How to Handle HOA Fraud and Abuse in Arizona

A homeowners’ association (“HOA”) is intended to protect the interest of all members of a community so that the community is great place to live and to establish a set of standards for care, maintenance, and appearance for all homes.  Ideally, an HOA should also protect the value of all homes in the community and develop a way to remedy issues caused by any homeowners that might not be keeping up their homes in an acceptable manner.  Unfortunately, this is not always the case; at times, disagreements among homeowners or members of the HOA Board stray from this goal.  You may find yourself in a community where there is unequal enforcement of standards and rules, or general disagreements about interpretations of what those standards mean.

The Declarations of Covenants, Conditions, and Restrictions (commonly referred to as “CC&Rs”) generally give an HOA broad powers over the standards for the community.  Communities in Arizona may also have bylaws and architectural rules that are enacted by the HOA Board of Directors that will limit your ability to make improvements and changes to your home or yard.  If you violate these rules and bylaws, you can face significant fines, liens, and possible lawsuits from the HOA.

Homeowners can find themselves in situations where it appears the HOA has overstepped acceptable boundaries and they are abusing this power.  This frequently happens when personal disputes between neighbors or community members rise to the level where the HOA must intervene.  One party will often end up feeling that the HOA has chosen to side with a favored or influential member of the community.  This is frequently the point at which a disagreement becomes a legal dispute to ensure that the HOA is operating for the benefit of the community and not simply siding with a board member or favored homeowner.

Planned Community Act and Condominium Act in Arizona

If you feel that your HOA is no longer operating in the best interest of the entire community, Arizona provides some important protections with the Planned Communities Act and the Condominium Act.  These acts, as well as judicial precedent restrict the power of all HOAs, regardless of the rules and restrictions the individual HOA has placed in their CC&Rs.  There are legal actions that can be taken by homeowners to prove their HOA is not acting in the best interest of the community.

Individual board members can be removed from the HOA Board if a majority of homeowners vote to remove them.  This process is clearly spelled out in the Arizona Planned Community Act.  The homeowners that would like to remove board members will need to create a petition for a special meeting to vote on the removal.  This meeting must then be held within 30 days after the board’s receipt of the petition if either 25% of community or 100 community members sign it.  If the HOA has more than 1000 members, signatures of 10% of the members are required to call for a vote on board member removal.  At least 20% of the HOA members must be present, and then a simple majority of those voting must vote to remove the contested board members.  Before starting this removal process, you will want to consult with an experienced real estate attorney in Arizona, because the board members will almost always contest this removal process.

Homeowners can also force a change to the CC&Rs if enough members decide it is in the best interest of the community.  The process for amending community HOA rules, regulations and powers will vary depending on the individual HOA.  Some will require a simple majority, while others will require a unanimous vote to make a change.  This process can be difficult if you do not have the support of the board members, and you will want to consult with an experienced real estate attorney before starting the process.

Arizona Laws for Homeowners’ Associations

Arizona limits the power of HOAs.  First, board members have a fiduciary duty to the association and they must put the interests of the community first.  Board members must also disclose any financial interest or benefit in all HOA actions before a vote.  The HOA Board members must treat all members fairly, meaning they cannot carry out actions that are unreasonable or arbitrary.  Finally, HOAs must enforce rules and regulations equally among all community members.

Find an Experienced Real Estate Attorney in Arizona

The attorneys at MacQueen & Gottlieb have significant experience with HOA fraud and abuse.  Our firm can help you investigate and pursue remedies for any actions that were not taken in the best interest of the community or that unfairly harmed individual community members.  Contact us today at 602-533-2840 to schedule an initial consultation or make an appointment online.