HOA - ALJDEC decisions

25F-H119-REL · Department of Real Estate - H/C · 2026-05-04

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Nathaniel Smith

Petitioner,

Anthem Country Club Community Association

Respondent.

No. 25F-H119-REL

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: April 13, 2026

APPEARANCES: Nathaniel Smith appeared on behalf of himself. Josh Bolen Esq. appeared on behalf of Anthem Country Club Community Association.

ADMINISTRATIVE LAW JUDGE: Velva Moses-Thompson

EXHIBITS ADMITTED INTO EVIDENCE: Exhibits A, C, D, G, and I submitted by Nathaniel Smith. Exhibits 6 and 8 submitted by Anthem Country Club Community Association.

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FINDINGS OF FACT

The Arizona Department of Real Estate (Department) is authorized by

statute to receive and to decide Petitions for Hearings from members of homeowners’ associations in Arizona.

Anthem Country Club Community Association (ACCCA) is a homeowners’

association whose members own lots in the Anthem Country Club Community in Anthem, Arizona.

Nathaniel Smith owns a lot in and is a member of the ACCCA.

On or about October 31, 2025, the Association notified Mr. Smith in writing

that he had met the requirements for the deactivation of his transponder(s) pursuant to ACCCA’s Policy. ACCCA further notified Mr. Smith that he needed to bring his account

current, ensuring that any unpaid balances were below the $400 threshold, and cure any compliance with ACCCA’s Covenants, Codes, and Restrictions (CC&Rs) within ten days from the date of the notice, and that if he failed to meet these requirements, his transponder would be deactivated and he would be required to pay a $25 reactivation fee.

Mr. Smith failed to pay the unpaid balance.

The ACCCA deactivated Mr. Smith’s transponder.

The Anthem Country Club property has four entrances and four entry

gates. Two of the gates are for both residents and visitors, (hereinafter “main gates”) and two of the gates are for residents only (hereinafter “resident gates”). The resident gates are activated by remote control or “transponder”. A resident who enters through a main gate may require waiting in line for entry into the Anthem Country Club if the resident does not have a transponder. Mr. Smith explained at hearing that he is required to travel approximately 8 more minutes to access the one of the main gates that does not require a transponder.

On or about December 2025, Mr. Smith filed a petition with the

Department that provided as follows, “On multiple occasions including the most recent in December 2, 2025, the Association unlawfully obstructed my easement of ingress and egress, in violation of CC&R §§ 10.11, 11.1, 11.1(d)(ii), 3.3(d), and 3.4(a), A.R.S. §§ 33-1803 and 33-1807, and the holdings of Kalway and Tierra Ranchos, by arbitrarily deactivating my transponder at varying account balances and imposing an undisclosed, unauthorized $25 reactivation fine that the governing documents and Arizona law do not permit.”

Mr. Smith paid a filing fee of $500.00 for the petition.

On January 20, 2026, ACCCA filed a Motion to Dismiss alleging that

Mr. Smith alleged three violations in his petition, but failed to pay the required filing fee of $1,500.00 for the petition. The ACCCA also contended that the Office of Administrative Hearings lacked jurisdiction to hear the petition.

On January 20, 2026, Mr. Smith filed an objection contending that he was

alleging only one violation.

On January 29, 2026, the Administrative Law Judge (ALJ) issued an

Order denying the Motion to Dismiss for lack of jurisdiction. However, the ALJ

found that Mr. Smith’s petition included the following three issues:

1) Allegations that The Association violated the Association’s Declaration of Covenants, Conditions, and Restrictions, specifically Article X, Section 10.11, Article XI, Section 11.1, Article XI, Section 11.1(d)(ii), Article III, Section 3.3(d), and Article III, Section 3.4(a), when it deactivated Mr. Smith’s transponder and charged a $25 reactivation fee.

2) An allegation that The Association violated Ariz. Rev. Stat. § 33-1803 “Assessment limitation; penalties; notice to member of violation”, when it deactivated his transponder and charged him a $25 reactivation fee.

3) An allegation that The Association violated Ariz. Rev. Stat. §33-1807, “Common expense liens; priority; mechanics' and materialmen's liens; notice.”, when it deactivated Mr. Smith’s transponder and charged at $25 reactivation fee.

The ALJ ordered Mr. Smith to choose which issue he desired to proceed

with at hearing, or pay the $1,500.00 filing fee to hear all three issues.

On January 29, 2026, Mr. Smith notified the tribunal that he elected to

proceed with issue #1, allegations that the ACCCA violated its Covenants, Conditions, and Restrictions, specifically Article X, Section 10.11, Article XI, Section 11.1, Article XI, Section 11.1(d)(ii), Article III, Section 3.3(d), and Article III, Section 3.4(a), when it deactivated Mr. Smith’s transponder and charged a $25 reactivation fee.

A hearing was held on April 13, 2026.

At hearing, Mr. Smith testified on behalf of himself. ACCCA presented

the testimony of its former Community Manager, Meghan Hill.

Relevant CC&Rs

ACCCA’s CC&Rs provide, in relevant part, as follows:

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Part Two: CREATION AND MAINTENANCE OF COMMUNITY STANDARDS

The standards for use and conduct, maintenance, and architecture within the Anthem Country Club Community are what give the community its identity and make it a place that people want to call "home." Each Owner and resident upholding such standards can take pride in the results of that common effect. This Declaration establishes procedures for adopting, modifying, applying, and enforcing such standards while providing the flexibility for the community standards to evolve as Anthem and the Anthem Country Club Community change and grow.

Article III. Use and Conduct

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Rule Making Authority.

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d. No action taken under this Article shall have the effect of modifying, repealing, or expanding the Design Guidelines or any provision of this Declaration other than the Use Restrictions. In the event of a conflict between the Design Guidelines and the Use Restrictions, the Design Guidelines shall control.

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3.4 Protection of Owners and Others

Except as may be specifically set forth in this Declaration (either initially or by amendment) or in the initial Use Restrictions set forth in Exhibit “C”, all Association actions must comply with the following:

a. Similar Treatment. Similarly situated Owners shall be treated similarly; provided, the Use Restrictions and rules may vary by Benefited Area.

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10.11 Equal Treatment

So long as Declarant owns any property described in Exhibits "A" or "B", neither the Association nor any other entity shall, without the prior written consent of Declarant, adopt any policy, rule, or procedure that:

a. limits the access of Declarant, its successors, assigns, and/or affiliates or their personnel and/or guests, including visitors, to the Common Areas of the Association or to any property owned by any of them;

b. limits or prevents Declarant, its successors, assigns, and/or affiliates or their personnel from advertising, marketing, or using the Association or its Common Areas or any property owned by any of them in promotional materials;

c. limits or prevents purchasers of new residential housing constructed by Declarant, its successors, assigns, and/or affiliates in the Anthem Country' Club Community from becoming members of the Association or enjoying full use of its Common Areas, subject to the membership provisions of this Declaration and the By-Laws;

d. discriminates against or singles out any group of Members or prospective Members or Declarant [this provision shall expressly prohibit the establishment of

a fee structure (i.e.), assessments, Special Assessments and other mandatory fees or charges other than Benefited Assessments, chartered club dues, and use fees) that discriminates against or singles out any group of Members or Declarant, but shall not prohibit the establishment of Benefited Assessments];

e. impacts the ability of Declarant, its successors, assigns, and/or affiliates, to carry out to completion its development plans and related construction activities for the Anthem Country Club Community, as such plans are expressed in the Master Plans, as such may be amended and updated from time to time. Policies, rules, or procedures affecting the provisions of existing easements established by Declarant and limiting the establishment by Declarant of easements necessary to complete the Anthem Country Club Community shall be expressly included in this provision. Easements that may be established by Declarant shall include but shall not be limited to easements for development, construction, and landscaping activities and utilities; or

f. impacts the ability of Declarant, its successors, assigns, and/or affiliates to develop and conduct customer service programs and activities in a customary and reasonable manner.

Neither the Association nor any other entity shall exercise its authority over the Common Areas (including, but not limited to, any gated entrances and other means of access to the Properties or the Exhibit "B" property) to interfere with the rights of Declarant set forth in this Declaration or to impede access to any portion of the Properties or the Exhibit "B" property over the streets and other Common Areas within the Properties.

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Part Five: PROPERTY RIGHTS WITHIN THE COMMUNITY

The nature of living in a planned community, with its wide array of properties and development types and its ongoing development activity, requires the creation of special property rights and provisions to address the needs and responsibilities of the Owners, Declarant, the Association, and others within or adjacent to the community.

Article XI. Easements

11.1 Easements in Common Area

Declarant grants to each Owner a non-exclusive right and easement of use, access, and enjoyment in and to the Common Area, subject to:

a. the Governing Documents and any other applicable covenants (including, but not limited to, that certain Deed of Conservation Easement Between Anthem Arizona, L.L.C. and Del E. Webb Land Conservancy, Recorded on February 16, 1996 as Document Number 96-0105850, as it may be amended);

b. any restrictions or limitations contained in any deed conveying such property to the Association;

c. the authority and rights of the Council as set forth in this Declaration and the Community Covenant;

d. the Board's right to:

i. adopt rules regulating the use and enjoyment of the Common Area, including rules limiting the number of guests who may use the Common Area;

ii. suspend the right of an Owner to use facilities within the Common Area:

A. for any period during which any charge against such Owner's Lot remains delinquent; and

B. for a period not to exceed 30 days for a single violation or for a longer period in the case of any continuing violation, of the Governing Documents after notice and a hearing pursuant to the By-Laws;

iii. dedicate or transfer all or any part of the Common Area, subject to such approval requirements as may be set forth in this Declaration;

iv. rent or lease any portion of any clubhouse or other recreational facilities within the Common Area on a short-term basis to any Person approved by the Board for such Person's exclusive use;

v. permit use by Persons other than Owners, their families, lessees, and guests upon payment of admission charges, membership fees, of other use fees established by the Board;

vi. mortgage, pledge, or hypothecate any or all of its real or personal property as security for money borrowed or debts incurred; and

vii. create, enter into agreements with, and grant easements to tax-exempt organizations under Section 7.11;

e. the rights of certain Owners to the exclusive use of those portions of the Common Area designated "Limited Common Areas," as described in a Tract Declaration;

f. the Association's right to require Members, Owners, and/or their guests to present activity or use privilege cards, as may be issued by the Association, for access and use of amenities or facilities within the Properties; and

g. the use of the entry facilities, including manned entry gates, and private streets within the Properties by Declarant, its affiliates, and their designees, and the owner, members, and other permitted users of the Country Club Amenity currently known as Anthem Country Club.

The initial Common Area shall be conveyed to the Association prior to or concurrent with the conveyance of the first Lot to a Class "A" Member other than a Builder.

Any Owner may extend his or her right of use and enjoyment to the members of his or her family, lessees, social invitees, and occupants of his or her Lot, as applicable, subject to reasonable regulation by the Board. An Owner who leases his or her Lot in its entirety shall be deemed to have assigned all such rights to the lessee of such Lot for the period of the lease.

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At hearing, the counsel for the ACCA contended that Mr. Smith is

barred by the Petitioner is barred under the “six-year breach of contract statute of limitations” or the “four-year fallback statute of limitations” from filing a petition with the Department that challenges a policy adopted by the ACCCA approximately 12 years ago.

CONCLUSIONS OF LAW

A.R.S. § 32-2199(B) permits an owner or a planned community organization to file a petition with the Department for a hearing concerning violations of planned community documents under the authority Title 33, Chapter 16. Such petitions will be heard before the Office of Administrative Hearings, an independent state agency.

Petitioners bear the burden of proof to establish that Respondent violated § 3.11(D)(1) of the Common Project Guidelines by a preponderance of the evidence. 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.”

In Arizona, if a restrictive covenant is unambiguous, it is enforced to give effect to the intent of the parties. “Restrictive covenants must be construed as a whole and interpreted in view of their underlying purposes, giving effect to all provisions contained therein.”

The ALJ concludes that Mr. Smith was not barred by a “six-year breach of contract statute of limitations” or the “four-year fallback statute of limitations” from filing the petition in this matter. To the extent that the ACCCA contends that the petition is barred under A.R.S. 12-550 or A.R.S. 12-548, those statutes do not apply to administrative proceedings at the Office of Administrative Hearings, but rather, to courts and civil proceedings. This initial hearing is government by A.R.S. Title 41, Chapter 6, Article 10 (Uniform Administrative Procedure Act).

Upon consideration of the evidence presented at hearing, the ALJ

concludes that Mr. Smith has failed to establish by a preponderance of the evidence that the ACCCA violated Article X, Section 10.11, Article XI, Section 11.1, and Article XI, Section 11.1(d)(ii), when it deactivated Mr. Smith’s transponder and charged a $25 reactivation fee. The weight of the evidence presented at hearing shows that Mr. Smith was not prevented from accessing his home or the common areas through the two main gates that were available 24 hours a day and 7 days a week. Entry through the main gates does not require the use of a transponder. Although it may have been inconvenient for Mr. Smith to access his property using a main gate, the ACCCA has not limited or blocked Mr. Smith’s access to his home or the Common Areas by deactivating his transponder. Mr. Smith offered no probative evidence that he was unable to access his property through the main gates due to the deactivation of his transponder.

7. There was no evidence that the ACCCA amended the Use Restrictions

contemplated in Section 3.3(d). In addition, the record does not show that the ACCCA failed to deactivate transponders held by other residents who had an outstanding balance with the ACCCA. Therefore, Mr. Smith has failed to establish that the ACCCA violated Article III, Section 3.3(d), and Article III, Section 3.4(a) of its CC&Rs

The ALJ concludes that Mr. Smith failed to establish by a

preponderance of the evidence that the ACCCA violated Article X, Section 10.11, Article XI, Section 11.1, Article XI, Section 11.1(d)(ii), Article III, Section 3.3(d), and Article III, Section 3.4(a) of its CC&Rs, when it deactivated Mr. Smith’s transponder and charged a $25 reactivation fee.

Accordingly, the petition must be dismissed.

order

IT IS ORDERED that Nathaniel Smith’s petition against Anthem Country Club Community Association is dismissed.

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.

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001

-137160-45720000Done this day, May 4, 2026.

/s/ Velva Moses-Thompson

Administrative Law Judge

Transmitted by either mail, e-mail, or facsimile May 4, 2026 to:

Susan Nicolson

Commissioner

Arizona Department of Real Estate

[email redacted]

Nathaniel Smith

[email redacted]

Josh Bolen, Esq.

Anthem Country Club Community Association

CHDB Law LLP

[email redacted]

By: OAH Staff