HOA - ALJDEC decisions

25F-H061-REL · Department of Real Estate - H/C · 2025-09-01

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Chad D. Rainey,

Petitioner,

The Garden Lakes Community Association,

Respondent.

No. 25F-H061-REL

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: August 4, 2025

APPEARANCES: Chad D. Rainey represented himself. Attorney Ashley N. Turner represented The Garden Lakes Community Association.

ADMINISTRATIVE LAW JUDGE: Kay A. Abramsohn

EXHIBITS ADMITTED INTO EVIDENCE: Notice of Hearing Packet (“Packet”), containing Petition and its attachments, and other background procedural documents; Petitioner Exhibits 1 through 7; Respondent Exhibits A through D.

_____________________________________________________________________

FINDINGS OF FACT

1. Pursuant to Arizona Revised Statutes (“Ariz. Rev. Stat.”) § 33-1801 et seq., the Arizona Department of Real Estate (“Department”) is authorized by statute to receive and to decide Petitions for Hearings from members of planned community associations in Arizona.

2. Chad D. Rainey (“Petitioner”) is a homeowner within The Garden Lakes Community Association (“Garden”).

3. On or about May 8, 2025, Petitioner filed a single issue petition with the Department which alleged that the Association failed to fulfill Petitioner’s records request in violation of Ariz. Rev. Stat. § 33-1805(A) and Bylaws Article VI, Section 6.13.

4. On or about June 20, 2025, Garden returned its Answer to the Department whereby it denied Petitioner’s claim.

5. On or about June 27, 2025, the Department referred this matter to the Office of Administrative Hearings (“Tribunal”), an independent state agency, for an evidentiary hearing on August 4, 2025, to determine whether the alleged violation of Ariz. Rev. Stat. § 33-1805(A) occurred.

Hearing Evidence

6. On April 18, 2025, Petitioner emailed Garden’s Community Manager and requested the following:

Please provide access to copies of these documents:

Invoices for past 24 months for entries in accounts 618 Water Feature Maintenance, 66702 LakeRepairs, 664 Water Feature Repairs/Maint, 70705 Chemicals, 72308 Lake Chemicals/Dye, and 724Fish Stock

Invoices for the past 12 months for 56701 Annual Meeting Expense

Copy of current CCMC contract

Copy of current contract for the contractor under account 619 Landscape Contract

. . .

As per Arizona law, these documents are to be provided within a reasonable time.

7. With its letter dated May 1, 2025, Garden provided some but not all the requested records. Garden indicated that “The Association records that are not executive in nature and that are responsive to your request are enclosed ...”. Garden further indicated that “financial statements are available online ...”. Finally, Garden stated”:

[T]he Association declines to produce any documents related to your requests for invoices from various vendors or other contractors. Such third-party invoices are not “records of the Association” and the Association has no obligation under Arizona law to produce or disclose thirty-party invoices. See A.R.S. § 10-11601. For this reason, the Association declines to produce any of the invoices you requested for the past 12 or 24 months.

8. At hearing, Petitioner testified on his own behalf.

9. At hearing, Garden presented testimony of Deborah Taylor, Treasurer, and Stephanie Villa, Community Manager.

10. Petitioner argued that the requested documents are not exempted from disclosure under the statute and are not “executive” in nature. Petitioner argued that Garden-referenced posted “financial” records are only summary in form and do not contain the invoices he seeks. Petitioner argued that the failure to provide the documents is a violation of the statute and the By-Laws. Ultimately, Petitioner asked the Tribunal to grant his appeal and to assess penalties to Garden.

11. Ms. Taylor testified that vendor invoices go to the “invoicing” department and are handled by the management company. Ms. Taylor indicated that she only reviews financial information she receives from the management company for purposes of looking for variances from the budget. Ms. Taylor testified that no one on the Board processes or manages the invoices.

12. Ms. Taylor testified that the management company prepares a “Financial Packet,” which is typically 100+ pages for the Board for Board meetings; she indicated that the packet does not include the invoices.

13. Stephanie Villa testified that the management company’s accounting department prepares the Financial Packet. Ms. Villa indicated that the Garden expenses incurred are not paid until the Board approves the expenses. Ms. Villa indicated that the invoices are then paid through “IPS.”

14. After Board meetings, a summary packet is posted online and homeowners can see the amounts of expense line items but not the invoices.

15. Garden argued that the statutes do not require that an Association provide “source” documents, and that these requested invoices are not Garden’s records which are required to be disclosed. Garden argued that it is transparent in its “financials” which are available to all homeowners online. Ultimately, Garden requested that the Tribunal deny Petitioner’s appeal.

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. the Tribunal has the authority to hear and decide the contested case at bar. Ariz. Rev. Stat § 32-2199.02 authorizes the administrative law judge to “order any party to abide by the statute, condominium documents, community documents or contract provision at issue and may levy a civil penalty on the basis of each violation.”

In this proceeding, Petitioner bears the burden of proving by a preponderance of the evidence that Respondent violated Ariz. Rev. Stat. § 33-1805(A).

“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.”

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. Gutierrez v. Industrial Commission of Arizona; see also State v. McFall, 103 Ariz. 234, 238, 439 P.2d 805, 809 (1968) ("Courts will not place an absurd and unreasonable construction on statutes."). 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.

Ariz. Rev. Stat. § 33-1805 provides, in relevant parts, as follows:

A. 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.

B. Books and records kept by or on behalf of the association and the board may be withheld from disclosure to the extent that the portion withheld relates to any of the following:

1. Privileged communication between an attorney for the association and the association.

2. Pending litigation.

3. Meeting minutes or other records of a session of a board meeting that is not required to be open to all members pursuant to section 33-1804.

4. Personal, health or financial records of an individual member of the association, an individual employee of the association or an individual employee of a contractor for the association, including records of the association directly related to the personal, health or financial information about an individual member of the association, an individual employee of the association or an individual employee of a contractor for the association.

5. Records relating to the job performance of, compensation of, health records of or specific complaints against an individual employee of the association or an individual employee of a contractor of the association who works under the direction of the association.

C. The association shall not be required to disclose financial and other records of the association if disclosure would violate any state or federal law.

Garden By-Laws Article VI, Section 6.13 – Records and Statements of Account, provides as follows in relevant part:

The Treasurer shall cause to be kept detailed and accurate records in chronological order of the receipts and expenditures affecting the Common Areas and property owned or controlled by the Association and specifying and itemizing the expenses incurred and expenditures made. All records authorizing payments shall be available for examination by the Owners at convenient times hours designated by the Board.

Ariz. Rev. Stat. § 33-1805 provides that “all financial and other records of the association shall be made reasonably available for examination by any member.” It does not require Respondent to provide documents that it does not have or that do not exist. However, based on the hearing record, Garden’s financial documents are prepared by, and kept in the custody of, Garden’s property management company and, thus, are considered to be Garden’s documents and Garden is obligated to provide access to those documents to homeowners pursuant to Ariz. Rev. Stat. § 33-1805.

The documents requested by Petitioner do not meet any of the stated statutory exemptions. Garden’s portrayal of requested documents as “executive,” “third-party,” or “source” is disingenuous. The Garden Bylaws require Garden to keep detailed and accurate records of the receipts and expenditures affecting the Common Areas, and those records must specify and itemize the expenses incurred and expenditures made. For the requested periods, Garden had contracts for services and products, incurred expenses, and received invoices for those services and products rendered to Garden. Garden’s Board approved the expenditures for payment, after which Garden, through its agent, made payment for Garden’s expenditures.

Based on the foregoing, the Administrative Law Judge concludes that Petitioner sustained his burden of proof that Garden, by failing to provide access to Garden financial records, violated Ariz. Rev. Stat. § 33-1805(A) and Garden Bylaws Laws Article VI, Section 6.13, and, therefore, Petitioner’s Petition must be granted.

ORDER

Based on the foregoing,

IT IS ORDERED that Petitioner is the prevailing party and his Petition is granted. IT IS ORDERED that Garden comply with Ariz. Rev. Stat. § 33-1805(A) and Garden Bylaws Laws Article VI, Section 6.13 and reasonably provide examination access to the requested documents.

IT IS ORDERED that Respondent reimburse Petitioner’s filing fee of $500.00 in certified funds. No civil penalty is found to be appropriate in this matter.

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, September 1, 2025.

/s/ Kay A. Abramsohn

Administrative Law Judge

Transmitted by either mail, e-mail to:

Susan Nicolson

Commissioner

Arizona Department of Real Estate

[email redacted]

Chad Rainey

[email redacted]

Ashley N. Turner, Esq.

CHBD Law

[email redacted]

By: OAH Staff