Case Summary
| Case ID | 17F-H1716004-REL-RHG |
|---|---|
| Agency | ADRE |
| Tribunal | OAH |
| Decision Date | 2017-08-10 |
| Administrative Law Judge | Thomas Shedden |
| Outcome | loss |
| Filing Fees Refunded | $0.00 |
| Civil Penalties | $0.00 |
Parties & Counsel
| Petitioner | Brian Sopatyk | Counsel | Nathan Andrews |
|---|---|---|---|
| Respondent | The Lakeshore Village Condo. Association, Inc. | Counsel | Bradley R. Jardine |
Alleged Violations
ARIZ. REV. STAT. section 33-1260
Outcome Summary
The ALJ decision, certified as the final administrative decision, dismissed the Petitioner's claim after rehearing, finding that the Petitioner failed to prove the Association violated A.R.S. § 33-1260. The challenged $660 fee was determined to be a permissible working capital contribution under the CC&Rs, not a fee restricted by the statutory cap on resale disclosure services.
Why this result: Petitioner failed to meet the burden of proof; the fee in question was determined to be a working capital fee/assessment governed by the CC&Rs and ARS § 33-1242(A)(2), and not subject to the limitation set forth in ARS § 33-1260.
Key Issues & Findings
Alleged excessive fee collection for resale disclosure/transfer services
Petitioner alleged the Association violated A.R.S. § 33-1260 by charging a $660 fee, which he argued exceeded the statutory maximum of $400 for resale disclosure/transfer services. The Association argued the $660 fee was a working capital contribution mandated by CC&R section 8.13 and was mislabeled, and therefore not subject to the statutory limitations of § 33-1260.
Orders: Brian D. Sopatyk’s petition is dismissed.
Filing fee: $0.00, Fee refunded: No
Disposition: petitioner_loss
- ARIZ. REV. STAT. section 33-1260
- ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11
- ARIZ. ADMIN. CODE § R2-19-119
- ARIZ. REV. STAT. § 32-2199.01
- ARIZ. REV. STAT. § 32-2199.02
- ARIZ. REV. STAT. § 33-1242(A)(2)
Analytics Highlights
- ARIZ. REV. STAT. § 33-1260
- ARIZ. REV. STAT. Title 32, Ch. 20, Art. 11
- ARIZ. ADMIN. CODE § R2-19-119
- ARIZ. REV. STAT. § 32-2199.01
- ARIZ. REV. STAT. § 32-2199.02
- ARIZ. REV. STAT. § 33-1242(A)(2)
Video Overview
Audio Overview
Decision Documents
17F-H1716004-REL-RHG Decision – 531040.pdf
17F-H1716004-REL-RHG Decision – 540004.pdf
Briefing: Sopatyk v. Lakeshore Village Condominium Association, Inc.
Executive Summary
This document synthesizes the findings and outcomes of an administrative legal case brought by petitioner Brian Sopatyk against The Lakeshore Village Condominium Association, Inc. The core of the dispute was Mr. Sopatyk’s allegation that the Association charged a “transfer fee” of $660 upon the sale of a condominium unit, in violation of Arizona Revised Statute (A.R.S.) § 33-1260, which caps fees for resale disclosure services at an aggregate of $400.
Following an initial hearing and a subsequent rehearing, the Administrative Law Judge (ALJ) consistently ruled in favor of the Association, dismissing Mr. Sopatyk’s petition on both occasions. The central finding was that the petitioner failed to prove a statutory violation by a preponderance of the evidence. The Association successfully argued that the disputed $660 charge was not a resale disclosure fee governed by A.R.S. § 33-1260, but rather a “working capital fee” authorized by its Covenants, Conditions, and Restrictions (CC&Rs). The Association admitted that this fee had been historically mislabeled as a “transfer fee,” an error it had since identified and corrected. The actual fee charged for resale disclosure documents was a separate, compliant $30 “statement fee.” The ALJ’s decision from the rehearing was certified as the final administrative decision in the matter on August 10, 2017.
Case Overview
Case Number
17F-H1716004-REL (Initial Hearing)
17F-H1716004-REL-RHG (Rehearing)
Jurisdiction
State of Arizona, Office of Administrative Hearings
Petitioner
Brian Sopatyk
Respondent
The Lakeshore Village Condominium Association, Inc.
Core Allegation
Violation of A.R.S. § 33-1260, which limits fees for resale disclosure services to a maximum of $400.
Final Outcome
Petition Dismissed. The Respondent was deemed the prevailing party.
Chronology of Legal Proceedings
March 2, 2015
The Association issues a disclosure statement for Mr. Sopatyk’s purchase, showing a $660 “transfer fee” and a $30 “statement fee.”
May 18, 2016
Prompted by Mr. Sopatyk, the Association’s Board discusses the fee structure. It concludes the $660 fee is a mislabeled “working capital fee” and not a statutory violation.
August 9, 2016
Mr. Sopatyk files a petition with the Arizona Department of Real Estate alleging the violation.
November 14, 2016
The initial administrative hearing is conducted before ALJ Thomas Shedden.
November 29, 2016
ALJ Shedden issues a decision dismissing Mr. Sopatyk’s petition.
December 13, 2016
The Commissioner of the Department of Real Estate adopts the ALJ’s recommendation, issuing a Final Order to dismiss the petition.
Post-Dec. 2016
Mr. Sopatyk requests a rehearing of the matter.
June 9, 2017
The rehearing is conducted, again before ALJ Thomas Shedden.
June 26, 2017
ALJ Shedden issues a new decision, once again dismissing Mr. Sopatyk’s petition.
August 10, 2017
With no modifying action from the Department of Real Estate, the ALJ’s June 26 decision is certified as the final administrative decision.
Core Dispute Analysis
The case centered on the interpretation and classification of two fees charged by the Association during the sale of Mr. Sopatyk’s condominium unit.
Petitioner’s Position (Brian Sopatyk)
• Allegation of Violation: Mr. Sopatyk alleged that the Association charged a “transfer fee” of $660, which directly contravened the $400 statutory maximum established by A.R.S. § 33-1260 for services related to resale disclosure.
• Evidence Presented: The petitioner submitted a March 2, 2015 disclosure form from the Association listing both a “660transferfee”anda”30 statement fee.” A HUD-1 disclosure statement for the purchase was also entered, showing the $660 “Transfer Fee” was split, with $330 paid from the buyer’s (Sopatyk’s) funds and $330 from the seller’s funds.
• Contradictory Testimony: The ALJ noted a discrepancy in the petitioner’s statements. The sworn petition stated the $660 fee was split between him and the seller, while his testimony at the rehearing claimed he “had in fact paid the entire $660 as part of the negotiated price.” The ALJ decision stated, “either Mr. Sopatyk’s sworn statement or his testimony must be false.”
• Requested Remedies: Mr. Sopatyk requested that the Association be ordered to comply with the statute, that refunds be paid to those who paid fees in excess of the statutory maximum, and that a civil penalty be imposed against the Association.
Respondent’s Position (The Lakeshore Village Condo. Assoc.)
• Distinction Between Fees: The Association’s central argument was that two separate and legally distinct fees were assessed:
1. A $30 Resale Statement Fee: This was the charge for preparing documents pursuant to A.R.S. § 33-1260 and was well within the $400 limit.
2. A $660 Working Capital Fee: This fee was authorized under a separate provision, Section 8.13 of the Association’s CC&Rs, which mandates an assessment from each new owner equal to two monthly installments to fund the Association’s working capital (reserve) fund.
• “Mislabeled” Fee: The Association acknowledged that the $660 working capital fee was incorrectly labeled as a “transfer fee.” Association Manager Amy Telnes testified that she received erroneous information from the prior manager and had been using the wrong label.
• Board Action and Corrective Measures: The minutes from the May 18, 2016 Board meeting show that the Board, after reviewing a legal opinion, concluded the issue was one of “labeling, not violating the statute.” The Board directed Ms. Telnes to perform an accounting and transfer all such fees collected into the Reserve Account. To prevent future confusion, the Board also voted to assess a single $400 transfer fee on all future transactions, with no other fees.
• Fund Allocation: Ms. Telnes testified that the $660 fee was deposited into the Association’s reserve fund, consistent with its purpose as a working capital contribution, while the $30 fee was the charge pursuant to A.R.S. § 33-1260(C).
Administrative Law Judge’s Findings and Rulings
ALJ Thomas Shedden presided over both the initial hearing and the rehearing, reaching the same conclusion in both instances.
Key Rulings and Legal Reasoning
• Burden of Proof: The ALJ established that Mr. Sopatyk, as the petitioner, bore the burden of proving the alleged violation by a “preponderance of the evidence.”
• Core Finding: The evidence demonstrated that the Association charged two distinct fees. The $30 fee was for document preparation under A.R.S. § 33-1260, while the $660 fee was a working capital assessment authorized by CC&R Section 8.13. The ALJ concluded that A.R.S. § 33-1260 was not applicable to the $660 fee.
• Conclusion on Violation: Based on the evidence, including the testimony of the Association manager and the board meeting minutes, the ALJ found that the $660 fee was mislabeled but was not collected for services related to resale disclosure. Therefore, Mr. Sopatyk did not meet his burden to show that the Association violated the statute.
• Rejection of Harm-Based Argument: The ALJ did not accept the Association’s argument that the claim should fail because Mr. Sopatyk did not personally pay over $400. The judge clarified that A.R.S. § 33-2199.01 “does not require this type of particularized harm, but rather applies to all statutory violations.”
• Dismissal of Petition: In both the November 29, 2016 decision and the June 26, 2017 decision, the order was to dismiss Mr. Sopatyk’s petition and deem the Association the prevailing party.
Final Disposition and Legal Status
The decision issued by ALJ Shedden on June 26, 2017, was transmitted to the Arizona Department of Real Estate. The Department had until August 1, 2017, to accept, reject, or modify the decision. As no action was taken by the deadline, the Office of Administrative Hearings issued a Certification of Decision of Administrative Law Judge on August 10, 2017. This certification established the ALJ’s decision as the final administrative decision of the Department of Real Estate in the matter.
Key Legal Citations and Definitions
• A.R.S. § 33-1260 (Resale of Units; Information Required): This Arizona statute governs the information a condominium association must provide to a prospective purchaser. It explicitly limits the fees an association can charge for these services:
• CC&R Section 8.13 (Transfer Fee and Working Capital Fund): This section of The Lakeshore Village Condominium Association’s governing documents provides the authority to collect a fee from new owners for a different purpose:
• Preponderance of the Evidence: The standard of proof required for the petitioner to prevail, defined in the legal decisions as:
Study Guide: Sopatyk v. The Lakeshore Village Condo. Association, Inc.
Short Answer Quiz
Instructions: Answer the following questions in 2-3 complete sentences, drawing exclusively from the information provided in the case documents.
1. Identify the petitioner and the respondent in this case, and state the core legal violation the petitioner alleged.
2. What specific fees were charged during the petitioner’s condominium purchase that became the central point of the dispute?
3. According to the Association, what was the true nature of the $660 fee, and how did it explain the “transfer fee” label on the disclosure documents?
4. What role did Amy Telnes, the Association manager, play in explaining the history of the disputed fee?
5. What actions did the Association’s Board take during its meeting on May 18, 2016, to address the petitioner’s concerns and correct its internal procedures?
6. Who held the burden of proof in this matter, and what was the legal standard required to meet that burden?
7. What was the official outcome of the initial administrative hearing held on November 14, 2016?
8. Why was a re-hearing conducted, and what was the final outcome of that hearing on June 9, 2017?
9. According to the re-hearing decision, there was a significant contradiction between the petitioner’s sworn petition and his later testimony. What was this contradiction?
10. What was the legal basis, according to the Association’s CC&Rs, for collecting the $660 working capital fee?
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Answer Key
1. The petitioner was Brian Sopatyk, and the respondent was The Lakeshore Village Condominium Association, Inc. Mr. Sopatyk alleged that the Association violated ARIZ. REV. STAT. section 33-1260 by charging a transfer fee in excess of the statutory maximum of $400.
2. The disputed fees were a $660 “transfer fee,” which was split between the buyer (Mr. Sopatyk) and the seller, and a separate $30 “statement fee” or “Resale Statement Fee.” The petitioner’s claim focused on the $660 fee being above the legal limit for resale disclosure services.
3. The Association argued the $660 fee was not a transfer fee for disclosure services but was a “working capital fee” authorized by its CC&Rs. It explained that the fee had been mislabeled as a “transfer fee” due to an error passed down from a previous property manager.
4. Amy Telnes testified that when she became the Association manager, she was incorrectly told the working capital fee was the transfer fee. She further testified that the $660 was deposited into the Association’s reserve fund, and the actual fee charged for disclosure under the statute was the separate $30 statement fee.
5. At the May 18, 2016, meeting, the Board concluded it was not in violation of the law but that its fee labeling was confusing. The Board directed Amy Telnes to perform an accounting and transfer all mislabeled fees into the Reserve Account and voted to assess a single, correctly labeled $400 transfer fee on all future transactions.
6. The petitioner, Brian Sopatyk, bore the burden of proof. The standard of proof required was a “preponderance of the evidence,” defined as evidence with the most convincing force that inclines an impartial mind to one side of an issue over the other.
7. 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 ordered that Mr. Sopatyk’s petition be dismissed.
8. A re-hearing was conducted after Mr. Sopatyk requested one following the initial decision. The final outcome of the June 9, 2017, re-hearing was the same as the first: the Administrative Law Judge found the petitioner did not meet his burden of proof and ordered the petition to be dismissed.
9. In his sworn petition, Mr. Sopatyk stated that the $660 transfer fee was split between him and the seller. However, during his testimony at the re-hearing, he stated that he had in fact paid the entire $660 as part of the negotiated price of the unit.
10. The legal basis was Section 8.13 of the Association’s Declaration of Covenants, Conditions and Restrictions (CC&Rs). This section, titled “Transfer Fee and Working Capital Fund,” called for an assessment from each new owner of two monthly installments of the annual fee to be deposited into the working capital fund.
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Essay Questions
Instructions: The following questions are designed to test a deeper, more synthesized understanding of the case. Formulate a comprehensive response to each prompt, incorporating specific facts, legal arguments, and procedural details from the source documents.
1. Trace the complete timeline of the case, beginning with the filing of the petition. Include key dates of filings, hearings, decisions, and final certifications, and describe the significance of each event in the legal process.
2. Analyze the central legal argument of the Respondent, The Lakeshore Village Condominium Association. Explain how the distinction between a “transfer fee” under ARIZ. REV. STAT. section 33-1260 and a “working capital fee” under the Association’s CC&Rs was crucial to the Administrative Law Judge’s final decision.
3. Discuss the concept of “preponderance of the evidence” as it is defined and applied in this case. Explain why the petitioner, Brian Sopatyk, failed to meet this standard of proof in both the initial hearing and the re-hearing, citing specific evidence presented by the Association.
4. Evaluate the importance of the Association’s Board Meeting Minutes from May 18, 2016, as a piece of evidence. Detail the specific findings and resolutions from that meeting and explain how they were used to build the Association’s defense.
5. Examine the roles of the key individuals and entities in this administrative action. Describe the functions and contributions of Brian Sopatyk (Petitioner), Amy Telnes (Association Manager), Michael Cibellis (Association President), Thomas Shedden (Administrative Law Judge), and the Arizona Department of Real Estate.
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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, makes findings of fact and conclusions of law, and issues a decision.
ARIZ. REV. STAT. section 33-1260
The Arizona statute that requires a condominium association to provide certain disclosure documents to a prospective purchaser. It also limits the fee an association can charge for the preparation of these documents to an aggregate of four hundred dollars.
Burden of Proof
The obligation of a party in a legal case to prove their allegations. In this matter, the petitioner, Brian Sopatyk, bore the burden of proof.
An abbreviation for the Declaration of Covenants, Conditions and Restrictions. In this case, section 8.13 of the Association’s CC&Rs authorized the collection of a fee from new owners for a working capital fund.
Final Administrative Decision
The ultimate, legally binding decision in the administrative matter. In this case, the Administrative Law Judge’s decision became the final administrative decision after the Department of Real Estate did not act to accept, reject, or modify it within the statutory time limit.
HUD-1 Disclosure Statement
A document used in the petitioner’s property purchase that itemized all charges imposed upon a borrower and seller for a real estate transaction. It was used as evidence to show how the $660 “Transfer Fee” and $30 “Resale Statement Fee” were assessed and paid.
Petitioner
The party who files a petition initiating a legal action. In this case, Brian Sopatyk was the petitioner.
Preponderance of the Evidence
The standard of proof required in this administrative hearing. It is defined as “The greater weight of the 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.”
Reserve Fund
An account maintained by the Condominium Association. The Association referred to its “working capital fund” as the Reserve Fund, into which the disputed $660 fees were deposited.
Respondent
The party against whom a petition is filed. In this case, The Lakeshore Village Condominium Association, Inc. was the respondent.
Statement Fee / Resale Statement Fee
A $30 fee charged by the Association for the preparation of disclosure documents. The Association argued this was the fee governed by ARIZ. REV. STAT. section 33-1260, which was compliant with the $400 statutory cap.
Transfer Fee
In the context of the petitioner’s allegation, a fee charged for resale disclosure services, limited to $400 by statute. In the context of the Association’s defense, this was the erroneous label applied to the working capital fee.
Working Capital Fee
A fee authorized by section 8.13 of the Association’s CC&Rs, assessed to each new owner to be deposited into the working capital fund (or Reserve Fund). The Association successfully argued that the disputed $660 fee was this type of fee, not one for resale disclosure.
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)
Represented himself at the initial hearing; sought rehearing - Nathan Andrews (petitioner attorney)
ASU Alumni Law Group - Jill M. Kennedy (petitioner attorney)
ASU Alumni Law Group - Judy Sopatyk (petitioner's wife)
Co-purchaser of the condominium unit, - Chance Peterson (petitioner attorney)
ASU Alumni Law Group
Respondent Side
- Bradley R. Jardine (HOA attorney)
Jardine Baker Hickman & Houston - 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.
Testified at the rehearing
Neutral Parties
- Thomas Shedden (ALJ)
- Judy Lowe (Commissioner)
Arizona Department of Real Estate - Abby Hansen (HOA Coordinator)
Contact for requests for rehearing - Greg Hanchett (Interim Director)
OAH
Signed the Certification of Decision,
Other Participants
- Rosella J. Rodriguez (administrative staff)
Administrative staff for transmission/mailing,
