Many homeowners across Arizona live in communities andneighborhoods that are part of Homeowners’ Associations (HOAs). Theseassociations can be a bit divisive, with some people praising them while othersfind them overly restrictive. Whatever your opinion might be, there are severalkey points about HOAs you should be aware of.
HOAs are more than just community groups. They are legalentities that help govern communities and enforce rules that maintain order,community amenities, and aesthetics. HOAs are usually headed by an HOA boardmade up of community members. The board must abide by the bylaws that governhow they may do their jobs and enforce the rules. If egal disputes arise, anHOA may seek legal representation and take action against homeowners who refuseto comply with the rules.
Ask our Arizona association governance lawyers for a privatelegal review by calling Halk,Oetinger, and Brown at (602) 759-9205.
How Do HOAs Create Rulesand Regulations for Homeowners?
HOAs may create and enforce rules about what homeowners canand cannot do in the community. These rules are not pulled out of thin air, andthere are legal procedures for how HOAs are formed and how they create theserules.
Articles ofIncorporation
First, an HOA is a legal entity, not just a group of like-mindedcommunity members. As such, there is legal paperwork and documentation thatcreates the HOA.
When developers create new communities and neighborhoods,they may draft articles of incorporation to establish the HOA. These articlesare founding documents that legally create the HOA and establish it as anon-profit entity.
HOA articles of incorporation may be filed with the ArizonaCorporation Commission. If these documents are not filed, the HOA legally doesnot exist, and homeowners are not bound by any rules or authority the HOAclaims to have.
Covenants, Conditions,and Restrictions
Perhaps the most significant part of an HOA, at least tohomeowners, is the covenants, conditions, and restrictions imposed uponhomeowners. Also called CC&Rs, these rules typically regulate and restrictwhat homeowners may do with their properties and how community amenities are tobe maintained.
CC&Rs may impose certain requirements on homeownersseeking to renovate their homes. Often, there are rules about how a homeownermay alter the exterior of their home or front yard, usually to promotecommunity aesthetics.
CC&Rs may also explain HOA fees, including how much theycost, what they are used for, and how often they are to be paid. These rulesmay also explain the fines imposed on homeowners who violate them.
HOA Bylaws
Another crucial aspect of HOAs in Arizona is their bylaws.These are rules that apply to HOA members, not to homeowners within thecommunity. These bylaws describe the duties of board members, how they are toperform their duties, and the consequences of violating the rules.
The bylaws may also describe certain rights of homeowners.For example, the bylaws may explain how HOA board members are elected, electionprocedures, and the voting rights of community members.
Bylaws help to keep board members accountable. If boardmembers violate the bylaws, they can be removed from the board.
Compliance with Stateand Federal Law
When an HOA is created, it cannot promulgate whatever rulesit sees fit. The CC&Rs and bylaws must comply with existing state andfederal laws. Generally, if HOA rules conflict with state or federal law, thestate or federal law prevails, and the HOA must rescind or amend the rule tocomply with the law.
Often, HOAs will review CC&Rs and bylaws with lawyers todetermine if there are any conflicts. If there are, our Arizona associationgovernance lawyers may help the HOA take steps to change the rules to ensurelegal compliance.
How Does an HOA EnforceIts Rules in Arizona?
While some homeowners feel that HOA rules are fair, othersmight find them overly restrictive. Sometimes, homeowners refuse to play by therules, which can cause friction within communities and may lead to legal actionfrom the HOA to enforce the rules.
Fines and Penalties
Perhaps the primary method used by many HOAs to enforce rulesis to require homeowners to pay fines and fees for violations. For example, HOArules may require homeowners to mow their lawns at least once per week tomaintain community aesthetics. If a homeowner lets their grass grow for toolong, they may be fined.
Penalties may become more serious as violations become moreegregious. For example, it is one thing to skip mowing the lawn, but it isanother to make alterations to a home’s exterior that violate the rules. Suchalterations may be difficult or impossible to change, and penalties may be moresevere.
Demand Letters
Homeowners sometimes believe that fines or penalties are tooharsh or unfair. They may refuse to pay fines as a form of protest. While HOAsoften issue multiple warnings to homeowners who refuse to abide by the rules,further legal action is sometimes necessary.
An HOA may have a lawyer issue a demand letter to ahomeowner who refuses to pay fees or fines. The letter should explain theamount owed and state that, if it is not paid, further legal action will betaken against them.
Liens
In more serious cases, an HOA can talk to our Arizonaassociation governance lawyers about placing a lien on a homeowner’s property.This is a legal claim on the property that may allow the HOA to block the saleof the property if fees and fines are not paid.
A lien can seriously restrict what homeowners can do withtheir property, and they may be far more willing to cooperate with an HOA if itmeans the lien will be removed.
Foreclosures
In more extreme cases, an HOA may be able to initiateforeclosure on a homeowner’s property. Under Arizona law, an HOA may place alien on a property for the homeowner’s failure to pay required fees or fines.If the homeowners remain delinquent for at least 18 months, or if theirdelinquent fees total at least $10,000, the HOA may legally initiateforeclosure.
What Duties Does an HOAOwe to the Community?
While HOAs have a lot of rules, their job is more than justimposing restrictions. HOAs are also responsible for providing and maintainingcommunity services and amenities.
Maintaining CommunityAmenities
Communities and neighborhoods often provide certainamenities to homeowners. For example, a public park, tennis courts, pools, oreven a community lounge or clubhouse may be funded and maintained by the HOA.
HOAs also provide for the upkeep of public areas around thecommunity. Landscaping, security in gated communities, and infrastructure suchas water and sewage may fall under the HOA’s responsibility.
Fiduciary Duties
Community services and amenities rarely come cheap, and HOAsuse the fees and fines paid by homeowners to fund necessary maintenance andupkeep. As such, HOAs owe a legal fiduciary duty to homeowners.
The HOA must maintain these funds for the benefit of thecommunity. If HOA board members mismanage the funds or steal from them, theymay face serious legal repercussions.
Legal Transparency
HOAs owe legal transparency to homeowners. Not only shouldall important legal documents about the HOA (e.g., articles of incorporation,CC&Rs, bylaws) be made publicly available to community members, but theyare also permitted to vote for board members.
If a community does not like the rules or believes certainboard members are not doing a good job, they may vote for new board members atthe next election.
Does an HOA in ArizonaNeed Help from Lawyers?
HOAs are legal entities responsible for creating andenforcing rules and restrictions for homeowners. As such, they should seekadvice from attorneys to make sure that they comply with the law. They shouldalso seek legal representation if legal action is necessary to enforce therules.
Creating CC&Rs
When an HOA is first formed, it must file covenants,conditions, and restrictions along with its articles of incorporation.Community developers must consider what they want the community to be and howCC&Rs can help them achieve it. However, these rules must comply withexisting laws.
For example, CC&Rs generally cannot restrict certaingroups of people from buying homes in the community and becoming part of theHOA, as this is blatantly discriminatory and a violation of various state andfederal laws.
Whatever CC&Rs an HOA is looking to create, it shouldseek advice from an experienced attorney to make sure the rules are legal andenforceable.
Handling Legal Disputes
Unfortunately, HOAs sometimes must deal with legal disputeswith homeowners. Someone in the community might not want to follow the rules,refuse to pay fees or fines, or even cause damage to community property andamenities.
An HOA might be sued by an angry homeowner. Alternatively,the HOA may sue a homeowner for causing damage to community amenities or some otherviolation. Either way, the HOA needs legal representation and advice.
Following LegalProcedures
When enforcing the rules, HOAs must navigate the correctlegal channels. They cannot enforce rules arbitrarily or use methods that areillegal, unusual, or mean-spirited. This is just another reason why an HOAshould have legal representation.
An attorney can guide the HOA through proper legalprocedures and protocols to enforce the rules in a way that is fair and doesnot alienate the HOA from other homeowners in the community.
FAQs About HOA Laws andRules in Arizona
Do Homeowners Have toJoin an HOA in Arizona?
HOAs may already exist before someone buys a home.Generally, the HOA is a part of the purchase agreement when someone buysproperty, meaning they are contractually obligated to abide by the HOA’s rulesand pay any required fees. If a person does not want to be a part of an HOA,they may be out of luck, as homeowners usually cannot opt out of HOA membershipif it is included in their property deed.
Can Homeowners Sue anHOA in Arizona?
Yes. HOAs owe various legal duties to homeowners. Ifhomeowners within the community feel that a violation has occurred, one or moreof them may seek legal representation and sue the HOA. For example, if the HOAis suspected of embezzling funds or enforcing discriminatory CC&Rs,homeowners may sue.
Are HOAs Allowed toChange the Rules?
Yes. HOA may alter their conditions, covenants, andrestrictions, and their bylaws. However, altering the rules often requiresaltering the founding documents of the HOA, and there are legal proceduresinvolved. If an HOA wants to alter the rules, it may need help from anattorney.
What Happens if aHomeowner Refuses to Pay HOA Fees or Fines?
If a homeowner is delinquent with fees or fines, the HOA mayhire an attorney to help them recover the money owed. An attorney may begin bysending the homeowner a demand letter outlining the amount owed, the paymentdeadline, and what will happen if payment is not made. If the demand letter isignored, the HOA may initiate more formal legal action, such as a lawsuit,against the homeowner.
Do HOAs Have to Have aLawyer?
While an HOA is not required to have a lawyer on hand at alltimes, an attorney is necessary under various circumstances. First, developersseeking to establish a new HOA should seek help from a lawyer to make sure theHOA’s proposed rules and bylaws are legal and enforceable.
Second, HOAs should have a lawyer they can go to when legaldisputes with homeowners arise.
Contact Our ArizonaAssociation Governance Attorneys for Help Now
Ask our Arizona association governance lawyers for a privatelegal review by calling Halk,Oetinger, and Brown at (602) 759-9205.
