Briefing Document: Brokaw v. Sin Vacas Property Owners Association (Case No. 19F-H1918017-REL)

Executive Summary

This document synthesizes the findings and final order from the Administrative Law Judge Decision in the matter of Loraine Brokaw (Petitioner) versus the Sin Vacas Property Owners Association (Respondent). The core dispute centered on the Association’s 2017 decision to increase the Petitioner’s annual property assessment from 150% to 200% of the standard rate for a single lot, thereby ending a practice that had been in place since 2003. The Petitioner owned a single residence constructed across two adjacent lots.

The Administrative Law Judge (ALJ) denied the Petitioner’s petition in its entirety. The central conclusion of the ruling is that the Association’s governing documents (CC&Rs) take legal precedence over any prior informal board decisions or long-standing practices. The CC&Rs mandate that assessments be fixed at a uniform rate for all lots of a specific type. Therefore, the Association’s action to charge the full assessment for each of the Petitioner’s two lots was not a violation, but rather a move to bring its billing practices into compliance with its own Declaration. The Petitioner failed to meet the burden of proof required to show that the Association’s action was arbitrary, capricious, or in violation of any community document or statute.

Case Overview

• Parties:

◦ Petitioner: Loraine Brokaw

◦ Respondent: Sin Vacas Property Owners Association

• Case Number: 19F-H1918017-REL

• Tribunal: Arizona Office of Administrative Hearings

• Administrative Law Judge: Jenna Clark

• Hearing Date: March 25, 2019

• Decision Date: April 01, 2019

Issue Presented for Hearing

The central legal question addressed by the hearing was:

“Whether Sin Vacas Property Owners Association (Respondent) arbitrarily and capriciously raised annual assessments for some homeowners and not others in contravention of decades of past board practice and contractual agreements based on utterly flawed legal theory, which, in fact, changed from attorney to attorney.”

Petitioner’s Position and Testimony

The Petitioner, Loraine Brokaw, initiated the action following the Association’s decision to increase her annual assessment.

• Core Complaint: The Petitioner alleged that the Association unlawfully and selectively raised her assessment for a single residence built across two adjacent lots (Lots 156 and 157), which she and her husband purchased in 1979 and 2003, respectively.

• Historical Assessment Practice: She testified that since 2003, the Association had assessed her property at 150% of the standard rate (100% for a home on a single lot, plus 50% for the adjacent lot). This reduced rate was granted by a Board vote, and she received written confirmation of this decision on March 24, 2003.

• The Assessment Change: On or around December 4, 2017, the Petitioner received a letter from the Association’s management company informing her that the Board had decided to increase her assessment to 200% (a full assessment for each lot) based on “advice of counsel.”

• Rationale and Repercussions: The Petitioner stated she was given varying reasons for the increase, but was ultimately told it was because all plats needed to be assessed uniformly. To be assessed for a single lot, she was informed she would have to officially combine her lots on the county’s plat map, a process she claimed would cost between $3,000 and $10,000 and require the permission of every other homeowner in the subdivision.

• Requested Relief: The Petitioner requested that the Board be compelled to reinstate the 150% assessment schedule and reimburse her for the costs associated with filing the petition.

Respondent’s Position

The Sin Vacas Property Owners Association did not present witnesses or exhibits but cross-examined the Petitioner.

• Interpretation Dispute: The Association’s position at the hearing was that the matter stemmed from differing interpretations of the governing Bylaws.

• Compliance with Ruling: The Respondent indicated it would resolve the matter according to the tribunal’s interpretation and decision. The judge’s findings established that the Association’s action was based on its new interpretation that the CC&Rs required uniform assessment for each individual CR-1 lot.

Analysis of Governing Documents (CC&Rs)

The decision rested heavily on the interpretation of the Association’s Covenants, Conditions, and Restrictions (CC&Rs), recorded on April 13, 1978. The following articles were central to the case.

Article & Section

Provision

Relevance to Case

Article I, Section 5

Defines a “[Lot]” as “any numbered lot shown upon any recorded subdivision map.”

This established that the Petitioner’s two properties were legally distinct “Lots” according to the governing documents, despite having one home built across them.

Article IV, Section 6 (“Special Assessments”)

States that “Special assessments must be fixed and apportioned at a uniform rate for all CR-1 lots, SR lots, and each 20,000 square feet of TR lots.”

Although concerning special assessments, this clause was cited by the ALJ as clear evidence of the document’s intent for uniform apportionment, which was applied to the annual assessments.

Article IV, Section 7 (“Annual Assessments”)

States that “The Board of Directors shall fix the amount of the annual assessment against each Lot at least thirty (30) days in advance of each annual assessment period.”

This provision empowers the Board to set the annual assessment amount for each individual lot, reinforcing the principle of lot-by-lot assessment.

Administrative Law Judge’s Findings and Ruling

The ALJ concluded that the Petitioner failed to sustain her burden of proof and denied the petition based on a strict interpretation of the Association’s governing documents.

Key Findings of Fact

• It is undisputed that the Petitioner owns two separate CR-1 lots: Lot 156 and Lot 157.

• Her residence is constructed across both lots.

• The lots have never been legally combined or consolidated into a single lot on the Pima County Assessor’s plat map. The Petitioner testified they were legally combined but presented no documentation to substantiate this claim.

Conclusions of Law

1. Governing Documents Supersede Past Practice: The central legal conclusion was that the Association’s formal CC&Rs take precedence over any informal agreement or prior Board order, regardless of the duration of that practice. The 2003 Board decision to grant a 150% assessment was deemed an informal agreement that could not override the plain language of the recorded Declaration.

2. No Binding Contract: The ALJ noted that the 2003 reduced assessment did not constitute a binding contract, as the “Petitioner provided no proof of consideration tendered to the Association.”

3. Uniform Assessment is Required: The Declaration requires the Association to assess all developed CR-1 lots at a uniform rate. By assessing both of the Petitioner’s lots at the same full rate as every other developed CR-1 lot, the Association was acting in compliance with its governing documents.

4. No Unlawful Action: The Petitioner did not establish that her assessments were raised selectively or unlawfully. The evidence showed she owned two distinct lots that were previously assessed at a non-uniform rate, and the Board’s action was to correct this by applying the uniform rate to both lots as required by the CC&Rs. The Board’s new interpretation of the Declaration was not found to be in error or a violation of statute.

A key excerpt from the decision states:

“In this case the governing documents for the Association take precedent over any informal agreement Petitioner had with the Board, regardless of the duration of that agreement.”

Final Order

Based on the findings and conclusions, the Administrative Law Judge issued the following order:

IT IS ORDERED that Petitioner’s petition be denied.