As a result of the efforts of two homeowners, Bill Brown and Walt Kearns, Arizona HOA case statistics for the first two years (22 months) have been developed based on 59 cases, of which 42 were decided by the Administrative Law Judges ( 4 split decisions were ignored).  In spite of some minor differences in views, the analysis showed some 43% of the cases were won by the petitioner, the homeowner.  (18 decisions for the homeowner; 24 for the HOA).

This result is consistent with the results found in September 2007 by this writer based on the first-year cases (32 decisions), which showed a 42% win percentage by homeowners.  (See http://azhoaoah.wordpress.com/2007/09/24/first-year-oah-statistics-on-hoa-cases/).

In Arizona in 2005, a bill to permit Justice of the Peace Courts to hear HOA disputes was defeated by claims by CAI attorney lobbyists of a huge flood of complaints that would destroy the effectiveness of the JP courts.  This was a dramatic and marked reversal of the CAI position, maintained for years, that only 5% of the HOAs were bad, so why make new laws.  It appears that CAI, Community Associations Institute, that national lobbying trade group proclaimed as the experts on homeowner associations matters, got it all wrong.  What else are the CAI attorneys telling the legislators that’s has no basis in fact?

In 2006, the bill to authorize OAH resolution of HOA disputes had a tough battle — Chairmen of both the Senate and House attempted to not hear the bill, based on their rights as Chairman of the Rules committee.  They failed and the bill was overwhelmingly passed by the Arizona Senate and House.

Just this past week, Senator Obama stated the problem with the American political system quite succinctly.  Referring to current political attitudes as “You’re on your own“, he said,

Ours is a promise that says government cannot solve all our problems, but what it should do is that which we cannot do for ourselves - protect us from harm . . . .  Our government should work for us, not against us. It should help us, not hurt us.

There are more necessary reforms to the OAH procedures.  The CAI attorneys have challenged the constitutional rights for OAH to adjudicate HOA disputes.  They have attempted to turn OAH into a civil court with its strict Rules of Civil Procedure.  The OAH cannot hear disputes raising questions of constitutional issues, but more importantly, it is restricted by the enabling act from applying the Restatement (Third) of Laws, Property: Servitudes to these disputes. Yet,  HOAs owe their power and oppression based on this common law source.  For example, Chapter 3 deals with the Validity of Covenants, and Chapter 6 deals with HOA structure, functions, etc.

When will the legislators, the courts, the media, and the various public interest nonprofits going to wake up and face the reality before them?

In this OAH decision, the ALJ invalidated the board’s interpretation of a declaration voting provision that was based on attorney advice. (See OAH-029 Review).  The HOA appealed this administrative decision to the Arizona Superior Court, as permitted under the statutes.

Among other things in its appeal, the HOA alleged that

The decision is arbitrary, irrational and capricious in that it exceeds the agency’s legislative authority in the scope of its remedial power and in that it ignores the plain language of the contract at issue; and

The legislative authority for the proceeding violates the Arizona Constitution by improperly delegating judicial functions to the executive branch as the agency does not have authority that is auxiliary to and dependent upon the proper exercise of legitimate regulatory power.

The HOA argued in its brief, in addition to the interpretation by the ALJ of the initial covenant in dispute,

1. that the OAH lacked judicial authority to adjudicate HOA disputes since the agency involved, the Dept. of Fire, Building and Life Safety was set up to regulate mobile homes and not to regulate homeowners associations.  Further, OAH adjudication violated the separation of powers doctrine and Arizona Constitution.
2. the ALJ exceeded its authority by ignoring a provision of the declaration that said that the board had exclusive say over the interpretation of the meaning of its covenants.
3. that the OAH was not a “court of competent jurisdiction”, as expressed ion the declaration as the exception to board interpretation of covenants.
4. that the ALJ could only order compliance with the declaration, but not issue a declaratory injunction that the election was invalid.

These are serious allegations by the HOA attorney, a CAI member.  In this layman’s view, with some knowledge of federal and state case law on the powers and authority of administrative agencies,

1.  allegation (1) is weak, based on the enabling statutes and OAH statutes (ARS 41-2198 et seq.). 

2.  Allegation (2) above is based on the allegation that OAH was not a court of competent jurisdiction, see allegation (3) above. However, based on Black’s Law Dictionary definition of this term, the OAH statutes clearly grant the authority and power to OAH to act as a court of competent jurisdiction.

3.  Finally, if the ALJ could not issue a declaration as a result of its adjudication of a homeowner association problem, allegation (4) above, then the entire due process by means of OAH adjudication is without meaning.  This was clearly not the intent of the Arizona Legislature.

Contrary to the above defense of the HOA and its attempt to undercut OAH adjudication of disputes, OAH has been very successful in its limited area of application, and its powers and authority must be increased, not decreased. (See first year OAH statistics). These powers must include substantial penalties to serve as a detriment to HOA abuse, and to include reliance on the common law of equitable servitudes, which govern many areas of homeowner association law. 

The objective here is a fair and just application of the law to protect homeowners from abusive HOA boards, not to defend HOAs as independent city-states.

In this complaint, the homeowners sought the name of the HOA board member who was guilty of a violation of the HOA rules, but was denied under ARS 33-1805(B)(4), “personal information”.

The ALJ ruled in favor of the homeowner:

13.  The identity of a lot owner within a homeowner’s association is public information that is available through various public entities.  There is no basis in law for concluding that a violation of Association’s governing documents is confidential information because it is personal.  By analogy, civil and criminal cases involving alleged violations of law, including administrative proceedings, unless specifically identified as confidential by statute, are public proceedings. 

 14. The Administrative Law Judge concludes that certain information such as when a member will be away from his home, social security numbers, birth dates, and sensitive information such that a reasonable person would expect such information to remain confidential would fall within the classification of personal records that would not be subject to disclosure.   Consequently, the Administrative Law Judge finds that an association member should be able to inspect homeowner’s association documents reflecting the business of the association, including citations or notices of violations, which are not of such a personal nature so as to remain confidential. 

HOA, with Carpenter law firm, stipulated to violation as filed by homeowner.  The violation was an appointment of direcors not permitted under CC&Rs.  Yet, HOA refused to pay homeowner his $550. By law, the homeowner gets the money.

How much did it cost the HOA for these attoneys?  Why did the HOA continue to the OAH?  According to the HOA, it’s not a contested case, since they conceded.  So why should HOA pay the fee?  ALJ said the admission by HOA occurred after the petition was filed, so, by law, the fee is due.

The new judge, Lewis Kowall, appears to be a rather straight-forward judge,  keeping the hearing an orderly process.  No “excess”, non-related documents and evidence, witnesses, or non-related testimony. Good idea! Stick to the issues.  Quick, short decision. 

In the past, too many hearings were “let them get it of their chest” sessions with evidence and testimony unrelated to the complaint being allowed.  Petitioners must stay focused and stick to the narrow issue stated in their complaint.  If it’s about an invalid election, do not talk about garbage can violations, or open meeting violations, etc.

The judge did stiplulate a time frame for paying the $550 fee — 30 days.

ALJ judge, nor any judge, can issues orders for potential violations not yet occurring.