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Arizona HOA Board Members

Insurance Essentials for HOAs: A Guide to Safeguarding Your Community

Homeowners’ associations play a pivotal role in the upkeep of communities. From landscaping to shared amenities, HOAs are responsible for numerous tasks that enhance residents’ living experience and preserve property values. A large part of these responsibilities is planning for the long-term viability of the community. This is why finding and maintaining appropriate insurance coverage for any association or planned community is essential. In this article, we will delve into the types of insurance HOAs typically need, the importance of the right insurance coverage for your community’s needs, and how to strike the right balance between utilizing that insurance coverage and avoiding potential pitfalls.

Types of Insurance HOAs Typically Need

In managing a homeowners association (HOA), it is crucial to have a comprehensive insurance portfolio that addresses the unique risks associated with community living and management. Insurance is not just a legal requirement but a critical component in safeguarding the financial health and stability of the association. From covering legal claims arising from injuries on common property to protecting the HOA’s physical assets and the individuals who serve on its board, various types of insurance are essential for the smooth operation of an HOA. Together, these coverages create a safety net that helps ensure the ongoing viability and success of the association. Here are the typical types of insurance coverage needed for planned communities and associations:

General Liability Insurance: General liability insurance is the cornerstone of an HOA’s insurance portfolio. HOA-sponsored events or bodily injury on common property are covered under this coverage. In a litigious society, having this coverage can safeguard the HOA from substantial financial burdens due to legal claims.

Property Insurance: Property insurance extends a protective shield over physical structures owned by the HOA. Whether it’s the community clubhouse, tennis courts, or landscaping features, property insurance ensures that unexpected events like fires, vandalism, or severe weather don’t lead to insurmountable financial strain for the association.

Directors and Officers (D&O) Insurance: The individuals who serve on an HOA board shoulders considerable responsibilities. D&O insurance is like a safety net for them, offering protection in case they face legal action due to decisions they’ve made on behalf of the HOA. This coverage is vital for attracting competent and committed board members who might otherwise shy away from potential legal exposure.

Fidelity Insurance: This coverage protects the HOA against embezzlement, theft, or other dishonest acts committed by employees or board members. Financial stability is maintained through the recovery of lost funds.

Workers’ Compensation Insurance: If the HOA employs staff or contractors, workers’ compensation insurance is essential. Employees or contractors who are injured on the job are covered for medical expenses and lost wages.

Securing the appropriate types of insurance is not just a matter of compliance, but also a demonstration of prudence and responsibility by the HOA board. HOAs are required under Arizona law and their declarations to maintain adequate insurance. Some declarations have very specific coverage requirements. Keep in mind, it is essential to consult with a professional insurance agent or broker who specializes in HOA insurance to ensure that all potential risks are adequately covered as well as the HOA attorney. By being proactive and comprehensive in its approach to insurance, an HOA can protect its interests, members, and employees, ensuring a safe and secure community for all.

The Importance of Insurance for HOAs: Safeguarding the Community’s Future

HOAs are not just caretakers of a neighborhood’s aesthetic appeal; they are guardians of its essence, responsible for curating shared spaces and upholding property values. This multifaceted role brings with it numerous challenges and potential pitfalls, making insurance an essential protector of the community’s future. Insurance mitigates financial vulnerabilities, preserves community harmony, empowers HOA leadership, fosters a culture of longevity, and helps balance utilization and pitfalls.

  • Mitigating Financial Vulnerabilities: HOAs operate as microcosms of interconnected lives, with shared spaces, amenities, and common property forming the fabric of community living. This network of shared resources exposes the association to potential liabilities, such as slip-and-fall incidents by the pool or burst pipes damaging multiple units. Insurance shields this vulnerability, ensuring that unforeseen events do not result in a financial burden for residents or the HOA. It covers legal expenses, repair costs, and liability claims, enabling HOAs to navigate uncertainties without compromising their mission.

  • Empowering HOA Leadership: HOA board members serve out of a commitment to their community, but the weight of their decisions can lead to apprehension about personal liability. Directors and Officers (D&O) insurance reassures board members, enabling them to make decisions in the community’s best interest without fearing legal repercussions. This encourages creative, strategic, and decisive thinking for the neighborhood’s betterment.

  • Fostering a Culture of Longevity: Thriving communities withstand the test of time, with residents taking pride in their surroundings and maintaining robust property values. Insurance is pivotal in nurturing this longevity. For example, significant property damage requiring extensive repairs could lead to delays or subpar fixes without insurance, eroding property values. With insurance, the HOA can promptly address issues, maintaining the community’s allure and protecting residents’ investments.
  • Balancing Utilization and Pitfalls: While insurance is crucial, HOAs must avoid over-reliance, as frequent claims can increase premiums or risk coverage cancellation. To balance utilization and pitfalls, HOAs should invest in preventative maintenance, maintain an emergency fund, implement safety measures and guidelines, and carefully evaluate the necessity of each claim. Consulting legal experts before filing an insurance claim is always advisable to ensure vigorous legal defense of the association’s rights and interests.

It should be clear that finding the right insurance coverage is vital for HOAs, enabling them to mitigate financial vulnerabilities, preserve community harmony, empower HOA leadership, and foster a culture of longevity. Regularly reviewing insurance coverage and consulting experienced HOA attorneys help to ensure that any association and its members enjoy the benefits of a safe and secure community far into the future.

Strategically Navigating Insurance for a Thriving HOA Community

Insurance coverage is a vital component of a well-managed HOA. It safeguards the association’s financial stability, protects board members from legal challenges, and ensures that the community’s assets are preserved. While insurance should be used when necessary, balancing utilizing coverage and minimizing unnecessary claims is essential. By implementing preventative measures and practicing responsible claim management, HOAs can effectively navigate the world of insurance and continue to provide a thriving and secure living environment for their residents. Halk, Oetinger and Brown routinely work with associations on insurance-related issues from determining what needs to be covered to representing the association’s interest throughout any claims or litigation. Schedule an initial consultation with our firm using the contact us page of our site here.

Halk, Oetinger, and Brown shares this article for informational purposes only, and it does not create an attorney-client relationship.

Categories
Arizona HOA Laws

A Comprehensive Guide to Navigating HOA Foreclosures Responsibly

Homeownership in planned communities and condominiums often comes with the responsibility of being a part of the broader association. While HOAs play a crucial role in maintaining the aesthetics and functionality of these communities, they also have the authority to enforce rules and collect assessments from residents. In cases where homeowners fall behind on their assessments, the HOA has the right to pursue foreclosure as a last resort. In this comprehensive guide, we will delve into the intricate process of HOA foreclosures, shedding light on the regulations and steps involved.

The Basics of HOA Foreclosures

Before an HOA can initiate a foreclosure, certain conditions must be met. According to Arizona Revised Statutes (“A.R.S.”) 33-1807(A), for planned communities, and A.R.S. 33-1256(A) for condominiums, an HOA cannot proceed with a foreclosure unless there is a year of unpaid assessments or if the amount owed exceeds $1,200.00, excluding late fees and additional charges. These requirements provide Arizona homeowners with an opportunity to address their outstanding assessments and avoid the severe consequences of foreclosure.

Understanding the Impact of HOA Foreclosure

HOA foreclosures can have far-reaching consequences, affecting not only the homeowner but also the community as a whole. When a property falls into foreclosure, it can lead to a decline in property values for neighboring homes, as well as potential maintenance and upkeep challenges. Homeowners should be aware that addressing their assessment obligations in a timely manner is not only crucial for their individual property but also for the overall well-being of the community.

Considering Alternative Solutions

Prior to filing foreclosures, HOAs can file breach of contract lawsuits to encourage homeowners to pay. HOAs can then explore collection options through garnishment, however those powers were severely restricted in 2022. As a law firm specializing in HOA matters, we can provide expert guidance on negotiation and resolution strategies for resolving assessment delinquencies. Homeowners may also seek assistance from various public and private organizations that may offer assistance. These alternatives can offer homeowners the necessary respite to resolve their financial challenges while maintaining their property ownership.

The Crucial Role of Open Communication

Homeowners struggling to fulfill their assessment obligations should proactively engage with the HOA to discuss their circumstances prior to collections. Associations also need to have processes in place to make sure they are providing clear communication to any homeowners that have fallen behind on their obligations and make all reasonable attempts to work with those homeowners to get caught up on any past due obligations. Establishing a communication channel can lead to mutually advantageous agreements and avert the progression of foreclosure proceedings, which is generally best case for all parties. 

Navigating the Foreclosure Process

Foreclosure is a multifaceted process to ensure legal compliance. As a law firm specializing in HOA matters, we have the expertise to guide associations and planned communities through each step of the foreclosure process.

  • Initiation: The process commences when a homeowner fails to fulfill their assessment obligations, prompting the HOA to initiate collection actions. If the Association meets the statutory requirements, the HOA may file for foreclosure.

  • Foreclosure Judgment: Following successful legal proceedings, a foreclosure judgment is rendered. This judgment authorizes the HOA to proceed with the foreclosure sale.

  • Sheriff’s Sale: The HOA, in conjunction with the County Sheriff’s Office, schedules a Sheriff’s Sale, during which the property is auctioned to the highest bidder.

  • Redemption Period: Subsequent to the property being auctioned, the homeowner is afforded an additional six months to redeem the HOAs assessment lien and reclaim ownership of the property. This period allows the homeowner to resolve their debts and avert the transfer of property ownership.

  • Sheriff’s Deed and Ownership: If the homeowner fails to redeem the lien within the redemption period, the Sheriff’s Office issues a Sheriff’s Deed to the highest bidder, transferring ownership and the obligation to pay assessments.

The foreclosure process is intricate and demands a thorough understanding of each phase, from initiation to potential outcomes. It is imperative for HOAs to act with diligence, maintain open communication with homeowners, and explore all available options before resorting to foreclosure, ensuring a fair and equitable approach for all parties involved.

Guiding Principles for Navigating HOA Foreclosures

HOA foreclosures are intricate procedures that necessitate legal proceedings, meticulous compliance with regulations, and a comprehensive understanding of homeowners’ rights and responsibilities. Our firm has established itself as a leader in assisting Arizona’s planned communities and condominiums through the complex maze of assessment collections and HOA foreclosures. With our expertise and dedication to fair and transparent practices, both homeowners and HOAs can traverse the challenging landscape of foreclosure while aiming for fair resolutions. It is crucial to remember that foreclosure is a measure of last resort, and homeowners are urged to actively communicate with their HOA and seek legal counsel to explore alternative solutions and avert such severe repercussions.

At Halk, Oetinger, and Brown, we only represent associations and planned communities so we can assist HOAs with improvising assessment collections, considering alternative solutions for past due payments, and pursuing HOA foreclosure, if necessary. Schedule an initial consultation with our firm using the contact us page of our website here.

Halk, Oetinger, and Brown shares this article for informational purposes only, and it does not create an attorney-client relationship.

 

Categories
Arizona HOA Laws

Final Demand Letters: A Comprehensive Guide to A.R.S. 33-1807(K) Compliance

Homeowners’ associations (HOAs) and condominium associations play a vital role in maintaining the harmony and integrity of planned communities. To ensure timely payment of assessments, these associations may need to resort to a collections process when homeowners become delinquent. It is vital for board members to understand and follow the legal procedures outlined in Arizona statutes when sending a final demand letter. This article will discuss the main issues surrounding the requirements for a final demand letter and the importance of documentation in this process.  Here is what your HOA or condo association needs to know about final demand letter requirements in Arizona.

HOA Collections: Final Demand Letter Requirements Pursuant to A.R.S. 33-1807(K)

1) Statutory Disclaimer: The final demand letter must include the statutory disclaimer in ALL CAPS or in boldface type:

YOUR ACCOUNT IS DELINQUENT. IF YOU DO NOT BRING YOUR ACCOUNT CURRENT OR MAKE ARRANGEMENTS THAT ARE APPROVED BY THE ASSOCIATION TO BRING YOUR ACCOUNT CURRENT WITHIN THIRTY DAYS AFTER THE DATE OF THIS NOTICE, YOUR ACCOUNT WILL BE TURNED OVER FOR FURTHER COLLECTION PROCEEDINGS. SUCH COLLECTION PROCEEDINGS COULD INCLUDE BRINGING A FORECLOSURE ACTION AGAINST YOUR PROPERTY.

2) Certified Mail with Tracking: The letter must be sent by certified mail with tracking to provide proof the final demand letter was mailed.

3) Return Receipt Requested: The letter must also be sent return receipt requested to request the homeowner’s signature as proof of receipt. The statute does not require the homeowner’s signature, only that the final demand letter is sent return receipt requested.

4) HOA Contact Person: The letter must provide the name and contact information the homeowner can reach to resolve the assessment delinquency.

5) 30-day Waiting Period: After the letter is mailed, the HOA must wait for a minimum of 30 days to allow the homeowner an opportunity to make the necessary payment.

  • Contents of the Demand Letter
    The final demand letter should clearly state the amount of delinquent assessments owed, including any interest, late fees, and other charges applicable under the association’s governing documents and state law.

The Importance of Proper HOA Documentation

Documentation is the backbone of any legal process, including the collections procedure. Accurate and well-organized records can safeguard the HOA’s interests and provide evidence of compliance with the law. Important documents include:

  • Copies of the final demand letter, properly formatted with the statutory disclaimer.
  • Certified mail receipts and tracking information.
  • Return receipt documentation, including the United States Postal Service’s green card or electronic mailing.
  • Records of any payment receipts, communication, or agreements made with the homeowner during the process.

Condo Association Collections: Final Demand Letter Requirements under A.R.S. 33-1256(K)

Just like in planned communities, a condominium association must follow the same, specific requirements for sending a final demand letter. The association may not initiate collections until 30 days after they have provided written notice with the statutory language, as required in A.R.S. 33-1256(K).

  • Form and Delivery
    Similar to A.R.S. 33-1807(K), the final demand letter for condominium associations must be sent by certified mail, return receipt requested, to provide evidence of mailing. This ensures that the HOA provides notice of the association’s intent to pursue collections.
  • Opportunity to Cure
    The final demand letter must include the HOAs contact person to discuss payment of the delinquency within that 30 day period. The HOA may send the account to collections if the assessment debt is not resolved timely.

Navigating Collections with Confidence: How Our HOA Law Firm Supports Associations

Complying with the legal requirements for final demand letters is essential for both HOAs and condo associations when initiating collections proceedings. By following the specific statutes, including A.R.S. 33-1807(K) for HOAs and A.R.S. 33-1256(K) for condo associations, and maintaining comprehensive documentation, associations can protect their interests, minimize disputes, and pursue collections in a legally compliant manner. Seeking guidance from experienced HOA attorneys can provide valuable assistance in navigating complex situations and ensuring full compliance with the law.  Contact the attorneys at Halk, Oetinger, and Brown for an initial consultation using the form on our contact us page today.

Halk, Oetinger, and Brown shares this article for informational purposes only, and it does not create an attorney-client relationship.

Categories
Association Legal News

The Crucial Importance of Reserve Funds for HOAs: Lessons from the Surfside Tragedy

In the aftermath of the tragic Surfside condominium collapse in Florida, the relevance and importance of Homeowners Association (HOA) reserve funds are shown in a new light. As we piece together the lessons from this unfortunate incident, it becomes abundantly clear that adequately funded reserve accounts are a vital part of responsible HOA management.  Here are the most important things to understand about HOA reserve funds and how to properly plan for emergency needs in your association.

What is an HOA Reserve Fund?

An HOA reserve fund is a pool of money set aside by the association to cover the costs of anticipated major repairs, replacements, and improvements in the community. This could include repairing shared roads, replacing roofs on community buildings, updating community amenities, and more. These funds ensure that the HOA can afford to maintain and improve shared assets without the need for sudden, large assessments on homeowners. These funds help the Association to plan for large expenses and to preserve the property values within the HOA.

Calculating HOA Reserve Fund Needs

Determining the right amount for your HOA’s reserve fund requires careful calculation and thoughtful forecasting. All HOAs should hire a reserve analyst to develop a reserve study. The primary elements that a reserve analyst will consider include:

  1. An inventory of the shared assets that the HOA is responsible for maintaining.
  2. An estimation of the remaining useful life of each of these assets.
  3. The projected cost of maintaining, replacing, or repairing these assets.

The reserve study will help the HOA to determine the amount necessary to hold in reserves. An ideal reserve fund should have enough money to cover these projected costs without causing significant financial burden to homeowners in the form of unexpected assessments.  If your association is unsure if your reserve fund has adequately saved for future expenses, it is vital to meet with qualified financial planners and an experienced HOA attorney for a complete review.  Reserve studies should be updated every 3-5 years.

What HOA Reserve Funds Can Be Used For

HOA reserve funds are specifically meant for substantial, long-term projects, not for routine expenses like lawn maintenance, utility bills, or other operational costs. The key purpose of these funds is to ensure the financial stability of the HOA and to facilitate the smooth management of the community’s common areas and amenities. Reserve funds should be prudently invested, in vehicles that preserve the principal. 

Lessons from the Surfside Tragedy

The Surfside condominium collapse in 2021 offers a sobering look at what can go wrong when HOAs neglect to appropriately fund and use their reserve accounts. The condominium, plagued by years of structural issues, failed to adequately address these problems due to a lack of funds. Over the years, the problems compounded and, tragically, resulted in the building’s eventual collapse and the tragic loss of many lives. This incident underscores the importance of proactively addressing maintenance issues and adequately funding reserve accounts to ensure the safety and well-being of all community residents.

The Importance of Legal Consultation for Arizona HOAs

Having an experienced HOA law firm review your current reserve fund strategy and emergency planning is crucial. Legal professionals specializing in HOA law can provide guidance on state requirements, and ensure that the board is meeting its fiduciary duties.

HOA reserve funds play a vital role in the preservation of a community’s integrity and the protection of its residents’ safety and financial well-being. The Surfside tragedy serves as a stark reminder of what can happen when reserve funds are not appropriately managed. We urge all HOAs to reassess their current reserve fund planning and consider seeking legal counsel to ensure they are sufficiently prepared for future needs.  Contact our firm today to schedule an initial consultation with our HOA attorneys by submitting your information on our contact us page.

Halk, Oetinger, and Brown shares this article for informational purposes only, and it does not create an attorney-client relationship.

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Legislative Updates

2023 Legislative Update

As the end of the 2023 Legislative Session nears its end, Governor Hobbs has signed several pieces of legislation that affect planned communities and condominiums.  On April 18, 2023, Governor Hobbs signed legislation that regulates whether a planned community has the authority to regulate public streets within the community.  Find more details about that new law here.  The additional new laws are as follows:

Flag Display:  This new legislation applies to both planned communities and condominiums.  It provides that associations may not prohibit the display of any historic version of the American Flag, including the Betsey Ross Flag, without regard to how the stars and strips are arranged on the flag.  Under the current law, associations also may not prohibit the display of the American Flag, the POW/MIA flag, the Arizona State Flag, an Arizona Indian Nations Flag, the Gadsden Flag, a first responder flag, and a blue star or gold service flag. This law firm is happy to assist with determining if any flag displayed by an owner is protected by this statute.

Political Activity: This new legislation applies to both planned communities and condominiums.  It provides that, while an association may not prohibit door-to-door political activity, an association may prohibit a person who is not accompanied by a member or resident of the association from entering the association, if the association restricts vehicular or pedestrian access.  This will allow the association to require any person who wishes to conduct door-to-door political activity within a gated or otherwise closed community to be accompanied by a member or resident.  Currently, an association is also permitted to restrict political activity from sunset to sunrise, and to require identification tags for each person engaging in the activities, as well as the prominent display of the candidate or ballot issue.  This law firm is happy to assist with determining if a specific type of door-to-door political activity is permitted by this statute. 

Removal of Directors:  This new legislation applies to both planned communities and condominiums.  It is related to the process by which the members may vote to remove a director from the Board.  Currently, upon receipt of a petition calling for the removal of a director signed by 25% of the members in an association with 1,000 or less members, or by the lesser of 10% or 1,000 members in an association with more than 1,000 members, the Board must call, notice, and hold a special meeting to vote on the removal within 30 days of receipt of the petition.  This new law provides that if a valid petition is received, and the Board fails to call, notice, and hold the special meeting within 30 days of receipt of the petition, the members of the Board shall be deemed to have been removed from office effective at midnight of 31st day.  Under current law, there is no penalty for a failure to hold the meeting within the statutory timeline. This new law will require Boards to act promptly upon receipt of a valid petition.  If any association receives a petition calling for the removal of a director or directors, this law firm is happy to assist with ensuring that the Board conforms to the statutory timeline, as well as preparing the necessary documents for the special meeting.

Halk, Oetinger, and Brown routinely assists Arizona planned communities and condominium associations with reviews of how new legislation could impact their community.  Schedule an initial consultation on our contact us page to meet with one of our experienced HOA attorneys.

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Association Legal News Legislative Updates

LEGISLATIVE UPDATE: Arizona HOAs and Public Streets

On April 18, 2023, Governor Hobbs signed legislation that regulates whether a planned community has the authority to regulate publics streets within the community.  The law does not apply to condominiums. This new law will go into effect 91 days after the legislative session concludes.

Under current law, planned communities have the authority to regulate the public streets within the association if the community’s declaration was recorded before and including December 31, 2014.  Planned communities in which the declaration was recorded after December 31, 2014 may not enforce public street parking, even if allowed by the governing documents. 

This new law provides that, for any planned community for which the declaration was recorded before January 1, 2015, and that currently regulates the public streets, the community may no longer regulate the public streets unless:

  1. The association calls a meeting of the membership no later than June 30, 2025.  The purpose of the meeting is vote on the question of whether to continue to regulate the public streets within the community.  If the number of owners voting at the meeting constitutes a quorum of the membership, and a majority of the votes cast are in favor of continuing to regulate the public streets, the community may continue to regulate and enforce violations on the public streets.  The Board of Directors must then record a notice confirming that the association will continue to regulate the public streets in the county recorder’s office. 
  1. If the vote fails, or the community declines to hold a vote, the association will no longer have the authority to regulate the public streets within the association. 

This law does not apply to public one-way streets.  It also does not apply to any private streets within planned communities. Associations may continue to regulate private roadways and enforce violations of the governing documents. 

This law firm recommends that any planned community for which the declaration was recorded before January 1, 2015, and that currently regulates public streets within the community begin discussing whether it wishes to continue to regulate the public streets.  Boards may consider sending out a survey to its members to gauge interest in continuing to regulate public streets.  If any community wishes to continue to regulate the public streets it must call a meeting to vote on the matter no later than June 30, 2025.  Associations should keep this deadline in mind.  Our firm is happy to assist with reviewing the governing documents, the voting documents, and if passed, the notice to be recorded with the county recorder.

Schedule an initial consultation with the firm to review how this legislation could impact your association using the form on our contact us page here.

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Arizona HOA Board Members

Tips for Improving HOA Rule Compliance

Homeowners associations play a crucial role in maintaining the visual appeal, functionality, and overall value of the communities they govern. However, it can sometimes be challenging to encourage members to adhere to the rules and regulations set forth by the HOA. As an experienced HOA law firm, we understand this challenge and are here to help Arizona HOAs with some simple tips. In this blog, we will cover the best tips to improve HOA rule compliance and foster an environment that encourages all members to contribute to the betterment of the community.

Clear Communication

Ensure that your HOA’s rules and regulations are clearly communicated to all members. Provide them with a copy of the rules upon moving into the community and make it easily accessible online. Moreover, it’s essential to regularly remind members of the rules through newsletters, emails, or community meetings.  Finding simple ways to summarize the most important rules and sharing them with the community in multiple formats will help ensure that all members are aware of the rules.

Keep Rules Reasonable

HOA rules should be reasonable and necessary to maintain community standards. Avoid creating unnecessary or overly restrictive regulations that may lead to resentment among members. Review your rules periodically to ensure they remain relevant and fair.  It is also a good idea to regularly review the community rules and regulations with the community to gauge what rules might be getting pushback from members. For example, in a younger community with many children and families, a rule that prohibits basketball hoops may not fit the demographics of the community.

Foster a Sense of Community

A strong sense of community encourages members to follow the rules out of respect for their neighbors. Organize events, meetings, or social gatherings that allow residents to build relationships and connect with one another. A cohesive community is more likely to adhere to established guidelines.  HOA board members can only do so much.  It is important to encourage members to help other members understand and follow community rules and regulations. 

HOA Board Members Lead by Example

It might seem obvious, but HOA board members need to model the behavior they expect from the community. By adhering to the rules and maintaining a respectful and considerate attitude, board members can set a positive example for the rest of the community.  Board members should take special care to make sure they are adhering to the community rules and providing an example to other members.

Find Ways to Offer Positive Reinforcement

Recognize and acknowledge residents who consistently follow community rules. You may consider organizing an annual award ceremony or sending personal notes of appreciation to those who demonstrate exemplary adherence to the regulations. This will encourage a positive atmosphere where rule-following becomes a point of pride.  Even the simple act of taking the time to thank those active community members that set a good example for others and keep their property in great shape can go a long way towards encouraging the whole community to comply with the rules.

Enforce Rules Fairly and Consistently

One of the most critical aspects of rule enforcement for any HOA is consistency. Members should feel confident that the rules apply equally to everyone, including board members. If violations occur, address them promptly and fairly, following the procedures outlined in your governing documents.  Board members should take special care to address any potential violations or issues with the rules in a fair and consistent manner. 

Implement a Transparent Violation and Appeals Process

A well-defined violation and appeals process ensures fairness and transparency, which are vital to maintaining community trust. Clearly communicate the process to all members and ensure it is easily accessible. This will help members feel more comfortable in raising concerns and resolving issues in a timely manner.  HOA board members should take some time to regularly review the violation and appeals process with its HOA attorney to see if there are simple ways for the process to be improved or changed.

Provide Education and Training

Educate and train new board members on the importance of enforcing community rules and their role in the process. This will ensure that they are well-equipped to handle any situations that may arise during their tenure.  HOAs that leverage new technology can make this process simple and accessible for all members.  It has never been easier to create videos and guides that can be posted online for all members to access whenever they want.  A quick video from board members on why certain rules were created, how they are enforced, and where members can get any questions addressed can help all community members understand their role in making the neighborhood a better place to live.

Board Members Need to Be Open to Feedback

Encourage open dialogue and allow members to voice their concerns or suggestions regarding community rules. This will help you identify potential issues and make necessary adjustments. Being responsive to feedback demonstrates that the board values the input of community members.  When all community members feel included in the process and comfortable with the reasoning behind any rules or regulations, it will be substantially easier to get members to comply with the rules.  HOA board members that are approachable and open to feedback help give community members a true sense of ownership in the process.

Review HOA Rules and Regulations with an HOA Law Firm

Encouraging HOA members to follow community rules is a vital aspect of maintaining a harmonious and well-functioning neighborhood. By implementing these best practices, your HOA can create a positive environment where residents feel a sense of responsibility to adhere to community guidelines. Remember, clear communication, fairness, and fostering a sense of community are essential to achieving this goal.  Regularly reviewing your HOA rules and regulations with an experienced HOA law firm helps to make sure that your community is following local, state and federal laws, while also ensuring the rules are reasonable and enforceable.  Halk, Oetinger, and Brown only represents Arizona associations and planned communities.  Our firm can help make sure your rules and regulations are up to date and assist with a plan to encourage members to follow the HOA rules.  Schedule an initial consultation with our firm today by submitting the contact us form here.

Categories
Arizona HOA Laws

Understanding Kalway v. Calabria Ranch HOA

Kalway v. Calabria Ranch HOA LLC arose from a dispute between a homeowner, Maarten Kalway, and his homeowners association, Calabria Ranch HOA LLC.  Kalway is a case that affects all Arizona HOAs. The dispute was over amendments to the governing documents. The Arizona Supreme Court ruled that the Association did not provide proper notice to, or obtain consent from, Mr. Kalway. Ultimately, the Court ruled those provisions in the amendments that were not “reasonable and foreseeable” are invalid.

The conflict leading to the Kalway was extremely fact specific and unique to Calabria Ranch Estates.  Calabria Ranch Estates consists of only six lots, of which Kalway owned two.  The other four lot owners apparently conspired together to pass multiple amendments disproportionally affecting only Kalway’s much larger property.  Kalway received neither notice nor an opportunity to vote for or against the amendments.   Kalway was not aware that the other owners were making efforts to amend the declaration. 

Kalway argued that the amendments were invalid because he did not receive notice, and that unanimous consent was required for new provisions. The Supreme Court agreed and invalidated some amendments because they contained unreasonable provisions. The Court held that the original declaration must give sufficient notice of the possibility of a future amendment, and that didn’t occur in this case. So, for example, if there are no leasing provisions in the original declaration, the Members can’t amend the Declaration to add short-term leasing provisions without unanimous consent since it wasn’t foreseeable in the original declaration.

It is essential for Associations desiring to amend their declaration to obtain a legal opinion that carefully evaluates the proposed amendment for reasonableness and foreseeability. If, in the attorney’s legal opinion, the amendment is reasonable and foreseeable, the regular amendment provisions in the declaration apply. Those provisions are typically a majority of the Members, 67 percent of the Members, or 75 percent of the Members.

If the proposed amendment is not “reasonable or foreseeable” then a 100 percent vote of the Membership is required to add the amendment. It is clear that this holding puts the Members and the Arizona HOA attorneys in a perilous position. Attorneys will give more conservative advice simply to be safe since the attorney wants to protect the Association from litigation. However, obtaining a 100 percent vote of the Membership in most Associations is impossible.

As a practical matter, a complete amendment and restatement of the declaration in all but the smallest Associations is impossible. Associations may be able to amend their Declaration using the amendment provisions in the Declaration if the amendment is narrowly tailored and refers to existing provisions in the Declaration.

It is more important than ever for HOAs to have experienced legal representation that can assist with review of the current governing documents and help carefully draft proposed amendments that will stand up to a challenge based on the ruling in Kalway v. Calabria Ranch HOA.

Work with an Arizona HOA Law Firm

Following, establishing, and enforcing HOA rules and the law can be tricky. There are many factors to take into account. From keeping tabs on recent legislation that impacts your HOA to complying with state and federal laws to enacting protocols and objective enforcement policies, there are a long list of reasons why your association should be working with experienced HOA attorneys.  Halk, Oetinger, and Brown is a leader in HOA representation in Arizona because it is our only practice area.  We only represent associations and planned communities in Arizona. Schedule an initial consultation to review your HOA representation needs on our contact us page.

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Arizona HOA Laws

Arizona Legislative Update for 2022

In 2022, the Arizona legislature passed several bills affecting community associations, all of which are effective as of September 24, 2022.

House Bill 2158: Political Signs and Assemblies

The legislature amended laws related to political signs and assemblies, Arizona Revised Statutes §§33-1261 and 33-1808. This legislation applies to both planned communities and condominiums.

Association Specific Political Signs: This legislation allows owners to place signs on their property in support of or opposition to 1) candidates in a Board election, 2) a recall effort, or 3) ballot measures, such as amendments to the Governing documents. This will allow owners to become more politically involved in the community. The association may adopt reasonable rules regarding the placement, location, and manner of display of association-specific political signs, except that the association may not:

  • Prohibit the display of association-specific political signs between the date that the association provides written or absentee ballots to members and three days after the vote.
  • Limit the number of association-specific signs, except that the aggregate total dimensions of all association-specific signs may be limited to no more than nine square feet.
  • Require association-specific signs to be commercially produced or professionally manufactured.
  • Prohibit using both sides of the sign.
  • Regulate the number of candidates supported or opposed in an election, the number of board members supported or opposed in a recall, or the number of ballot measures supported or opposed on an association-specific political sign.
  • Regulate the content of an association-specific sign, except that an association may prohibit the use of profanity, discriminatory text, images, or content based on race, color, religion, sex, familial status or national origin as prescribed by federal or state fair housing laws.

Unfortunately, the ability to regulate profanity on non-association-specific political signs was not included in this new law. This law firm advises that an association encourage respectful political signs for all elections. This law firm advises that associations adopt the following statement of values regarding political signs:

STATEMENT OF VALUES

The Board values the divergent and different political beliefs and values seeing those beliefs in an atmosphere of mutual respect. To that end the Board asks the Members and Residents to join us in committing to not displaying signs that contain curse words, are intentionally offensive, or are obvious symbols of racial or religious oppression. 

Right to Peacefully Assemble: This legislation prevents planned communities and condominiums from restricting a member’s ability to use the common areas of a planned community or the common elements of a condominium to peacefully assemble, if done in compliance with reasonable restrictions. Specifically, it provides that:

  • That a member, or group of members, may assemble on the common areas/elements to discuss matters related to the association, including, but not limited to elections, recalls, potential or actual ballot issues, revisions to the governing documents, safety issues, or property maintenance.
  • That a member may invite 1 political candidate or 1 non-member guest to speak at an assembly about matters related to the association.
  • That the association shall not prohibit a member from posting notices regarding an assembly of members on bulletin boards located within the common areas/elements. 
  • That an assembly of members does not constitute an official members’ meeting unless it is properly noticed and convened pursuant to Arizona law and the governing documents.

The association may adopt reasonable restrictions that govern the assemblies. These may include permitted hours during which the assemblies may take place, proper security and event insurance, or preapproved locations for the assemblies, such as the clubhouse or pool area. The Brown Law Group is happy to assist with adopting a policy that complies with this new law.

House Bill 2010: First Responder Flags

The legislature amended Arizona Revised Statutes §33-1261 and §33-1808 to add certain first responder flags to the list of flags an association cannot prohibit an owner from displaying. 

The Association cannot prohibit an owner from displaying 1) first responder flags, and 2) blue star service flags or gold star service flags. A first responder flag may incorporate the design of one or two other first responder flags to form a combined flag, for example, a flag that honors both the police and fire departments.

“First responder flag” is defined as one that recognizes and honors the services of 1) law enforcement, 2) fire departments, or 3) paramedics or emergency medical technicians. The specific requirements for each are below:

  • Law Enforcement:  Is limited to the colors blue, black and white, the words “law enforcement”, “police”, “officers”, “first responder”, “honor our”, “support our”, and “department”, and the symbol of a generic police shield in a crest or star shape.
  • Fire Department: Is limited to the colors red, gold, black and white, the words “fire”, “fighters”, “F”, “D”, “FD”, “First Responder”, “department”, “honor our”, and “support our”, and the symbol of a generic Maltese cross.
  • Paramedics or Emergency Medical Technicians:  Is limited to the colors blue, black, and white, the words “first responder”, “paramedic”, “emergency medical”, “service”, “technician”, “honor our”, and “support our”, and the symbol of a generic star of life.

There are many types of first responder flags with varying designs and language. Associations may prohibit all first responder flags that do not conform to the above specifications. If any association is unsure whether a flag a member is displaying complies with the above statute, BLG is happy to evaluate the flag for compliance.

House Bill 2131: Artificial Turf 

House Bill 2131 amends the Planned Community Act by adding section 33-1819 to prevent communities from prohibiting owners from installing artificial turf on their property. This section does not apply to condominiums.

This new law will help to preserve water by lowering water usage and costs. The association must allow artificial turf where natural grass is allowed. If natural grass is not permitted within the association, the association is not required to allow artificial turf. The association is permitted to create reasonable rules and regulations that govern the installation and quality of the artificial turf. Specifically, this new law provides that:

  • If a planned community allows for natural grass, the association may not prohibit the installation of artificial turf.
  • The association may adopt reasonable rules governing the installation and appearance of the artificial turf, but only if those rules do not prevent the installation of artificial turf in the same manner that natural grass would be allowed by the association.
  • The association may adopt reasonable rules governing the location and the percentage of the property that may be covered with artificial turf to the same extent as natural grass. The association may also adopt rules governing the quality of the artificial turf.
  • The association may require removal of artificial turf if it causes a health or safety issue that the owner fails to correct. The association may require replacement or removal of artificial turf if it is not maintained in accordance with the association’s maintenance standards.
  • An association can prohibit the installation of artificial turf if: 1) it is installed in an area that the association maintains or irrigates–for example front yards of Lots– and 2) if an association prohibits the new installation of natural grass on an owner’s property, the association can also prohibit the new installation of artificial turf on an owner’s property, except that, an association may not prohibit a member from converting natural grass to artificial turf.
  • If an owner files a lawsuit against the association for violating this new law, and the court finds in favor of the owner, the court will award reasonable attorneys’ fees and costs to the owner.
  • The law does not apply to associations that have unique vegetation or geologic characteristics that require preservation by the association and the viability of those characteristics is protected, supported, or enhanced as a result of the continued existence of natural landscaping materials.

House Bill 2275: Condominium Termination

This legislation amends Arizona Revised Statutes §33-1228 of the Condominium Act to update the percentage of members that most vote to terminate a condominium. This section does not apply to planned communities.

This legislation provides that an already existing condominium may only be terminated by the approval of 80% of the votes in the association, except:

  1. In the case of a taking of all of the units by eminent domain.
  2. If the declaration specifics a smaller percentage, but only if the units are restricted to non-residential uses.

This legislation provides that condominiums created on or after September 24, 2022 may only be terminated if 95% of the members vote in favor of the termination, or any larger percentage specified in the declaration.

Work with an Arizona HOA Law Firm

Following, establishing, and enforcing HOA rules and the law can be tricky. There are many factors to take into account. From keeping tabs on recent legislation that impacts your HOA to complying with state and federal laws to enacting protocols and objective enforcement policies, there are a long list of reasons why your association should be working with experienced HOA attorneys.  Halk, Oetinger, and Brown is a leader in HOA representation in Arizona because it is our only practice area.  We only represent associations and planned communities in Arizona. Schedule an initial consultation to review your HOA representation needs on our contact us page.

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Arizona HOA Laws

How To Properly Establish and Enforce Parking Rules in an Arizona HOA

As an HOA you need to ensure that you have provided means by which the cars in your communities are adequately regulated in order to achieve cohesion between homeowners. While many HOAs already have these parking rules in effect, some may not realize that their rules do not comply state and federal law or may not be specific enough to properly oversee the conduct of vehicle owners in the community. This article will outline how to properly establish and enforce parking rules in an Arizona HOA.

Establishing HOA Parking Laws in Arizona

HOAs will find it useful to educate themselves on the HOA parking rules in Arizona. They will be adequately equipped with understanding the kinds of rules they can establish in their communities. Restricting parking conduct will more than likely create a defensive homeowner or two so understanding what you as an HOA Board are allowed to do to handle parking incidents can be the decision that saves you from a lawsuit from disgruntled homeowners.

The first step is for your HOA board understands the local administrative control on public roads as well as the commercial and residential HOA parking rules as the boundaries within which you can establish parking laws. Then your HOA board will need to ensure that the HOA parking policies are conveyed to the community with specific details and clear, concise language.

Using vague language or sentences that can be interpreted in several ways will pose an issue when confronting parking violators. The specific jargon to use when creating policies is usually best handled by a seasoned Arizona HOA law firm to ensure that your policies are airtight and difficult to be misunderstood.

Arizona Residential Parking Laws

There are three main categories of residential parking laws an Arizona HOA board should focus on:

  • Parking Locations
  • Abandoned Vehicles
  • Prohibited Vehicles

Arizona HOA Rules on Parking Locations

The rules governing parking locations will vary depending on the layout of each HOA community. Some communities may have rules which mandate that each homeowner should park in their driveways while others may establish that each homeowner, sometimes their visitors as well, are assigned parking spots. It is important to adopt rules that do not conflict with the CC&Rs.

In addition to establishing where homeowners should park, it needs to specify the areas in the community that they are not allowed to park which may be: a) in front of another homeowner’s house b) in front of communal areas and b) on the streets in the community.

If your HOA community consists of both private and public roads, your authority to establish where HOA homeowners park may be limited to only the private roads in the community according to A.R.S. §33-1818, prohibiting Arizona HOAs in which the CC&Rs were recorded after 2014 from regulating how public roads in the community are used for parking. With the guidance of an HOA law firm, you will be able to understand whether the use of public roads can be legally regulated by the HOA board.

Arizona HOA Rules on Abandoned Vehicles

To ensure that homeowners don’t end up leaving abandoned vehicles parked in the community, HOAs may devise regulations for cars to be parked on the streets at a specified amount of time. extend to any vehicle including motorboats, trailers, or RVs. An HOA may also adopt rules that prevent unregistered or inoperable vehicles from being parked in the streets.

Arizona HOA Rules on Prohibited Vehicles

Your parking policy can also specify the types of cars that are allowed to park in the community. Vehicle attributes that they can specify include, but are not limited to, trailers, boats, un-drivable, junk vehicles, and RVs. Associations have the right to protect their community’s appearance.

All of these restrictions will need to be placed in the CC&R so that the homeowners would have had a chance to look at these rules before agreeing to purchase property in the community.

Enforcing HOA Parking Rules in Arizona

In the same manner that the scope in which HOAs can regulate the use of roads depending on whether these roads are private or public, HOAs’ authority to enforce these parking rules is also contingent on this variable.

On private streets, HOAs are authorized to enforce parking rules by means of fining violators, or in some cases, towing vehicles. 

Towing of Vehicles in Arizona

Most states, including Arizona, permit HOAs to tow vehicles that violate the community’s parking policy. For instance, if a homeowner should park in a location that was established in the policy as prohibited, then HOAs will have authority to tow the vehicle out of the community which will also be reported to the local traffic law enforcement.

It is best to speak with an HOA attorney before enforcing parking rules in this way as there may have been steps, including appropriate signage and warnings, that could be taken before ultimately having to tow a homeowner’s property, potentially saving you the hassle of having to deal with disgruntled drivers filing lawsuits against the HOA board.

Work With An Arizona Law Firm That Specializes in Representing HOAs

As you may have noticed, establishing and enforcing parking policies in an HOA may be a bit tricky as there are many factors and federal laws to consider when organizing these rules. In order to ensure that your rules are established within the confines of state and federal laws and that these rules are overall reasonable, you will need the assistance of an experienced Arizona law firm that can guide you through the process. Halk, Oetinger, and Brown is a leader in HOA representation in Arizona because it’s our sole area of practice. Schedule an initial consultation to review your HOA representation needs on our contact us page.