It’s no secret that Arizona homeowners associations (“HOAs”) hold tremendous power over homeowners. It’s also no secret that many HOAs, HOA boards, and their management companies abuse that power when dealing with homeowners. Unlike homeowners associations, which can issue fines and impose liens on homeowners’ properties, homeowners have few options to enforce their rights when an Arizona HOA is asserting power unlawfully or failing to adhere to its obligations under the governing documents and Arizona statutes. Homeowners do, however, have the ability to sue an Arizona HOA when other efforts to resolve a dispute have failed.
Homeowners associations are intended to make the communities they govern a better place to live by caring for common areas and amenities and holding all property owners to the rules and regulations they have agreed to live by. By doing so, HOAs should help maintain and enhance property values and serve to equally benefit all the homeowners in the community.
Homeowners associations have broad powers, which are primarily derived from the community’s Declaration of Covenants, Conditions, and Restrictions. Other sources of power include the bylaws, design guidelines or architectural rules, and other rules and regulations that may be adopted by the board of directors. These documents typically empower HOAs to regulate land usage and pursue enforcement of rules through fines, liens, and/or legal action when necessary. But these governing documents can also empower homeowners, who can pursue legal claims by filing lawsuits to compel the performance of the HOA.
In addition to rights and obligations arising under an association’s governing documents, Arizona has adopted the Arizona Planned Community Act and the Arizona Condominium Act that provide additional protections for homeowners. Sometimes these protections override the powers given to the HOA in its community documents. Arizona common law, derived from decisions of Arizona courts, also place restrictions upon HOA power that apply to all homeowners associations.
Unfortunately, HOAs don’t always do what they are supposed to do. Sometimes disagreements arise from an HOA’s refusal to fairly and equitably evaluate architectural improvement requests. Other disputes often related to uneven enforcement efforts - either in the form of dissatisfaction with an association failing to enforce certain rules, or disagreements over the interpretation of the rules.
When disputes with an HOA arise homeowners do have options to ensure that their HOA is acting in the community’s best interest and is not acting unlawfully with respect to enforcement efforts against individual homeowners.
One thing many homeowners consider is withholding payment of assessments based on the theory that if the HOA is not providing services it should be providing then it is not entitled to collect assessments from homeowners. To be clear, homeowners should never withhold assessments for this or any other reason. There is no legal justification for withholding assessments and by doing so homeowners cede the legal and moral high ground to the HOA, making it harder for homeowners to prevail in a dispute about the HOA’s legal violations.
When a homeowner or group of homeowners becomes dissatisfied with the actions or failures of a homeowners association, they should consider other options to resolve the dispute before filing a lawsuit. Often, the easiest thing to do is to remove the board members who are causing the problems. An association’s bylaws often include guidelines for removing board members, and both the Planned Community Act and the Condominium Act include a uniform process to remove board members. That statutory process requires the circulation of a petition calling for a special meeting to vote on the removal of one or more board members. To compel such a meeting, the petition must usually be signed by 25% of the homeowners entitled to vote in the community. In larger HOAs the petition must only be signed by 10% of the homeowners entitled to vote. At that special meeting, it only takes the vote of a simple majority of those present at the meeting to remove the board member or members. Because HOAs often contest these removal requirements and because the rules that must be followed can be difficult to understand, it is a good idea for homeowners to consult with and/or retain an attorney to help manage this process.
If homeowners are not dissatisfied with the actions of the board but instead have objections to the restrictions set forth in the Declaration of CC&Rs they may seek to amend the Declaration to conform with the wishes of the broad community. The CC&Rs typically include amendment provisions that require two-thirds or more of the homeowners in the community consent to an amendment. Absent such an amendment provision, the Declaration can still be amended by unanimous consent. In reality, amending a Declaration of CC&Rs is difficult to do because it can be hard to garner enough support to pass such an amendment. In addition, HOAs or other homeowners may challenge amendments for a number of reasons. That being the case, meeting with an experienced HOA attorney is advised before pursuing amendment of an association’s Declaration of CC&Rs.
If all else fails and an association fails and refuses to adhere to its legal obligations, homeowners can file a lawsuit against their HOA. In some circumstances such a lawsuit can also be filed against individual board members and/or other homeowners. Such lawsuits might ask the Court to issue an order or declaration that a statute or community rule has been violated and order the HOA to come into compliance. In most cases involving disputes with an HOA, the prevailing party is also entitled to recover their attorneys’ fees and costs incurred in bringing such action. Of course, if a homeowner does not prevail in the lawsuit, they may be compelled to pay the HOA’s legal fees.
Most lawyers will advise homeowners that filing a lawsuit against an HOA should be viewed as a last resort after exhausting every other option. Lawsuits are expensive and can drag on for months and years in the court system before reaching a final resolution. But when all else fails, the law does empower homeowners to sue an HOA. Before considering this option, homeowners should meet with an experienced HOA lawyer to discuss all their options.