## Facts

- A developer recorded condominium declarations for a planned 53-unit project and formed a condominium association under the amended declaration.
- The governing documents required the developer to pay monthly assessments on each unit it owned beginning May 1, 1986, and to fund reserves within sixty days after the first unit sale.
- After selling several units, the developer exercised a declaration provision allowing it to “temporarily withdraw” 23 planned units (Phase Two lots) from the condominium regime.
- The developer stopped paying assessments for the withdrawn Phase Two lots; the association continued to charge assessments on those lots.
- The association later adopted a late-payment charge and applied it retroactively to amounts it considered already delinquent, adding interest and late charges to its claimed arrearages.

## Issues

1. Whether lots withdrawn from the condominium regime under the declaration remained subject to association assessments and late charges.
2. Whether the association had authority to impose late-payment fees and, if so, whether retroactive application was reasonable.
3. Whether the association’s summary-judgment evidence was admissible and sufficient to establish the developer’s liability and the amounts owed.

## Decision

- The court reversed summary judgment for the association and remanded.
- The developer’s withdrawal of the 23 Phase Two lots was effective; those lots were not subject to assessments or late charges during the withdrawal period.
- Although the association had contractual and statutory authority to impose late fees, it acted unreasonably by imposing them retroactively.
- The association’s supporting affidavit did not provide admissible evidence establishing liability and amounts owed, so it failed to make a prima facie showing for summary judgment.

## Legal Principles

- When a declaration permits a developer to withdraw units or lots from a condominium regime and the withdrawal is properly effected, the association cannot levy assessments and related charges on the withdrawn property as if it remained within the regime.
- An association’s express contractual and statutory powers (including the power to impose late-payment fees) must be exercised reasonably; retroactive imposition of newly adopted financial penalties may be unreasonable.
- Summary judgment requires competent, admissible evidence; conclusory or improperly supported affidavits do not establish a prima facie case for monetary liability.

## Conclusion

The court held that properly withdrawn Phase Two lots were not assessable, that retroactive late fees were an unreasonable exercise of association authority, and that the association’s evidentiary showing was inadequate to support summary judgment, requiring reversal and remand.


Villas at Hidden Lakes Condominiums Ass'n v. Geupel Constr. Co., 174 Ariz. 72, 847 P.2d 117 (Ct. App. 1992)