Briefing Doc – 17f-H1716004-REL
Briefing Document: Sopatyk v. The Lakeshore Village Condominium Association, Inc.
Executive Summary
This document synthesizes the legal proceedings and outcomes of the case Brian Sopatyk v. The Lakeshore Village Condominium Association, Inc. (Case No. 17F-H1716004-REL), adjudicated by the Arizona Office of Administrative Hearings. The core of the dispute was Petitioner Brian Sopatyk’s allegation that the Respondent Condominium Association violated Arizona Revised Statute (A.R.S.) § 33-1260 by charging a $660 “transfer fee” upon the sale of a condominium unit, which exceeded the statutory maximum of $400 for resale disclosure services.
The Association’s defense centered on the argument that the $660 charge was not a disclosure fee but a separate “working capital fee” authorized by its Covenants, Conditions, and Restrictions (CC&Rs). The Association contended that this fee had been erroneously mislabeled as a “transfer fee” due to a clerical error inherited by its current manager. The actual statutory fee for disclosure documents, the Association argued, was a separate $30 charge paid by the seller.
After an initial hearing in November 2016 and a subsequent re-hearing in June 2017, the Administrative Law Judge consistently found that Mr. Sopatyk failed to prove the alleged violation by a preponderance of the evidence. The court concluded that the evidence supported the Association’s claim of a mislabeled working capital fee. Consequently, Mr. Sopatyk’s petition was dismissed on both occasions, and the Association was deemed the prevailing party.
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Case Overview
Parties and Jurisdiction
Representation
Petitioner
Brian Sopatyk
On his own behalf (Initial Hearing); Nathan Andrews, Esq. & Jill Kennedy, Esq. (Re-Hearing)
Respondent
The Lakeshore Village Condominium Association, Inc.
Bradley R. Jardine, Esq. (Both Hearings)
Jurisdiction
Arizona Department of Real Estate (ADRE)
Authority under A.R.S. Title 32, Ch. 20, Art. 11.
Adjudicator
Administrative Law Judge (ALJ) Thomas Shedden
Office of Administrative Hearings, Phoenix, AZ
Core Allegation and Governing Statute
• Allegation: Brian Sopatyk alleged that The Lakeshore Village Condominium Association violated A.R.S. § 33-1260 by charging fees exceeding the statutory maximum for resale disclosure services. Specifically, a $660 fee labeled as a “transfer fee” was charged when he purchased his unit.
• Petitioner’s Request: Mr. Sopatyk sought an order for the Association to comply with the statute, issue refunds to all who paid fees in excess of the maximum, and for a civil penalty to be imposed.
• Governing Statute: A.R.S. § 33-1260 stipulates that a condominium association “may charge the unit owner a fee of no more than an aggregate of four hundred dollars to compensate the association for the costs incurred in the preparation of a statement or other documents furnished… for purposes of resale disclosure, lien estoppel and any other services related to the transfer or use of the property.” The statute explicitly forbids charging any other fees for these services except as authorized.
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Chronology of Legal Proceedings
March 2, 2015
The Association issues a “Disclosure Form” for Mr. Sopatyk’s purchase, listing a $660 transfer fee and a $30 statement fee.
May 18, 2016
The Association’s Board of Directors meets to address Mr. Sopatyk’s claim. They conclude the $660 fee was a mislabeled working capital fee and direct corrective accounting.
August 9, 2016
Mr. Sopatyk files a petition with the Arizona Department of Real Estate.
November 14, 2016
The initial hearing is conducted before ALJ Thomas Shedden.
November 29, 2016
ALJ Shedden issues a decision dismissing Mr. Sopatyk’s petition.
December 13, 2016
The ADRE Commissioner, Judy Lowe, adopts the ALJ’s decision, issuing a Final Order dismissing the case.
February 7, 2017
A Notice of Re-Hearing is issued after Mr. Sopatyk requests one.
June 9, 2017
A re-hearing is conducted before ALJ Thomas Shedden.
June 26, 2017
ALJ Shedden issues a new decision, again dismissing Mr. Sopatyk’s petition.
August 1, 2017
The deadline passes for the ADRE to accept, reject, or modify the ALJ’s re-hearing decision. No action is taken.
August 10, 2017
The Office of Administrative Hearings certifies the ALJ’s decision from the re-hearing as the final administrative decision in the matter.
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Analysis of Arguments and Evidence
Petitioner’s Position (Brian Sopatyk)
• Primary Argument: The Association’s own documents, specifically the Disclosure Form and the HUD-1 settlement statement, explicitly labeled the $660 charge as a “Transfer Fee.” This amount is a prima facie violation of the $400 statutory cap in A.R.S. § 33-1260.
• Evidence Presented:
◦ March 2, 2015 Disclosure Form: Showed a required payment of a $660 “transfer fee” and a $30 “statement fee.”
◦ HUD-1 Settlement Statement: Documented that the $660 Transfer Fee was paid to the Association, with $330 paid from the Borrower’s (Sopatyk’s) funds and $330 from the Seller’s funds. It also showed the Seller paid a separate $30 Resale Statement Fee.
• Contradictory Testimony: In his sworn petition, Mr. Sopatyk stated the $660 fee was “split between the seller and the buyer.” However, during the re-hearing, he testified that he had “in fact paid the entire $660 as part of the negotiated price of the unit.” The ALJ noted this discrepancy, stating “either Mr. Sopatyk’s sworn statement or his testimony must be false.”
Respondent’s Position (The Lakeshore Village Condo. Association)
• Primary Argument: The $660 fee was not for resale disclosure services but was a working capital fee authorized by the Association’s CC&Rs. The “transfer fee” label was a historical clerical error that the Board had since identified and corrected.
• Evidence and Testimony:
◦ CC&R Section 8.13 (“Transfer Fee and Working Capital Fund”): This provision authorizes the Association to assess each new owner a fee of “at least twice the average monthly assessment” to be deposited into the working capital fund (referred to as the Reserve Fund). The monthly assessment was $328.83, making the $660 fee consistent with this rule.
◦ Testimony of Amy Telnes (Association Manager): Ms. Telnes testified that when she became manager, she was incorrectly informed that the working capital fee was the transfer fee. She affirmed that the $660 fee was deposited into the Association’s reserve fund and that the separate $30 fee was the one charged pursuant to A.R.S. § 33-1260.
◦ May 18, 2016 Board Meeting Minutes: These minutes, entered into evidence, documented the Board’s conclusion that it was collecting a working capital contribution but “erroneously calling it a transfer fee.” The Board directed Ms. Telnes to perform an accounting and transfer all such fees collected after October 1, 2013, to the Reserve Account. The minutes also show the Board voted to change its fee structure moving forward to a single $400 fee to avoid future confusion.
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Judicial Findings and Final Disposition
Standard and Burden of Proof
Across both hearings, the ALJ established that the standard of proof was a preponderance of the evidence, defined as evidence with “the most convincing force” that is “sufficient to incline a fair and impartial mind to one side of the issue rather than the other.” The burden of proof rested entirely on the petitioner, Mr. Sopatyk, to demonstrate that a violation had occurred.
Initial Hearing Decision (November 29, 2016)
• Findings of Fact: The ALJ found that the Association was charging a $660 working capital fee in accordance with its CC&Rs but had been mislabeling it. It was also charging a separate $30 document preparation fee.
• Conclusion of Law: Mr. Sopatyk did not show by a preponderance of the evidence that the Association violated A.R.S. § 33-1260.
• Order: The petition was dismissed, and the decision was adopted as final by the ADRE Commissioner on December 13, 2016.
Re-Hearing Decision (June 26, 2017)
• Findings of Fact: The re-hearing produced more detailed findings but led to the same conclusion. The ALJ found that the Association had authority under its CC&Rs to collect the $660 working capital fee and that the statutory disclosure statute did not apply to this charge. The fee applicable to the statute was the $30 charge paid by the seller.
• Conclusion of Law: The ALJ reiterated that Mr. Sopatyk failed to meet his burden of proof. The Association’s argument that the claim should fail because Sopatyk did not personally pay over $400 was deemed “not persuasive,” as the statute applies to all violations regardless of particularized harm.
• Order: The petition was again ordered to be dismissed.
Final Administrative Disposition
The ADRE took no action to modify or reject the ALJ’s re-hearing decision by the statutory deadline of August 1, 2017. As a result, the Office of Administrative Hearings certified the June 26, 2017 decision as the final administrative decision on August 10, 2017, concluding the matter in favor of the Respondent Association.
