Buying a Home or Condo in an Arizona HOA?
Read this before you sign…
Most new homes in metro Phoenix come with a homeowners or condominium association attached. When you buy, you automatically become a member and you are bound by the community's governing documents, whether you read them or not. The time to understand what you're agreeing to is before closing, not after the first violation notice arrives.
Two statutory schemes govern these HOA communities.
Planned communities fall under the Planned Communities Act, A.R.S. § 33-1801 et seq.
Condominiums fall under the Condominium Act, A.R.S. § 33-1201 et seq.
Both give homeowners real rights. Both also give associations real power.
The Resale Disclosure Package Is Your Best Friend - Read it!
Arizona law requires that buyers receive a disclosure package before the sale closes. A.R.S. § 33-1806 (planned communities); A.R.S. § 33-1260 (condominiums).
The resale disclosure package should include:
The governing documents
The association's financial information
Pending litigation
Unpaid assessments on the unit, and
Any outstanding violations.
The statute caps what the association may charge for it, and a seller or association that fails to comply can face a civil penalty.
Too many buyers treat this package as closing-table clutter. It is the single best window into what you are buying. Read it.
Know the Rules Before They Become Your Rules
The CC&Rs, bylaws, and rules can reach surprisingly far into how you use your property. Common restrictions cover paint colors, landscaping, parking, pets, rentals and short-term leasing, and holiday decorations.
Buyers regularly discover after closing that they cannot rent out the property or park a work truck in their own driveway.
None of this is hidden. It is all in the documents you received before you signed.
Follow the Money
Your monthly assessment funds landscaping, amenities, insurance, and reserves. But the number on the listing sheet is not the whole story.
Ask about the reserve fund balance, the delinquency rate, and the association's history of special assessments… because an underfunded association eventually sends its members the bill.
Arizona law offers some protection here.
In a planned community, the board generally cannot raise the regular assessment more than 20% over the prior year without majority member approval. A.R.S. § 33-1803(A).
The Condominium Act contains no equivalent cap, which is one more reason condo buyers should study the budget closely. Special assessments are another matter entirely, which is why the reserve study deserves your attention.
Unpaid assessments are serious and can lead to foreclosure very quickly. It can lead to late fees and other charges even more quickly.
If a HOA Dispute Comes, You Have Rights
Homeowner Associations can enforce their documents through notices, fines, and lawsuits. But Arizona law requires proper notice of a claimed violation and gives the homeowner a chance to respond. A.R.S. § 33-1803(D).
Homeowners can also petition the Arizona Department of Real Estate for an administrative hearing on alleged violations of the statutes or community documents, a faster and cheaper forum than court. A.R.S. § 32-2199.01.
Red Flags Worth Walking Away From
Frequent special assessments, shabby common areas, high delinquency rates, and a docket full of association lawsuits all tell you something about how the community is run. So does a rulebook that doesn't match how you actually live.
Before you ever buy in an HOA community, or need an HOA lawyer, make sure to read, do your research, and walk away when the rulebook doesn’t align.