HOA - ALJDEC decisions

25F-H090-REL · Department of Real Estate - H/C · 2026-05-18

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

In the Matter of

Rainey, Chad D. / HN&CR Living Trust dated August 13, 2019,

Petitioner,

The Garden Lakes Community Association,

Respondent.

No. 25F-H090-REL

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: An April 10, 2026, pre-hearing discussion, followed by written hearing memoranda filed on April 24, 2026.

APPEARANCES: Chad D. Rainey appeared on his own behalf. Lauren Elliott Stine, Esq. represented The Garden Lakes Community Association.

ADMINISTRATIVE LAW JUDGE: Kay A. Abramsohn

EXHIBITS ADMITTED INTO EVIDENCE: Department of Real Estate Notice of Hearing Packet (Packet). Petitioner Exhibits A and B. Hearing Memoranda.

_____________________________________________________________________

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, HN&CR Living Trust dated August 13, 2019 (Petitioner) is a homeowner within The Garden Lakes Community Association (Garden).

3. On or about October 15, 2025, Petitioner filed a single-issue petition with the Department which stated that the Association has imposed a $500.00 “Unapproved Modification Penalty” without providing a reasonable opportunity to cure. Petitioner alleges this is violation of Arizona Revised Statues (Ariz. Rev. Stat.) § 33-1803(B). Petitioner further states that this $500.00 penalty is “redundant, excessive and inconsistent” with the established Enforcement and Fine Policy which already outlines specific penalties for unapproved modifications; Petitioner indicates that other fines are $50.00, $75.00, and $100.00, and the $500.00 policy was every 6 months for eternity. Petitioner further stated that such a notice fails to explain how the penalty could be cured within 14 days because the architectural committee only meets every 30 days. Finally, Petitioner noted that there was no way to “un-start” a modification to cure the disapproval if the architectural committee does not approve the modification.

4. Among other documents filed with the Petition, Petitioner included: a copy of “The Garden Lakes Community Association Deed Restriction Enforcement and Fine Policy” (Policy); a copy of “Garden Lakes Community Association Architectural Guidelines;” and, a copy of Minutes from a July 21, 2021 Board Meeting Minutes at which an updated Policy was adopted to be effective November 1, 2022, and the $500.00 penalty was implemented for any unapproved modification.

5. Petitioner did not include with his Petition a copy of any notice of violation of unapproved modification and/or imposition of a $500.00 penalty which he had received from Garden.

6. On November 14, 2025, Garden returned its Answer to the Department whereby it simply denied Petitioner’s claim.

7. On or about November 21, 2025, the Department referred this matter to the Office of Administrative Hearings (Tribunal), an independent state agency, for an evidentiary hearing to determine whether the alleged violation of Ariz. Rev. Stat. § 33-1805(A) had occurred.

8. On December 26, 2025, Petitioner filed to the Tribunal two documents: a copy of the “Community Association Management Agreement between Garden Lakes Community Association and Capital Consultants Management Corporation;” and a copy of a May 1, 2025 letter from counsel for Garden, which letter responded to Petitioner’s emails (dated April 16, 2025 and April 18, 2025) regarding various requests from Petitioner for records and documents.

9. Following continuances, the hearing convened on April 10, 2026. Discussion at the hearing session turned into a pre-hearing conference, with the Tribunal indicating that Petitioner had not provided a document demonstrating that the complained-of policy has been imposed on Petitioner and, thus, calling into question whether the Petition was appropriate for consideration at the Tribunal. 10. Garden moved to dismiss the Petition, given that Garden has not issued any such notice or imposed any such penalty on Petitioner.

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11. The Policy sets forth a process for residents to obtain the approval of the community’s Architectural Committee for making changes to the exterior of a home and further sets forth a schedule of fines that a resident may be subject to in the event the resident fails to comply with the policy.

12. Pursuant to Section 4 in Garden’s Declaration of Covenants Conditions, Restrictions and Easements for Garden Lakes (CC&R), the Lots of all residents are subject to some restrictions. Section 4.2(a) sets forth the restrictions regarding proposed improvements, alterations and repairs to the Lots.

Except as otherwise expressly provided in this Declaration, the Architectural Review Committee Guidelines or any applicable Recorded Tract Declaration, (i) no improvements, alterations, repairs, excavation, grading, landscaping (except landscaping on a Lot designated for Single Family or Cluster Residential Use) or other work which in any way alters the exterior appearance of any property or improvements thereon from their natural or improved state existing on the date a Tract Declaration for such property was first Recorded shall be made or done, and (ii) no building, fence, exterior wall, residence, or other structure or grading shall be commenced, erected, maintained, altered, changed or made on any Lot or Parcel at any time, unless and until the Architectural Review Committee has, in each such case, reviewed and approved the nature of the proposed work, alteration, structure or grading and the plans and specifications therefor. No substantial changes or deviations in or from the plans and specifications, once approved by the Architectural Review Committee, shall be permitted.

13. The Policy sets forth the types of violations for which the Board may impose penalties. One such violation would be as follows:

Architectural - Improvements of any kind or nature erected, placed or altered on any Lot, which are visible from neighboring property and have not been first approved by the Architectural Committee pursuant to Article XI and Article IV, Section 4.2 of the Declaration .

14. The Policy sets forth a 4-step notification process by which the Board would notify residents of any violations:

a. First Notice of Violation - A notice will be delivered to the Owner of the property outlining the violation. In the event that the Owner of the property can be identified as an absentee Owner, a copy of the violation letter will also be sent to the tenant at the property address. The Owner will be given fourteen (14) calendar days to bring the violation into compliance. The Notice will inform the Owner that a monetary penalty, not exceeding the Initial Monetary Penalty (as established on the Monetary Penalty Schedule), will be imposed for the violation if the violation has not been corrected after fourteen (14) calendar days from the date of the Notice.

b. Second Notice of Violation and Assessment of Initial Monetary Penalty - The Association will assess an Initial Monetary Penalty according to the Monetary Penalty Schedule if the Owner: (1) fails to correct the violation within fourteen (14) calendar days; (2) the violation has repeated or returned within six (6) months of the date the First Notice of Violation. All penalty notices may be sent via regular and certified mail. The homeowner shall be responsible for a certified fee added to the penalty.

15. The Policy sets forth a Monetary Penalty Schedule as follows: (a) a $50.00 penalty after the second notice; (b) an additional $75.00 penalty after the third notice; an additional $100.00 penalty after the fourth and any successive notice and a (d) $500 penalty for any unapproved architectural modification on the first and any successive notices. The Policy allows residents to seek a hearing before the Board of Directors before any penalty is assessed as follows:

Opportunity to be Heard - The Association recognizes each Owner’s right to explain the reasons why there is a violation of the Declaration or the other Project Documents, particularly if the violation results in a monetary penalty. Before any penalty is assessed, an Owner has the opportunity to request a hearing before the Board of Directors. The Owner must request a hearing, in writing, within (30) thirty days of receipt of the notice of violation. If the hearing is scheduled, the Owner is bound by the decision of a majority of the Board.

16. Petitioner’s Petition alleges that the $500.00 penalty is a violation of Ariz. Rev. Stat. § 33-1803(B), which provides, in pertinent part:

After notice and an opportunity to be heard, the board of directors may impose reasonable monetary penalties on members for violations of the declaration, bylaws and rules of the association. Notwithstanding any provision in the community documents, the board of directors shall not impose a charge for a late payment of a penalty that exceeds the greater of fifteen dollars or ten percent of the amount of the unpaid penalty. A payment is deemed late if it is unpaid fifteen or more days after its due date, unless the declaration, bylaws or rules of the association provide for a longer period.

17. In his memorandum, Petitioner argued that this matter is a “current dispute” arising from a completed Board action, i.e., the adoption/amendment of the Policy, which Board action presently determines Petitioner’s rights, duties, and privileges as a homeowner. Petitioner argued that Garden has initiated enforcement action, governed by the Policy, against him in its October 25, 2025 violation notice, which he attached to his memorandum. Petitioner argued that the October 25, 2025 notice “placed me in jeopardy of a $500 fine under the applicable enforcement scheme.”

18. The October 25, 2025 notice was issued by Garden regarding weed(s) on Petitioner’s property. The notice informs Petitioner regarding “Rear yard on dock. Please remove weeds from landscaping” and further indicates:

We understand that this matter may have been simply overlooked and/or the inspector may have observed a very temporary situation. If the

situation has not been corrected we request that you make arrangements to remedy the violation within 14 days of the date of this letter.

Failure to comply or to provide a reasonable corrective action plan could result in the imposition of fines and/or other remedies. In accordance

with Arizona State Law and the Association`s CC&R`s, you have the right to appeal this violation and attend a hearing at which you may speak

prior to any fines being levied on your account. The hearing request must be in writing to the Association within 14 days of the date of this Courtesy Notice. The Association will then provide notice of the date, time, and place the hearing is scheduled to occur. Failure of the homeowner to request a hearing within the prescribed time limit shall constitute a waiver of the opportunity for such hearing and will allow the Association to impose fines, other remedies, and/or engage in corrective action. Fines imposed, if any, will be enforced per the Association's collection policy.

19. In its memorandum, Garden argued that the matter is not a “dispute” which can be considered or determined in this Tribunal under the applicable statutes. Ultimately, Garden requested that the Tribunal dismiss Petitioner’s Petition.

20. The hearing record does not contain any notice from Garden regarding unapproved modifications, or any notice regarding a $500.00 penalty, as had been stated in Petitioner’s Petition.

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. An owner or an association may petition the Department for a hearing concerning alleged violations of community documents or alleged violations of the statutes which 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. § 32-2199.01.

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 contested cases. Ariz. Rev. Stat. § 41-1001 defines: "Contested case" as “any proceeding, including rate making ... in which the legal rights, duties or privileges of a party are required or permitted by law, other than this chapter, to be determined by an agency after an opportunity for an administrative hearing.”

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. § 33-1803(B) as alleged in his Petition. Respondent bears the burden to establish affirmative defenses by the same evidentiary standard.

“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.”

Based on the hearing record, the Administrative Law Judge concludes that Garden has not imposed a $500.00 unapproved modification penalty on Petitioner as was alleged in his Petition. Therefore, technically, the hearing record does not demonstrate the existence of a current “dispute” between Garden and Petitioner on the alleged grounds.

In consideration of the submitted October 25, 2025 notice from Garden to Petitioner regarding the need to remove weeds from the dock on Petitioner’s property, the Administrative Law Judge concludes that such notice did not demonstrate either notice of an unapproved modification or any imposed penalty, let alone a $500.00 penalty.

The Administrative Law Judge concludes that Petitioner has failed to demonstrate a current dispute of the nature as was alleged in his Petition and, further, failed to sustain his burden of proof that Garden violated Ariz. Rev. Stat. § 33-1803(B) as alleged in his Petition and, therefore, Petitioner’s Petition must be dismissed.

ORDER

IT IS ORDERED that Petitioner’s petition in 25F-H090-REL be dismissed.

IT IS FURTHER ORDERED that Petitioner bears the $500.00 filing fee.

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, May 18, 2026.

/s/ Kay A. Abramsohn

Administrative Law Judge

Transmitted by either mail, e-mail, or facsimile May 18, 2026 to:

Susan Nicolson, Commissioner

Arizona Department of Real Estate

[email redacted]

Lauren Elliott Shine

Quarles & Brady

[email redacted]

Chad D. Rainey

[email redacted]

By: OAH Staff