support by the evidence.” The HOA specifically alleged the ALJ had not considered evidence that it had reason to believe violations were continuing and had erred in interpreting the CC&Rs.
9. The HOA argued that because the Petitioner had admittedly violated the CC&Rs, he had “unclean hands” and therefore was not entitled to seek relief from the Department regarding the HOA’s actions. The ALJ noted that the remedy sought by the Petitioner was monetary (release from fees), not equitable, and the core issue remained whether the HOA’s enforcement actions were valid under its own governing documents.
10. The final outcome, upheld on rehearing, was that the Petitioner’s petition was granted. The HOA was ordered to reimburse Mr. Stienstra for his $500 filing fee, and the ALJ concluded that the asserted legal fees were not assignable to him due to the HOA’s failure to follow its own CC&R enforcement procedures.
——————————————————————————–
Essay Questions
Instructions: The following questions are designed for a more in-depth analysis of the case. Formulate a comprehensive response to each question using only the facts and arguments presented in the provided legal decisions.
1. Analyze the procedural missteps made by the Cedar Ridge HOA Board in its enforcement actions against Steven Stienstra. How did its choice to proceed under Section 1.1 instead of Section 18 fundamentally undermine its position, according to the Administrative Law Judge?
2. Discuss the role of communication and miscommunication in escalating the conflict between Stienstra and the HOA. Use specific examples from the text, such as the Ferguson phone call, the continued VRBO listing, the HOA’s internal distrust, and the unofficial board meeting, to illustrate your points.
3. Evaluate the HOA’s argument on rehearing that its actions were protected because they acted in good faith based on the advice of their attorney, as allowed under A.R.S. § 10-3830. Why was this argument ultimately unpersuasive to the Administrative Law Judge?
4. The central issue in this case evolved from CC&R violations to a dispute over attorney’s fees. Trace this evolution, explaining how each Cease & Desist letter escalated the financial stakes and why the ALJ ultimately determined the fees were not assignable to Stienstra.
5. Compare and contrast the enforcement mechanisms detailed in Section 1.1 and Section 18 of the Cedar Ridge CC&Rs. Explain the specific purpose of each section and why applying the correct one was critical to the outcome of this case.
——————————————————————————–
Glossary
Definition
A.R.S. § 33-1806.01
An Arizona Revised Statute providing that a planned community property owner may use their property as a rental unless prohibited in the declaration and must abide by the declaration’s rental time period restrictions.
Administrative Law Judge (ALJ)
The official who presides over administrative hearings, hears evidence, and makes legal findings and rulings. In this case, the ALJ was Kay Abramsohn.
Burden of Proof
The obligation on a party in a legal case to prove their allegations. In this proceeding, the Petitioner bore the burden of proving the HOA’s violations by a preponderance of the evidence.
Covenants, Conditions, and Restrictions. The governing legal documents that set forth the rules for a planned community or homeowners association.
Cease & Desist Letter
A formal written demand from an attorney or party to stop (cease) and not restart (desist) an allegedly illegal or infringing activity.
Declaration
The legal document that creates a homeowners association and its CC&Rs.
Forcible Entry and Detainer
A legal action, often used for eviction, to recover possession of real property from someone who is in wrongful possession. Section 1.1 mentions this as an action an owner could take against a non-compliant tenant.
A legal claim or right against a property to secure the payment of a debt. Section 18 of the CC&Rs allows the HOA to place a lien on a property for an unpaid special assessment or fine.
Occupant
As used in Section 1.1, refers to a tenant or lessee under a lease agreement, distinct from the property owner.
Petitioner
The party who files a petition initiating a legal or administrative action. In this case, homeowner Steven D. Stienstra.
Preponderance of the Evidence
The standard of proof in this case, meaning that the evidence as a whole shows that the fact sought to be proved is more probable than not.
Respondent
The party against whom a petition is filed. In this case, the Cedar Ridge Homeowners Association.
Special Assessment
A charge levied by an HOA against an owner for a specific purpose, such as repaying attorney’s fees incurred by the HOA or as a fine, as described in Sections 1.1 and 18.
Unclean Hands
A legal doctrine arguing that a party who has acted unethically or in bad faith in relation to the subject of a complaint should not be entitled to seek relief. The HOA raised this argument against the Petitioner on rehearing.
An Expedia Group website containing listings for vacation property rentals, which the Petitioner’s son used to list the property.
Blog Post – 19F-H1918033-REL-RHG
Study Guide: Stienstra v. Cedar Ridge Homeowners Association
This study guide provides a comprehensive review of the administrative hearing and rehearing decisions in the case between petitioner Steven D. Stienstra and respondent Cedar Ridge Homeowners Association. It includes a short-answer quiz with an answer key, a series of essay questions for deeper analysis, and a glossary of key terms found in the legal decisions.
Short-Answer Quiz
Instructions: Answer the following questions in two to three complete sentences, drawing exclusively from the information provided in the case documents.
1. Who were the primary parties in this case, and what was the central issue that prompted the administrative hearing?
2. What specific violations of the CC&Rs did the homeowner, Steven Stienstra, or his son commit that initiated the dispute?
3. Describe the initial action taken by HOA President Bill Ferguson in April 2018 and explain why the Administrative Law Judge did not consider it a formal enforcement action.
4. The HOA’s attorneys sent three Cease & Desist letters. What was the primary demand of the first letter, and what financial demands were added in the second and third letters?
5. What were the two key sections of the CC&Rs at the center of the dispute, and what did each section generally govern?
6. Why did the Administrative Law Judge (ALJ) conclude that the HOA’s decision to proceed under Section 1.1 of the CC&Rs was inappropriate for the violations committed by the owner?
7. According to the ALJ’s decision, what specific procedural steps should the HOA have followed under Section 18 of the CC&Rs to properly enforce the covenants against an owner?
8. On what grounds did the Cedar Ridge HOA request a rehearing after the initial decision was issued in favor of the petitioner?
9. During the rehearing, the HOA introduced an “unclean hands” argument. What did this argument claim, and how did the ALJ respond to it?
10. What was the final, binding outcome of this case after the rehearing, including the ruling on attorney’s fees and the petitioner’s filing fee?
——————————————————————————–
Quiz Answer Key
1. The primary parties were the Petitioner, homeowner Steven D. Stienstra, and the Respondent, Cedar Ridge Homeowners Association (HOA). While the dispute began over rental violations, the central issue at the hearing was the liability for legal fees the HOA incurred and asserted were owed by the Petitioner.
2. The Petitioner’s son violated Section 1.1 of the CC&Rs by listing the property on VRBO for short-term rentals (less than 30 consecutive days) and producing revenue from January to April 2018. He also later posted on Facebook Marketplace offering to rent separate units within the home, which violated the rule requiring the lease of an “owner’s entire lot.”
3. HOA President Bill Ferguson made a phone call to Mr. Stienstra in April 2018 to bring the short-term rental violations to his attention. The ALJ characterized this as a “courtesy or informational call” and not a formal enforcement action because it did not comply with the written notice procedures required by either Section 1.1 or Section 18 of the CC&Rs.
4. The first letter (May 11, 2018) demanded that Stienstra cease all rentals of less than 30 days. The second letter (June 1, 2018) added a demand for $1,500 in attorney’s fees, and the third letter (June 17, 2018) increased this demand to $2,600.
5. The key sections were Section 1.1 and Section 18. Section 1.1 governed leasing requirements (e.g., minimum 30-day term) and detailed a process for an owner to take action against a non-compliant tenant (occupant). Section 18, titled “Enforcement of Covenants,” provided the formal process for the HOA Board to take action against a non-compliant owner.
6. The ALJ concluded that Section 1.1 was inappropriate because its enforcement mechanism empowers the HOA to act “on behalf of such owner against owner’s occupant” if the owner fails to do so. In this case, the HOA was taking direct action against the owner (Stienstra) for his own violations, a scenario that the ALJ determined was governed by Section 18.
7. Under Section 18, the HOA was required to notify the owner “in writing of the breach,” provide the owner 30 days to appear before the Board to respond, and then grant a reasonable time period (not to exceed 60 days) to remedy the breach before it could levy a fine.
8. The HOA requested a rehearing on the grounds that the ALJ’s decision was “arbitrary, capricious, and an abuse of discretion, and was not support by the evidence.” The HOA specifically alleged the ALJ had not considered evidence that it had reason to believe violations were continuing and had erred in interpreting the CC&Rs.
9. The HOA argued that because the Petitioner had admittedly violated the CC&Rs, he had “unclean hands” and therefore was not entitled to seek relief from the Department regarding the HOA’s actions. The ALJ noted that the remedy sought by the Petitioner was monetary (release from fees), not equitable, and the core issue remained whether the HOA’s enforcement actions were valid under its own governing documents.
10. The final outcome, upheld on rehearing, was that the Petitioner’s petition was granted. The HOA was ordered to reimburse Mr. Stienstra for his $500 filing fee, and the ALJ concluded that the asserted legal fees were not assignable to him due to the HOA’s failure to follow its own CC&R enforcement procedures.
——————————————————————————–
Essay Questions
Instructions: The following questions are designed for a more in-depth analysis of the case. Formulate a comprehensive response to each question using only the facts and arguments presented in the provided legal decisions.
1. Analyze the procedural missteps made by the Cedar Ridge HOA Board in its enforcement actions against Steven Stienstra. How did its choice to proceed under Section 1.1 instead of Section 18 fundamentally undermine its position, according to the Administrative Law Judge?
2. Discuss the role of communication and miscommunication in escalating the conflict between Stienstra and the HOA. Use specific examples from the text, such as the Ferguson phone call, the continued VRBO listing, the HOA’s internal distrust, and the unofficial board meeting, to illustrate your points.
3. Evaluate the HOA’s argument on rehearing that its actions were protected because they acted in good faith based on the advice of their attorney, as allowed under A.R.S. § 10-3830. Why was this argument ultimately unpersuasive to the Administrative Law Judge?
4. The central issue in this case evolved from CC&R violations to a dispute over attorney’s fees. Trace this evolution, explaining how each Cease & Desist letter escalated the financial stakes and why the ALJ ultimately determined the fees were not assignable to Stienstra.
5. Compare and contrast the enforcement mechanisms detailed in Section 1.1 and Section 18 of the Cedar Ridge CC&Rs. Explain the specific purpose of each section and why applying the correct one was critical to the outcome of this case.
——————————————————————————–
Glossary
Definition
A.R.S. § 33-1806.01
An Arizona Revised Statute providing that a planned community property owner may use their property as a rental unless prohibited in the declaration and must abide by the declaration’s rental time period restrictions.
Administrative Law Judge (ALJ)
The official who presides over administrative hearings, hears evidence, and makes legal findings and rulings. In this case, the ALJ was Kay Abramsohn.
Burden of Proof
The obligation on a party in a legal case to prove their allegations. In this proceeding, the Petitioner bore the burden of proving the HOA’s violations by a preponderance of the evidence.
Covenants, Conditions, and Restrictions. The governing legal documents that set forth the rules for a planned community or homeowners association.
Cease & Desist Letter
A formal written demand from an attorney or party to stop (cease) and not restart (desist) an allegedly illegal or infringing activity.
Declaration
The legal document that creates a homeowners association and its CC&Rs.
Forcible Entry and Detainer
A legal action, often used for eviction, to recover possession of real property from someone who is in wrongful possession. Section 1.1 mentions this as an action an owner could take against a non-compliant tenant.
A legal claim or right against a property to secure the payment of a debt. Section 18 of the CC&Rs allows the HOA to place a lien on a property for an unpaid special assessment or fine.
Occupant
As used in Section 1.1, refers to a tenant or lessee under a lease agreement, distinct from the property owner.
Petitioner
The party who files a petition initiating a legal or administrative action. In this case, homeowner Steven D. Stienstra.
Preponderance of the Evidence
The standard of proof in this case, meaning that the evidence as a whole shows that the fact sought to be proved is more probable than not.
Respondent
The party against whom a petition is filed. In this case, the Cedar Ridge Homeowners Association.
Special Assessment
A charge levied by an HOA against an owner for a specific purpose, such as repaying attorney’s fees incurred by the HOA or as a fine, as described in Sections 1.1 and 18.
Unclean Hands
A legal doctrine arguing that a party who has acted unethically or in bad faith in relation to the subject of a complaint should not be entitled to seek relief. The HOA raised this argument against the Petitioner on rehearing.
An Expedia Group website containing listings for vacation property rentals, which the Petitioner’s son used to list the property.
Case Participants
Petitioner Side
- Steven D. Stienstra (petitioner)
Appeared on his own behalf,.
- Petitioner's son (witness)
Related to Petitioner
Managed rental property listings (referred to as 'Son'),,; testified at hearing,.
Respondent Side
- Michelle Molinario (HOA attorney)
Jones, Skelton & Hochuli, PLC.
Represented Cedar Ridge Homeowners Association,.
- Keith D. Collett (HOA attorney)
Jones, Skelton & Hochuli, PLC.
Represented Cedar Ridge Homeowners Association/HOA,,.
- Diana J. Elston (HOA attorney)
Jones, Skelton & Hochuli, P.L.C.
Represented Cedar Ridge Homeowners Association/HOA,.
- Vic Burolla (board member)
Cedar Ridge Homeowners Association
HOA Board Secretary,,; witness at initial hearing,,; no longer Secretary by time of hearing,.
- Bill Ferguson (board member)
Cedar Ridge Homeowners Association
HOA Board President,; no longer President by time of hearing,; witness at initial hearing.
- Tucker (board member)
Cedar Ridge Homeowners Association
HOA Board Vice-president,; participated in September 4, 2018 meeting,.
- Griffin (board member)
Cedar Ridge Homeowners Association
HOA Board Treasurer,; participated in September 4, 2018 meeting,.
- Dick Ellis (board member)
Cedar Ridge Homeowners Association
May have attended portion of September 4, 2018 meeting,.
Neutral Parties
- Kay Abramsohn (ALJ)
Office of Administrative Hearings
Administrative Law Judge,,.
- Judy Lowe (commissioner)
Arizona Department of Real Estate
Commissioner,,.
