Tag Archives: A.R.S. § 41-1092.08

John Sellers vs. Rancho Madera Condominium Association

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Case Summary

Case ID 17F-H1716021-REL
Agency ADRE
Tribunal OAH
Decision Date 2017-03-30
Administrative Law Judge Diane Mihalsky
Outcome none
Filing Fees Refunded $0.00
Civil Penalties $0.00

Parties & Counsel

Petitioner John Sellers Counsel —
Respondent Rancho Madera Condominium Association Counsel Lydia Peirce Linsmeier, Esq.

Alleged Violations

A.R.S. § 33-1258

Outcome Summary

The Administrative Law Judge denied the Petitioner's request, finding that the Respondent HOA complied with A.R.S. § 33-1258 by providing documents related to expenditures, and was not required to provide bank signature cards or read-only online access credentials.

Why this result: Petitioner failed to meet the burden of proof that Respondent violated A.R.S. § 33-1258 because the statute does not require the association to provide records (like signature cards or usernames/passwords) which are not financial records showing actual expenditures and are often held by the financial institution.

Key Issues & Findings

Association financial and other records; applicability

Petitioner, a member of the HOA, alleged the HOA violated A.R.S. § 33-1258 by refusing access to bank account signature cards and read-only user names/passwords. The ALJ found that these items were not 'financial and other records' that the association was statutorily required to provide, as they related to mechanisms for disbursement rather than actual expenditure, and would be maintained by the bank, not the association.

Orders: Petitioner's petition was denied and dismissed.

Filing fee: $0.00, Fee refunded: No

Disposition: respondent_win

Cited:

  • A.R.S. § 33-1258
  • A.R.S. § 41-2198.01

Analytics Highlights

Topics: Records Request, Condominium Act, Access to Records, Financial Records, Bank Records
Additional Citations:

  • A.R.S. § 33-1258
  • A.R.S. § 41-2198.01
  • A.R.S. § 41-1092.08

Video Overview

Audio Overview

Decision Documents

17F-H1716021-REL Decision – 549566.pdf

Uploaded 2026-01-23T17:18:59 (60.9 KB)

17F-H1716021-REL Decision – 554490.pdf

Uploaded 2026-01-23T17:19:02 (88.6 KB)

17F-H1716021-REL Decision – 558591.pdf

Uploaded 2026-01-23T17:19:05 (757.3 KB)





Briefing Doc – 17F-H1716021-REL


Administrative Hearing Briefing: Sellers v. Rancho Madera Condominium Association

Executive Summary

This document synthesizes the proceedings and outcome of the administrative case John Sellers v. Rancho Madera Condominium Association. The core of the dispute was Petitioner John Sellers’s allegation that the Respondent, Rancho Madera Condominium Association, violated Arizona Revised Statute (A.R.S.) § 33-1258 by refusing to produce specific records: bank account signature cards and read-only online banking credentials for the association’s account with Mutual of Omaha.

The Administrative Law Judge (ALJ) ultimately recommended the petition be denied, a decision that was formally adopted by the Commissioner of the Arizona Department of Real Estate. The ruling hinged on a narrow interpretation of the statute. The ALJ concluded that the requested items were not “financial and other records of the association” as required by law. Key findings supporting this conclusion were:

• Custody: The signature cards, if they exist, are records held by the bank (Mutual of Omaha), not the association.

• Nature of Request: Online user names and passwords constitute “information,” not a “document” or “record” in the statutory sense.

• Sufficient Disclosure: The association had already provided a comprehensive set of financial documents (bank statements, contracts, resolutions, etc.) sufficient for a member to ascertain whether the association was prudently managing its funds, thereby satisfying the plain-meaning purpose of A.R.S. § 33-1258.

The petitioner’s arguments that such records must exist under federal banking regulations and that electronic access is superior to paper records were deemed policy arguments to be addressed to the legislature, not grounds for finding a statutory violation.

Case Overview

Case Name

John Sellers, Petitioner, vs. Rancho Madera Condominium Association, Respondent

Case Number

No. 17F-H1716021-REL (also listed as DOCKET NO. 17F-H1716021-REL and CASE NO. HO 17-16/021)

Petitioner

John Sellers (Appeared on his own behalf)

Respondent

Rancho Madera Condominium Association

Respondent’s Counsel

Lydia Peirce Linsmeier, Esq., Carpenter, Hazlewood, Delgado & Bolen, PLC

Adjudicating Body

Arizona Office of Administrative Hearings

Reviewing Body

Arizona Department of Real Estate

Administrative Law Judge

Diane Mihalsky

Commissioner

Judy Lowe, Arizona Department of Real Estate

Core Allegation and Legal Framework

Petitioner’s Claim

On or about December 20, 2016, John Sellers, a condominium owner and member of the Rancho Madera Condominium Association, filed a petition with the Arizona Department of Real Estate. The petition alleged that the association had violated A.R.S. § 33-1258 by refusing to provide two specific items related to its bank account at Mutual of Omaha:

1. Bank account signature cards.

2. Read-only user names and passwords for online access to the account.

Sellers argued that these documents must exist, citing federal banking statutes and regulations intended to combat terrorism.

Governing Statute: A.R.S. § 33-1258

The case revolved around the interpretation of A.R.S. § 33-1258, “Association financial and other records.” The key provisions of this statute state:

• A. Right to Examine: “Except as provided in subsection B of this section, all financial and other records of the association shall be made reasonably available for examination by any member…”

• Timeline: An association has ten business days to fulfill a request for examination and ten business days to provide copies upon request.

• Fees: An association may charge a fee of not more than fifteen cents per page for copies.

• B. Withholdable Records: The statute allows an association to withhold records related to:

1. Privileged attorney-client communication.

2. Pending litigation.

3. Records of board meetings not required to be open to all members.

4. Personal, health, or financial records of individual members or employees.

5. Records related to job performance or complaints against employees.

• C. Legal Prohibitions: An association is not required to disclose records if doing so would violate state or federal law.

The Uniform Condominium Act, of which this statute is a part, does not provide a more specific definition of “financial and other records.”

Factual Findings and Evidence Presented

Records Provided by the Association

Prior to the hearing, the Respondent had already provided the Petitioner with a substantial volume of financial records. Emails attached to the initial petition indicated that the following documents were furnished:

• All bank statements

• Account opening documentation

• Forms for members’ direct debit authorizations

• The Board’s resolution authorizing the opening of the bank account

• Agreements between the property management company, Trestle Management Group, and Mutual of Omaha regarding fees, indemnities, and netting

• The association’s insurance certificate

• The association’s management contract with Trestle Management Group

Witness Testimony

A hearing was held on March 7, 2017, where testimony was presented by both parties.

• Petitioner’s Testimony: John Sellers testified on his own behalf and submitted ten exhibits.

• Respondent’s Witnesses:

◦ Marc Vasquez (Vice President of Trestle Management Group): Testified that all signature cards for the association’s bank accounts were held by the bank at which the accounts were opened. He stated that Mutual of Omaha was the custodian of those cards.

◦ Alan Simpson (Vice President of Respondent’s Board) & Marc Kaplan (President of Respondent’s Board): Both testified that they did not have user names and passwords for the association’s Mutual of Omaha account. They believed, however, that the association’s treasurer may have had such credentials to access the account online.

Administrative Law Judge’s Decision and Rationale

The ALJ’s decision, issued on March 29, 2017, denied the Petitioner’s petition. The reasoning was based on a direct interpretation of A.R.S. § 33-1258 and the evidence presented.

• Burden of Proof: The decision established that the Petitioner bore the burden of proving by a “preponderance of the evidence” that the Respondent had violated the statute. A preponderance of the evidence is defined as proof that “convinces the trier of fact that the contention is more probably true than not.”

• Statutory Interpretation: The ALJ determined that the “plain meaning” of A.R.S. § 33-1258 is to provide members with access to documents that allow them to “ascertain whether the association is prudently managing its members’ assessments.” The decision explicitly states that the numerous documents already provided by the Respondent fulfilled this purpose.

• Custody and Control: A central finding was that the requested items were not “records of the association.” The signature cards were records held and maintained by a third party, Mutual of Omaha. The statute does not compel an association to produce records that are not in its possession or under its control.

• Information vs. Documents: The decision drew a distinction between records and information, stating, “The user names and passwords are information, not a document.” Furthermore, it noted that these items “do not relate to Respondent’s actual expenditure of members’ assessments” but rather to the mechanisms for disbursing funds.

• Scope of the Statute: The ALJ concluded that A.R.S. § 33-1258 does not require an association to “create, maintain, or provide this information or documentation to Petitioner, either to serve his convenience or to allow him to ascertain Respondent’s or Mutual of Omaha’s compliance with federal banking statutes that are not incorporated in the Uniform Condominium Act.”

• Policy Arguments: The Petitioner’s contention that “paper access to the account information is inferior to electronic access” was dismissed as “a policy argument that should be addressed to the Legislature.” The statute only requires that records be made “reasonably available,” which the Respondent had done.

Procedural History and Final Outcome

c. Dec. 20, 2016

John Sellers files a petition with the Arizona Department of Real Estate.

Mar. 7, 2017

An evidentiary hearing is held before ALJ Diane Mihalsky. An order is issued holding the record open for the parties to submit legal memoranda regarding the scope of A.R.S. § 33-1258.

Mar. 21, 2017

The deadline for submitting legal memoranda passes, and the record on the matter is closed.

Mar. 29, 2017

ALJ Diane Mihalsky issues the “Administrative Law Judge Decision,” which includes Findings of Fact, Conclusions of Law, and a Recommended Order to deny the Petitioner’s petition.

Mar. 30, 2017

Judy Lowe, Commissioner of the Department of Real Estate, issues a “Final Order.” This order formally accepts and adopts the ALJ’s decision, and the petition is denied.

The Final Order, effective immediately upon service, represented the final administrative action in the matter. The order noted that parties could file a motion for rehearing within 30 days or appeal the final administrative decision through judicial review.






Study Guide – 17F-H1716021-REL


Study Guide:Sellers v. Rancho Madera Condominium Association

This study guide provides a comprehensive review of the administrative case John Sellers v. Rancho Madera Condominium Association, Case No. 17F-H1716021-REL. It covers the key parties, legal arguments, statutory interpretations, and the ultimate decision rendered by the Office of Administrative Hearings and the Arizona Department of Real Estate.

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Short-Answer Quiz

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

1. What was the central allegation made by the Petitioner, John Sellers, against the Rancho Madera Condominium Association?

2. Identify the specific Arizona Revised Statute (A.R.S.) that formed the basis of the legal dispute and summarize its primary requirement for homeowners’ associations.

3. What specific documents or information did John Sellers request that the association refused to provide?

4. In its defense, what was the association’s stated reason for not producing the requested items?

5. List the documents that the association did provide to the Petitioner prior to the hearing.

6. Who testified on behalf of the Respondent association at the March 7, 2017 hearing?

7. How did the Administrative Law Judge (ALJ) distinguish between “information” and “documents” in her legal conclusions?

8. What is the “burden of proof” in this case, and which party was responsible for meeting it?

9. What was the final outcome of the petition as determined by the Administrative Law Judge and subsequently adopted by the Commissioner of the Department of Real Estate?

10. According to the ALJ’s decision, what is the plain meaning and purpose of A.R.S. § 33-1258?

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Answer Key

1. The Petitioner, John Sellers, alleged that the Respondent, Rancho Madera Condominium Association, had violated A.R.S. § 33-1258. The specific violation was the association’s refusal to provide him with certain records related to its bank account at Mutual of Omaha.

2. The statute at the center of the dispute was A.R.S. § 33-1258, titled “Association financial and other records.” This statute generally requires that all financial and other records of a homeowners’ association be made reasonably available for examination by any member within ten business days of a request.

3. John Sellers requested bank account signature cards for the association’s Mutual of Omaha account. He also requested read-only user names and passwords for online access to that same account.

4. The association denied the request because it asserted that the requested documents and information either did not exist or were not included in the association’s records. It was testified that the signature cards were held by the bank, Mutual of Omaha, as their custodian.

5. The association provided copies of all bank statements, account opening documentation, direct debit authorization forms, the Board’s resolution to open the account, agreements between its management company (Trestle) and the bank, its insurance certificate, and its management contract with Trestle.

6. Three witnesses testified for the Respondent: Alan Simpson (Vice President of the Board), Marc Kaplan (President of the Board), and Marc Vasquez (Vice President of Trestle Management Group).

7. The ALJ concluded that the requested user names and passwords constituted “information,” not a “document” as covered by the statute. She further reasoned that neither the signature cards nor the online credentials related to the actual expenditure of funds, but rather to the mechanisms for disbursement, and were maintained by the bank, not the association.

8. The burden of proof rested on the Petitioner, John Sellers, to establish by a “preponderance of the evidence” that the Respondent had violated the statute. A preponderance of the evidence is proof that convinces the trier of fact that a contention is more probably true than not.

9. The Administrative Law Judge issued a recommended order denying the Petitioner’s petition. This decision was then adopted by the Commissioner of the Department of Real Estate in a Final Order, formally denying the petition and making the decision binding on the parties.

10. The ALJ determined the plain meaning of A.R.S. § 33-1258 is that associations must provide members with access to documents that allow them to ascertain whether the association is prudently managing its members’ assessments. The judge noted that arguments for different types of access (e.g., electronic vs. paper) are policy arguments that should be addressed to the Legislature.

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Essay Questions

Instructions: The following questions are designed for a more in-depth analysis of the case. Formulate comprehensive responses based on the facts, legal reasoning, and conclusions presented in the source documents.

1. Analyze the Administrative Law Judge’s interpretation of “financial and other records” under A.R.S. § 33-1258. How did this interpretation, particularly the distinction between disbursement mechanisms and actual expenditures, lead to the denial of John Sellers’ petition?

2. Discuss the concept of “burden of proof” as it applied in this case. Explain what “preponderance of the evidence” means and detail why the Petitioner, according to the ALJ’s findings, failed to meet this standard.

3. Trace the procedural timeline of the case from the initial petition filed around December 20, 2016, to the Final Order dated March 30, 2017. Identify the key legal bodies involved (Office of Administrative Hearings, Department of Real Estate) and their respective roles in the process.

4. Evaluate the Petitioner’s argument that federal banking statutes and regulations intended to fight terrorism necessitated the existence and disclosure of the requested records. Why was this argument ultimately unpersuasive to the court?

5. Examine the exceptions to disclosure outlined in A.R.S. § 33-1258(B). Although not the central issue in the final decision, explain how these exceptions frame the limits of a homeowner’s right to association records.

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Glossary of Key Terms

Definition

Administrative Law Judge (ALJ)

An official who presides over administrative hearings, makes findings of fact and conclusions of law, and issues decisions or recommended orders. In this case, Diane Mihalsky served as the ALJ.

A.R.S. § 33-1258

The specific Arizona Revised Statute at the heart of the case, part of the Uniform Condominium Act. It governs a homeowner association’s duty to make its “financial and other records” available for examination by members.

Burden of Proof

The obligation on a party in a legal case to prove their allegations. In this matter, the Petitioner bore the burden of proof.

Commissioner

The head of a government department. In this case, Judy Lowe, the Commissioner of the Arizona Department of Real Estate, adopted the ALJ’s decision and issued the Final Order.

Evidentiary Hearing

A formal proceeding where parties present evidence (such as documents and testimony) before a judge or hearing officer. The hearing in this case was held on March 7, 2017.

Final Order

A binding decision issued by an administrative agency that concludes a case. In this matter, the Final Order was issued by the Commissioner of the Department of Real Estate on March 30, 2017, denying the petition.

Homeowners’ Association

An organization in a subdivision, planned community, or condominium development that makes and enforces rules for the properties and its residents. In this case, the Rancho Madera Condominium Association.

Petitioner

The party who files a petition initiating a legal or administrative action. In this case, John Sellers.

Preponderance of the Evidence

The standard of proof in most civil and administrative cases. It means that the evidence presented is sufficient to incline a fair and impartial mind to one side of the issue rather than the other, establishing that a claim is “more probably true than not.”

Respondent

The party against whom a petition is filed. In this case, the Rancho Madera Condominium Association.

Trestle Management Group (“Trestle”)

The property management company for the Rancho Madera Condominium Association. The Vice President of Trestle, Marc Vasquez, testified at the hearing.

Uniform Condominium Act

The section of Arizona law (Chapter 9 of Title 33, Arizona Revised Statutes) that governs condominiums. A.R.S. § 33-1258 is part of this act.






Blog Post – 17F-H1716021-REL



⚖️

17F-H1716021-REL

3 sources

These sources document the administrative legal proceedings of a dispute between John Sellers (Petitioner) and the Rancho Madera Condominium Association (Respondent) before the Arizona Office of Administrative Hearings. The core issue of the case, No. 17F-H1716021-REL, was the Association’s alleged violation of A.R.S. § 33-1258 by refusing to provide bank account signature cards and read-only user credentials for online access to their bank account. The initial order, dated March 7, 2017, held the record open to allow both parties to submit legal memoranda concerning the scope of corporate records required under the statute. The subsequent Administrative Law Judge Decision, dated March 29, 2017, denied the Petitioner’s petition, concluding that the requested items were not considered financial records the association was legally required to create, maintain, or disclose. Finally, the Commissioner of the Department of Real Estate adopted the ALJ Decision as a Final Order on March 30, 2017.



Case Participants

Petitioner Side

  • John Sellers (petitioner)

Respondent Side

  • Lydia Peirce Linsmeier (respondent attorney)
    Carpenter, Hazlewood, Delgado & Bolen, PLC
  • Alan Simpson (board member/witness)
    Rancho Madera Condominium Association
    Vice President of Respondent's board
  • Marc Kaplan (board member/witness)
    Rancho Madera Condominium Association
    President of Respondent's Board
  • Marc Vasquez (property manager/witness)
    Trestle Management Group
    Vice President of Trestle
  • Annette Graham (attorney staff)
    Carpenter, Hazlewood, Delgado & Bolen, PLC
    Derived from email address (Annette.graham)

Neutral Parties

  • Diane Mihalsky (ALJ)
    Office of Administrative Hearings
  • Judy Lowe (Commissioner)
    Arizona Department of Real Estate
  • Abby Hansen (HOA Coordinator)
    Arizona Department of Real Estate
    Also listed as AHansen

Other Participants

  • M. Johnson (clerical staff)
    Signatory on document transmission
  • LDettorre (ADRE Staff)
    ADRE
    Email recipient
  • djones (ADRE Staff)
    ADRE
    Email recipient
  • jmarshall (ADRE Staff)
    ADRE
    Email recipient
  • ncano (ADRE Staff)
    ADRE
    Email recipient

John Sellers vs. Rancho Madera Condominium Association

Posted on by

Case Summary

Case ID 17F-H1716021-REL
Agency ADRE
Tribunal OAH
Decision Date 2017-03-30
Administrative Law Judge Diane Mihalsky
Outcome none
Filing Fees Refunded $0.00
Civil Penalties $0.00

Parties & Counsel

Petitioner John Sellers Counsel —
Respondent Rancho Madera Condominium Association Counsel Lydia Peirce Linsmeier, Esq.

Alleged Violations

A.R.S. § 33-1258

Outcome Summary

The Administrative Law Judge denied the Petitioner's request, finding that the Respondent HOA complied with A.R.S. § 33-1258 by providing documents related to expenditures, and was not required to provide bank signature cards or read-only online access credentials.

Why this result: Petitioner failed to meet the burden of proof that Respondent violated A.R.S. § 33-1258 because the statute does not require the association to provide records (like signature cards or usernames/passwords) which are not financial records showing actual expenditures and are often held by the financial institution.

Key Issues & Findings

Association financial and other records; applicability

Petitioner, a member of the HOA, alleged the HOA violated A.R.S. § 33-1258 by refusing access to bank account signature cards and read-only user names/passwords. The ALJ found that these items were not 'financial and other records' that the association was statutorily required to provide, as they related to mechanisms for disbursement rather than actual expenditure, and would be maintained by the bank, not the association.

Orders: Petitioner's petition was denied and dismissed.

Filing fee: $0.00, Fee refunded: No

Disposition: respondent_win

Cited:

  • A.R.S. § 33-1258
  • A.R.S. § 41-2198.01

Analytics Highlights

Topics: Records Request, Condominium Act, Access to Records, Financial Records, Bank Records
Additional Citations:

  • A.R.S. § 33-1258
  • A.R.S. § 41-2198.01
  • A.R.S. § 41-1092.08

Audio Overview

Decision Documents

17F-H1716021-REL Decision – 549566.pdf

Uploaded 2025-10-08T06:57:15 (60.9 KB)

17F-H1716021-REL Decision – 554490.pdf

Uploaded 2025-10-08T06:57:16 (88.6 KB)

17F-H1716021-REL Decision – 558591.pdf

Uploaded 2025-10-08T06:57:17 (757.3 KB)





Briefing Doc – 17F-H1716021-REL


Administrative Hearing Briefing: Sellers v. Rancho Madera Condominium Association

Executive Summary

This document synthesizes the proceedings and outcome of the administrative case John Sellers v. Rancho Madera Condominium Association. The core of the dispute was Petitioner John Sellers’s allegation that the Respondent, Rancho Madera Condominium Association, violated Arizona Revised Statute (A.R.S.) § 33-1258 by refusing to produce specific records: bank account signature cards and read-only online banking credentials for the association’s account with Mutual of Omaha.

The Administrative Law Judge (ALJ) ultimately recommended the petition be denied, a decision that was formally adopted by the Commissioner of the Arizona Department of Real Estate. The ruling hinged on a narrow interpretation of the statute. The ALJ concluded that the requested items were not “financial and other records of the association” as required by law. Key findings supporting this conclusion were:

• Custody: The signature cards, if they exist, are records held by the bank (Mutual of Omaha), not the association.

• Nature of Request: Online user names and passwords constitute “information,” not a “document” or “record” in the statutory sense.

• Sufficient Disclosure: The association had already provided a comprehensive set of financial documents (bank statements, contracts, resolutions, etc.) sufficient for a member to ascertain whether the association was prudently managing its funds, thereby satisfying the plain-meaning purpose of A.R.S. § 33-1258.

The petitioner’s arguments that such records must exist under federal banking regulations and that electronic access is superior to paper records were deemed policy arguments to be addressed to the legislature, not grounds for finding a statutory violation.

Case Overview

Case Name

John Sellers, Petitioner, vs. Rancho Madera Condominium Association, Respondent

Case Number

No. 17F-H1716021-REL (also listed as DOCKET NO. 17F-H1716021-REL and CASE NO. HO 17-16/021)

Petitioner

John Sellers (Appeared on his own behalf)

Respondent

Rancho Madera Condominium Association

Respondent’s Counsel

Lydia Peirce Linsmeier, Esq., Carpenter, Hazlewood, Delgado & Bolen, PLC

Adjudicating Body

Arizona Office of Administrative Hearings

Reviewing Body

Arizona Department of Real Estate

Administrative Law Judge

Diane Mihalsky

Commissioner

Judy Lowe, Arizona Department of Real Estate

Core Allegation and Legal Framework

Petitioner’s Claim

On or about December 20, 2016, John Sellers, a condominium owner and member of the Rancho Madera Condominium Association, filed a petition with the Arizona Department of Real Estate. The petition alleged that the association had violated A.R.S. § 33-1258 by refusing to provide two specific items related to its bank account at Mutual of Omaha:

1. Bank account signature cards.

2. Read-only user names and passwords for online access to the account.

Sellers argued that these documents must exist, citing federal banking statutes and regulations intended to combat terrorism.

Governing Statute: A.R.S. § 33-1258

The case revolved around the interpretation of A.R.S. § 33-1258, “Association financial and other records.” The key provisions of this statute state:

• A. Right to Examine: “Except as provided in subsection B of this section, all financial and other records of the association shall be made reasonably available for examination by any member…”

• Timeline: An association has ten business days to fulfill a request for examination and ten business days to provide copies upon request.

• Fees: An association may charge a fee of not more than fifteen cents per page for copies.

• B. Withholdable Records: The statute allows an association to withhold records related to:

1. Privileged attorney-client communication.

2. Pending litigation.

3. Records of board meetings not required to be open to all members.

4. Personal, health, or financial records of individual members or employees.

5. Records related to job performance or complaints against employees.

• C. Legal Prohibitions: An association is not required to disclose records if doing so would violate state or federal law.

The Uniform Condominium Act, of which this statute is a part, does not provide a more specific definition of “financial and other records.”

Factual Findings and Evidence Presented

Records Provided by the Association

Prior to the hearing, the Respondent had already provided the Petitioner with a substantial volume of financial records. Emails attached to the initial petition indicated that the following documents were furnished:

• All bank statements

• Account opening documentation

• Forms for members’ direct debit authorizations

• The Board’s resolution authorizing the opening of the bank account

• Agreements between the property management company, Trestle Management Group, and Mutual of Omaha regarding fees, indemnities, and netting

• The association’s insurance certificate

• The association’s management contract with Trestle Management Group

Witness Testimony

A hearing was held on March 7, 2017, where testimony was presented by both parties.

• Petitioner’s Testimony: John Sellers testified on his own behalf and submitted ten exhibits.

• Respondent’s Witnesses:

◦ Marc Vasquez (Vice President of Trestle Management Group): Testified that all signature cards for the association’s bank accounts were held by the bank at which the accounts were opened. He stated that Mutual of Omaha was the custodian of those cards.

◦ Alan Simpson (Vice President of Respondent’s Board) & Marc Kaplan (President of Respondent’s Board): Both testified that they did not have user names and passwords for the association’s Mutual of Omaha account. They believed, however, that the association’s treasurer may have had such credentials to access the account online.

Administrative Law Judge’s Decision and Rationale

The ALJ’s decision, issued on March 29, 2017, denied the Petitioner’s petition. The reasoning was based on a direct interpretation of A.R.S. § 33-1258 and the evidence presented.

• Burden of Proof: The decision established that the Petitioner bore the burden of proving by a “preponderance of the evidence” that the Respondent had violated the statute. A preponderance of the evidence is defined as proof that “convinces the trier of fact that the contention is more probably true than not.”

• Statutory Interpretation: The ALJ determined that the “plain meaning” of A.R.S. § 33-1258 is to provide members with access to documents that allow them to “ascertain whether the association is prudently managing its members’ assessments.” The decision explicitly states that the numerous documents already provided by the Respondent fulfilled this purpose.

• Custody and Control: A central finding was that the requested items were not “records of the association.” The signature cards were records held and maintained by a third party, Mutual of Omaha. The statute does not compel an association to produce records that are not in its possession or under its control.

• Information vs. Documents: The decision drew a distinction between records and information, stating, “The user names and passwords are information, not a document.” Furthermore, it noted that these items “do not relate to Respondent’s actual expenditure of members’ assessments” but rather to the mechanisms for disbursing funds.

• Scope of the Statute: The ALJ concluded that A.R.S. § 33-1258 does not require an association to “create, maintain, or provide this information or documentation to Petitioner, either to serve his convenience or to allow him to ascertain Respondent’s or Mutual of Omaha’s compliance with federal banking statutes that are not incorporated in the Uniform Condominium Act.”

• Policy Arguments: The Petitioner’s contention that “paper access to the account information is inferior to electronic access” was dismissed as “a policy argument that should be addressed to the Legislature.” The statute only requires that records be made “reasonably available,” which the Respondent had done.

Procedural History and Final Outcome

c. Dec. 20, 2016

John Sellers files a petition with the Arizona Department of Real Estate.

Mar. 7, 2017

An evidentiary hearing is held before ALJ Diane Mihalsky. An order is issued holding the record open for the parties to submit legal memoranda regarding the scope of A.R.S. § 33-1258.

Mar. 21, 2017

The deadline for submitting legal memoranda passes, and the record on the matter is closed.

Mar. 29, 2017

ALJ Diane Mihalsky issues the “Administrative Law Judge Decision,” which includes Findings of Fact, Conclusions of Law, and a Recommended Order to deny the Petitioner’s petition.

Mar. 30, 2017

Judy Lowe, Commissioner of the Department of Real Estate, issues a “Final Order.” This order formally accepts and adopts the ALJ’s decision, and the petition is denied.

The Final Order, effective immediately upon service, represented the final administrative action in the matter. The order noted that parties could file a motion for rehearing within 30 days or appeal the final administrative decision through judicial review.


John Sellers vs. Rancho Madera Condominium Association

Posted on by

Case Summary

Case ID 17F-H1716021-REL
Agency ADRE
Tribunal OAH
Decision Date 2017-03-30
Administrative Law Judge Diane Mihalsky
Outcome none
Filing Fees Refunded $0.00
Civil Penalties $0.00

Parties & Counsel

Petitioner John Sellers Counsel —
Respondent Rancho Madera Condominium Association Counsel Lydia Peirce Linsmeier, Esq.

Alleged Violations

A.R.S. § 33-1258

Outcome Summary

The Administrative Law Judge denied the Petitioner's request, finding that the Respondent HOA complied with A.R.S. § 33-1258 by providing documents related to expenditures, and was not required to provide bank signature cards or read-only online access credentials.

Why this result: Petitioner failed to meet the burden of proof that Respondent violated A.R.S. § 33-1258 because the statute does not require the association to provide records (like signature cards or usernames/passwords) which are not financial records showing actual expenditures and are often held by the financial institution.

Key Issues & Findings

Association financial and other records; applicability

Petitioner, a member of the HOA, alleged the HOA violated A.R.S. § 33-1258 by refusing access to bank account signature cards and read-only user names/passwords. The ALJ found that these items were not 'financial and other records' that the association was statutorily required to provide, as they related to mechanisms for disbursement rather than actual expenditure, and would be maintained by the bank, not the association.

Orders: Petitioner's petition was denied and dismissed.

Filing fee: $0.00, Fee refunded: No

Disposition: respondent_win

Cited:

  • A.R.S. § 33-1258
  • A.R.S. § 41-2198.01

Analytics Highlights

Topics: Records Request, Condominium Act, Access to Records, Financial Records, Bank Records
Additional Citations:

  • A.R.S. § 33-1258
  • A.R.S. § 41-2198.01
  • A.R.S. § 41-1092.08

Audio Overview

Decision Documents

17F-H1716021-REL Decision – 549566.pdf

Uploaded 2025-10-08T07:01:27 (60.9 KB)

17F-H1716021-REL Decision – 554490.pdf

Uploaded 2025-10-08T07:01:28 (88.6 KB)

17F-H1716021-REL Decision – 558591.pdf

Uploaded 2025-10-08T07:01:28 (757.3 KB)





Briefing Doc – 17F-H1716021-REL


Administrative Hearing Briefing: Sellers v. Rancho Madera Condominium Association

Executive Summary

This document synthesizes the proceedings and outcome of the administrative case John Sellers v. Rancho Madera Condominium Association. The core of the dispute was Petitioner John Sellers’s allegation that the Respondent, Rancho Madera Condominium Association, violated Arizona Revised Statute (A.R.S.) § 33-1258 by refusing to produce specific records: bank account signature cards and read-only online banking credentials for the association’s account with Mutual of Omaha.

The Administrative Law Judge (ALJ) ultimately recommended the petition be denied, a decision that was formally adopted by the Commissioner of the Arizona Department of Real Estate. The ruling hinged on a narrow interpretation of the statute. The ALJ concluded that the requested items were not “financial and other records of the association” as required by law. Key findings supporting this conclusion were:

• Custody: The signature cards, if they exist, are records held by the bank (Mutual of Omaha), not the association.

• Nature of Request: Online user names and passwords constitute “information,” not a “document” or “record” in the statutory sense.

• Sufficient Disclosure: The association had already provided a comprehensive set of financial documents (bank statements, contracts, resolutions, etc.) sufficient for a member to ascertain whether the association was prudently managing its funds, thereby satisfying the plain-meaning purpose of A.R.S. § 33-1258.

The petitioner’s arguments that such records must exist under federal banking regulations and that electronic access is superior to paper records were deemed policy arguments to be addressed to the legislature, not grounds for finding a statutory violation.

Case Overview

Case Name

John Sellers, Petitioner, vs. Rancho Madera Condominium Association, Respondent

Case Number

No. 17F-H1716021-REL (also listed as DOCKET NO. 17F-H1716021-REL and CASE NO. HO 17-16/021)

Petitioner

John Sellers (Appeared on his own behalf)

Respondent

Rancho Madera Condominium Association

Respondent’s Counsel

Lydia Peirce Linsmeier, Esq., Carpenter, Hazlewood, Delgado & Bolen, PLC

Adjudicating Body

Arizona Office of Administrative Hearings

Reviewing Body

Arizona Department of Real Estate

Administrative Law Judge

Diane Mihalsky

Commissioner

Judy Lowe, Arizona Department of Real Estate

Core Allegation and Legal Framework

Petitioner’s Claim

On or about December 20, 2016, John Sellers, a condominium owner and member of the Rancho Madera Condominium Association, filed a petition with the Arizona Department of Real Estate. The petition alleged that the association had violated A.R.S. § 33-1258 by refusing to provide two specific items related to its bank account at Mutual of Omaha:

1. Bank account signature cards.

2. Read-only user names and passwords for online access to the account.

Sellers argued that these documents must exist, citing federal banking statutes and regulations intended to combat terrorism.

Governing Statute: A.R.S. § 33-1258

The case revolved around the interpretation of A.R.S. § 33-1258, “Association financial and other records.” The key provisions of this statute state:

• A. Right to Examine: “Except as provided in subsection B of this section, all financial and other records of the association shall be made reasonably available for examination by any member…”

• Timeline: An association has ten business days to fulfill a request for examination and ten business days to provide copies upon request.

• Fees: An association may charge a fee of not more than fifteen cents per page for copies.

• B. Withholdable Records: The statute allows an association to withhold records related to:

1. Privileged attorney-client communication.

2. Pending litigation.

3. Records of board meetings not required to be open to all members.

4. Personal, health, or financial records of individual members or employees.

5. Records related to job performance or complaints against employees.

• C. Legal Prohibitions: An association is not required to disclose records if doing so would violate state or federal law.

The Uniform Condominium Act, of which this statute is a part, does not provide a more specific definition of “financial and other records.”

Factual Findings and Evidence Presented

Records Provided by the Association

Prior to the hearing, the Respondent had already provided the Petitioner with a substantial volume of financial records. Emails attached to the initial petition indicated that the following documents were furnished:

• All bank statements

• Account opening documentation

• Forms for members’ direct debit authorizations

• The Board’s resolution authorizing the opening of the bank account

• Agreements between the property management company, Trestle Management Group, and Mutual of Omaha regarding fees, indemnities, and netting

• The association’s insurance certificate

• The association’s management contract with Trestle Management Group

Witness Testimony

A hearing was held on March 7, 2017, where testimony was presented by both parties.

• Petitioner’s Testimony: John Sellers testified on his own behalf and submitted ten exhibits.

• Respondent’s Witnesses:

◦ Marc Vasquez (Vice President of Trestle Management Group): Testified that all signature cards for the association’s bank accounts were held by the bank at which the accounts were opened. He stated that Mutual of Omaha was the custodian of those cards.

◦ Alan Simpson (Vice President of Respondent’s Board) & Marc Kaplan (President of Respondent’s Board): Both testified that they did not have user names and passwords for the association’s Mutual of Omaha account. They believed, however, that the association’s treasurer may have had such credentials to access the account online.

Administrative Law Judge’s Decision and Rationale

The ALJ’s decision, issued on March 29, 2017, denied the Petitioner’s petition. The reasoning was based on a direct interpretation of A.R.S. § 33-1258 and the evidence presented.

• Burden of Proof: The decision established that the Petitioner bore the burden of proving by a “preponderance of the evidence” that the Respondent had violated the statute. A preponderance of the evidence is defined as proof that “convinces the trier of fact that the contention is more probably true than not.”

• Statutory Interpretation: The ALJ determined that the “plain meaning” of A.R.S. § 33-1258 is to provide members with access to documents that allow them to “ascertain whether the association is prudently managing its members’ assessments.” The decision explicitly states that the numerous documents already provided by the Respondent fulfilled this purpose.

• Custody and Control: A central finding was that the requested items were not “records of the association.” The signature cards were records held and maintained by a third party, Mutual of Omaha. The statute does not compel an association to produce records that are not in its possession or under its control.

• Information vs. Documents: The decision drew a distinction between records and information, stating, “The user names and passwords are information, not a document.” Furthermore, it noted that these items “do not relate to Respondent’s actual expenditure of members’ assessments” but rather to the mechanisms for disbursing funds.

• Scope of the Statute: The ALJ concluded that A.R.S. § 33-1258 does not require an association to “create, maintain, or provide this information or documentation to Petitioner, either to serve his convenience or to allow him to ascertain Respondent’s or Mutual of Omaha’s compliance with federal banking statutes that are not incorporated in the Uniform Condominium Act.”

• Policy Arguments: The Petitioner’s contention that “paper access to the account information is inferior to electronic access” was dismissed as “a policy argument that should be addressed to the Legislature.” The statute only requires that records be made “reasonably available,” which the Respondent had done.

Procedural History and Final Outcome

c. Dec. 20, 2016

John Sellers files a petition with the Arizona Department of Real Estate.

Mar. 7, 2017

An evidentiary hearing is held before ALJ Diane Mihalsky. An order is issued holding the record open for the parties to submit legal memoranda regarding the scope of A.R.S. § 33-1258.

Mar. 21, 2017

The deadline for submitting legal memoranda passes, and the record on the matter is closed.

Mar. 29, 2017

ALJ Diane Mihalsky issues the “Administrative Law Judge Decision,” which includes Findings of Fact, Conclusions of Law, and a Recommended Order to deny the Petitioner’s petition.

Mar. 30, 2017

Judy Lowe, Commissioner of the Department of Real Estate, issues a “Final Order.” This order formally accepts and adopts the ALJ’s decision, and the petition is denied.

The Final Order, effective immediately upon service, represented the final administrative action in the matter. The order noted that parties could file a motion for rehearing within 30 days or appeal the final administrative decision through judicial review.


Brian Sopatk vs. The Lakeshore Village Condo. Assoc., Inc.

Posted on by

Case Summary

Case ID 17F-H1716004-REL-RHG
Agency ADRE
Tribunal OAH
Decision Date 2017-08-10
Administrative Law Judge Thomas Shedden
Outcome none
Filing Fees Refunded $0.00
Civil Penalties $0.00

Parties & Counsel

Petitioner Brian Sopatyk Counsel Nathan Andrews, Esq. and Jill Kennedy, Esq.
Respondent The Lakeshore Village Condo. Association, Inc. Counsel Bradley R. Jardine, Esq.

Alleged Violations

ARIZ. REV. STAT. section 33-1260

Outcome Summary

The Administrative Law Judge dismissed the petition because the Petitioner failed to prove the HOA violated A.R.S. § 33-1260. The contested $660 fee was determined to be a working capital contribution authorized by the Association's CC&Rs (section 8.13), which is distinct from the resale disclosure fees limited by statute.

Why this result: The Petitioner did not meet the burden of proof to show a statutory violation because the fee in question was a valid working capital fee collected under the CC&Rs, not an illegal transfer fee under A.R.S. § 33-1260.

Key Issues & Findings

Alleged violation of statutory maximum fee for resale disclosure/transfer documents.

Petitioner alleged the Association charged a $660 transfer fee, plus a $30 statement fee, violating A.R.S. § 33-1260, which limits aggregate fees for resale disclosure and transfer services to $400. The ALJ found the $660 fee was a working capital fee authorized by CC&R section 8.13, not a statutory disclosure fee, despite being mislabeled by the Association.

Orders: Petitioner Brian D. Sopatyk's petition is dismissed.

Filing fee: $0.00, Fee refunded: No

Disposition: respondent_win

Cited:

  • ARIZ. REV. STAT. section 33-1260
  • ARIZ. REV. STAT. § 32-2199.01
  • ARIZ. REV. STAT. § 32-2199.02
  • ARIZ. REV. STAT. § 33-1242(A)(2)
  • ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11
  • ARIZ. ADMIN. CODE § R2-19-119

Analytics Highlights

Topics: HOA fees, transfer fee, working capital fund, statutory compliance, burden of proof, condominium association, resale disclosure
Additional Citations:

  • ARIZ. REV. STAT. section 33-1260
  • ARIZ. REV. STAT. § 32-2199.01
  • ARIZ. REV. STAT. § 32-2199.02
  • ARIZ. REV. STAT. § 33-1242(A)(2)
  • ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11
  • ARIZ. ADMIN. CODE § R2-19-119
  • A.R.S. § 41-1092.08
  • A.R.S. § 41-1092.09
  • A.R.S. § 1-243

Audio Overview

Decision Documents

17f-H1716004-REL Decision – 531040.pdf

Uploaded 2025-10-08T07:02:39 (67.9 KB)

17f-H1716004-REL Decision – 540004.pdf

Uploaded 2025-10-08T07:02:40 (154.0 KB)





Briefing Doc – 17f-H1716004-REL


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

Executive Summary

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

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

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

——————————————————————————–

Case Overview

Parties and Jurisdiction

Representation

Petitioner

Brian Sopatyk

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

Respondent

The Lakeshore Village Condominium Association, Inc.

Bradley R. Jardine, Esq. (Both Hearings)

Jurisdiction

Arizona Department of Real Estate (ADRE)

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

Adjudicator

Administrative Law Judge (ALJ) Thomas Shedden

Office of Administrative Hearings, Phoenix, AZ

Core Allegation and Governing Statute

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

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

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

——————————————————————————–

Chronology of Legal Proceedings

March 2, 2015

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

May 18, 2016

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

August 9, 2016

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

November 14, 2016

The initial hearing is conducted before ALJ Thomas Shedden.

November 29, 2016

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

December 13, 2016

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

February 7, 2017

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

June 9, 2017

A re-hearing is conducted before ALJ Thomas Shedden.

June 26, 2017

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

August 1, 2017

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

August 10, 2017

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

——————————————————————————–

Analysis of Arguments and Evidence

Petitioner’s Position (Brian Sopatyk)

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

• Evidence Presented:

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

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

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

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

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

• Evidence and Testimony:

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

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

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

——————————————————————————–

Judicial Findings and Final Disposition

Standard and Burden of Proof

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

Initial Hearing Decision (November 29, 2016)

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

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

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

Re-Hearing Decision (June 26, 2017)

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

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

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

Final Administrative Disposition

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


Brian Sopatk vs. The Lakeshore Village Condo. Assoc., Inc.

Posted on by

Case Summary

Case ID 17F-H1716004-REL-RHG
Agency ADRE
Tribunal OAH
Decision Date 2017-08-10
Administrative Law Judge Thomas Shedden
Outcome none
Filing Fees Refunded $0.00
Civil Penalties $0.00

Parties & Counsel

Petitioner Brian Sopatyk Counsel Nathan Andrews, Esq. and Jill Kennedy, Esq.
Respondent The Lakeshore Village Condo. Association, Inc. Counsel Bradley R. Jardine, Esq.

Alleged Violations

ARIZ. REV. STAT. section 33-1260

Outcome Summary

The Administrative Law Judge dismissed the petition because the Petitioner failed to prove the HOA violated A.R.S. § 33-1260. The contested $660 fee was determined to be a working capital contribution authorized by the Association's CC&Rs (section 8.13), which is distinct from the resale disclosure fees limited by statute.

Why this result: The Petitioner did not meet the burden of proof to show a statutory violation because the fee in question was a valid working capital fee collected under the CC&Rs, not an illegal transfer fee under A.R.S. § 33-1260.

Key Issues & Findings

Alleged violation of statutory maximum fee for resale disclosure/transfer documents.

Petitioner alleged the Association charged a $660 transfer fee, plus a $30 statement fee, violating A.R.S. § 33-1260, which limits aggregate fees for resale disclosure and transfer services to $400. The ALJ found the $660 fee was a working capital fee authorized by CC&R section 8.13, not a statutory disclosure fee, despite being mislabeled by the Association.

Orders: Petitioner Brian D. Sopatyk's petition is dismissed.

Filing fee: $0.00, Fee refunded: No

Disposition: respondent_win

Cited:

  • ARIZ. REV. STAT. section 33-1260
  • ARIZ. REV. STAT. § 32-2199.01
  • ARIZ. REV. STAT. § 32-2199.02
  • ARIZ. REV. STAT. § 33-1242(A)(2)
  • ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11
  • ARIZ. ADMIN. CODE § R2-19-119

Analytics Highlights

Topics: HOA fees, transfer fee, working capital fund, statutory compliance, burden of proof, condominium association, resale disclosure
Additional Citations:

  • ARIZ. REV. STAT. section 33-1260
  • ARIZ. REV. STAT. § 32-2199.01
  • ARIZ. REV. STAT. § 32-2199.02
  • ARIZ. REV. STAT. § 33-1242(A)(2)
  • ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11
  • ARIZ. ADMIN. CODE § R2-19-119
  • A.R.S. § 41-1092.08
  • A.R.S. § 41-1092.09
  • A.R.S. § 1-243

Video Overview

Audio Overview

Decision Documents

17f-H1716004-REL Decision – 531040.pdf

Uploaded 2025-10-09T03:31:50 (67.9 KB)

17f-H1716004-REL Decision – 540004.pdf

Uploaded 2025-10-09T03:31:51 (154.0 KB)





Briefing Doc – 17f-H1716004-REL


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

Executive Summary

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

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

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

——————————————————————————–

Case Overview

Parties and Jurisdiction

Representation

Petitioner

Brian Sopatyk

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

Respondent

The Lakeshore Village Condominium Association, Inc.

Bradley R. Jardine, Esq. (Both Hearings)

Jurisdiction

Arizona Department of Real Estate (ADRE)

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

Adjudicator

Administrative Law Judge (ALJ) Thomas Shedden

Office of Administrative Hearings, Phoenix, AZ

Core Allegation and Governing Statute

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

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

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

——————————————————————————–

Chronology of Legal Proceedings

March 2, 2015

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

May 18, 2016

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

August 9, 2016

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

November 14, 2016

The initial hearing is conducted before ALJ Thomas Shedden.

November 29, 2016

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

December 13, 2016

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

February 7, 2017

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

June 9, 2017

A re-hearing is conducted before ALJ Thomas Shedden.

June 26, 2017

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

August 1, 2017

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

August 10, 2017

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

——————————————————————————–

Analysis of Arguments and Evidence

Petitioner’s Position (Brian Sopatyk)

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

• Evidence Presented:

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

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

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

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

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

• Evidence and Testimony:

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

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

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

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Judicial Findings and Final Disposition

Standard and Burden of Proof

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

Initial Hearing Decision (November 29, 2016)

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

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

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

Re-Hearing Decision (June 26, 2017)

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

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

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

Final Administrative Disposition

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






Study Guide – 17f-H1716004-REL


Study Guide: Sopatyk v. The Lakeshore Village Condo. Association, Inc.

Quiz: Short-Answer Questions

Instructions: Answer the following ten questions based on the provided case documents. Each answer should be two to three sentences in length.

1. What specific Arizona Revised Statute did petitioner Brian Sopatyk allege that The Lakeshore Village Condominium Association violated, and what is the core requirement of that statute?

2. Identify the two fees charged in connection with Mr. Sopatyk’s unit purchase, the amount of each fee, and how they were documented on the HUD-1 disclosure statement.

3. What was the Association’s central argument for why the $660 fee did not violate the statute in question?

4. Who was the Association’s manager, and what explanation did she provide for the labeling of the $660 fee?

5. According to the Association’s Declaration of Covenants, Conditions and Restrictions (CC&Rs), what is the purpose of the fee outlined in section 8.13?

6. What was the outcome of the initial administrative hearing held on November 14, 2016?

7. During the rehearing, a discrepancy was noted between Mr. Sopatyk’s sworn petition and his testimony regarding the payment of the $660 fee. What was this discrepancy?

8. What corrective actions did the Association’s Board vote to take during its meeting on May 18, 2016, after Mr. Sopatyk raised the issue?

9. What is the standard of proof the petitioner was required to meet in this case, and did the Administrative Law Judge find that he met it?

10. What was the final, certified administrative decision in this matter after the rehearing on June 9, 2017?

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Answer Key

1. Brian Sopatyk alleged a violation of ARIZ. REV. STAT. section 33-1260. This statute requires a condominium association to provide specific disclosure documents to a prospective purchaser and limits the aggregate fee for preparing these documents and other related services to no more than four hundred dollars.

2. The two fees were a $660 “Transfer Fee” and a $30 “Resale Statement Fee.” The HUD-1 disclosure statement shows the $660 fee was split, with $330 paid by the borrower (Sopatyk) and $330 paid by the seller, while the seller alone paid the $30 fee.

3. The Association’s central argument was that the $660 fee was not a transfer fee for disclosure services but was actually a “working capital fee” collected pursuant to section 8.13 of its CC&Rs. They contended that the fee had been incorrectly labeled as a “transfer fee” due to a clerical error.

4. The Association’s manager was Amy Telnes. She testified that when she became manager, she was incorrectly told the working capital fee was the transfer fee, and these fees had been mislabeled since that time.

5. According to CC&R section 8.13 (“Transfer Fee and Working Capital Fund”), each new unit owner is to be assessed a fee of at least twice the average monthly assessment. These fees are to be deposited into the working capital fund, which the Association refers to as its Reserve Fund.

6. Following the initial hearing, Administrative Law Judge Thomas Shedden found that Mr. Sopatyk had not shown by a preponderance of the evidence that the Association violated the statute. The Judge’s decision was to dismiss Mr. Sopatyk’s petition, and this decision was adopted by the Commissioner of the Department of Real Estate.

7. In his sworn petition, Mr. Sopatyk stated that the $660 fee was split between him and the seller. However, at the hearing, he testified that he had in fact paid the entire $660 as part of the negotiated price of the unit, meaning one of his statements had to be false.

8. The Board directed Ms. Telnes to account for all working capital fees and transfer them to the Reserve Account to correct the error. The Board also determined its system was confusing and voted to assess a single transfer fee of $400 (and no other fees) on all future transactions.

9. The petitioner, Mr. Sopatyk, bore the burden of proof and was required to meet the standard of a “preponderance of the evidence.” The Administrative Law Judge concluded in both hearings that Mr. Sopatyk did not meet this burden.

10. The final decision was that Mr. Sopatyk’s petition was dismissed again. On August 10, 2017, the Administrative Law Judge’s decision from the rehearing was certified as the final administrative decision of the Department of Real Estate because the Department took no action to reject or modify it.

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Suggested Essay Questions

1. Analyze the legal concept of “preponderance of the evidence” as it is defined and applied in this case. Explain in detail why the evidence presented by the Association was deemed to have greater convincing force than the evidence presented by the Petitioner, leading to the dismissal of his petition.

2. Discuss the critical role of the Association’s governing documents, specifically CC&R section 8.13, in its successful defense. How did the language of this section allow the Association to re-characterize the disputed $660 fee and differentiate it from the fees regulated by ARIZ. REV. STAT. § 33-1260?

3. Trace the procedural history of case No. 17F-H1716004-REL, from the filing of the petition to the final certified order. Identify the key dates, participants (judges, legal counsel, witnesses), and the function of the Office of Administrative Hearings and the Department of Real Estate in the process.

4. Examine the actions taken by the Association’s Board during its May 18, 2016, meeting. Evaluate whether these actions demonstrated good-faith governance and a proactive attempt to correct a procedural error, and discuss how the minutes from this meeting were used as evidence in the hearing.

5. Despite losing the case, Mr. Sopatyk’s petition prompted significant changes in the Association’s fee structure. Argue whether the petitioner’s actions ultimately served the public interest for future condominium purchasers in the Lakeshore Village community, even though he did not prevail in his specific legal claim.

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Glossary of Key Terms

Definition

Administrative Law Judge (ALJ)

The official, in this case Thomas Shedden, who presides over hearings at the Office of Administrative Hearings and issues a decision based on the evidence presented.

ARIZ. REV. STAT. § 33-1260

The Arizona statute that requires a condominium association to furnish a prospective purchaser with disclosure documents and other information. It explicitly limits the fee an association can charge for these services to “no more than an aggregate of four hundred dollars.”

Burden of Proof

The responsibility of a party in a legal case to prove their claims. In this matter, the burden of proof was on the petitioner, Brian Sopatyk.

The Declaration of Covenants, Conditions and Restrictions, which are the governing documents for the condominium association. Section 8.13 of the Lakeshore Village CC&Rs authorizes the collection of a fee for a working capital fund.

Petitioner

The party who initiates a legal action by filing a petition. In this case, Brian Sopatyk.

Preponderance of the Evidence

The standard of proof required in this case, defined as “The greater weight of the evidence… by evidence that has the most convincing force; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.”

Respondent

The party defending against a petition. In this case, The Lakeshore Village Condominium Association, Inc.

Reserve Fund

The account into which the Association deposits its working capital fees. It is also referred to as the Working Capital Fund.

Statement Fee / Resale Statement Fee

A $30 fee, separate from the disputed $660, that was paid by the seller to the Association for the preparation of the resale statement. This fee was considered part of the allowable charges under ARIZ. REV. STAT. § 33-1260.

Transfer Fee

The label erroneously applied to the $660 fee on the disclosure statement and HUD-1 form. The central dispute of the case was whether this was a true transfer fee subject to the statutory cap or a mislabeled working capital fee.

Working Capital Fee

A fee authorized by CC&R section 8.13 to be assessed from each new unit owner for the purpose of funding the Association’s working capital fund (Reserve Fund). The Association successfully argued the $660 charge was this type of fee.






Blog Post – 17f-H1716004-REL


How a $660 Fee Sparked a Legal Showdown: 5 Surprising Lessons from a Homeowner vs. HOA Dispute

We sign, we initial, we pay—assuming every line item on our closing documents is gospel. When buying a home in a condominium association, the stack of paperwork and list of fees can feel overwhelming. But what if one of those “standard” fees wasn’t standard at all?

For homeowner Brian Sopatyk, a single $660 charge from The Lakeshore Village Condominium Association wasn’t just a number; it was a thread he pulled that unraveled a surprising story of HOA governance, legal strategy, and the power of asking “why?” This post breaks down the five most impactful takeaways from a seemingly minor dispute that went all the way through a formal hearing and re-hearing.

1. A Simple Label Can Ignite a Legal Firestorm

A clerical error triggers a full-blown legal dispute.

The entire case hinged on a single, crucial mistake: the HOA mislabeled a “working capital fee” as a “transfer fee” on its disclosure forms.

Why was this one word so important? Because Mr. Sopatyk’s formal petition alleged that by charging a “$660 transfer fee,” the HOA violated Arizona statute 33-1260, which caps fees for resale disclosure services at a maximum of $400. On its face, the $660 charge looked like a clear violation of state law.

The Association’s manager, Amy Telnes, testified that when she took over her position, she was given erroneous information that the working capital fee was the transfer fee. As a result, the charge had been incorrectly labeled ever since. This simple administrative error was enough to trigger a formal petition to the Arizona Department of Real Estate, a full administrative hearing, and eventually, a re-hearing, proving how a small clerical mistake can escalate into a significant legal conflict.

2. In the Eyes of the Law, Substance Can Trump Form

Why the fee’s purpose mattered more than its name.

The Association’s core defense was that while the name of the fee was wrong, its purpose and authority were legitimate. The $660 charge, they argued, wasn’t for resale documents (the service capped by state law), but was a “working capital fee” authorized by an entirely different rule: the Association’s own Covenants, Conditions, and Restrictions (CC&Rs).

Specifically, Section 8.13 of the CC&Rs allowed for this assessment, with the funds designated for the Association’s reserve fund. This working capital fee, in contrast, was an assessment on the new owner as mandated by the CC&Rs to ensure the association’s financial health. The actual fee for the statutory disclosure documents was a separate, compliant $30 “Resale Statement Fee,” which was paid by the seller.

The Administrative Law Judge ultimately agreed. The fee’s underlying purpose and the HOA’s authority to collect it (its substance) were deemed more important than its incorrect name on the form (its form). This is a crucial lesson for any homeowner challenging an HOA: it’s not enough to find a mistake on a form. You must be prepared to argue against the underlying authority and purpose of the action itself.

3. You Can Lose the Battle but Win the War

How a dismissed case led to a major policy victory.

Perhaps the most counter-intuitive outcome is that although Mr. Sopatyk’s petition was dismissed, his actions were the direct catalyst for a significant and positive policy change by the HOA.

In a summary of the Association’s May 18, 2016, Board Meeting, which was entered as evidence, the judge noted that the Board reviewed the very issue Mr. Sopatyk had raised. Under the pressure of his legal challenge, they came to a powerful conclusion about their own system, determining it was “confusing and unfair.”

As a direct result of this internal review prompted by the dispute, the Board voted to simplify its process. It resolved to assess a single, clear transfer fee of $400 on all future transactions, eliminating the other confusing fees. This proves that even an unsuccessful legal challenge can be a powerful tool, forcing an organization to confront and correct its own problematic practices for the benefit of all future members.

4. The ‘Burden of Proof’ Is More Than Just a Phrase

What it really means to have to prove your case.

In both the original decision and the re-hearing, the judge repeatedly stated that Mr. Sopatyk, as the petitioner, bore the “burden of proof.” This legal standard was critical to the outcome. It meant he had to prove his claim by a “preponderance of the evidence,” which the court documents defined as:

The greater weight of the evidence, not necessarily established by the greater number of witnesses testifying to a fact but by evidence that has the most convincing force; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.

In this case, it meant Mr. Sopatyk’s job was to prove that the $660 fee was, more likely than not, an illegal charge for resale documents. The HOA’s defense—that it was a legally separate “working capital fee” that was simply mislabeled—created enough doubt that he couldn’t clear this hurdle.

5. A Small Contradiction Can Damage Credibility

When every word you say (and write) is on the record.

A fascinating detail appeared in the re-hearing decision, highlighting how every word matters in a legal proceeding.

There was a discrepancy in Mr. Sopatyk’s statements. His sworn petition, filed on August 9, 2016, stated the $660 fee was “split between the seller and the buyer.” However, during the hearing, he testified that he had “in fact paid the entire $660.”

The judge noted this contradiction directly in footnote 3 of the re-hearing decision, stating: “either Mr. Sopatyk’s sworn statement or his testimony must be false.” While not the deciding factor, this kind of inconsistency can subtly erode a petitioner’s standing. Remember the “burden of proof” from Takeaway 4? It requires convincing a judge to “incline a fair and impartial mind” to your side. Contradictions, even small ones, make that inclination much harder to achieve.

Conclusion: The Devil Is in the Details

This case is the perfect microcosm of community association disputes. It began with a clerical error (form), was adjudicated on intent (substance), was lost on a technicality (the burden of proof), yet resulted in a victory for transparency. Mr. Sopatyk may not have won his case, but he won a better system for his neighbors.

The ultimate lesson? In an HOA, the most powerful tool isn’t always a lawsuit—sometimes, it’s a magnifying glass. It leaves us with a thought-provoking question: When is it worth challenging the system for clarity and fairness, even if the outcome isn’t a clear ‘win’ on paper?


Case Participants

Petitioner Side

  • Brian Sopatyk (petitioner)
  • Nathan Andrews (petitioner attorney)
    ASU Alumni Law Group
  • Jill M. Kennedy (petitioner attorney)
    ASU Alumni Law Group
  • Chance Peterson (petitioner attorney)
    ASU Alumni Law Group
  • Judy Sopatyk (party)
    Wife of petitioner and co-purchaser of the unit

Respondent Side

  • Bradley R. Jardine (HOA attorney)
    Jardine Baker Hickman & Houston
    Attorney for Respondent
  • Amy Telnes (property manager/witness)
    The Lakeshore Village Condo. Association, Inc.
    Association manager who testified
  • Michael Cibellis (association president/witness)
    The Lakeshore Village Condo. Association, Inc.
    Association president who testified at rehearing

Neutral Parties

  • Thomas Shedden (ALJ)
  • Judy Lowe (Commissioner)
    ADRE
    Arizona Department of Real Estate Commissioner
  • Greg Hanchett (Interim Director)
    OAH
    Signed Certification of Decision
  • Abby Hansen (HOA Coordinator)
    ADRE
    Administrative contact for rehearing requests
  • Rosella J. Rodriguez (administrative staff)
    Involved in copy mailing/distribution

Brian Sopatk vs. The Lakeshore Village Condo. Assoc., Inc.

Posted on by

Case Summary

Case ID 17F-H1716004-REL-RHG
Agency ADRE
Tribunal OAH
Decision Date 2017-08-10
Administrative Law Judge Thomas Shedden
Outcome none
Filing Fees Refunded $0.00
Civil Penalties $0.00

Parties & Counsel

Petitioner Brian Sopatyk Counsel Nathan Andrews, Esq. and Jill Kennedy, Esq.
Respondent The Lakeshore Village Condo. Association, Inc. Counsel Bradley R. Jardine, Esq.

Alleged Violations

ARIZ. REV. STAT. section 33-1260

Outcome Summary

The Administrative Law Judge dismissed the petition because the Petitioner failed to prove the HOA violated A.R.S. § 33-1260. The contested $660 fee was determined to be a working capital contribution authorized by the Association's CC&Rs (section 8.13), which is distinct from the resale disclosure fees limited by statute.

Why this result: The Petitioner did not meet the burden of proof to show a statutory violation because the fee in question was a valid working capital fee collected under the CC&Rs, not an illegal transfer fee under A.R.S. § 33-1260.

Key Issues & Findings

Alleged violation of statutory maximum fee for resale disclosure/transfer documents.

Petitioner alleged the Association charged a $660 transfer fee, plus a $30 statement fee, violating A.R.S. § 33-1260, which limits aggregate fees for resale disclosure and transfer services to $400. The ALJ found the $660 fee was a working capital fee authorized by CC&R section 8.13, not a statutory disclosure fee, despite being mislabeled by the Association.

Orders: Petitioner Brian D. Sopatyk's petition is dismissed.

Filing fee: $0.00, Fee refunded: No

Disposition: respondent_win

Cited:

  • ARIZ. REV. STAT. section 33-1260
  • ARIZ. REV. STAT. § 32-2199.01
  • ARIZ. REV. STAT. § 32-2199.02
  • ARIZ. REV. STAT. § 33-1242(A)(2)
  • ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11
  • ARIZ. ADMIN. CODE § R2-19-119

Analytics Highlights

Topics: HOA fees, transfer fee, working capital fund, statutory compliance, burden of proof, condominium association, resale disclosure
Additional Citations:

  • ARIZ. REV. STAT. section 33-1260
  • ARIZ. REV. STAT. § 32-2199.01
  • ARIZ. REV. STAT. § 32-2199.02
  • ARIZ. REV. STAT. § 33-1242(A)(2)
  • ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11
  • ARIZ. ADMIN. CODE § R2-19-119
  • A.R.S. § 41-1092.08
  • A.R.S. § 41-1092.09
  • A.R.S. § 1-243

Audio Overview

Decision Documents

17f-H1716004-REL Decision – 531040.pdf

Uploaded 2025-10-08T06:51:51 (67.9 KB)

17f-H1716004-REL Decision – 540004.pdf

Uploaded 2025-10-08T06:51:51 (154.0 KB)





Briefing Doc – 17f-H1716004-REL


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

Executive Summary

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

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

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

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Case Overview

Parties and Jurisdiction

Representation

Petitioner

Brian Sopatyk

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

Respondent

The Lakeshore Village Condominium Association, Inc.

Bradley R. Jardine, Esq. (Both Hearings)

Jurisdiction

Arizona Department of Real Estate (ADRE)

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

Adjudicator

Administrative Law Judge (ALJ) Thomas Shedden

Office of Administrative Hearings, Phoenix, AZ

Core Allegation and Governing Statute

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

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

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

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Chronology of Legal Proceedings

March 2, 2015

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

May 18, 2016

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

August 9, 2016

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

November 14, 2016

The initial hearing is conducted before ALJ Thomas Shedden.

November 29, 2016

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

December 13, 2016

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

February 7, 2017

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

June 9, 2017

A re-hearing is conducted before ALJ Thomas Shedden.

June 26, 2017

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

August 1, 2017

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

August 10, 2017

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

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Analysis of Arguments and Evidence

Petitioner’s Position (Brian Sopatyk)

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

• Evidence Presented:

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

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

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

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

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

• Evidence and Testimony:

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

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

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

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Judicial Findings and Final Disposition

Standard and Burden of Proof

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

Initial Hearing Decision (November 29, 2016)

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

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

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

Re-Hearing Decision (June 26, 2017)

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

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

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

Final Administrative Disposition

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


Brian Sopatk vs. The Lakeshore Village Condo. Assoc., Inc.

Posted on by

Case Summary

Case ID 17F-H1716004-REL-RHG
Agency ADRE
Tribunal OAH
Decision Date 2017-08-10
Administrative Law Judge Thomas Shedden
Outcome none
Filing Fees Refunded $0.00
Civil Penalties $0.00

Parties & Counsel

Petitioner Brian Sopatyk Counsel Nathan Andrews, Esq. and Jill Kennedy, Esq.
Respondent The Lakeshore Village Condo. Association, Inc. Counsel Bradley R. Jardine, Esq.

Alleged Violations

ARIZ. REV. STAT. section 33-1260

Outcome Summary

The Administrative Law Judge dismissed the petition because the Petitioner failed to prove the HOA violated A.R.S. § 33-1260. The contested $660 fee was determined to be a working capital contribution authorized by the Association's CC&Rs (section 8.13), which is distinct from the resale disclosure fees limited by statute.

Why this result: The Petitioner did not meet the burden of proof to show a statutory violation because the fee in question was a valid working capital fee collected under the CC&Rs, not an illegal transfer fee under A.R.S. § 33-1260.

Key Issues & Findings

Alleged violation of statutory maximum fee for resale disclosure/transfer documents.

Petitioner alleged the Association charged a $660 transfer fee, plus a $30 statement fee, violating A.R.S. § 33-1260, which limits aggregate fees for resale disclosure and transfer services to $400. The ALJ found the $660 fee was a working capital fee authorized by CC&R section 8.13, not a statutory disclosure fee, despite being mislabeled by the Association.

Orders: Petitioner Brian D. Sopatyk's petition is dismissed.

Filing fee: $0.00, Fee refunded: No

Disposition: respondent_win

Cited:

  • ARIZ. REV. STAT. section 33-1260
  • ARIZ. REV. STAT. § 32-2199.01
  • ARIZ. REV. STAT. § 32-2199.02
  • ARIZ. REV. STAT. § 33-1242(A)(2)
  • ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11
  • ARIZ. ADMIN. CODE § R2-19-119

Analytics Highlights

Topics: HOA fees, transfer fee, working capital fund, statutory compliance, burden of proof, condominium association, resale disclosure
Additional Citations:

  • ARIZ. REV. STAT. section 33-1260
  • ARIZ. REV. STAT. § 32-2199.01
  • ARIZ. REV. STAT. § 32-2199.02
  • ARIZ. REV. STAT. § 33-1242(A)(2)
  • ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11
  • ARIZ. ADMIN. CODE § R2-19-119
  • A.R.S. § 41-1092.08
  • A.R.S. § 41-1092.09
  • A.R.S. § 1-243

Audio Overview

Decision Documents

17f-H1716004-REL Decision – 531040.pdf

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17f-H1716004-REL Decision – 540004.pdf

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Briefing Doc – 17f-H1716004-REL


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

Executive Summary

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

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

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

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Case Overview

Parties and Jurisdiction

Representation

Petitioner

Brian Sopatyk

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

Respondent

The Lakeshore Village Condominium Association, Inc.

Bradley R. Jardine, Esq. (Both Hearings)

Jurisdiction

Arizona Department of Real Estate (ADRE)

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

Adjudicator

Administrative Law Judge (ALJ) Thomas Shedden

Office of Administrative Hearings, Phoenix, AZ

Core Allegation and Governing Statute

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

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

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

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Chronology of Legal Proceedings

March 2, 2015

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

May 18, 2016

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

August 9, 2016

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

November 14, 2016

The initial hearing is conducted before ALJ Thomas Shedden.

November 29, 2016

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

December 13, 2016

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

February 7, 2017

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

June 9, 2017

A re-hearing is conducted before ALJ Thomas Shedden.

June 26, 2017

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

August 1, 2017

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

August 10, 2017

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

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Analysis of Arguments and Evidence

Petitioner’s Position (Brian Sopatyk)

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

• Evidence Presented:

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

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

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

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

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

• Evidence and Testimony:

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

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

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

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Judicial Findings and Final Disposition

Standard and Burden of Proof

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

Initial Hearing Decision (November 29, 2016)

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

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

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

Re-Hearing Decision (June 26, 2017)

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

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

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

Final Administrative Disposition

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


Paul Gounder vs. Royal Riviera Condominium Association

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Case Summary

Case ID 17F-H1716002-REL-RHG
Agency ADRE
Tribunal OAH
Decision Date 2017-06-12
Administrative Law Judge Suzanne Marwil
Outcome partial
Filing Fees Refunded $500.00
Civil Penalties $0.00

Parties & Counsel

Petitioner Paul Gounder Counsel —
Respondent Royal Riviera Condominium Association Counsel Mark Kristopher Sahl

Alleged Violations

A.R.S. § 33-1250(C)(2)

Outcome Summary

The Administrative Law Judge found Respondent violated A.R.S. § 33-1250(C)(2) by using two substantively different ballots during the 2016 board election,. Respondent was ordered to reimburse the Petitioner’s $500.00 filing fee,. The Administrative Law Judge concluded Respondent did not violate A.R.S. § 33-1250(C)(4),.

Why this result: Petitioner failed to prove violation of A.R.S. § 33-1250(C)(4), which specifies timing requirements for ballots; the ALJ noted that a meeting ballot did not need to contain a received-by date or be mailed seven days in advance if it had been substantively the same as the compliant absentee ballot,,,.

Key Issues & Findings

Ballot must provide an opportunity to vote for or against each proposed action.

The use of two substantively different ballots in the March 2016 election violated A.R.S. § 33-1250(C)(2) because members who did not attend the meeting were unaware of an additional candidate (Eric Thompson) listed on the meeting ballot, thereby denying those members the opportunity to vote for or against each proposed action contained in the meeting ballot,. This finding does not require ballots to be identical, but substantive changes must be presented to all members,,.

Orders: Petitioner's Petition was granted, and Respondent was ordered to reimburse Petitioner's filing fee of $500.00,. No other relief was available.

Filing fee: $500.00, Fee refunded: Yes

Disposition: petitioner_win

Cited:

  • A.R.S. § 33-1250(C)(2)
  • A.R.S. § 32-2199.02
  • A.R.S. § 41-1092.08

Analytics Highlights

Topics: HOA, Condominium, Board Election, Absentee Ballot, Statutory Violation, Filing Fee Reimbursement
Additional Citations:

  • A.R.S. § 33-1250(C)(2)
  • A.R.S. § 33-1250(C)(4)
  • A.R.S. § 33-1250(C)
  • A.R.S. § 41-2198.01
  • Article VII CC&Rs

Video Overview

https://youtu.be/0-3GaFWuqA8

Audio Overview

Decision Documents

17F-H1716002-REL Decision – 523915.pdf

Uploaded 2025-12-09T10:03:26 (103.0 KB)

17F-H1716002-REL Decision – 564851.pdf

Uploaded 2025-10-09T03:30:55 (44.2 KB)

17F-H1716002-REL Decision – 567887.pdf

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17F-H1716002-REL Decision – 575055.pdf

Uploaded 2025-10-09T03:30:55 (689.5 KB)





Briefing Doc – 17F-H1716002-REL


Briefing Document: Gounder v. Royal Riviera Condominium Association

Executive Summary

This briefing document synthesizes the key events, arguments, and legal conclusions from the administrative case of Paul Gounder versus the Royal Riviera Condominium Association (Case No. 17F-H1716002-REL-RHG). The central issue revolved around the Association’s use of two substantively different ballots for its March 14, 2016, board member election.

The Petitioner, Paul Gounder, alleged that the use of a separate mail-in ballot and an in-person meeting ballot, which contained different candidate lists, violated Arizona statute A.R.S. § 33-1250(C)(2). Specifically, the ballot distributed at the meeting included the name of a seventh candidate, Eric Thompson, who was not listed on the mail-in ballot, thereby denying absentee voters the opportunity to vote for all candidates.

After an initial hearing resulted in a recommended dismissal, a rehearing was granted. Administrative Law Judge (ALJ) Suzanne Marwil ultimately concluded that the Association’s actions constituted a statutory violation. The Judge found that because members voting by mail were not informed of Mr. Thompson’s candidacy, they were denied their right to vote “for or against each proposed action.” The Respondent’s argument that the matter was moot due to a subsequent election was rejected.

The Department of Real Estate adopted the ALJ’s decision, issuing a Final Order on June 12, 2017. The Order granted the petition and required the Royal Riviera Condominium Association to reimburse Mr. Gounder’s $500.00 filing fee. The ruling establishes that while election ballots are not required to be identical, any substantive changes must be presented to all members to ensure an equal opportunity to vote.

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I. Case Overview and Background

This matter was brought before the Arizona Department of Real Estate and the Office of Administrative Hearings.

• Petitioner: Paul Gounder, a condominium owner and member of the Association.

• Respondent: Royal Riviera Condominium Association, a homeowners’ association for a development of approximately 32 condominiums.

• Initial Petition: Filed on or about June 23, 2016.

• Core Allegation: The Association violated A.R.S. § 33-1250(C)(2) and its own CC&Rs by using two substantively different ballots to elect Board members at its March 14, 2016, annual meeting.

II. Procedural History

1. Initial Hearing (October 17, 2016): A hearing was held before Administrative Law Judge Diane Mihalsky.

2. Recommended Dismissal (October 18, 2016): Judge Mihalsky recommended the petition be dismissed, concluding:

3. Rehearing Granted (February 17, 2017): The Petitioner requested a rehearing, which the Department of Real Estate granted. The Department’s order specifically requested a review of A.R.S. § 33-1250, with a focus on subsection (C)(4).

4. Rehearing (May 17, 2017): A rehearing was held before Administrative Law Judge Suzanne Marwil. At this hearing, the Respondent raised a procedural question regarding the correct statutory subsection for review, leading to a temporary order holding the record open until May 24, 2017, for clarification.

5. ALJ Decision (June 2, 2017): Judge Marwil issued a decision finding that the Respondent had committed a statutory violation.

6. Final Order (June 12, 2017): The Commissioner of the Department of Real Estate, Judy Lowe, accepted the ALJ’s decision and issued a Final Order making the decision binding.

III. The Core Dispute: The Two-Ballot System

The parties stipulated that two different ballots were used for the March 14, 2016, board election, which had seven open positions. The key differences are outlined below.

Feature

Mail Ballot (Absentee)

Meeting Ballot (In-Person)

“Mail Ballot”

“Ballot”

Candidates Listed

Six names

Seven names (added Eric Thompson)

Write-in Option

Included a blank line for a write-in candidate

No space provided for write-in candidates

Distribution

Distributed at least seven days before the meeting

Handed out to members attending the meeting

Return Deadline

Specified the date by which it had to be returned

Did not specify when it needed to be returned

IV. Arguments of the Parties

A. Petitioner’s Position (Paul Gounder)

• Violation of A.R.S. § 33-1250(C)(2): The addition of Eric Thompson’s name to the meeting ballot deprived members who voted by mail of their right “to vote for or against each proposed action,” as they had no opportunity to vote for Mr. Thompson.

• Violation of A.R.S. § 33-1250(C)(4): The meeting ballot violated this subsection because it was not mailed to all members at least seven days in advance of the meeting and did not provide a date by which it had to be received to be counted.

B. Respondent’s Position (Royal Riviera Condominium Association)

• No Violation: The statutes do not explicitly require the use of identical ballots for an election.

• Common Practice: It is a common practice for homeowners’ associations to use a different absentee ballot and meeting ballot.

• Mootness: The issue is moot because the Association had already held another election in 2017 and seated a new board, which included the Petitioner’s wife as a member.

V. Administrative Law Judge’s Findings and Conclusions

In her June 2, 2017 decision, ALJ Suzanne Marwil made the following key legal conclusions:

The ALJ found that the Association’s use of two substantively different ballots did violate this statute.

• Reasoning: Members who did not attend the meeting in person were not notified of Mr. Thompson’s willingness to run for the board. As a result, “these members did not have the opportunity to vote for him and hence were denied their right to vote for or against each proposed action contained in the meeting ballot.”

• Clarification: The ruling explicitly states that this finding does not impose a requirement that all ballots must be identical; however, it establishes that “substantive changes to ballots must be presented to all members.”

The ALJ concluded that no violation of this subsection occurred.

• Reasoning: The Petitioner conceded that the absentee ballot itself complied with the statutory requirements (e.g., being mailed seven days in advance with a return-by date). The judge reasoned that a meeting ballot handed out in person would not need to contain this information if it were “substantively the same as the absentee ballot.” The legal problem arose not from a failure to mail the second ballot, but from the substantive difference between the two.

The ALJ determined that the matter was not rendered moot by the 2017 election and the seating of a new board. The Judge affirmed that the tribunal “can and does find that Respondent committed a statutory violation in the course of holding its 2016 election.”

VI. Final Order and Outcome

• ALJ Recommended Order (June 2, 2017):

◦ The Petitioner’s petition should be granted.

◦ The Respondent must reimburse the Petitioner’s filing fee.

◦ No other relief was available to the Petitioner.

• Department of Real Estate Final Order (June 12, 2017):

◦ The Commissioner of the Department of Real Estate accepted and adopted the ALJ’s decision.

◦ The Order is a final administrative action, effective immediately.

◦ The Royal Riviera Condominium Association was ordered to reimburse the Petitioner’s filing fee of $500.00 within thirty (30) days.

◦ The parties were notified that the Order could be appealed via a complaint for judicial review.






Study Guide – 17F-H1716002-REL


Study Guide: Gounder v. Royal Riviera Condominium Association

This study guide provides a comprehensive review of the administrative case Paul Gounder v. Royal Riviera Condominium Association, Case No. 17F-H1716002-REL-RHG. It includes a short-answer quiz, an answer key, suggested essay questions, and a glossary of key terms based on the provided legal documents.

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Short-Answer Quiz

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

1. What was the central allegation made by the Petitioner, Paul Gounder, in his initial petition?

2. Describe the two different ballots used by the Royal Riviera Condominium Association for its March 14, 2016, board election.

3. What were the two primary legal arguments made by the Respondent, Royal Riviera Condominium Association, to defend its actions?

4. What was the initial outcome of the hearing held on October 17, 2016, before Administrative Law Judge Diane Mihalsky?

5. What was Administrative Law Judge Suzanne Marwil’s final conclusion regarding the alleged violation of A.R.S. § 33-1250(C)(2)?

6. How did Judge Marwil explain her finding that A.R.S. § 33-1250(C)(4), which deals with ballot delivery timelines, was not violated?

7. How did the Respondent argue that the case was moot, and why did Judge Marwil reject this argument?

8. According to the Final Order issued by the Commissioner of the Department of Real Estate, what specific relief was granted to the Petitioner?

9. What is the standard of proof in this matter, and which party has the burden of proof?

10. What specific action did the Department of Real Estate request be reviewed when it granted the request for a rehearing?

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Answer Key

1. The Petitioner, Paul Gounder, alleged that the Respondent violated A.R.S. § 33-1250(C)(2) and its own CC&Rs. The violation occurred by using two substantively different ballots for the election of Board members at the annual meeting on March 14, 2016.

2. The first ballot was an absentee “Mail Ballot” with six candidate names and a blank line for a write-in. The second ballot, handed out at the meeting, was titled “Ballot” and included the names of seven candidates (adding Eric Thompson) but had no space for a write-in candidate.

3. The Respondent argued that it committed no violation because the statutes do not explicitly require the use of identical ballots and that using different absentee and meeting ballots is common practice. It also maintained that the matter was moot because a new election had already occurred in 2017.

4. Following the initial hearing, Judge Diane Mihalsky recommended the dismissal of the Petition on October 18, 2016. She concluded that no statute or bylaw prevented the Respondent from adding the names of willing members to the ballot used at the annual election.

5. Judge Suzanne Marwil found that the use of two substantively different ballots did violate A.R.S. § 33-1250(C)(2). Because members voting by mail were not informed of Eric Thompson’s candidacy, they were denied their right to vote for or against each proposed action.

6. Judge Marwil concluded A.R.S. § 33-1250(C)(4) was not violated because the absentee ballot itself complied with the statute’s requirements for delivery timelines. She reasoned that a meeting ballot would not need to meet these requirements if it were substantively the same as the compliant absentee ballot; the problem arose only because the ballots were different.

7. The Respondent argued the case was moot because a new board had been seated in a 2017 election. Judge Marwil rejected this, stating that the fact a new board is seated does not prevent an Administrative Law Judge from finding that a statutory violation occurred in a past election.

8. The Final Order, issued by Commissioner Judy Lowe on June 12, 2017, granted the Petitioner’s petition. It ordered the Respondent to reimburse the Petitioner’s filing fee of $500.00 within thirty (30) days.

9. The standard of proof is a “preponderance of the evidence,” as stated in A.A.C. R2-19-119(A). Pursuant to A.A.C. R2-19-119(B), the Petitioner has the burden of proof in the matter.

10. In its February 17, 2017, Order Granting Request for Rehearing, the Department of Real Estate specifically requested a review of A.R.S. § 33-1250, and in particular, A.R.S. § 33-1250(C)(4).

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Suggested Essay Questions

Instructions: The following questions are designed for longer, essay-style responses to test a deeper understanding of the case. Answers are not provided.

1. Analyze the legal distinction Judge Marwil makes between ballots being “identical” versus “substantively different.” How did this distinction become the central point upon which her decision on A.R.S. § 33-1250(C)(2) turned?

2. Trace the procedural history of this case, from the filing of the initial petition to the issuance of the Final Order. Discuss the role and decisions of each key actor, including Petitioner Gounder, Respondent Royal Riviera, ALJ Mihalsky, ALJ Marwil, and Commissioner Lowe.

3. Evaluate the legal arguments presented by the Respondent. Why was the argument about “common practice” for homeowners’ associations ultimately unpersuasive, and why did the “mootness” doctrine not apply?

4. Discuss the significance of the specific provisions within A.R.S. § 33-1250(C). How do subsections (C)(2) and (C)(4) work together to ensure fair voting rights for all members of a condominium association, including those who vote by absentee ballot?

5. Examine the relationship between the Arizona Department of Real Estate and the Office of Administrative Hearings as demonstrated in this case. How do they interact to adjudicate disputes between homeowners and their associations?

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Glossary of Key Terms

Definition

Administrative Law Judge (ALJ)

An official who presides over administrative hearings, hears evidence, and makes legal findings and recommendations. In this case, Diane Mihalsky and Suzanne Marwil served as ALJs.

A.R.S. (Arizona Revised Statutes)

The codified collection of laws for the state of Arizona. This case centered on the interpretation of A.R.S. § 33-1250.

Arizona Department of Real Estate (the Department)

The state agency authorized by statute to receive and decide Petitions for Hearings from members of homeowners’ associations in Arizona. It granted the rehearing and accepted the final ALJ decision.

CC&Rs (Covenants, Conditions, and Restrictions)

The governing legal documents that set up the rules for a planned community or condominium. The Petitioner alleged the Respondent violated Article VII of its CC&Rs.

Final Order

The concluding and binding decision in an administrative case. In this matter, the Final Order was issued by the Commissioner of the Department of Real Estate on June 12, 2017, accepting the ALJ’s decision.

A legal term for a matter that is no longer in controversy or has become irrelevant. The Respondent unsuccessfully argued the case was moot because a subsequent election had been held.

Office of Administrative Hearings (OAH)

An independent state agency that conducts administrative hearings for other state agencies. The Department of Real Estate referred this case to the OAH for a hearing.

Petitioner

The party who files a petition initiating a legal or administrative action. In this case, the Petitioner was Paul Gounder.

Preponderance of the Evidence

The standard of proof required in this administrative hearing. It means the party with the burden of proof must convince the judge that there is a greater than 50% chance that their claim is true.

Rehearing

A second hearing of a case to review the decision made in the first hearing. The Petitioner requested and was granted a rehearing after the initial recommendation to dismiss his petition.

Respondent

The party against whom a petition is filed. In this case, the Respondent was the Royal Riviera Condominium Association.






Blog Post – 17F-H1716002-REL


Your HOA’s Election Rules Might Be Unfair. This Court Case Explains Why.

Introduction: The Devil in the Details

Living in a community governed by a Homeowners’ Association (HOA) often means navigating a complex web of rules, regulations, and procedures. While most are designed to maintain property values and community standards, the enforcement of these rules can sometimes feel arbitrary. But what happens when the very process for electing the board that enforces those rules is flawed?

A fascinating legal challenge demonstrates that even a single, seemingly minor discrepancy in an HOA election can have significant consequences. But the victory was anything but certain. In the case of Paul Gounder versus the Royal Riviera Condominium Association, the homeowner’s initial petition was actually recommended for dismissal by the first judge. It was only through persistence—requesting a rehearing—that the homeowner ultimately prevailed. This case serves as a powerful real-world example of why procedural fairness in community governance is not just important—it’s legally required—and reveals several surprising lessons for any homeowner who values a fair and transparent election process.

Takeaway 1: “Common Practice” Isn’t a Legal Defense

When challenged on its election procedures, the Royal Riviera Condominium Association’s defense was simple: it was merely following “common practice.” The board argued that many HOAs use a different absentee and in-person ballot, so they had done nothing wrong. However, the Administrative Law Judge disregarded this argument entirely, focusing instead on the explicit requirements of Arizona statute A.R.S. § 33-1250(C)(2). This decision provides a crucial lesson for all homeowners: an association’s internal habits or traditions do not override clear legal statutes. If a state law or the community’s own governing documents dictate a specific procedure, the HOA must follow it, regardless of what other associations might be doing. This empowers homeowners by showing that the law, not just internal tradition, is the ultimate authority governing their association’s actions.

Takeaway 2: A “Small” Change Can Invalidate an Election

The dispute in the March 14, 2016 election centered on two different ballots used for the same board election. The mail-in ballot, sent to members voting absentee, listed six names and included a blank line for a write-in candidate. The in-person ballot, distributed to members at the meeting, listed seven names—adding candidate Eric Thompson—and provided no space for write-ins. This difference was not seen as a minor error but as a “substantive” change that fundamentally altered the election. The judge reasoned that members who voted by mail “did not have the opportunity to vote for him and hence were denied their right to vote for or against each proposed action contained in the meeting ballot.”

The judge made a critical distinction about what constitutes a fair process, clarifying that the issue wasn’t about perfection, but equality of opportunity.

Finding this violation does not impose a requirement that ballots be identical; it simply states that substantive changes to ballots must be presented to all members.

This point is not about minor cosmetic differences like fonts or paper color. It’s about ensuring every single voting member has the exact same set of choices. Adding or removing a candidate on one version of a ballot creates two different elections, disenfranchising one group of voters. This ruling affirms that a fair election requires that all members have an equal opportunity to vote on all candidates and measures.

Takeaway 3: Accountability Matters, Even After the Fact

The association attempted to have the case dismissed by arguing that the issue was “moot.” Because a new election had already been held in 2017 and a new board was in place, the HOA claimed the flawed 2016 election no longer mattered. The Administrative Law Judge explicitly rejected this argument. The decision stated that “the fact that a new board is currently seated does not render the matter moot as the Administrative Law Judge can and does find that Respondent committed a statutory violation in the course of holding its 2016 election.” The final order granted the homeowner’s petition and required the Royal Riviera Condominium Association to reimburse his $500.00 filing fee. This is an impactful takeaway for any homeowner who feels it’s too late to act. It demonstrates that an HOA can be held legally accountable for past procedural violations, establishing an important precedent for the community and putting the board on notice for future conduct.

Conclusion: Knowledge is Power

The case of Gounder v. Royal Riviera Condominium Association is a powerful reminder that procedural fairness, strict adherence to legal statutes, and the vigilance of individual homeowners are essential checks on the power of an HOA board. The core lesson is clear: seemingly small details in an election process can have major legal consequences. Homeowners who take the time to understand the specific laws and bylaws governing their community can successfully challenge their associations. But this case also teaches a deeper lesson about perseverance. Faced with an initial recommendation for dismissal, the homeowner could have given up. Instead, he challenged the ruling and won on rehearing, proving that knowledge combined with conviction is a powerful force for ensuring the principles of fairness and equality are upheld.

Does your own community’s voting process ensure every member has an equal voice, and would it stand up to this kind of scrutiny?


Case Participants

Petitioner Side

  • Paul Gounder (petitioner)
  • Frederick C. Zehm (witness)
    Royal Riviera Condominium Association member
    Testified for Petitioner
  • Marlys Kleck (witness)
    Royal Riviera Condominium Association member
    Testified for Petitioner

Respondent Side

  • Mark Kristopher Sahl (HOA attorney)
    Carpenter Hazlewood Delgado & Bolen PLC
  • Dan Peterson (property manager)
    Owner of Respondent's management company

Neutral Parties

  • Diane Mihalsky (ALJ)
    Presided over initial hearing
  • Suzanne Marwil (ALJ)
    Presided over rehearing
  • Judy Lowe (ADRE Commissioner)
    Arizona Department of Real Estate
  • Abby Hansen (ADRE staff/HOA Coordinator)
    Arizona Department of Real Estate
    Also listed as AHansen
  • LDettorre (ADRE staff)
    Arizona Department of Real Estate
  • djones (ADRE staff)
    Arizona Department of Real Estate
  • jmarshall (ADRE staff)
    Arizona Department of Real Estate
  • ncano (ADRE staff)
    Arizona Department of Real Estate
  • M. Aguirre (staff)
    Transmitted order

Other Participants

  • Eric Thompson (member/candidate)
    Candidate added to meeting ballot
  • Al DeFalco (member/candidate)
    Nominated from the floor