HOA - ALJDEC decisions

23F-H010-REL · Department of Real Estate - H/C · 2022-12-16

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

In the Matter of

Richard Busack

Petitioner

The Cliffs Condominium Association

Respondent

No. 23F-H010-REL

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: December 7, 2022

APPEARANCES: Petitioner Richard Busack appeared on his own behalf. Respondent The Cliffs Condominium Association was represented by Melissa Doolan.

ADMINISTRATIVE LAW JUDGE: Tammy L. Eigenheer

_____________________________________________________________________

FINDINGS OF FACT

The Cliffs Condominium Association (Respondent or HOA) is an association of condominium owners located in Surprise, Arizona.

On or about September 1, 2022, Richard Busack (Petitioner) filed a petition with the Arizona Department of Real Estate (Department), alleging that Respondent had violated Article III, Section 3.07 of the Declaration of Establishment of Condominium and of Declaration of Covenants, Conditions, and Restrictions for The Cliffs Condominium (CC&Rs). Petitioner indicated he were claiming one issue in the Petition and paid the required $500.00 filing fee.

The Notice of Hearing in this matter set forth the issues to be determined as follows:

Petitioner states “On July 14, 2022, the Cliffs Condominium Board of Directors denied my [Petitioner’s] request for reimbursement kitchen cabinet and countertop replacement and mold remediation/restoration after a leaking pipe, located within/between the ceiling and subfloor of units 163 and 263, caused severe damage to my [Petitioner’s] kitchen by way of CAT 3 water coming from unit 263, therefore violating the CC&R’s Article III section 3.07. . .”

All errors in original.

On or about May 30, 2022, Petitioner learned of a potential leak in his unit from his tenant.

On or about June 1, 2022, Petitioner called Respondent’s management company and left a voicemail regarding the potential leak.

Two hours after notifying the management company, Petitioner contacted “24hr Flood Pros”, a restoration company, regarding the situation.

After a visual inspection, the restoration company determined there was extensive water damage and mold in the unit.

In the evening of June 1, 2022, the management company notified Petitioner than the information had been forwarded to the Board.

After not getting a response from the HOA, Petitioner had the restoration company do further work to determine the source of the leak and repair options.

On or about June 3, 2022, the restoration company determined that the leak was coming from the toilet in Unit 263.

The HOA repaired the leak in the pipe and repaired the drywall in Petitioner’s unit.

Petitioner requested that the HOA pay the total restoration bill of $4300.00. Initially, someone erroneously indicated that the HOA would pay for the work. That statement was corrected by Board members.

When the HOA failed to perform any corrective work to the cabinetry in the unit, Petitioner had the work done himself.

On or about July 13, 2022, Petitioner sent the HOA a demand letter requesting $8541.00 for the total cost to repair.

On or about July 14, 2022, Respondent advised Petitioner that the Board of Directors had voted to deny Petitioner’s claim for reimbursement.

Petitioner then filed the instant petition with the Department.

At the hearing, Petitioner argued that his unit was damaged by a leaking pipe in the walls. Petitioner asserted that, because the pipe was in the walls, it was not in an open and unobstructed condition and it was, therefore, the responsibility of the HOA to fix the leak and the resulting damage. Petitioner argued that, had the leak occurred within his unit, it would have been his responsibility to repair the damage, but because the leak was outside the unit, it was the HOA’s responsibility. Petitioner urged that, because the HOA repaired the drywall in Petitioner’s unit, the HOA accepted it had a responsibility to repair the other damage. Petitioner acknowledged that the leak that led to the damage in his unit came from a section of pipe between Unit 263 and where that pipe joined the pipes serving other units.

Respondent elected not to present any testimony at the hearing. Respondent’s counsel avowed that the HOA had completed the repairs to the leak, but had not yet made a determination if the costs of those repairs would be charged to Unit 263. Further, Respondent’s counsel indicated that the HOA repaired the drywall because Article III, Section 3.05 defines bearing walls as Common Elements.

CONCLUSIONS OF LAW

The Department has jurisdiction to hear disputes between a property owner and a condominium unit owners’ association. A.R.S. § 32-2199 et seq.

In this proceeding, Petitioner bears the burden of proving by a preponderance of the evidence that Respondent violated the CC&Rs. A.A.C. R2-19-119.

A preponderance of the evidence is “[e]vidence which is of greater weight or more convincing than the evidence which is offered in opposition to it; that is, evidence which as a whole shows that the fact sought to be proved is more probable than not.” Black’s Law Dictionary 1182 (6th ed. 1990).

Article III, Section 3.07 of the CC&Rs provides, in pertinent part, as follows:

3.07 Maintenance By Owners. Each Owner shall furnish and be responsible for, at his own expense, all of the maintenance, repairs, and replacements within his own Condominium Unit. Such obligation shall include: . . . (c) the maintenance of, in an open and unobstructed condition, all sewer and drainage pipes, water and other utility lines serving an Owner’s respective Condominium Unit between the points at which the same enter the respective Condominium Unit and the points where the same joins the utility lines serving other Condominium Units.

By its own terms, Article III, Section 3.07 addresses condominium owners’ responsibilities to maintain their units. While Petitioner argued his obligation to maintain the pipes ends where the pipe leaves his unit, that is not a proper reading of Article III, Section 3.07. Rather, unit owners are responsible for the maintenance of all sewer and drainage pipes “between the points at which the [pipes] enter [the unit] and the points where the [pipe] joins the utility lines serving other Condominium Units.”

Therefore, maintenance of the leaking pipe, which Petitioner acknowledged was between the point where the pipe entered Unit 263 and where the pipe joined the utility lines serving other units, was the responsibility of the owner of Unit 263.

Petitioner’s interpretation of “open and unobstructed condition” was also erroneous. Rather than referencing that access to the pipe had to be open and unobstructed, i.e., not inside a wall, a plain reading of “open and unobstructed condition” means that the pipe itself must not be allowed to remain clogged.

Petitioner failed to establish that Respondent violated Article III, Section 3.07 of the CC&Rs.

ORDER

IT IS ORDERED that Petitioner’s petition is denied.

NOTICE

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. Pursuant to A.R.S. § 41-1092.09, a request for rehearing in this matter must be filed with the Commissioner of the Department of Real Estate within 30 days of the service of this Order upon the parties.

-54864001

001

-137160-45720000Done this day, December 16, 2022.

/s/ Tammy L. Eigenheer

Administrative Law Judge

Transmitted by either mail, e-mail, or facsimile December 16, 2022 to:

Louis Dettorre, Commissioner

Arizona Department of Real Estate

100 N. 15th Avenue, Suite 201

Phoenix, Arizona 85007

Attn:

[email redacted]

Richard Busack

[email redacted]

Melissa Doolan

The Travis Law Firm, PLC

[email redacted]

By: Miranda Alvarez

Legal Secretary