Can the law force you to sell your home to other property owners? What if that law was declared unconstitutional after you agreed to be bound by legislation in place at the time? Those questions, along with the security of private property, are at stake in a case before the Arizona Supreme Court.
In 2018, Jie Cao and Haining Xia purchased a condominium at Dorsey Place in Tempe, Arizona. Over time, PFP Dorsey, an investment company, acquired 90 of the 96 units in the complex. According to the covenants, conditions, and restrictions (CC&Rs) that applied to the complex, owners were subject to state regulations regarding condominiums, and each unit had one vote within the association. That meant that PFP Dorsey controlled 90 out of 96 votes.
At the time, Arizona law (Section 33-1228) allowed an 80 percent supermajority (later increased to 95 percent) to terminate a condominium agreement and to “provide that all the common elements and units of the condominium shall be sold following termination.” PFP Dorsey exercised its votes to force the remaining individual owners to sell their units to the investment company.
Outraged, Jie Cao and Haining Xia sued.
“Defenders of Arizona’s law say it’s necessary to prevent the ‘holdout problem’—property owners who supposedly strategically refuse to sell at market price to compel extra compensation. In theory, such holdouts hinder economic development projects and their alleged trickle‐down effects,” comment Anastasia P. Boden and Nathaniel Lawson of the Cato Institute. “The fact that some people would rather see private property go to a supposed ‘better use’ can’t justify confiscating it. The Founders were very worried that private interests might coopt government power for their own ends.”
Hellbound and Down 