ORDER

18F-H1818029-REL · Department of Real Estate - H/C · 2018-03-15

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Mogollon Airpark, Inc. (“Respondent”) has filed a motion to continue the hearing and a motion to dismiss the petition that Warren R. Brown (“Petitioner”) filed with the Arizona Department of Real Estate (“Department”) under Ariz. R. Civ. P. Rule 12(b)(6). Respondent notes in its motion that Petitioner did not allege in his petition that Respondent violated any of Respondent’s Covenants, Conditions, and Restrictions (“CC&Rs”) or Bylaws or any statute governing planned communities, only that the CC&Rs and Bylaws did not authorize Respondent’s accounting practices and imposition of a special assessment for paving. Petitioner filed an opposition to the motion to dismiss alleging generally that he had no other means of redress and that Respondent violated A.R.S. § 33-1803 in imposing the special assessment. Petitioner did not oppose the motion to continue. A.R.S. § 32-2199.01 authorizes members of homeowner’s associations (“HOAs”) to file petitions with the Department, in relevant part as follows: For a dispute between an owner and a condominium association or planned community association that is regulated pursuant to title 33, chapter 9 or 16, the owner or association may petition the department for a hearing concerning violations of condominium documents or planned community documents or violations of the statutes that regulate condominiums or planned communities. The petitioner shall file a petition with the department and pay a filing fee in an amount to be established by the commissioner. The filing fee shall be deposited in the condominium and planned community hearing office fund established by section 32-2199.05. On dismissal of a petition at the request of the petitioner before a hearing is scheduled or by stipulation of the parties before a hearing is scheduled, the filing fee shall be refunded to the petitioner. . . .

(Emphasis added.) Petitioner does not allege in the petition that Respondent violated any specific CC&R, Bylaw, or statute governing planned communities, only that these documents do not support Respondent’s actions with respect to its accounting practices. If Petitioner is alleging fraud, he may file a complaint with the local police agency. In the absence of any alleged specific violation of the CC&Rs, Bylaws, or applicable statute, A.R.S. 32-2199.01(A) does not authorize the Administrative Law Judge to review a HOA’s general accounting practices or accounts. In his opposition to the motion to dismiss, Petitioner alleges that the “the dues increase when coupled with the special assessment equals 24% which is prohibited by A.R.S. 33-1803. A.R.S. § 33-1803(A) provides as follows: Unless limitations in the community documents would result in a lower limit for the assessment, the association shall not impose a regular assessment that is more than twenty percent greater than the immediately preceding fiscal year's assessment without the approval of the majority of the members of the association. Unless reserved to the members of the association, the board of directors may impose reasonable charges for the late payment of assessments. A payment by a member is deemed late if it is unpaid fifteen or more days after its due date, unless the community documents provide for a longer period. Charges for the late payment of assessments are limited to the greater of fifteen dollars or ten percent of the amount of the unpaid assessment and may be imposed only after the association has provided notice that the assessment is overdue or provided notice that the assessment is considered overdue after a certain date. Any monies paid by the member for an unpaid assessment shall be applied first to the principal amount unpaid and then to the interest accrued.

The statute by its terms applies only to regular assessments, not special assessments combined with a regular assessment. By its terms, A.R.S. § 33- 1803(A) does not apply to any part of special assessments. Although prehearing dismissals are not favored in the Office of Administrative Hearings, see A.R.S. § 41-1092.07(D), since Petitioner has not alleged that Respondent violated any specific CC&R or Bylaw and A.R.S. § 33-1803 by its terms does not apply to the special assessment that Petitioner complains about, IT IS ORDERED granting Respondent’s motion to dismiss. Petitioner may amend the petition that he filed with the Department to allege that Respondent’s accounting practices or the special assessment violate specific CC&Rs, Bylaws, or statutes governing planned communities. Because Petitioner only paid for a single-issue petition, he cannot allege both issues unless he pays additional monies to the Department. IT IS FURTHER ORDERED vacating the hearing on the merits that had been scheduled on April 25, 2018, rendering moot Respondent’s motion to continue. Pursuant to A.R.S. § 32-2199.02(B), this Order is binding on the parties unless a rehearing is granted pursuant to A.R.S. § 32-2199.04 based on a petition setting forth the reasons for the request for rehearing, in which case the order issued at the conclusion of the rehearing would be binding on the parties. Done this day, March 15, 2018.

/s/ Diane Mihalsky Administrative Law Judge

Copy mailed/e-mailed/faxed March 15, 2018 to:

Judy Lowe, Commissioner Arizona Department of Real Estate 2910 North 44th Street, Room 100 Phoenix, AZ 85018 Attn: [email redacted] [email redacted] [email redacted] [email redacted] [email redacted] [email redacted]

Mark K. Sahl, Esq. Carpenter, Hazlewood, Delgado & Bolen LLP Gregory A. Stein 1400 E. Southern Ave, Suite 400 Tempe, AZ 85282

Warren R. Brown PO Box 125 Overgaard, AZ 85933

By M.Aguirre -----------------------

Office of Administrative Hearings 1740 West Adams Street, Lower Level Phoenix, Arizona 85007 (602) 542-9826