Can the Bella Vista Property Owners Association legally shut off a member's water for unpaid POA dues?

Plain-English summary

Representative Kim Hendren asked the Attorney General about a dispute at the Bella Vista Property Owners Association. The POA had a policy of shutting off a member's water if the member fell 90 days behind on monthly POA assessment payments. The POA both ran the water department and collected the dues. Hendren asked whether, if the member's water bill itself was current, the POA could still shut off water service to collect on unpaid dues.

Attorney General Leslie Rutledge declined to opine. She invoked her predecessor's 2011 opinion on the same question (Op. Att'y Gen. 2011-077), reaffirmed that the Bella Vista POA is a private nonprofit corporation, and explained that the legal authority for the POA to terminate a service it provides is purely a matter of contract between the POA and its members. The AG is statutorily barred from engaging in the private practice of law (Ark. Code Ann. § 25-16-701), which would be what interpreting a private nonprofit's contracts amounts to. The opinion told the requester to take the question to private counsel.

The opinion attached and re-issued the 2011 opinion in full, which had answered six related questions about Bella Vista POA governance with the same refrain: "the POA's charter documents will control."

Currency note

This opinion was issued in 2019. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Background and legal framework

The Bella Vista Property Owners Association is a private nonprofit corporation, established in 1965 to manage the affairs of Bella Vista Village, a planned community in northwest Arkansas. Every property owner is a member of the POA, and every property is subject to the POA's Declaration and Protective Covenants.

The POA owns and operates a water and sewer system that serves the community. It also collects monthly assessments (POA dues) from its members under the Declaration. Bella Vista was incorporated as a city of the first class in 2006 (a separate event from the POA's continuing private status), but the POA itself remained a private nonprofit, not a public utility or governmental body.

That private status is what drove the AG's analysis. Ark. Code Ann. § 25-16-701 prohibits the Attorney General from engaging in the private practice of law. Interpreting a private corporation's contracts with its members, including whether the POA's Declaration permits a service termination for unpaid dues, falls squarely within the private practice of law.

The 2011 opinion (Op. Att'y Gen. 2011-077) had drawn an explicit contrast with municipal water shutoffs. When a city government provides water and considers shutting it off because a customer has not paid for a related service, the city's police power and statutory framework are in play, and AG opinions on those questions are appropriate. The earlier opinion had pointed to Op. Att'y Gen. 2008-028 as having addressed that municipal scenario in detail. A private POA is not invested with the police power. So even though the practical question (water cut off for unpaid dues) looks similar, the legal framework is entirely different.

Why the AG would not engage on the contract question

The bar against the AG engaging in private legal advice is not a discretionary preference. Section 25-16-701 makes it a statutory rule. The 2011 opinion noted that the AG's office had been provided copies of the Bella Vista Declaration and Protective Covenants and Bylaws, but was not authorized to interpret them. The same principle applied in 2018. The dispute, however practically pressing for the constituents involved, is a contract dispute between private parties.

The 2011 opinion did flag one related point that could change the analysis: if the POA were "intertwined" enough with municipal services or were receiving direct public funding, FOIA or other public-law obligations might attach. The Arkansas Court of Appeals in Waterworks v. Kristen Investment Properties had identified "water service" as "a service routinely provided by government." If the POA's water operations evolved into a structure tightly tied to the City of Bella Vista, public-records and other obligations might bind. But that question turned on facts the AG could not evaluate without more.

Common questions

Why won't the Attorney General answer this?

Because the Bella Vista POA is a private nonprofit, not a government entity. The AG is statutorily barred from engaging in the private practice of law. Interpreting a private nonprofit's Declaration and Protective Covenants is the kind of work private counsel does for paying clients.

Where should a Bella Vista resident with this question go?

Private counsel. The 2011 opinion also flagged the possibility of consulting the Bella Vista city attorney to the extent any aspect of the water operation was tied to the city through contract, but that is not always available.

Would the answer be different if a city operated the water system?

The 2011 opinion suggests yes. A municipality has police-power authority over its utility services, and the analysis of when a city may shut off one service for nonpayment of a related service is governed by public law. Op. Att'y Gen. 2008-028 had addressed that question in some detail.

Could the POA's status change in a way that opened the question to AG opinion?

Possibly. If the POA's water operations became tightly intertwined with municipal services or received direct public funding, FOIA and other public-law obligations might attach. But that would require a much more developed factual record.

Did the AG say the shutoff was illegal?

No. The AG made no judgment on legality at all. The opinion only held that the question lay outside the AG's authority to answer.

Citations

Ark. Code Ann. § 25-16-701; prior AG opinions Ops. Att'y Gen. 2011-077, 2008-028, 2007-192, 2007-227; Hutchens v. Bella Vista Village Property Owners' Ass'n, 82 Ark. App. 28, 31, 110 S.W.3d 325 (2003); Morris v. Medin, 43 Ark. App. 29, 30, 858 S.W.2d 142 (1993); Waterworks v. Kristen Investment Properties, 72 Ark. App. 37, 42, 32 S.W.3d 60 (2000); Central Hardware Co. v. N.L.R.B., 407 U.S. 539, 547 (1972).

Source

• Landing page: https://arkansasag.gov/divisions/opinions-foia/attorney-general-opinions-search/

Original opinion text

Opinion No. 2018-088
January 3, 2019
The Honorable Kim Hendren
State Representative
STATE OF ARKANSAS
ATTORNEY GENERAL
LESLIE RUTLEDGE
1501 West Highway 72 Southeast
Gravette, AR 72736-9438
Dear Representative Hendren:

This is in response to your request for an opinion on behalf of your constituents who are members of the Bella Vista Property Owners Association (POA). Your request states that the POA has implemented a policy that states "if a member is ninety days delinquent in his or her monthly assessment payments to the Association, the delinquent member's water is shut off." You also state that the POA owns and operates the water department.

In light of the above-referenced scenario, you ask the following question:

If the member is current in his or her water payments, is it legal for the Association to shut off said member's water?

RESPONSE

With respect, I am unable to provide an answer to your question. I must echo my immediate predecessor, who was presented with substantially the same question in 2011, in stating that the POA's legal ability to terminate a service it provides is purely a matter of contract between the POA and its individual members. I have enclosed a copy of that opinion for your convenience and review.

At the time of the 2011 opinion, the Bella Vista POA was a private non-profit corporation, and not a public body politic or governmental entity. It is my understanding that there has been no change in the POA's legal status since that time. Additionally, as you state in your request for my opinion, the POA owns and operates the system that provides water service to its members, which was also the case in 2011. As these facts appear to remain unchanged since that earlier opinion, I, like my predecessor, lack the authority to opine on whether private parties have contractually agreed to tie the provision of one service to the payment of a fee for another service or amenity. Any question regarding the propriety of the matter at issue should be addressed to private counsel as a matter of contract law.

Sincerely,
LESLIE RUTLEDGE
Attorney General
Enclosure

(The 2018 opinion attached and reissued the 2011 predecessor opinion, Op. Att'y Gen. 2011-077, which addressed six related Bella Vista POA governance questions and reached the same conclusion: "the POA's charter documents will control" and the AG is barred from interpreting them. The full text of that 2011 opinion is available through the Arkansas AG's opinions database.)