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Vales v. Kings Hill Condominium Association - 12/22/2005

Arizona Court of Appeals Division One Reverses Summary Judgment That Found a “No Rental” Provision Amendment to a Condominium’s Declaration of Rights Enforceable.


In 1999, Janet Vales purchased a condominium in the Kings’ Hill complex, which she immediately began leasing to others. In 2000, Kings Hill mailed ballots to the forty-two condo owners proposing to amend the complex’s Declaration of Restrictions to include a “no-rental” amendment (the “Amendment”). The required majority of homeowners adopted the Amendment, but Kings’ Hill recorded the Amendment with additional language not included in the ballot. Meanwhile, Vales continued renting her unit, but in 2003 her tenants cancelled their lease agreement after learning that Kings Hill planned to enforce the “no-rental” restriction. With more than three years lapsing since the Amendment’s recording, Vales then sued. After both parties moved for summary judgment, the Superior Court ruled that Kings Hill had properly adopted the Amendment with the modification (making it enforceable), and that Vales’ claim was time barred by the one-year statute of repose set forth in A.R.S. § 33-1227(B).

The Court of Appeals held that the one-year time bar set forth in A.R.S. § 33-1227(B) as part of the Uniform Condominium Act did not apply to Vales’ action because that statute applies only to actions challenging “the validity of an amendment adopted by the association pursuant to this section . . . .” The Court of Appeals reasoned that the Amendment was not adopted “pursuant to this section” because, under the Uniform Condominium Act’s terms, its voting requirements for adopting amendments apply to complexes built before its effective date (like Kings Hill), only to the extent the Act “does not conflict with an existing declaration of rights.” Because the Kings Hill Declaration included only a majority requirement, not the unanimity requirement specified in the Uniform Condominium Act for measures like the Amendment, the Amendment was adopted under the terms of the Kings Hill Declaration, not “pursuant to this section” for purposes of A.R.S. § 33-1227(B). Accordingly, the Court of Appeals looked to the general statutes of limitation, pursuant to which Vales’ claims were timely.

As for whether the Amendment was properly adopted, the Court found that the additional recorded language did not amount to a minor error, and thus found Villas at Hidden Lakes Condominium Ass’n v. Geupel Construction, 174 Ariz. 72, 76-77, 847 P.2d 117, 121-22 (App. 1992), and Watson Construction v. Amfac Mortgage, 124 Ariz. 570, 576, 606 P.2d 421, 427 (App. 1979), distinguishable. Nevertheless, the Court did not find the entire recorded Amendment void. The Court found the portion of the recorded Amendment adopted by the homeowners enforceable with the exception of an ambiguous restriction that would apply the no rental provision effective retroactively. The Court of Appeals struck as unenforceable the language that would have made the no-rental provision retroactive, finding that the homeowners would have approved the Amendment absent the unenforceable date restriction because it nevertheless prevents subsequent purchasers from buying and then leasing units. The Court vacated the trial court’s grant of summary judgment, and remanded for further proceedings.

Judge Hall authored the opinion in which Judges Snow and Norris concurred.

Posted On: 1/4/2006