CAO v PFP DORSEY
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In Arizona, condominium unit owners Jie Cao and Haining Xia challenged the forced sale of their unit by their condominium association (the “Association”) following the dissolution of the condominium. The Association, which had been given power to sell under the Arizona Condominium Act, sold the unit to PFP Dorsey Investments, a company that had previously acquired the majority of units in the condominium.
The Supreme Court of the State of Arizona held that the Arizona Condominium Act, which authorized the sale, did not violate the eminent domain provision of the Arizona Constitution. The court stated that the Act was incorporated into the condominium declaration, to which the owners had agreed. However, the court also held that in these circumstances, the Act required the sale of all property, rather than individual units as occurred in this case.
The court noted that the Association's power to sell derived from the condominium declaration that all unit owners had signed. Thus, the Act didn't effect a taking of the owners' property. As such, the forced sale of the owners’ unit alone rather than as part of a sale of all common elements and units of the condominium was impermissible under the Act.
The court vacated the court of appeals’ decision and remanded the case to the trial court for further proceedings consistent with its opinion. The court also granted the owners reasonable attorney fees for amounts expended to enforce the Declaration, excluding those attributable to the unsuccessful eminent domain claims.
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