What an Arizona HOA Needs to Know about Fines and CC&R Violations

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 to preserve the property values within the communities.  HOAs may send friendly reminders and violation notices to those homeowners that break the rules.  Arizona HOAs may also impose reasonable fines for violations of the restrictions and rules.  

Fine Enforcement in Arizona HOAs

When homeowners purchase property in a community governed by an HOA they are bound by the restrictions contained in the (CC&Rs). The CC&Rs define what homeowners can and cannot do with their property. It is important that HOAs hold each homeowner accountable to the CC&Rs. In many communities, the CC&Rs also permit the Board to enact rules for the community to which homeowners are contractually obliged to follow. 

Homeowners that fail to comply with their community rules and adequately maintain their property are in breach of their contractual obligations under the CC&Rs. HOAs have the ability to enforce these obligations with demand letters and lawsuits if necessary. To pursue a successful claim for fine enforcement actions, there are several preliminary considerations to set a foundation for successful enforcement.

Fine Policies & Notice Requirements

Before HOAs can impose fines for non-compliance to regulations, they should ensure that the CC&R or community rules have provisions that give the HOA authority to issue fines for the violation.

To fairly and uniformly enforce these fine, 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 the number of notices, time between notices, time to cure a violation, and the monetary penalty imposed for each violation notice.  This law firm advises a “presumptive” policy that the HOA can follow for run of the mill violations, while allowing the HOA to deviate from the standard procedure to address more severe violations.  For example, a fine policy that provides for a 14-day time to cure period does not make sense for violations like loud parties.  Parties are usually over by the morning, and with a 14-day time to cure period, the HOA could not address that behavior. 

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 is creating or enforcing its fine policy.

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 not likely sufficient.  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 HOAs rules.  The fine policy must allow for the HOA to fine a larger amount. 

The Arizona Planned Community and Condominium Acts, A.R.S. §33-1803 and §33-1243 require  that homeowners are given notice of violations and an opportunity to be heard before fines are imposed. .

Collection of HOA Fines

Once a community has adopted a fine policy, an HOA may begin prosecuting enforcement. It is important to note that fines and related charges may not be included in the HOA’s assessment lien. Successful fine cases need documentation and adherence to the fine policy. Letters and notice are great, but a picture is truly worth a thousand words in fine cases.

Put yourself in the judge’s position on the bench 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 HOAs use of power.

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.

As the CC&Rs are a legally binding contract, breach of this contract gives an HOA authority 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 issues are resolved after an initial notice.

It is best to seek counsel from an HOA attorney on the best approach to take with regards to enforcing fine compliance as well as options to collect attorney fees on violations. 

Work with an Experienced HOA Attorney

If your HOA or association board is dealing with enforcing CC&R violations on a regular basis, The Brown Law Group can help guide your HOA through any potential legal issues.  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.