Arizona Court of Appeals — Assessments & Late Fees
A condominium association’s suit to collect assessments and retroactive late fees from its developer fails on appeal, illustrating the reasonableness limit on association powers and the evidence needed to win summary judgment.
Last updated July 1, 2026. Case: The Villas at Hidden Lakes Condominiums Association v. Geupel Construction Co.; No. 1 CA-CV 90-263; 174 Ariz. 72, 847 P.2d 117 (App. 1992).
Current-status note: This page is published as a litigation record based on the source files available through 1992-11-10. Later filings, appeals, mandates, settlements, or dismissal orders may change the posture; the linked court records control.
Allegations, settlements, procedural dismissals, and notices are not findings of liability unless a cited court order expressly makes that finding.
Scope note: This educational case page summarizes a court ruling for Arizona HOA homeowners, boards, and counsel. It is not legal advice.
The rule in one sentence
Reversing summary judgment and remanding, the court held that the Developer had authority under the declaration to amend it and lawfully withdraw twenty-three units into a separate phase, so those units were not subject to monthly assessments or late charges while withdrawn; that although the Association had contractual and statutory authority under A.R.S. section 33-1242(11) to impose late fees, applying them retroactively to assessments already delinquent before the late-fee schedule was adopted was unreasonable, arbitrary, and an abuse of discretion; and that the Association’s supporting affidavit was conclusory and relied on inadmissible hearsay, so it failed to establish a prima facie case for summary judgment.
Case Participants
Neutral Parties
- The Villas at Hidden Lakes Condominiums Association (Party)
Arizona nonprofit condominium association; plaintiff, counter-defendant, and appellee. Lost summary judgment and its fee award on appeal. - Geupel Construction Company, Inc. (Party)
Co-venturer in Paradise Isle Associates, the developer; defendant, counter-claimant, and appellant. Prevailed on appeal. - R.G.W. Investment Co., Inc. (Party)
Co-venturer in Paradise Isle Associates, the developer; defendant, counter-claimant, and appellant. - Wallace Neal (Party)
The Villas at Hidden Lakes Condominiums Association
Association president and affiant on the summary-judgment motion; named defendant in the Developer's A.R.S. § 33-420 groundless-lien claim. - Barry A. Reiss (Counsel)
Barry Allen Reiss, P.C. (Phoenix)
Counsel for plaintiff/appellee, the Association. - Chad L. Schexnayder (Counsel)
Jennings, Kepner & Haug (Phoenix)
Counsel for defendants/appellants, the Developer. - Judge Toci (Judge)
Authored the opinion of the court. - Presiding Judge Taylor (Judge)
Concurred. - Judge Grant (Judge)
Concurred.
What happened and why it matters
The Villas at Hidden Lakes Condominiums Association, a group of condominium owners organized under a recorded declaration of horizontal property regime, sued its developer, Geupel Construction Company, Inc. and R.G.W. Investment Co., Inc. (together the joint venture Paradise Isle Associates, referred to as the “Developer”), to collect delinquent monthly assessments, retroactive late-payment penalties, and interest, and to foreclose an assessment lien on a lot the Developer still owned. The Developer answered that it owed no assessments on twenty-three of the original fifty-three units because it had recorded an amendment temporarily withdrawing those units into a separate phase, and that the late fees, which had grown to more than $47,000, were unenforceable because they were imposed retroactively and exceeded the twelve percent interest set by the bylaws. The trial court granted the Association summary judgment on both counts and awarded attorney’s fees. Division One of the Arizona Court of Appeals reversed. It held that the Developer had the votes and authority under the declaration to amend it and withdraw the Phase Two units, that the Association had contractual and statutory authority under the Uniform Condominium Act to impose late fees but exercised that power unreasonably by making them retroactive, and that the Association’s supporting affidavit was conclusory and relied on inadmissible hearsay, so it failed to establish a prima facie case. The court also found disputed fact issues on the Lot Six lien and the Developer’s tender of payment, reversed the fee award, and remanded.
The court analyzed each issue against the text of the recorded declaration (“Declaration Two”) and the Uniform Condominium Act. On the withdrawal question, it explained that the dispute was not whether the Developer had a “unilateral” right to amend, but whether it satisfied the declaration’s amendment procedure. Article Fourteen allowed amendment at any time by owners holding at least sixty-seven percent of the votes, and Article Six gave the Developer three votes per owned unit, yielding 144 votes against the five votes of the other owners, far more than enough. Mortgage-holder consent was unnecessary because those owners held under four percent of the votes, and the declaration’s own language (‘until or unless changed’) permitted altering the fractional common-element interests. The court rejected the argument that the recording mistake (a reference to the revoked Declaration One) invalidated the amendment, because the document clearly identified the property and its phasing purpose, gave constructive notice under A.R.S. section 33-416, and was re-recorded to fix the error. Distinguishing Camelback Del Este, Riley, and La Esperanza, the court held that the uniform-treatment rule applies only where the declaration so limits amendments; here the amendment merely provided for phased development and did not alter any covenant. Withdrawal of property (67 percent) was also distinct from termination of the regime (100 percent). On estoppel, the Association showed neither justifiable reliance nor injury, so no prima facie case existed. Turning to late fees, the court held the Association had power to impose them under Article Five and A.R.S. section 33-1242(11), and that the fees were a personal obligation, but that condominium associations must exercise such powers reasonably. Because no penalty schedule existed when the assessments became delinquent, owners never had the chance to choose timely payment over a known penalty; imposing the charge retroactively was therefore unreasonable, arbitrary, and an abuse of discretion. Finally, applying Rule 56(e) and the rules of evidence, the court found the Neal affidavit conclusory and built on computer-generated exhibits that were unauthenticated inadmissible hearsay, defeating the prima facie showing, and it found disputed facts on the Lot Six lien and the Developer’s $600 tender.
For Arizona homeowners and condominium associations, the decision is a leading illustration of two limits on association power. First, the powers a board holds under its declaration and under the Uniform Condominium Act, including the express statutory authority in A.R.S. section 33-1242(11) to impose late-payment charges, must still be exercised reasonably. An association cannot adopt a penalty and then reach backward to punish assessments that were already delinquent before any penalty schedule existed, because owners never had a chance to avoid a charge they could not have known about. Retroactive late fees, the court held, are unreasonable, arbitrary, and an abuse of discretion as a matter of law.
Second, the case underscores that assessment-collection and lien-foreclosure claims are ordinary civil actions in which the association carries the burden of proof. To win summary judgment an association must offer admissible evidence, not a conclusory affidavit attaching computer printouts with no foundation. A ledger or account summary must qualify under the business-records exception and be authenticated by someone with personal knowledge. The opinion also confirms that a developer or owner may validly amend a declaration to phase a project if the voting and recording requirements are met, and it flags the penalties in A.R.S. section 33-420 for recording a groundless lien, reminding associations to verify the amount actually owed before recording.
Video overview of the case record
An AI-generated video overview of The Villas at Hidden Lakes Condominiums Association v. Geupel Construction Co. (No. 1 CA-CV 90-263; 174 Ariz. 72, 847 P.2d 117 (App. 1992)). Developer authority over assessments survived if supported by the declaration and admissible records. This plain-language summary was generated from the court’s filings; the court’s own ruling controls.
Listen: audio deep dive on the case record
An AI-generated audio deep dive walking through the court record and procedural posture in The Villas at Hidden Lakes Condominiums Association v. Geupel Construction Co.. Generated from the case filings; verify against the linked case records below.
Step-by-step litigation record
Developer records Declaration One (declaration of horizontal property regime) for The Villas at Hidden Lakes.
Developer records amended Declaration Two, which governs the project.
The Villas at Hidden Lakes homeowners' association is formed under Declaration Two (October 1985).
Developer conveys the first condominium unit.
Monthly assessments on Developer-owned units begin under Declaration Two.
Developer records an amendment withdrawing 23 of the 53 units into a separate Phase Two.
Developer re-records the amendment to correct a reference to the revoked Declaration One.
The 23 withdrawn Phase Two units are rededicated to the project about five months after withdrawal (December 1986).
Association adopts a $10 per-unit monthly late-payment penalty and demands payment (Lot Six letter seeks $26,208.87).
Developer tenders a $600 check for Lot Six assessments from April 1987 and asks that interest and penalties be waived.
Association rejects the check and records a $1,439.25 lien against Lot Six.
Association begins charging a flat $3,180 monthly late charge; claimed late fees ultimately total $47,160 (July 1988).
Court of Appeals reverses summary judgment on all counts and remands.
Reconsideration denied.
Petition for review dismissed.
Complete source-document index
This index contains 0 PDFs, 1 other source file from the reviewed public source packet. Byte-identical copies are listed once. Files are ordered by the date and sequence in the public filename, and party filings or research materials are labeled separately from court rulings.
Cap Opinion
Type: Decision or judgment
Decision document; read it to understand the controlling result before moving to later filings.
FAQ
What was The Villas at Hidden Lakes v. Geupel about?
It was a condominium association’s collection suit against its own developer. The Association sought delinquent monthly assessments, retroactive late fees, and interest, and tried to foreclose a lien on a lot the developer still owned. The developer argued it owed nothing on 23 units it had temporarily withdrawn from the project and that the late fees, which exceeded $47,000, were unenforceable.
Can an Arizona HOA or condominium association charge late fees retroactively?
No. The court held that, even though the association had the power to impose late fees under its declaration and under A.R.S. section 33-1242(11), applying a newly adopted penalty to assessments that were already delinquent before the penalty existed was unreasonable, arbitrary, and an abuse of discretion. Owners must have had a chance to choose timely payment over a known penalty.
Does a condominium association have authority to impose late fees at all?
Yes. The court confirmed that both Article Five of the declaration and A.R.S. section 33-1242(11) of the Uniform Condominium Act give an association authority to impose charges for late payment of assessments, and that the Uniform Condominium Act applied even though the declaration predated its effective date. The problem here was only the retroactive, and therefore unreasonable, way the power was used.
Why did the association lose its summary judgment?
Because its only supporting affidavit, from the association president, was conclusory and relied on computer-generated exhibits with no foundation. The affidavit did not show the affiant’s personal knowledge of how the records were prepared and did not establish the business-records exception, so the exhibits were inadmissible hearsay under Rule 56(e) and the rules of evidence, defeating the prima facie case.
Could the developer amend the declaration to withdraw units into a separate phase?
Yes. The declaration allowed amendment by owners holding at least 67 percent of the votes, and the developer’s three-votes-per-owned-unit gave it 144 of 149 votes. A recording error was cured by re-recording and did not invalidate the amendment, and withdrawing property (as opposed to terminating the regime, which needs 100 percent approval) was permissible, so no assessments were due on the withdrawn units while they were out of the project.
What should associations take away about recording liens?
The court found disputed facts about whether the Lot Six lien overstated the amount due and whether the developer’s $600 tender was unconditional, and it noted A.R.S. section 33-420, which penalizes recording a groundless lien. The practical lesson is to verify the actual amount owed, account for any valid tender, and support the claim with admissible evidence before recording or foreclosing a lien.
Case Dossier
This dossier combines the case metadata, linked court sources, and the explanatory sections below. It distinguishes court rulings from party filings, allegations, and requested relief.
Case Summary
| Case ID / citation | No. 1 CA-CV 90-263; 174 Ariz. 72, 847 P.2d 117 (App. 1992) |
|---|---|
| Court / tribunal | Court of Appeals |
| Decision / key date | November 10, 1992 |
| Judge / panel | Toci, J. (author), Taylor, P.J., Grant, J. |
| Parties | A condominium association sued its developer to collect delinquent assessments, retroactive late fees, and interest and to foreclose an assessment lien; the developer countered that it had validly amended the declaration to withdraw 23 units into a separate phase and that the retroactive late fees were unenforceable. |
| Governing law |
|
| Topics | AssessmentsCC&RsForeclosureLiensAttorney FeesProcedure |
| Outcome / holding | Reversing summary judgment and remanding, the court held that the Developer had authority under the declaration to amend it and lawfully withdraw twenty-three units into a separate phase, so those units were not subject to monthly assessments or late charges while withdrawn; that although the Association had contractual and statutory authority under A.R.S. section 33-1242(11) to impose late fees, applying them retroactively to assessments already delinquent before the late-fee schedule was adopted was unreasonable, arbitrary, and an abuse of discretion; and that the Association's supporting affidavit was conclusory and relied on inadmissible hearsay, so it failed to establish a prima facie case for summary judgment. |
| Primary public source | View source opinion/order |
Parties, Court, and Research Coverage
| Reviewed source package | 1 other source file |
|---|---|
| Step-by-step docket roadmap | 15 roadmap entries |
| Video overview | The Villas at Hidden Lakes Condominiums Association v. Geupel Construction Co. |
| Study / briefing material | 1 section |
| FAQ / homeowner questions | 6 questions |
| Featured download links | 1 download link |
Key Issues & Findings
The Villas at Hidden Lakes Condominiums Association, a group of condominium owners organized under a recorded declaration of horizontal property regime, sued its developer, Geupel Construction Company, Inc. and R.G.W. Investment Co., Inc. (together the joint venture Paradise Isle Associates, referred to as the "Developer"), to collect delinquent monthly assessments, retroactive late-payment penalties, and interest, and to foreclose an assessment lien on a lot the Developer still owned. The Developer answered that it owed no assessments on twenty-three of the original fifty-three units because it had recorded an amendment temporarily withdrawing those units into a separate phase, and that the late fees, which had grown to more than $47,000, were unenforceable because they were imposed retroactively and exceeded the twelve percent interest set by the bylaws. The trial court granted the Association summary judgment on both counts and awarded attorney's fees. Division One of the Arizona Court of Appeals reversed. It held that the Developer had the votes and authority under the declaration to amend it and withdraw the Phase Two units, that the Association had contractual and statutory authority under the Uniform Condominium Act to impose late fees but exercised that power unreasonably by making them retroactive, and that the Association's supporting affidavit was conclusory and relied on inadmissible hearsay, so it failed to establish a prima facie case. The court also found disputed fact issues on the Lot Six lien and the Developer's tender of payment, reversed the fee award, and remanded.
The court analyzed each issue against the text of the recorded declaration ("Declaration Two") and the Uniform Condominium Act. On the withdrawal question, it explained that the dispute was not whether the Developer had a "unilateral" right to amend, but whether it satisfied the declaration's amendment procedure. Article Fourteen allowed amendment at any time by owners holding at least sixty-seven percent of the votes, and Article Six gave the Developer three votes per owned unit, yielding 144 votes against the five votes of the other owners, far more than enough. Mortgage-holder consent was unnecessary because those owners held under four percent of the votes, and the declaration's own language ('until or unless changed') permitted altering the fractional common-element interests. The court rejected the argument that the recording mistake (a reference to the revoked Declaration One) invalidated the amendment, because the document clearly identified the property and its phasing purpose, gave constructive notice under A.R.S. section 33-416, and was re-recorded to fix the error. Distinguishing Camelback Del Este, Riley, and La Esperanza, the court held that the uniform-treatment rule applies only where the declaration so limits amendments; here the amendment merely provided for phased development and did not alter any covenant. Withdrawal of property (67 percent) was also distinct from termination of the regime (100 percent). On estoppel, the Association showed neither justifiable reliance nor injury, so no prima facie case existed. Turning to late fees, the court held the Association had power to impose them under Article Five and A.R.S. section 33-1242(11), and that the fees were a personal obligation, but that condominium associations must exercise such powers reasonably. Because no penalty schedule existed when the assessments became delinquent, owners never had the chance to choose timely payment over a known penalty; imposing the charge retroactively was therefore unreasonable, arbitrary, and an abuse of discretion. Finally, applying Rule 56(e) and the rules of evidence, the court found the Neal affidavit conclusory and built on computer-generated exhibits that were unauthenticated inadmissible hearsay, defeating the prima facie showing, and it found disputed facts on the Lot Six lien and the Developer's $600 tender.
For Arizona homeowners and condominium associations, the decision is a leading illustration of two limits on association power. First, the powers a board holds under its declaration and under the Uniform Condominium Act, including the express statutory authority in A.R.S. section 33-1242(11) to impose late-payment charges, must still be exercised reasonably. An association cannot adopt a penalty and then reach backward to punish assessments that were already delinquent before any penalty schedule existed, because owners never had a chance to avoid a charge they could not have known about. Retroactive late fees, the court held, are unreasonable, arbitrary, and an abuse of discretion as a matter of law.
Second, the case underscores that assessment-collection and lien-foreclosure claims are ordinary civil actions in which the association carries the burden of proof. To win summary judgment an association must offer admissible evidence, not a conclusory affidavit attaching computer printouts with no foundation. A ledger or account summary must qualify under the business-records exception and be authenticated by someone with personal knowledge. The opinion also confirms that a developer or owner may validly amend a declaration to phase a project if the voting and recording requirements are met, and it flags the penalties in A.R.S. section 33-420 for recording a groundless lien, reminding associations to verify the amount actually owed before recording.