Legislature inhibits sales in HOAS
07/31 You have a listing in an HOA. The seller's neighbors are not abiding by the CC&Rs. The neighbors moved here from Philadelphia to follow Curt Schilling. They spent their winters watching TV travelogues about sunny Phoenix. They spent their summers watching the Phillies. They enjoy the newly discovered sun. They spend most of their time in the front yard insufficiently clad, drinking beer and playing lawn jarts.
They do not take a break from jarts to pull the weeds. The paint on their house is peeling. Their flea market business is so active that their inventory fills the garage and back yard. They park their dilapidated trailer in the front yard next to the lawn jart pit.
You are having trouble attracting buyers. The solution is easy. You ask your seller to contact the HOA, and urge the HOA to record a lien on the seller's neighbors until they comply with the CC&Rs. A lien often induces violators to comply quickly. Those days are over.
The legislature removed the HOA's power to lien quickly for violations. The HOA now has only insignificant lien rights for violations. The HOA may still fine violators, and collect fines through non-lien legal procedures. But to create a lien, the HOA must file a lawsuit against the violator. Then the HOA must obtain a judgment. This process takes approximately four months, if uncontested. It can take 10 months if contested. An attorney will charge the HOA $500.00 to $900.00 for an uncontested case, and substantially more if contested. HOAs will surely not pursue this route for isolated trash can and weed violations.
When the HOA obtains a judgment for the violations, it should be able to file a foreclosure on its lien. The legislature took this away as well. Now, when the HOA obtains a judgment for violations, the judgment becomes a lien only upon sale.
Because our friends from Philadelphia are in a cash business, the HOA is not able to garnish wages or bank accounts to collect the fines to induce them to comply with the CC&Rs. They continue with their violations, knowing that the HOA can only collect the fines when they sell the house.
If the HOA needs speedy compliance, this law firm is advising HOAs to file an action for a court order to enforce the CC&Rs. It will take an HOA between two weeks to two months to obtain this order. But if the HOA decides to obtain the order, the attorney fees it spends to obtain the order does not become a lien until the Philadelphians sell the house.
The Philadelphians experience their first summer in Phoenix. The flea market business drops off. They are not able to make the mortgage payments. The first mortgage holder conducts a trustee sale. The fines, judgments etc… that never became a lien become uncollectible. The bank takes the property back. The Philadelphians move to Boston to cheer for Curt Schilling. They leave their trailer behind.
The bank does not paint the house. It does not pull the weeds. The trailer stays. You have another easy solution. Most CC&Rs allow the HOA to enter onto the property, paint the house, pull the weeds and tow the trailer. This is known in the HOA business as "self-help". The HOA can then assess the cost of that self-help to the bank. Banks routinely pay those self-help assessments when they sell the houses. You can finally make your sale.
The legislature erected a barrier to self-help. There is no longer an automatic lien for those self-help assessments. Again, the HOA must file a lawsuit against the bank, prove up its case and then wait for the bank to sell to acquire a lien. You may need to wait another 8 months for the blight to be eliminated, so you can sell the house. A family from California buys the house from the bank. They replace the lawn jart pit in the front yard with life-size statues of Arnold Schwarzenegger and Pamela Anderson. We made need to start again.
When confronted with this kind of problem, keep in mind that HOAs in general have a legal obligation to enforce the CC&Rs against the Philadelphians and the bank. Johnson v. The Pointe Community Association, Inc., (Court of Appeals, July 31, 2003) (association liable to owner for not enforcing CC&Rs against neighbor's violations); Gfeller v. Scottsdale Vista North Townhomes Association, 193 Ariz. 52 (App. 1998) (depending on language in the CC&Rs, association has duty to enforce CC&Rs). This law firm suggests that an agent should urge its seller to contact the HOA, and urge the HOA to obtain a court order against violations that impair the sale of the listing. The order can be obtained in weeks, or two months.
The bill was HB 2402. It can be retrieved at www.azleg.state.az.us. It is codified at ARS sections 33-1807 for Planned Communities, and 33-1256 for Condominiums.
Reader Comments (3)
Hi,
I guess for breaking any lease, some legal assistance is must. Nothing can be proceed without legal formalities
Thanks,
Peter
HI there,
I too agree that legal formalities is vital for proceeding further
Thanks,
bradley
The crowd goes wild for louis vuitton monogram vernis merchandise. Seriously though, have you noticed all of the popularity behind these brands? If you have avidly been searching for an extremely decadent handbag, then perhaps this louis vuitton monogram denim pure black handbag may tickle your fancy.