Homeowners’ associations (HOAs) are popular in residential areas for the benefits each HOA provides its neighborhood: landscaping, curb appeal, amenities and more. Most homeowners know whether they belong to an association, but it may come as a surprise to business owners that their properties may be part of a commercial owners’ association. If you own commercial property, this is what you need to know about Arizona commercial owners’ associations and how they can affect you.
What Is An Arizona Commercial Owners’ Association?
A commercial owners’ association is a nonprofit organization that governs a community of commercial entities. Whether it oversees a corporate development, complex or business center, the property is not used for residential purposes.
These associations are similar to HOAs in the sense that members have obligations and responsibilities in exchange for receiving certain benefits. There are also governing documents that outline the operation of the community. However, unique disputes can arise within commercial associations that business owners should look out for.
Unique Issues That Arise In A Commercial Owners’ Association
The unique nature of commercial properties requires a different set of needs than those of residential properties. These are some of the most common issues in commercial communities that should be addressed in the association’s governing documents.
Use Restrictions: Homeowners’ associations utilize CC&Rs (covenants, conditions and restrictions) that set the standards for the neighborhood. They typically ban commercial activity as well as any potential disturbances to the peace within the community. Similarly, commercial owners’ associations use governing documents that declare how the units within the properties may be used. For example, a property may not allow tenants to run a cannabis business. Others may only lease to restaurants and retail businesses. This showcases the importance of thoroughly reading and understanding the lease agreement, both for landlords and tenants. Both parties would be penalized once the association discovered their activities.
Signage: Residential neighborhoods rarely allow signage aside from “For Sale” signs, but commercial properties need signage. It identifies each unit as being the location of a business, and it helps the business to be found and recognized by customers. The governing documents of a commercial owners’ association outline the types and sizes of signs that tenants may use—electronic signs, banners or others—as well as their colors and fonts. Each association has varying levels of rigidity, which is another reason to carefully review a lease. Its terms must be in alignment with those of the association.
Parking: Parking is typically a nonissue within residential communities because each home has space for its owners’ vehicles. For businesses, however, a parking situation can become contentious. Business owners and employees need access to parking, but more importantly, so do customers. Additionally, the closer the parking is to the business, the most likely it will be that customers or clients will choose that business. The documents may designate a certain number of parking spaces per unit unless there is a large lot for equal access.
Compliance with Laws: All properties are subject to basic property laws and zoning laws, but commercial properties are held to a different standard. Depending on the nature of the business in a unit, there may be unique rules and regulations the business must follow. Many commercial owners’ associations place the responsibility to research and adhere to these ordinances on each business owner. Again, this is a detail that should be covered in every lease agreement between landlord and tenant to align with the declarations of the association.
How Commercial Owners’ Associations Can Affect Your Business
If your property is part of a commercial owners’ association, you will be held to a set of standards as presented in the association’s governing documents. This means greater attention to detail before and during your tenants’ business operation and careful language in your lease agreements. For assistance, contact an experienced commercial real estate attorney.
Find An Experienced Arizona Commercial Real Estate Lawyer
The attorneys at MacQueen & Gottlieb have significant experience with commercial real estate in Arizona. Our attorneys can assist you with any issues and help you understand your rights. If you operate in a commercial owners’ association community and are experiencing disputes, our attorneys can assist you in pursuing that case. Contact us today at (602) 726-2229 to schedule an initial consultation or make an appointment online.