HOA Pros and Cons

July 8th, 2016

Home­own­ers’ As­so­ci­a­tions Pros and Cons

  Ques­tion: We sold a mo­bile home park we owned in Ne­braska, and we are now look­ing at homes in the Phoenix area to re­tire. We are not fa­mil­iar with the ben­e­fits and bur­dens of homeown­ers’ as­so­ci­a­tions which seem to be very com­mon in the Phoenix area. In Ne­braska we had rules and reg­u­la­tions gov­ern­ing our mo­bile home park, such as no junk cars and speed bumps to slow traf­fic, so we be­lieved that we would want to live in a com­mu­nity with a homeowners’ as­so­ci­a­tion. What is the down­side to a home­own­ers’ as­so­ci­a­tion?

  An­swer: The con­cept of home­own­ers’ as­so­ci­a­tions is that home­own­ers in the com­mu­nity who are vol­un­teers are elected to serve with­out pay on the board of di­rec­tors to en­force the recorded CC&Rs gov­ern­ing the com­mu­nity. Po­ten­tial buy­ers of a home are gen­er­ally fur­nished these recorded CC&Rs be­fore close of es­crow. If they don’t like the recorded CC&Rs, they can generally can­cel the pur­chase of the home. Al­though there are sig­nif­i­cant ben­e­fits that are similar to those you ex­pe­ri­enced in your Ne­braska mo­bile home park, there are down­sides to home­own­ers’ as­so­ci­a­tions. One down­side is when mem­bers of the board of di­rec­tors, usu­ally the pres­i­dent, strictly en­force minor vi­o­la­tions of the CC&Rs. An­other down­side is when a board of di­rec­tors, usu­ally in large home­own­ers’ as­so­ci­a­tions of hun­dreds of homes, gives too much con­trol to the prop­erty man­age­ment com­pany that is not re­spon­sive to the needs of the homeown­ers.

Published in Homeowners Associations

Are HOA Parking Rules Enforceable in Arizona?

June 20th, 2016

Are HOA Park­ing Rules En­force­able in Ari­zona?

  Ques­tion: At the time that our com­mu­nity was de­vel­oped in 2005, the roads were ded­i­cated to the City of Chan­dler. The CC&Rs of our home­own­ers as­so­ci­a­tion (“HOA”) have al­ways prohibited overnight park­ing on the roads. Are these HOA park­ing rules still en­force­able? I thought Ari­zona law was re­cently changed to pro­hibit CC&Rs of HOAs from reg­u­lat­ing pub­lic roads in a com­mu­nity.

  An­swer: You are cor­rect that a new Ari­zona law pro­hibits the CC&Rs of HOAs from reg­u­lat­ing pub­lic roads. This new Ari­zona law, how­ever, gen­er­ally only ap­plies to HOAs formed after Decem­ber 31, 2014. (See below A.R.S. § 331818.) There­fore, the CC&Rs of your Chandler HOA formed in 2005 pro­hibit­ing overnight park­ing on the roads should still be enforceable.

A.R.S. § 33-1818. Com­mu­nity au­thor­ity over pub­lic road­ways; ap­plic­a­bil­ity
A. Notwith­stand­ing any pro­vi­sion in the com­mu­nity doc­u­ments, after the pe­riod of de­clar­ant control, an as­so­ci­a­tion has no au­thor­ity over and shall not reg­u­late any road­way for which the own­er­ship has been ded­i­cated to or is oth­er­wise held by a gov­ern­men­tal en­tity.
B. This sec­tion ap­plies only to those planned com­mu­ni­ties for which the de­c­la­ra­tion is recorded after De­cem­ber 31, 2014.

  Note: A new amend­ment to CC&Rs reg­u­lat­ing park­ing on ded­i­cated streets in Ari­zona would be un­en­force­able.  A.R.S. § 331802(3) de­fines the term “de­c­la­ra­tion” to in­clude any amend­ment to CC&Rs, there­fore, the above statute ap­plies to an amend­ment to CC&Rs con­cern­ing an HOA park­ing rule made sub­se­quent to the De­cem­ber 31, 2014 cut­off date.

Published in Homeowners Associations

New Arizona Homeowners Association Laws

June 1st, 2016

New Ari­zona Home­own­ers As­so­ci­a­tion Laws

  In the Ari­zona leg­isla­tive ses­sion for 2016 the leg­is­la­ture en­acted many new Ari­zona homeowners as­so­ci­a­tion (“HOA”) laws that may af­fect your HOA. Most new HOA laws will go into ef­fect on Au­gust 6, 2016.

No­tice of vi­o­la­tion writ­ten re­sponse dead­lines ex­tended

A.R.S. § 331242 con­cern­ing con­do­minium units and A.R.S. § 33-1803 con­cern­ing planned com­mu­ni­ties are amended. These laws in­volve the no­tice of vi­o­la­tion that an HOA must give to home­own­ers.  The change that will take ef­fect later this year is an ad­di­tional grace pe­riod for home­own­ers re­spond­ing to a no­tice of vi­o­la­tion. Home­own­ers will now be given 21 cal­en­dar days to pro­vide the HOA with a writ­ten re­sponse. Home­own­ers pre­vi­ously had 10 busi­ness days to make such a re­sponse. In ef­fect, home­own­ers have been given ap­prox­i­mately an extra week to re­spond to an HOA’s no­tice of vi­o­la­tion.

Ap­proval for a con­struc­tion pro­ject’s ar­chi­tec­tural de­signs and plans

A.R.S. § 331817 per­tains to the de­sign re­view of new con­struc­tion within a planned com­mu­nity. This law will be amended to in­clude that de­sign re­view com­mit­tees, ar­chi­tec­tural com­mit­tees, or any com­mit­tee that per­forms a sim­i­lar re­view func­tion can­not “un­rea­son­ably with­hold” ap­proval of a con­struc­tion pro­ject. Al­though the lan­guage in this amend­ment to A.R.S. § 33-1817 is ambigu­ous as to what con­sti­tutes un­rea­son­able with­hold­ing of ap­proval, this law could im­pose ad­di­tional li­a­bil­ity for HOAs if their re­view boards fail to make a rea­son­able ap­proval of a new con­struc­tion pro­ject.

As­so­ci­a­tion late fees

An amend­ment to Ari­zona law will be made re­quir­ing an HOA to no­tify a home­owner when apply­ing a late fee. The lan­guage does not say how the no­ti­fi­ca­tion must be made, just that a mem­ber being sub­jected to a late fee must now have rea­son to know that a late fee has been ap­plied. As a prac­ti­cal mat­ter, this new law re­quir­ing no­ti­fi­ca­tion of a late fee will prob­a­bly have the most sig­nif­i­cant im­pact on the daytoday op­er­a­tions of an HOA.  The HOA will now have to in­form a mem­ber prior to ap­ply­ing a late fee to their ac­count.

Amend­ments to CC&Rs

Al­though most de­vel­oper de­c­la­ra­tions have pro­vi­sions for amend­ing Covenants, Con­di­tions, and Re­stric­tions (“CC&Rs”), there is a new Ari­zona law al­low­ing the CC&Rs to be amended by an HOA. The amend­ments to the CC&Rs au­tho­rized by state law would then need to be ap­proved by an af­fir­ma­tive vote or con­sent of the num­ber of el­i­gi­ble vot­ers or home­own­ers re­quired under the de­vel­oper de­c­la­ra­tion.  This new law clar­i­fies the process for mak­ing amend­ments to CC&Rs on a state-wide level in­stead of as­so­ci­a­tion-by-as­so­ci­a­tion. How­ever, the vot­ing re­quire­ments nec­es­sary for an amend­ment re­main un­changed.

Re­moval of Di­rec­tors and fill­ing of va­can­cies

Ari­zona law will pro­hibit an HOA from ap­point­ing a Di­rec­tor that has been re­moved by the member­ship in a re­call elec­tion.  The re­moved Di­rec­tor may run for re­elec­tion by a vote of homeown­ers, but is no longer el­i­gi­ble for a board ap­point­ment.

Va­ca­tion & short-term rentals

A new law pro­hibit­ing cities, towns and coun­ties from re­strict­ing short-term rentals be­cause a prop­erty is not clas­si­fied as a hotel does not have a di­rect ef­fect on home­own­ers as­so­ci­a­tions. How­ever, some HOAs that are silent on the issue of short term rentals, have re­lied on the laws of cer­tain mu­nic­i­pal­i­ties (such as Foun­tain Hills) to re­strict rental pe­ri­ods. An HOA’s re­liance on a city, town or county’s laws will no longer be avail­able to pro­tect against the pro­lif­er­a­tion of short-term, home-shar­ing ser­vices like Airbnb or VRBO.

  This ar­ti­cle is a recap of re­cent Ari­zona leg­is­la­tion ap­ply­ing to HOAs. It is not meant to be a com­pre­hen­sive re­view of all new laws per­tain­ing to HOAs.  As al­ways, all Ari­zona leg­is­la­tion, among other fac­tors, will be eval­u­ated by Combs Got­tlieb & Mac­Queen, P.C. prior to any spe­cific rec­om­men­da­tion to an HOA or home­owner. For more in­for­ma­tion on these new Ari­zona Homeown­ers As­so­ci­a­tion laws, or any other HOA query, please do not hes­i­tate to con­tact us at info@​cgmlawgroup.​com or (602)957-9810.

Published in Homeowners Associations

Self-Dealing by HOA Board Members

May 4th, 2016

Self-Deal­ing by HOA Board Mem­bers

  Ques­tion: We are home­own­ers in a com­mu­nity in Scotts­dale that is gov­erned by a Homeowners As­so­ci­a­tion (“HOA”). My wife and I are very upset with the in­com­pe­tent landscaping ser­vices being pro­vided on be­half of our HOA. The com­mon areas are not prop­erly main­tained. When we com­plained about these ser­vices to a neigh­bor last week­end, we learned that one of the mem­bers who serves on the Board of Di­rec­tors owns the land­scap­ing com­pany that ser­vices our HOA, and that our HOA pays an in­flated fee to the land­scap­ing com­pany each month. Is self-deal­ing by an HOA board mem­ber legal?

  An­swer: Prob­a­bly not. Under Ari­zona law, as a home­owner you have the legal right to i) inspect the HOA’s records, in­clud­ing all meet­ing min­utes, con­tracts, and other rel­e­vant documents of the HOA, ii) as­cer­tain when the land­scap­ing com­pany was hired by the HOA, iii) re­view the terms of the HOA’s agree­ment with the land­scap­ing com­pany, and iv) de­ter­mine whether the Board acted prop­erly in hir­ing the land­scap­ing com­pany in light of the above-stated con­flict of inter­est. If the records re­veal that the Board has not acted in the best in­ter­ests of the HOA, it is rec­om­mended that you con­sult with an at­tor­ney to dis­cuss your legal op­tions.

Published in Homeowners Associations

Condominium Open House Rules in Arizona

March 29th, 2016

Con­do­minium Open House Rules in Ari­zona

  Signs: Under Ari­zona law, an HOA con­not pro­hibit or reg­u­late tem­po­rary open house signs.  The only re­quire­ments are that the tem­po­rary open house signs be in­dus­try stan­dard size, and owned or used by the seller or the seller’s agent.  Also, an HOA is per­mit­ted to pro­hibit open house signs on the com­mon el­e­ments of the con­do­minium.

  Hours: An HOA may not limit the hours for an open house. An HOA can, how­ever, pro­hibit an open house being held be­fore 8:00 AM or after 6:00 PM.

  Note: For more in­for­ma­tion, see A.R.S. sec­tion 33-1261(c) below:

“With re­spect to real es­tate for sale, for rent or for lease in the con­do­minium, an as­so­ci­a­tion shall not… reg­u­late any of the fol­low­ing:

1. Tem­po­rary open house signs or a unit owner’s for sale sign. The as­so­ci­a­tion shall not re­quire the use of par­tic­u­lar signs in­di­cat­ing an open house or real prop­erty for sale and may not fur­ther reg­u­late the use of tem­po­rary open house or for sale signs that are in­dus­try stan­dard size and that are owned or used by the seller or the seller’s agent.

2. Open house hours. The as­so­ci­a­tion may not limit the hours for an open house for real es­tate that is for sale in the con­do­minium, ex­cept that the as­so­ci­a­tion may pro­hibit an open house being held be­fore 8:00 a.m. or after 6:00 p.m. and may pro­hibit open house signs on the common el­e­ments of the con­do­minium.”

Published in Homeowners Associations, Real Estate Agency Law

How to Get Rid of Noisy Neighbors

March 28th, 2016

How to Get Rid of Noisy Neigh­bors

  Ques­tion: We live in a town­house com­mu­nity in Scotts­dale where there is a com­mon wall between town homes. The prob­lem is that our neigh­bors are al­ways drink­ing and par­ty­ing late at night which keeps us awake. The CC&Rs for our town home com­mu­nity pro­hibit any of­fen­sive con­duct, in­clud­ing loud noise, by a neigh­bor which in­ter­feres with an­other neigh­bor’s use and en­joy­ment of their town home. Our home­own­ers’ as­so­ci­a­tion re­fuses to do any­thing. They say that they do not have any funds to hire a lawyer, and that our only re­course is for us to hire a lawyer to file a law­suit against our neigh­bors. Even if we de­cide to sell our town home, we obviously will have to tell prospec­tive buy­ers about this noise prob­lem. There­fore, we have to do some­thing. Can we ac­tu­ally file a law­suit now to “shut up” our neigh­bors?

  An­swer: Your home­own­ers’ as­so­ci­a­tion is cor­rect that, if they will not or can­not do any­thing, you as an in­di­vid­ual home­owner should have the right to en­force by a law­suit the CC&R provision pro­hibit­ing noisy neigh­bors. This law­suit would re­quest that the court order the noisy neigh­bors to “shut up,” and to award you at­tor­neys’ fees and costs. If the neigh­bors con­tinue to be noisy, the court can fine or even jail the neigh­bors for con­tempt of court.

Published in Easement & Other Neighbor Disputes, Homeowners Associations

Arizona HOA Documents Fee vs. HOA Transfer Fee

March 16th, 2016

HOA Doc­u­ments Fee vs. HOA Trans­fer Fee

  Ques­tion: We are sell­ing our home in east Mesa for $800,000. Al­though the es­crow is not sched­uled to close for an­other three weeks, we re­cently learned that our Home­own­ers Association (“HOA”) is de­mand­ing a trans­fer fee of one-half of 1 per­cent, or $4,000, to be paid at clos­ing. My sis­ter is a real es­tate agent and she says that a new law lim­its the fee that an HOA can charge to $400. Does this $4,000 fee have to be paid to the HOA?

  An­swer: Prob­a­bly. The Covenants, Con­di­tions and Re­stric­tions (“CC&Rs”) of an HOA can provide for dif­fer­ent types of HOA fees, in­clud­ing a doc­u­ments fee and a trans­fer fee. Your sis­ter likely was con­fused with a law lim­it­ing HOA doc­u­ments fees, be­cause there are cur­rently no limits for an HOA trans­fer fee.

An HOA doc­u­ments fee is a fee for any doc­u­ments re­lated to the dis­clo­sures an HOA must deliver to the buyer upon the sale of the homefor ex­am­ple, in­for­ma­tion re­gard­ing by­laws, a cur­rent op­er­at­ing bud­get and a most re­cent fi­nan­cial state­ment. For these re­quired dis­clo­sures A.R.S. § 331806 lim­its an HOA’s doc­u­ments fee to no more than $400, and an ad­di­tional $100 if the doc­u­ments are re­quired to be ex­pe­dited.

The CC&Rs may also au­tho­rize an HOA trans­fer fee on the sale of a home. An HOA trans­fer fee can be thou­sands of dol­lars, and is fre­quently a per­cent­age of the sales price of the home, such as your $4,000 trans­fer fee. Since there is no law lim­it­ing the amount of a trans­fer fee, you will prob­a­bly have to pay the $4,000 trans­fer fee.  Clos­ing cost fees are ne­go­tiable be­tween a Buyer and a Seller in­clud­ing HOA trans­fer fees.  Many times the buyer pays for an HOA trans­fer fee much like they would a mem­ber­ship fee to a health club; in other cases the trans­fer fee is split 50/50 or, in some cases, the seller pays.

  Note: If you were the pur­chaser of a new home within a de­vel­op­ment, there would not have been an HOA trans­fer fee when you pur­chased the new home. Un­less you were fa­mil­iar with this pro­vi­sion within your HOA CC&Rs, the HOA trans­fer fee may come as a com­plete shock as the fee can be a con­sid­er­able amount of money.

Published in Homeowners Associations

Foreclosure for Delinquent HOA Fees and Assessments

March 14th, 2016

 Fore­clo­sure for Delin­quent HOA Fees and As­sess­ments

  Ques­tion: In our home­own­ers’ as­so­ci­a­tion in North Phoenix there are sev­eral “dead­beat”     home­own­ers who have not paid their monthly dues for sev­eral months, and who also have not paid the spe­cial as­sess­ment for our new roads.  We have writ­ten nu­mer­ous let­ters to these home­own­ers, but these home­own­ers are still delin­quent.  The re­sult is that the other home­own­ers have to pay more than their share to make up for these delin­quent home­own­ers. I know that these delin­quent home­own­ers will prob­a­bly have to pay the delin­quent pay­ments when they sell their homes, but is there any­thing else that we can do now to col­lect the delin­quent pay­ments? Can we ini­ti­ate fore­clo­sure for delin­quent HOA fees and As­sess­ments?

  An­swer: Monthly dues and spe­cial as­sess­ments can be­come liens against a home.  Thus, if a home­owner is delin­quent in pay­ing these monthly dues and as­sess­ments, the home­own­ers’ asso­ci­a­tion can even­tu­ally fore­close on the home.  The home­own­ers’ as­so­ci­a­tion will need to pay an at­tor­ney to file and serve on each of the delin­quent home­own­ers a fore­clo­sure law­suit.  If a delin­quent home­owner still does not pay the monthly dues and as­sess­ments, plus at­tor­neys’ fees and other costs of the fore­clo­sure, any suc­cess­ful bid­der at the sher­iff’s sale con­ducted on the cour­t­house steps will be­come the owner of the home.  The suc­cess­ful bid­der will have to pay the home­own­ers’ as­so­ci­a­tion all of the delin­quent pay­ments, plus at­tor­neys’ fees and other costs.  If there are no bid­ders at the sher­iff’s sale, the home­own­ers’ as­so­ci­a­tion will be­come the owner of the home.

  Note: When served with a fore­clo­sure law­suit, most home­own­ers pay the delin­quent pay­ments, plus at­tor­neys’ fees and other costs.  On the other hand, a $250,000 home owned by an inattentive out-of-state owner was lost to fore­clo­sure at a sher­iff’s sale for fail­ure to pay delinquent monthly dues of orig­i­nally less than $700.

Published in Foreclosures & Short Sales, Homeowners Associations