Arizona HOAs are obligated to enforce the restrictions contained in the Declaration of Covenants, Conditions and Restrictions (CC&Rs) and Rules and Regulations. Enforcing these restrictions can help preserve property values within communities. Perhaps the most widely known method of enforcement is the assessment and collection of fines.
HOAs may send friendly reminders and violation notices to those homeowners who break the rules. Arizona HOAs may also impose reasonable fines for violations of the restrictions and rules. The costs of these fines may depend on the nature of the violation and whether the homeowner has committed the same or similar violations before. If fines go unpaid, the HOA can and should seek help from a lawyer to enforce the rules and collect any money owed.
For a confidential case review from our Arizona HOA assessment collection attorneys at Halk, Oetinger, and Brown at (602) 759-9205.
When Can an HOA Fine a Homeowner in Arizona
HOAs must comply with specific laws when setting fine schedules and imposing fines on community members. If you are unsure whether your HOA can legally impose a certain fine, ask your attorney for help.
Disclosing the Fine Schedule
An HOA may not fine homeowners for violations of CC&Rs unless a fine schedule has been determined and disclosed to the community. Homeowners within the HOA must be informed of what constitutes a violation and the types of fines that may be imposed. If a fine schedule has not been disclosed to the community, the HOA likely cannot legally impose fines.
Advanced Written Notice
When a homeowner commits a violation, they must be sent advanced written notice. The notice should explain what the violation is and when it was observed. The notice must also include information about the fine and when it must be paid.
A notice must also include information about how long a homeowner has to cure the violation before the fine is officially imposed. For example, if an HOA wants to fine a homeowner for failing to cut their grass, they must give the homeowner a reasonable amount of time to cut it or face fines.
Homeowner’s Right to Request a Hearing
Before demanding payment of a fine, an HOA must allow homeowners to have a hearing about the violation and plead their case. While many homeowners might not demand a hearing – most would rather just cure the violation or pay the fine – they must still be allowed to do so.
Imposing Late Fees
If an assessment is imposed and the homeowner fails to pay on time, the HOA may assess late fees, but only if certain conditions are met and under specific rules.
Under Arizona law, a payment is not considered late until at least 15 days have passed since the date the payment was due. Late fees may not exceed $15 or 10% of the total unpaid assessment, whichever is greater.
Late fees may not be imposed for late assessments unless the HOA first provides the homeowner with notice of the late payment.
Fine Policies & Notice Requirements
Before HOAs can impose fines for noncompliance with regulations, they should ensure that the CC&R or community rules include provisions granting the HOA the authority to issue fines for violations.
Establishing Fine Policies
To fairly and uniformly enforce these fines, community associations need to have a fine policy laying out the process by which fines in a particular community shall be imposed.
These fine policies often provide information and rules on the number of notices, the time between notices, the time to cure a violation, and the monetary penalty for each violation notice.
Presumptive Policies
This law firm advises a “presumptive” policy that the HOA can follow when imposing fines for run-of-the-mill violations. Such a policy may allow the HOA to deviate from standard procedures to address more severe violations.
For example, a policy that provides 14 days to cure a violation before a fine is imposed does not make sense for violations like loud parties. Parties are usually over by the morning, and with a 14-day time to cure, the HOA could not address that behavior.
Reasonableness of Fine Policies
HOAs may assess “reasonable” fines. Imposing a $2,000.00 fine for a homeowner’s failure to remove weeds from their property is unreasonable and would not be enforceable.
The reasonableness element is subject to judicial discretion and depends on the particular facts of the case. The legal standard comes from the case of Tierra Ranchos v. Kitchukov, where the court obligated HOAs to use their powers reasonably. Reasonableness should be the primary focus when an HOA creates or enforces its fine policy.
Sufficiency of Fine Policies and Schedules
Fines must also be sufficient to compel the homeowner to comply. Imposing a $25.00 monthly fine for storing a boat on the property is likely insufficient. It is more expensive for that homeowner to pay for off-site storage. It makes financial sense for that homeowner to simply pay the fine and keep breaking the HOA’s rules. The fine policy must allow for the HOA to fine a larger amount.
Collection of HOA Fines
Once an HOA has adopted a fine policy, it may begin prosecuting enforcement.
Evidence of the CC&R Violation
Successful fine cases need documentation and adherence to the fine policy. Letters and notices are great, but a picture is truly worth a thousand words in fine cases.
Put yourself in the judge’s position who reviews a case with well-documented letters and notes detailing fines for weeds. The words alone do not give the judge a sense of the violation. Is there a single weed in a pristinely manicured lawn, or are the rocks in the front yard no longer visible due to the severity of the weeds? Showing a photo of the violation provides tremendous leverage to prove the reasonableness requirement for the HOA’s use of power.
HOA Documentation
The best practice for HOAs is to have documentation, which includes:
- Clear photographs of the violation(s),
- Detailed record of violation,
- Violation notices sent in accordance with the fine policy,
- Violation fines assessed in accordance with the fine policy, and
- Record of notices given.
Suing to Collect Fines
As CC&Rs are a legally binding contract, a breach gives an HOA the right to file a lawsuit against homeowners.
Unlike assessments, fines cannot be recovered through foreclosure. Instead, an HOA may obtain a judgment against the violating homeowner and attempt collection through settlement, garnishment, or by placing a judgment lien upon the subject property. Lawsuits are a last resort, and most fine-related issues are resolved after an initial notice.
It is best to seek counsel from an HOA attorney regarding the best approach to enforcing fine compliance and options for collecting attorney fees for violations.
FAQs About How Arizona HOAs Assess Fines for CC&R Violations
How Do HOAs in Arizona Decide How Much Fines Are Worth?
It is up to the HOA Board to decide how much fines are worth, but there are restrictions on what they can do. Fines must be reasonable, and HOAs cannot impose exorbitant fines for minor violations. However, HOAs must be permitted to impose fines large enough to deter violations and ensure compliance from homeowners.
How Does an HOA Prove a Violation Occurred to Assess a Fine?
To impose a valid fine, an HOA must have evidence of the violation, and it should be prepared to provide that evidence to the homeowner. For example, if an HOA wants to impose a fine for uncut grass, a photo of the homeowner’s unkept lawn may be necessary. Information about the date and time the violation was observed may also be necessary.
Are HOAs Supposed to Provide Homeowners with Information About Fines?
Yes. An HOA must disseminate a fine schedule to the community before imposing any fines. If the fine schedule is ever adjusted, a new schedule must be provided to the community as soon as possible.
What Must Happen Before an HOA Fines a Homeowner?
Before an HOA can impose a fine, the HOA must provide written, advance notice of the violation to the homeowner and a period of time in which the homeowner can cure the violation, if possible, before the fine is officially imposed.
Also, the HAO must allow the homeowner to have a hearing about the fine and argue their case.
What if a Homeowners Fails to Pay a Fine On Time?
If a homeowner fails to pay on time, the HOA may impose late fees according to strict Arizona laws. Late fees may be imposed only if the homeowner is at least 15 days late with payment. The late fee may not exceed $15 or 10% of the total late payment, whichever is greater.
What Can an HOA Do if a Homeowner Refuses to Pay Fines?
If a homeowner refuses to pay fines that have been fairly and legally imposed, the HOA can hire a lawyer to pursue legal action against the homeowner. The HOA may collect fines and fees through lawsuits, settlements, or by garnishing the homeowner’s wages.
Can an HOA Initiate Foreclosure on a Homeowner’s Property to Recover Unpaid Fines?
No. Only assessments, which are mandatory fees that all homeowners within an HOA must pay, may be collected through the foreclosure process. Fines are excluded and must be collected in another way.
Can an HOA Place a Lien on a Homeowner’s Property to Collect Unpaid Fines?
Yes. When a lien is placed, it clouds the title to the property, making it very difficult for the homeowner to sell the property until the lien is removed. If the homeowner wants to sell the property or just wants to clear the title, they must pay the fine.
Is an HOA Allowed to Sue a Homeowner for Unpaid Fines?
Yes. Fines are generally described in the HOA’s CC&Rs, which are part of a legally binding contract between the HOA and the homeowner. If the homeowner fails to pay fines, they may be in breach of contract, giving the HOA the right to sue.
Are Homeowners Allowed to Challenge the Imposition of Fines by an HOA in Arizona?
Yes. Homeowners must be allowed to have a hearing or otherwise challenge fines. If a homeowner is not informed of this right, they may later challenge the fines, creating legal trouble for the HOA.
Work with an Experienced HOA Attorney
For a confidential case review from our Arizona HOA assessment collection attorneys at Halk, Oetinger, and Brown at (602) 759-9205.
