HOA - ALJDEC decisions

25F-H050-REL · Department of Real Estate - H/C · 2025-08-05

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

In the Matter of:

Marilyn J Fogelsong

Petitioner,

Park Townhouses Homeowners Association, INC.

Respondent.

No. 25F-H050-REL

ADMINISTRATIVE LAW JUDGE

DECISION

HEARING: July 16, 2025 at 1:00pm

APPEARANCES: Petitioner Marilyn J. Fogelsong on her own behalf. Respondent did not appear.

ADMINISTRATIVE LAW JUDGE: Nicole Robinson

EXHIBITS ADMITTED INTO EVIDENCE: Arizona Department of Real Estate Packet (“Packet”); Notice of Hearing; Notice of Petition; Respondent’s Response.

FINDINGS OF FACT

Background and Procedure

The Arizona Department of Real Estate (“Department”) is authorized by statute to receive and to decide petitions for hearings from members of homeowners’ associations and from homeowners’ associations in Arizona.

On or about March 31, 2025, Marilyn J. Fogelsong (“Petitioner”) filed a four issue petition with the Department which alleged that Park Townhouses Homeowners Association, Inc. (“Respondent”) violated Ariz. Rev. Stat. § 33-1811; Ariz. Rev. Stat. § 33-1804(A) and (F); Ariz. Rev. Stat. 10-830(A); and its Covenants, Conditions, and Restrictions (“CC&Rs”).

The relief requested by Petitioner, other than ordering Respondent to pay to Petitioner the filing fee required by Ariz. Rev. Stat. § 32-2199.01 if Petitioner prevailed, included the following – (1) Order a party to abide by the Arizona statute specified in the complaint section, and (2) Order a party to abide by the section(s) of the condominium/planned community document(s) specified.

On April 23, 2025, the Department sent a Homeowner’s Association (“HOA”) Notice of Petition (“Notice of Petition”) to Respondent which informed Respondent of the petition initiated against it. In addition, the Notice of Petition informed Respondent to send a timely response to the Department and to Petitioner no later than May 13, 2025.

On or about May 8, 2025, Respondent returned its Answer to the Department whereby it denied Petitioner’s claims.

On or about May 19, 2025, the Department referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing to address the issues set forth as follows:

The Petitioner’s allegation within the petition stated as follows:

Petitioner’s Issue #1: The HOA failed to disclose conflicts-of-interest [sic] when hiring an HOA property manager to manage the HOA which is a violation of ARS 33-1811.

Petitioner’s Issue #2: The HOA has violated paragraph 19 of the CC&Rs by directing an HOA property manager to pursue an unsanctioned project for individual townhouses which is beyond the scope of HOA management for common areas.

Petitioner’s Issue #3: The board has violated the open meeting laws of ARS 33-1804 (A) and (F) by: holding a private board meeting without notice; failing to provide material information, minutes, financial statements, and a budget upon request; and by failing to communicate via the designated representative.

Petitioner’s Issue #4: The board has violated ARS 10-830(A) by failing to act in good faith with the care an ordinarily prudent person in a like position would act by failing to perform their duties.

The Parties and Governing Documents

Respondent is a Planned Community Association whose members own properties in the Park Townhouses residential real estate development located in Tucson, Pima County, Arizona. The community consists of eight townhome units.

Petitioner is a Park Townhouses property owner and a member of the Association. Petitioner is a partial owner of 2467 East 1st Street with her son; the son lives in the unit and is the majority owner.

Tucson Realty & Trust Company, Management Services, LLC (“TRT”), was voted on and approved by Park Townhouses owners on February 17, 2025, for HOA management services. TRT had a separate division that managed individual townhome units and that individual management division managed a few units at the Park Townhouses.

The governing document includes the Declaration of Covenants, Conditions and Restrictions for Park Association.

The Declaration of CC&Rs for Park Association provides, in pertinent part, these sections:

The Indigo Company, an Arizona Partnership hereinafter referred to as Indigo, is the owner of the real property situated in Pima County Arizona, described as follows:

Lots 14, 15 and 16 in block 1 of Speedway Heights, a subdivision of Pima County, Arizona, according to the map of record in the Pima County Recorder’s Office in book 3 of maps and plats at page 104:

Except that protion (sic) of lot 16 conveyed to the city of Tucson, by deed recorded July 25, 1949 in Docket 184 at page 576.

And it is the desire and intention of Indigo to sell the real property and to impose on n it mutual beneficial restrictions under a general plan or scheme of improvements for the benefit of all that real property and the future owners of the various parts of it:

NOW, THEREFORE, INDIGO hereby declares various covenants, conditions and restrictions relating to the aforesaid real property, which is hereinafter sometimes referred to as “the premises”. This declaration hereby establishes a plan for the individual ownership of Lots 1 to 9 inclusive, and the improvements contained thereon, in Park Townhouses as recorded in Book 33 of Maps, Page 40, Official Records, Pima County, Arizona, together with ownership by a non-profit corporation of all recreation areas and streets and other common areas, which are hereinafter defined and referred to as “common area” or as “common elements”, and which are designated upon the aforesaid plat of Park Townhouses as common area A, and common area B. The said covenants, conditions and restrictions are as follows:

19. . . . [a]ny action necessary or appropriate to the proper maintenance, safety, control and upkeep of all or any of the common elements, and any action necessary or appropriate to the maintaining of, if provided, television antennae and cable systems to the lots, security or guard services for the premises or any portion thereof, streets, common areas, swimming pools and other recreational facilities, shall be taken through the Park Home Owners Association.

hearing evidence

Petitioner testified on her own behalf. No representative appeared on behalf of Respondent at the hearing. Administrative notice was taken of the Department’s electronic file and Notice of Hearing. The substantive evidence of record is as follows:

Petitioner’s Issue #1: On February 17, 2025, Respondent held an HOA meeting and on the agenda was whether to hire an HOA Manager. Only one proposal was presented to ownership and that proposal was accepted and TRT got the bid. TRT was also the community’s prior HOA Manager in 2022. Petitioner objected to this hire due to a conflict of interest. Petitioner argued that, because TRT had a separate division that managed two, individual townhouses in the community, TRT had a conflict of interest which was a violation of Ariz. Rev. Stat. § 33-1811. In addition, Petitioner alleged that in the past, TRT collected parking violation fines and did not remit them to the HOA and failed to disclose tenant information, among other issues.

Petitioner’s Issue #2: Petitioner testified on March 31, 2025, TRT met with a painting company to solicit bids to paint the exteriors of all the townhouses in the townhouse community. Petitioner argued that the HOA had no authority to manage an improvement to the individual townhomes and that paragraph 19 of the CC&Rs gave authority to the HOA to manage the common areas.

Petitioner’s Issue #3: Petitioner testified that the HOA had violated the open meeting laws of Ariz. Rev. Stat. § 33-1804 (A) and (F) by failing to provide requested paint bids; the February 17, 2025, HOA meeting was not properly noticed; failed to give Petitioner minutes from a December 10, 2024, HOA meeting upon request; and a March 5, 2025, email went out from the HOA to the owners regarding the landscaping, but Petitioner did not receive one.

Petitioner’s Issue #4: Petitioner testified that the HOA had violated Ariz. Rev. Stat. § 10-830(A) by failing to act in good faith with the care an ordinarily prudent person in a like position would exercise by failing to perform these duties, as follows: to timely review bills and records; to check the HOA post office box; to schedule a backflow test with the irrigation system which cost additional fees; to elect officers in a timely manner, to update the Arizona Corporation Commission filing with the new officers and directors; to manage the bank account, to invoice for January 2025 semi-annual dues, and to provide financial statements or a budget upon request.

Conclusions of Law

The Department has 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 the aforementioned Ariz. Rev. Stat. §§ 33-1811, 33-1804, 10-830, and the Park Townhouses CC&Rs.

A preponderance of the evidence means “proof which leads the [trier of fact] to find that the existence of the contested fact is more probable than its nonexistence.”

In regards to Petitioner’s Issue #1, Petitioner argued that the hiring of TRT was a conflict of interest and a violation of Ariz. Rev. Stat. § 33-1811 which states:

If any contract, decision or other action for compensation taken by or on behalf of the board of directors would benefit any member of the board of directors or any person who is a parent, grandparent, spouse, child or sibling of a member of the board of directors or a parent or spouse of any of those persons, that member of the board of directors shall declare a conflict of interest for that issue. The member shall declare the conflict in an open meeting of the board before the board discusses or takes action on that issue and that member may then vote on that issue. Any contract entered into in violation of this section is void and unenforceable.

The evidence established that TRT had served as the HOA manager in the past with Park Townhouses and prior to TRT, the McElwain Company was the HOA manager at the Park Townhouses. In addition, McElwain managed several individual townhouse units, as well. McElwain went out of business and TRT was voted back in at the February 17, 2025, HOA meeting. Petitioner failed to prove by a preponderance of the evidence that the hiring of TRT, for a second or third time, as the HOA manager for Park Townhouses constituted a conflict of interest per Ariz. Rev. Stat. § 33-1811.

In regards to Petitioner’s Issue #2, Petitioner argued that the HOA has the authority to manage the common areas in the community and not individual townhouses per paragraph 19 of the CC&Rs. However, Petitioner did not submit the entirety of the Park Townhouses CC&Rs and Bylaws. The Tribunal received snippets of these governing documents which are in evidence. As such, Petitioner failed to prove by a preponderance of the evidence that the HOA had violated the CC&Rs by soliciting a bid to paint the exterior of the entire community. There was no evidence that work was actually performed on the individual units.

Ariz. Rev. Stat. §§ 33-1804(D) and (F) states in pertinent part:

(D) Notice to members of meetings of the board of directors is not required if emergency circumstances require action by the board before notice can be given. Any notice of a board meeting shall state the date, time and place of the meeting. The failure of any member to receive actual notice of a meeting of the board of directors or a meeting agenda does not affect the validity of any action taken at that meeting.

(F) It is the policy of this state as reflected in this section that all meetings of a planned community, whether meetings of the members’ association or meetings of the board of directors of the association, be conducted openly and that notices and agendas be provided in advance for those meetings that contain the information that is reasonably necessary to inform the members of the matters to be discussed or decided and to ensure that members have the ability to speak after discussion of agenda items, but before a vote of the board of directors is taken.

In regards to Petitioner’s Issue #3, the February 17, 2025, HOA meeting provided notice through email and included the date, time and virtual link which adheres to Ariz. Rev. Stat. § 33-1804(D). Petitioner argued that she did not receive the March 5, 2025, landscaping email, which is accurate. However, Petitioner’s co-owner of unit 2467, did receive the landscaping email. If unit 2467 received HOA correspondence and information, then this Tribunal does not find that the HOA violated Park Townhouses Bylaws or Ariz. Rev. Stat. §§ 33-1804 (A), (F) or (D).

Furthermore, Ariz. Rev. Stat. § 33-1804(D) states that “[n]otice to members of meetings of the board of directors was not required if emergency circumstances require action by the board before notice can be given,” and this adheres to the December 2024, emergent meeting between the Board members.

In regards to Petitioner’s Issue #4, Petitioner asserted that the HOA violated Ariz. Rev. Stat. § 10-830. The Office of Administrative Hearings has no jurisdiction to enforce this statute. Ariz. Rev. Stat. § 32-2199 provides:

Pursuant to title 41, chapter 6, article 10, an administrative law judge shall adjudicate complaints regarding and ensure compliance with:

Title 33, chapter 9 and condominium documents.

Title 33, chapter 16 and planned community documents.

As such, the undersigned Administrative Law Judge concludes that, because Petitioner failed to meet her burden of proof that Respondent committed the alleged violations, her petition must be denied.

ORDER

Based on the foregoing,

It is Ordered that Petitioner’s petition be DENIED.

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 Department of Real Estate within 30 days of the service of this Order upon the parties.

-54864001

001

-137160-45720000Done this day, August 5, 2025.

/s/ Nicole Robinson

Administrative Law Judge

Transmitted by either mail, e-mail, or facsimile August 5, 2025 to:

Susan Nicolson, Commissioner

Arizona Department of Real Estate

100 N. 15th Avenue, Suite 201

Phoenix, Arizona 85007

[email redacted]

Park Townhouses Homeowners Association, Inc.

PO Box 57610

Tucson AZ 85732

[email redacted]

Marilyn J Fogelsong

3239 East 3rd St, Studio B

Tucson AZ 85716

[email redacted]

By: OAH Staff