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Arizona HOA Laws

What Your HOA Needs to Know About Assessment Payments in Arizona

Homeowners’ Associations carry a great deal of responsibility when it comes to maintaining the community. HOAs are often required by their governing documents to perform many actions, which may include maintaining insurance policies, paying for water or sewer charges, maintaining landscaping, caring for community facilities such as pools, playgrounds or golf courses, repairing roofing damages, maintaining common element areas, and much more.

HOAs cannot effectively meet these obligations without homeowners paying their assessments. Owners that are unable or unwilling to pay assessments may face legal action collect these unpaid assessments. Here is what you need to know about Assessment Payments. 

Obligation To Pay Assessments

All homes located within an HOA are governed by a contract called the Covenants, Conditions, and Restrictions (CC&Rs). By purchasing a property within an HOA, homeowners become contractually obligated to comply with the CC&Rs. Failure to comply is a breach of contract. The CC&Rs obligate homeowners to pay assessments to fund the various obligations of the community. 

Special assessments cover expenses which an HOA may not have sufficient funds to pay for from regular assessment payments.

Assessment payments are contractual in nature. A homeowner’s failure to pay these assessments is a breach of contract. HOAs can enforce their contractual rights to assessments by filing a lawsuit against delinquent homeowners when notices, letters, and requests from the HOA are ignored.

Arizona’s Property Lien Law & Foreclosure

In addition to the owner’s personal contractual obligations to pay assessments under the CC&Rs, property located within an HOA have a statutory assessment lien securing the assessment charges. A lien generally prevents an owner from selling or refinancing a property until the lien is released and assessments are paid, as it clouds the title to the property. 

Arizona Revised Statutes § 33-1807 and 33-1256 provide the statutory basis for the assessment lien. This statute provides that as soon as assessments become due, a lien is automatically placed against the property. HOAs frequently record a lien in their local county recorder’s office to make a public record of the lien in the event the home is refinanced or placed for sale.. 

When demand letters, breach of contract claims, and liens against a property fail to obtain payment of delinquent assessments, an HOA has the power to foreclose on its assessment lien. Foreclosure provides an avenue for HOAs to collect assessments, late fees, collection charges, attorney fees, and court costs for filing the foreclosure lawsuit.

HOAs may only employ the foreclosure option if one of the following is satisfied:

  • Assessments have not been paid for a period of one year; or
  • $1,200.00 or more in assessments are outstanding.

If either prong is satisfied, an HOA may proceed to collect the assessments due through foreclosure.

When evaluating a claim for foreclosure, it is important to note that some properties may already have liens in place. State and federal tax liens and first mortgages have priority over an HOA assessment lien. Other liens can include judgment liens, a second deed of trust, or a home equity line of credit.  The HOA assessment lien is superior to these liens.  It is important to discuss the implications of these liens in relation to the foreclosure process with your attorney.

Procedure To Collect Delinquent Assessment Fees in Arizona

Before an HOA can send an account to collections, homeowners must be afforded at least 30 days’ notice. The notice must be in writing and mailed via certified mail to the homeowner’s address. This is requirement is set out in A.R.S.. § 33-1807(K)  and A.R.S. 33-1256 which also outline that the notice must be boldface typed or in all capital letters. It must also include the contact information of the representative of the HOA that the homeowner can contact to discuss payment. The notice must also provide the following statement:

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. 

Once a homeowner is provided the statutorily required notice, and fails to satisfy the delinquent assessment balance, an HOA may send a homeowners’ account to collections and enforce its rights under contract and statute.

Find a Law Firm Dedicated to Representing HOAs with Assessment Collection

Whether your HOA is planning changes to your assessments or having issues with collection, The Brown Law Group can offer a many benefits to your association.  Our experienced team of attorneys and collection specialists only represent HOAs and condominium associations in Arizona.  We offer an alternative to the traditional hourly billing and it’s one of the major reasons we lead the state in HOA assessment collections.  Contact us today in our Tempe office at 602-952-6925 or our Tucson office at 520-299-3377 to schedule an initial consultation.  You can also make an appointment on our contact us page.

The Brown Law Group provided this article for informational purposes only and it does not create an attorney-client relationship.

Categories
Legislative Updates

2021 Arizona HOA Legislative Update

The COVID-19 pandemic shuttered the 2020 legislative session.  While there were several bills introduced in 2020 that would have impacted community associations, the legislature adjourned early and none of those bills were signed by Governor Ducey.   The Arizona legislature got back to work in 2021, passing several bills affecting community associations.

H2170 WRITS OF GARNISHMENT; ATTORNEY’S FEES 

Collecting Attorney’s Fees for Garnishments

The legislature amended laws relating to garnishment in Arizona Revised Statutes §§ 12-1572, 12-1574, 12-1580, 12-1591, 12-1598.03, 12-1598.04, 12-1598.07, 12-1598.10, 12-1598.12, and 12-1598.15.

Collecting judgments in Arizona just became more cost effective. For some creditors, obtaining a judgment is just the start of collecting the money owed to them. A judgment in a collection lawsuit is simply a piece of paper ordering one party to pay another. When a judgment debtor fails to pay the money ordered by a court, garnishment can be a powerful tool.

In the past, garnishment proceedings only served to reduce the net proceeds due to a creditor as attorney fees and court costs were uncollectable in garnishment proceedings. The new legislation now places the monetary burden for failure to pay a judgment on the uncooperative debtor by allowing those attorney fees and costs to be awarded in a garnishment action.

When efforts to resolve a collection judgment through voluntary payments or settlement agreements cannot be reached, creditors may now proceed with garnishment and have a statutory basis to request an award of attorney fees and costs. Creditors no longer have to sacrifice money owed to them in pursuit of collection.  

S1377 CIVIL LIABILITY; PUBLIC HEALTH PANDEMIC 

This legislation amends Title 12, Chapter 5, Article 1, Arizona Revised Statutes, by adding section: 12-515; Relating to Civil Liability.

Civil Liability Protection Relating to Public Health Pandemic

This Senate Bill provides for a liability shield that would protect nonprofit organizations, including community associations, from lawsuits related to the Covid-19 pandemic. Throughout the pandemic, our firm recommended that our communities close their amenities due to a lack of insurance coverage and a lack of a liability shield.  Without a liability shield, if a Member or guest contracted Covid and alleged that it was contracted association’s amenities, the association would not have insurance to cover the defense of that claim.  Whether the claim is valid would not matter much when the Association is required to pay out of pocket for its defense.

This liability shield now provides protection for community associations from such potential claims. Associations are now able to open their amenities.  Reasonable precautions must still be taken.  The liability shield will protect an association if it acted in good faith to protect members from Covid-19.  The individual claiming that they contracted Covid-19 while using the association’s amenities must prove by clear and convincing evidence that the association failed to take adequate protection measures or acted with willful misconduct or gross negligence.  If associations continue to enact appropriate precautions including enhanced cleaning, encouraging distancing, and requiring masks while using indoor amenities, the associations will be protected under the statute. 

This legislation is retroactive and will protect community associations from claims for acts that occurred on or after March 11, 2020.

S1722

POLITICAL SIGNS; CONDOMINIUMS; PLANNED COMMUNITIES 

This legislation amends sections: 16-1019, 33-1261 and 33-1808, Arizona Revised Statutes.  This legislation applies to both Planned Communities and Condominium. 

Definition of Political Sign

Political signs can be a contentious issue in community associations.  In recent elections, tensions have increased in the political climate.  While community associations must allow certain political signs, it is not always clear what type of sign qualifies as a political sign.  This legislation adds some much-needed clarity by providing a definition of a political sign.  A political sign is defined as one that attempts to influence the outcome of an election, including supporting or opposing the recall of a public officer or supporting or opposing the circulation of a petition for a ballot measure, question or proposition, or the recall of a public officer. 

Display of Political Signs

The Arizona Planned Community Act and Arizona Condominium Acts previously provided that an association may prohibit the display of political signs earlier than seventy-one days before the day of an election and later than three days after an election.  This legislation amends these timelines and provides some clarity.

This legislation provides that an association may prohibit the display of political signs as follows: 

  1. Earlier than seventy-one days before the day of a primary election.
  2. Later than three days after the day of the general election.
  3. For a sign for a candidate in a primary election who does not advance to the general election, later than fifteen days after the primary election.

Let The Brown Law Group Assist Your Arizona Community Association

The Brown Law Group provides industry leading general counsel for HOAs and condominium associations throughout Arizona.  Our firm regularly works with clients to address legal questions related to the community, management, enforcement, and collection of money due pursuant to the CC&Rs, Declaration, and governing documents.  Contact us today in our Phoenix office at 602-952-6925 or our Tucson office at 520-299-3377 to schedule an initial consultation.  You can also make an appointment on our contact us page.