HOA - ALJDEC decisions

25F-H026-REL · Department of Real Estate - H/C · 2026-05-19

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Jeremy R. Whittaker,

Petitioner,

vs.

The Val Vista Lakes Community Association,

Respondent.

No. 25F-H026-REL

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: June 17, 2025, January 30, 2026, and April 06, 2026.

APPEARANCES: Jeremy R. Whittaker (“Petitioner”) appeared on his own behalf. Josh Bolen, Esq. appeared on behalf of The Val Vista Lakes Community Association (“Respondent” and “Association”) with Bryan Patterson as a witness.

ADMINISTRATIVE LAW JUDGE: Jenna Clark.

EXHIBITS ADMITTED INTO EVIDENCE: The Notice of Hearing, including the referring agency’s attached administrative file, Petitioner Exhibits 202, 205-206, 208-209, 211-212, 214, 216-218, 225-226, 237, 239, 300-303, 306, 401, 403, 415, 500, 502-504, 509-510, 514, 524, and Respondent Exhibits C & O were substantively admitted into the evidentiary record. Minute Entries dated January 14, 2025, February 19, 2025, February 27, 2025, March 07, 2025, March 13, 2025, March 17, 2025, April 09, 2025, April 18, 2025, April 24, 2025, June 17, 2025, June 26, 2025, June 27, 2025, July 13, 2025, September 27, 2025, December 02, 2025, December 18, 2025, January 09, 2026, January 28, 2026, and March 03, 2026, were admitted into the evidentiary record for administrative purposes only.

_____________________________________________________________________

After review of the hearing record in this matter, the undersigned Administrative Law Judge makes the following Findings of Fact and Conclusions of Law, and issues this Order to the Commissioner of the Arizona Department of Real Estate (“Department”).

FINDINGS OF FACT

Background and Procedure

The Department is authorized by statute to receive and to decide petitions for hearings from members of homeowners’ associations and from homeowners’ associations in the State of Arizona.

On or about November 19, 2024, Petitioner filed a 4-issue HOA Dispute Process Petition (“Petition”) with the Department. In the petition, Petitioner identified Respondent’s alleged violations as follows: (1) an alleged violation of Ariz. Rev. Stat. § 33-1805(A) by failing to timely respond to an October 15, 2023, records request; (2) an alleged violation of Ariz. Rev. Stat. §§ 10-11601 and 33-1805(A), and Bylaw Art. IV sec. 3 by failing to maintain and provide access to the 2023 candidate applications for [D.E.] and [B.H.], and by conducting Association business with personal email accounts and unofficial communication channels; (3) an alleged (and unspecified) violation of the Association’s Covenants, Conditions, and Restrictions (“CC&Rs”) and Ariz. Rev. Stat. § 10-3830(A) by expending Association funds for political purposes; and (4) an alleged violation of Ariz. Rev. Stat. § 33-1805(A) and Bylaws Art. IX by failing to provide proof of payments to law firms secured as the Association’s legal counsel. Petitioner requested an order directing Respondent to abide by the referenced statutes and governing documents. Civil penalties were not requested.

On or about November 25, 2024, Petitioner filed another Petition that contained a 5th issue against Respondent – an alleged violation of CC&Rs Art. VII sec. 4(b) by overcharging through assessments in excess of the CPI-based Maximum Annual Assessment formula. Petitioner requested an order directing Respondent to abide by the referenced statutes and governing documents. Civil penalties were not requested.

On December 02, 2024, Petitioner tendered a $2,500.00 filing fee to the Department for both Petitions.

On December 04, 2024, the Department issued a HOA Notice of Petition to Respondent.

On December 20, 2024, Respondent returned its Answer to the Department whereby it denied all complaint items in the petition, save the first which it admitted violating.

On January 08, 2025, the Department issued a Notice of Hearing setting the above-captioned matter for hearing before the Office of Administrative Hearings (“OAH”), an independent state agency, on February 20, 2025, to address Respondent’s alleged violation(s) of Ariz. Rev. Stat. § 33-1805(A), Bylaw Art. IV sec. 3, and CC&Rs Art. VII sec. 4(b).

On January 13, 2025, the parties submitted a Stipulation to Continue, which was granted by the Tribunal. On January 14, 2025, the Tribunal issued an Order Granting Continuance that set the matter for a Status Update by March 14, 2025.

On March 17, 2025, the Tribunal issued a Minute Entry that scheduled a telephonic prehearing conference for April 21, 2025. Per stipulation of the parties, on April 24, 2025, the Tribunal issued an Order Granting Continuance that set the matter for continued hearing June 17-18, 2025.

On June 17, 2025, at the time scheduled for continued hearing, Petitioner submitted a Motion to Continue. As a result, on June 26, 2025, the Tribunal issued an Order Granting Continuance that set the matter for continued hearing August 13-14, 2025.

On August 12, 2025, Petitioner submitted an Emergency Motion to Continue. As a result, by that same date the Tribunal issued an Emergency Order Granting Stay that set the matter for a Status Update by September 29, 2025. Per Petitioner’s timely request, on September 29, 2025, the Tribunal issued an Order Granting Stay Continuance that extended the Status Update to December 01, 2025.

On December 02, 2025, per Petitioner’s request, the Tribunal issued an Order Granting Continuance that set the matter for continued hearing on January 30, 2026. Because the parties were unable to conclude the presentation of their evidence, the Tribunal issued a Further Hearing Order that set the matter for further hearing on April 06, 2025.

The Parties and Governing Documents

Respondent is a homeowners’ association formed in June 1985, whose members own properties in a residential-commercial real estate development located in Gilbert, Arizona. Membership for the Association is compromised of 2,200 units in the Val Vista Lakes subdivision.

Petitioner is a Val Vista Lakes residential property owner and a member of the Association.

The Association is recognized by the State of Arizona as a domestic nonprofit corporation.

The Association is governed by a Declaration of CC&Rs and overseen by a Board of Directors (“the Board”). The CC&Rs empower the Association to control certain aspects of property use within the development. When a party buys a residential unit in the development, the party receives a copy of the CC&Rs and Bylaws and agrees to be bound by their terms. Thus, the CC&Rs form an enforceable contract between the Association and each property owner, and the Bylaws outline how the Association is permitted to operate.

CC&Rs Art. VII sec. 4(b) – Maximum Annual Assessment provides the following:

The Annual Assessment to be established by the Board may not exceed a certain amount, hereinafter referred to as the “Maximum Annual Assessment”, which Maximum Annual Assessment shall be determined and shall vary in accordance with the following provisions:

(b) From and after January 1 of the year immediately following recordation of the first Trace Declaration and during such year, the Maximum Annual Assessment shall be increased effective January 1 of each year without a vote of the Membership in conformance with the rise, if any, of the Consumer Price Index as hereinafter defined. The Maximum Annual Assessment for each such period shall be computed by reference to the statistics published in the Monthly Labor Review by the United States Department of Labor, Bureau of Labor Statistics, designated “Consumer Price Index – U.S. City Average for Urban Wage Earners and Clerical Workers, 1967 Equals 100, All Items”, hereinafter called the “Consumer Price Index”. For purposes of identification, the Consumer Price Index for June, 1980 was 247.8. The Maximum Annual Assessment shall be computed by the following formula:

X – Consumer Price Index for September of the year immediately preceding the year of the first Annual Assessment.

Y = Consumer Price Index for September of the year immediately preceding the calendar year for which the Maximum Annual Assessment is to be determined.

(Y) X $300 = the Maximum Annual Assessment for the

(X) year in question.

If the Bureau of Labor Statistics shall change the method of determining the Consumer Price Index, the formula for determining the Maximum Annual Assessment shall be altered or amended, if possible, so as to continue the base period and base figure, but in the event it shall be impossible to do so, or in the event the Bureau of Labor Statistics shall cease to publish the said statistical information and such information is not available from any other source, public or private, then and in any such events a new formula for determining the Maximum Annual Assessment shall be adopted by the Board.

(All errors in original.)

On November 25, 1986, the first sentence of Art. VII sec. 4(b) was amended to “From and after January 1 of the year immediately following the Recording of the first Tract Declaration and during such year, the Maximum Annual Assessment may be increased effective January 1 of each year without a vote of the Membership in conformance with the rise, if any, of the Consumer Price Index as hereinafter defined, or by five percent (5%), whichever is greater.” However, on July 11, 1990, the amendment was cancelled in its entirety. The original language was restored with full force and effect.

CC&Rs Art. IX sec. 1 – Purpose for which Association’s Funds may be Used provides the following, in pertinent part:

The Association shall not expend funds directly or indirectly to support, endorse, or contribute to any political candidate or issue.

Bylaw Art. IV sec. 3 – Candidates for the Board of Directors provides the following:

Nomination for election to the Board of Directors may be made by a call for candidates delivered to all Members at least ninety (90) days in advance of the Annual Meeting of the Members. In no event shall nominations be made from the floor of the Annual Meeting. Each candidate for the Board of Directors shall fill out an application which at minimum will require the candidate to disclose any familial, business or ownership relationships with other Directors or candidates; any current or anticipated conflicts of interest with the Association, including whether the candidate is current in Assessments and/or otherwise in violation of the Declaration or Rules; and whether they have previously served on the Board. The application shall be made available to all Association Members prior to the election.

Bylaws Art. IX – Books and Records provides the following, in pertinent part:

The books, records and papers of the Association, including, but not limited to the Declaration and Bylaws, Membership register, books of account, and minutes of meeting of the Members, the Board of Directors, and committees, shall be made available for inspection by any Member of any person designated by the Member in writing as the Member’s representative during reasonable business hours withing ten (10) business days of such request.

The Val Vista Lakes Document Retention Policy provides, in pertinent part, that accounting records must be retained for “at least 7 years”, and voting agreements must be retained for “at least 3 years.”

Val Vista Lakes Resolution – Enforcement of the Governing Documents (updated August 2023) provides that, in accordance with CC&Rs Art. V and Bylaws Art. VI, the Board has the authority to adopt rules and regulations as it pertains to the governing of the Association. The Resolution specifies as follows, in pertinent part:

It is hereby RESOLVED, that the following policy and procedures be implemented in regards to the campaign, ballot and election procedures for the Annual Meeting of the Members.

GENERAL CAMPAIGN PROCEDURE

The General Manager is responsible for supervising the entire campaign process.

A member of the Board (who is not running for re-election) will be appointed to be the Board member liaison for the annual election process. The appointment of this Board member will take place in the June timeframe.

The appointed Board member liaison is responsible for ensuring the election process is handled in compliance with applicable law and per the agreed upon process and rules governing the elections.

The election process timeline is updated each year in order to achieve a Member Meeting where the results are announced in or around mid-November.

* * *

CAMPAIGN MATERIAL

All candidates may submit a biography for inclusion in official election materials. The candidate biography must be submitted on the Val Vista Lakes form and in a format suitable for duplication and posting on the website.

(Emphasis in original.)

The Association was managed by FirstService Residential (“FSR”) until termination on August 20, 2024. On October 01, 2024, HOAMCO was appointed by vote of the Board of Directors as the Associations’ new property management company.

A number of files were not transferred by FSR to HOAMCO as they were missing, corrupted, and/or unable to be downloaded due to being inaccessible.

Party Stipulations

Only Issues 2-5 are to be adjudicated due to Respondent’s admission of Issue 1.

Issue 3 is clarified to be a sole alleged violation of CC&Rs Art. IX sec. 1.

Because Title 10 (Corporations and Associations) of the Ariz. Rev. Stat. falls outside the jurisdiction of the Department, and therefore cannot be addressed by OAH, Respondent’s alleged violations of Ariz. Rev. Stat. §§ 10-11601 and 10-3830(A) are removed from the underlying Petition.

Hearing Evidence

Petitioner testified on his own behalf. Bryan Petterson testified on behalf of Respondent. The substantive evidence of record is as follows:

Petitioner owns residential property located at 2103 E. Clipper Ln. Gilbert, Arizona 85234 and is a member of the Association. Petitioner was conveyed the property on or about June 07, 2024.

Issue #2 –

On October 15, 2024, Petitioner submitted a records request to the Board of Directors to review the 2023 candidate applications for D.E. and B.H.

On October 31, 2024, counsel for the Association advised Petitioner that the Association did not have the records in its possession but was “working on obtaining them” from the Association’s prior property management company. Counsel further advised that once the records were obtained, they would be provided to Petitioner.

Petitioner did not receive the requested documents, or an opportunity to review them, withing ten (10) days of his original request.

On December 26, 2024, Petitioner submitted a follow-up records request to counsel for the Association.

On February 19, 2025, counsel for the Association advised Petitioner that there were no candidate applications for the 2023 election, and that candidates had only been required to complete a Request for Candidates form.

On February 25, 2025, counsel for the Association provided Petitioner with a 2023 Request for Candidates biography page that outlined all of the information candidates were required to submit to the Board of Directors.

On March 04, 2025, counsel for the Association informed Petitioner that an alleged lack of disclosure(s) was attributable to the 2023 Board President, S.M., who approved the Request for Candidates form along with the rest of the Board of Directors, and who also appointed another member, C.T., to oversee the 2023 election. Neither D.E., B.H., nor CHDB Law. were involved in the 2023 election process.

Attached were all 2023 Candidate Forms received as required by the 2023 Board of Directors.

Issue #3 –

On unknown date(s), the Association placed several signs throughout common areas regarding an upcoming vote to increase monthly dues by $25.00. Signage included phrases “Help VVL Come Back,” “You’re your Community,” “Stand Up for VVL,” “Why $25?” and “Make a Difference.” Postcards titled HOW TO VOTE were also mailed to members. The postcards provided notice that voting deadline was November 21, 2024, and instructed members to scan the included QR code to Vote “YES” online to increase the maximum yearly assessment by $25.00 per month. Members were also advised that voting via paper ballot at the Clubhouse was also an option. (Emphasis in original.)

An unknown number of signs were privately purchased. An unknown number of signs were purchased by the Association. The Association spent approximately $1,200.00 on its own signage.

On November 15, 2024, Petitioner submitted an objection to the Association regarding alleged misuse of community funds, lack of transparency, and a breach of fiduciary duties. Specifically, Petitioner accused the Board of Directors of improperly voting for the “Vote Yes” campaign in closed session, and opined that signs at issue were not for the collective benefit of the community and therefore violated statute.

On November 18, 2024, D.E. sent an email blast to members regarding the “Vote Yes” campaign and November 21, 2024, deadline. D.E. directly asked members to “vote to approve a one-time increase of the maximum yearly assessment by just $25.00 a month,” and noted that the request was due to inflation eroding the Association’s resources despite streamlining costs for years.

On December 26, 2024, Petitioner submitted a copy of meeting minutes where funds were approved for “Vote Yes” campaign sign creation and placement.

Issue #4 –

On October 15, 2024, Petitioner submitted a request for financial information to Respondent. Specifically, Petitioner sought to review the amount of monies paid to CHDB Law, formerly Carpenter Hazlewood, hired by the Association for “services rendered during for the 2023 election.”

Petitioner did not receive the requested information, or an opportunity to review related documents, withing ten (10) days of his original request.

On November 03, 2024, Petitioner renewed his financial records request.

On December 26, 2024, Petitioner submitted a follow-up records request to counsel for the Association.

Issue #5 –

At the Annual Meeting held September 05, 2024, the Board announced that members would vote on whether to approve a proposed 20% increase to the Maximum Annual Assessment per Lot for the 2025 fiscal year. The Association advised that it had determined that a $300.00 annual increase, or $25.00 monthly, would total $150.49 per month starting January 01, 2025, and that at least two-thirds of members would have to vote in favor in order for the proposed Maximum Annual Assessment increase to pass.

On September 09, 2024, Petitioner submitted an inquiry to FSR and the Board of Directors whereby he opined, pursuant to his calculations, that a 5% increase cap was limited to $6.27 per month. Petitioner requested clarification on the Consumer Price Index used and reconsideration of its determination.

On September 11, 2024, the Board President replied that, after consulting counsel, it was determined the 1990 amendment cancellation of the first sentence in Art. VII sec. 4(b) was invalid because the filer did not have authority and the cancellation was not filed with the County. Petitioner was additionally advised that in August 2024 the Board of Directors approved a motion to cancel the 1990 amendment cancellation in general session. Thus, it was the Association’s position that since 1987 the Maximum Annual Assessment was either per the Consumer Protection Index or 5%, whichever was greater, resulting in a 20% dues increase.

Additional Evidence

Petitioner was unaware of the Association’s financial position during fiscal years 2021-2024, including concerns of receivership and bankruptcy.

Mr. Patterson testified that while the Association’s general ledger did contain information regarding legal payments related to Petitioner’s records request, that it also contained confidential and privileged information. Redacted materials were not provided, in part, because monthly financial statements were made available to members on the Association’s website – including payments made to legal counsel.

In an affidavit dated August 03, 2025, former Board member S.M. avowed that she served from November 2020 through November 2024. Per S.M., when FSR was the Association’s property manager it distributed monthly Accrual Basis Financial Statements consisting of approximately 65 pages, beginning with a Table of Contents and including a General Ledger Transaction Register that detailed non-privileged vendor payments and accounting entries.

Closing Arguments

In closing, Respondent conceded its violation of Issue 1 but argued that it should prevail on the remaining contested Issues 2-5. Specifically, Respondent opined that Petitioner could not prevail because the Candidate Form was not a “record” that was required to be kept and was not in its possession when the request was made but was provided to Petitioner in good faith. Regarding Issue 3, Respondent argued that funds were expended for the “common good” of community members which served as an exception to CC&Rs Art. IX sec. 1 by advocating for financial stability on the nonprofit. Regarding Issue 4, Respondent argued that it was under no obligation to create records, and that Petitioner conceded that he had asked for a summary. Lastly, regarding Issue 5, Respondent argued that Petitioner failed to sustain his burden of proof as he was required to establish yearly increases since 1987, and opined that finding in Petitioner’s favor required the Tribunal to ignore member votes in support of annual increases. Per Respondent, Petitioner used a “bad faith” calculation to accuse the Association of mischarging members, which was inaccurate.

In closing, Petitioner argued that he had sustained his burden of proof on all contested issues and requested the imposition of civil penalties against Respondent.

Conclusions of Law

This matter lies within the Department’s jurisdiction pursuant to Ariz. Rev. Stat. §§ 32-2102 and 32-2199 et seq., regarding a dispute between an owner and a planned community association. The owner or association may petition the department for a hearing concerning violations of community documents or violations of the statutes that regulate planned communities as long as the petitioner has filed a petition with the department and paid a filing fee as outlined in Ariz. Rev. Stat. § 32-2199.05.

Pursuant to Ariz. Rev. Stat. §§ 32-2199(2), 32-2199.01(A), 32-2199.01(D), 32-2199.02, and 41-1092 et seq. OAH has the authority to hear and decide the contested case at bar. OAH has the authority to interpret the contract between the parties.

In this proceeding, Petitioner bears the burden of proving by a preponderance of the evidence that Respondent violated Ariz. Rev. Stat. § 33-1805(A), Bylaw Art. IV sec. 3, and CC&Rs Art. VII sec. 4(b). Respondent bears the burden of establishing any affirmative defenses by the same evidentiary burden.

“A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” A preponderance of the evidence is “[t]he 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.”

Ariz. Rev. Stat. § 33-1805(A) provides, in relevant part, as follows:

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 or any person designated by the member in writing as the member's representative. The association shall not charge a member or any person designated by the member in writing for making material available for review. The association shall have ten business days to fulfill a request for examination. On request for purchase of copies of records by any member or any person designated by the member in writing as the member's representative, the association shall have ten business days to provide copies of the requested records. An association may charge a fee for making copies of not more than fifteen cents per page.

(Emphasis added.)

In Arizona, when construing statutes, we look first to a statute's language as the best and most reliable index of its meaning. If the statute's language is clear and unambiguous, we give effect to that language and apply it without using other means of statutory construction, unless applying the literal language would lead to an absurd result. Words should be given “their natural, obvious, and ordinary meaning." Statutes should be interpreted to provide a fair and sensible result. Unless defined by the legislature, words in statutes are given their ordinary meanings. Each word, phrase, clause, and sentence of a statute or rule must be given meaning so that no part will be void, inert, redundant, or trivial.

The crux of the case at bar is whether Petitioner established that Respondent’s alleged conduct constitutes one or more violations of Ariz. Rev. Stat. § 33-1805(A), Bylaw Art. IV sec. 3, and CC&Rs Art. VII sec. 4(b) by the requisite evidentiary standard. Based upon a review of the credible and relevant evidence in the record, the Tribunal finds that Petitioner sustained his burden of proof regarding Issues 1 and 3-4, and that Petitioner failed to sustain his burden of proof regarding issues 2 and 5.

Here, the material facts are clear.

The credible evidence of record reflects that the Association advocated for a political position by vehemently encouraging members to vote a specific way, and that the Association deliberately did not fulfill Petitioner’s financial records request. Neither the fact that information was likely available online, ignoring the fact that such information was not provided to Petitioner, nor any concerns the Association may have had regarding Petitioner’s ability to un-redact information, the Association was still obliged to timely reply to the underlying request.

There is insufficient evidence in the record to find that the Association had a duty to maintain the 2023 Request for Candidates form for D.E. and/or B.H. Moreover, because it was established that the Maximum Annual Assessment was calculated by the greater outcome of the Consumer Protection Index or 5%, the Association’s increase for the 2025 fiscal year was permissible.

Thus, the undersigned concludes that because Petitioner sustained his burden of proof as to Issues 1 and 3-4 but failed to sustain his burden of proof as to Issues 2 and 5, his petition must be granted in part and denied in part.

FINAL ORDER

In light of the foregoing,

IT IS ORDERED that Issues 1, 3, and 4 as pled in the November 19, 2024, Petition, including the relief requested for each, are granted.

IT IS FURTHER ORDERED that Issues 2 and 5 as pled in the November 25, 2024, Petition, including the relief requested for both, are denied and dismissed with prejudice.

IT IS FURTHER ORDERED that Respondent shall reimburse a portion of Petitioner’s filing fee, totaling $1,500.00, as required by Ariz. Rev. Stat. §§ 32-2199.01-02.

IT IS FURTHER ORDERED that no civil penalties shall be levied against Respondent as a result of these proceedings.

NOTICE

Pursuant to Ariz. Rev. Stat. §32-2199.02(B), this Order is binding on the parties unless a rehearing is granted pursuant to Ariz. Rev. Stat. § 32-2199.04. Pursuant to Ariz. Rev. Stat. § 41-1092.09, a request for rehearing in this matter must be filed with the Commissioner of the Arizona Department of Real Estate within thirty (30) days of the service of this Order upon the parties.

Done this day, May 19, 2026.

Office of Administrative Hearings

/s/ Jenna Clark

Administrative Law Judge

Transmitted by either mail, e-mail, or facsimile to:

Susan Nicolson, Commissioner

Arizona Department of Real Estate

100 N. 15th Ave., Ste. 201

Phoenix, AZ 85007

[email redacted]

[email redacted]

[email redacted]

[email redacted]

[email redacted]

[email redacted]

[email redacted]

Josh M. Bolen, Esq.

Ashley N. Turner, Esq.

CHDB Law, LLP, Counsel for Respondent

1400 E. Southern Ave., Ste. 400

Tempe, AZ 85282-5691

[email redacted]

[email redacted]

[email redacted]

Jeremy Whittaker, Petitioner

2103 E. Clipper Ln.

Gilbert, AZ 85234

[email redacted]

By: OAH Staff