Residential Arizona Parking Laws

Wondering if your HOA can fine you for parking on the street?

We regularly meet with homeowners whose HOAs threaten to impose fines or even take them to court to enforce HOA on-street parking bans. In one case, the HOA spent more than $40,000.00 unsuccessfully attempting to enforce an on-street parking ban against a family that had five licensed drivers in the family.

HOA parking enforcement. Are these HOA street parking bans enforceable?

HOA parking rules in Arizona say that the HOA has "no authority over and shall not regulate any roadway" if it is a public street.

BUT this law only applies to planned communities whose CC&Rs were recorded since December 31, 2014. So if your HOA is new or if it has recorded an amendment to its CC&Rs since December 31, 2014, the HOA does not have the authority to ban you from or enforce parking on public streets.

What about those older HOA’s or those that have not yet amended or refiled their CC&Rs?

The answer often depends on the precise language used in the CC&Rs. However, it does not make sense for HOAs to be able to regulate public streets. HOAs, after all, are not public entities.

No Arizona court has had the chance to address this specific issue. The argument is that the power to regulate public roads is vested exclusively in governmental bodies and private entities, such as homeowners’ associations, do not have the power to impose restrictions on the use of it. In some cases, this can turn on the language used in the CC&Rs, plat map, or other governing documents.

Finally, it is important to keep in mind that HOAs cannot enforce street parking bans, even if they are valid, if they are doing so in a selective, random, arbitrary, capricious, unreasonable and/or potentially discriminatory manner. A use restriction that singles out and targets a particular homeowner is unreasonable, arbitrary, capricious, and unenforceable. If all of your neighbors also park on the street and you're the only one getting fines or threatening letters, you may have a good selective enforcement defense.

If you feel you need legal assistance with regard to the new short-term rental law or if you have any questions, check out our HOA Law or Real Estate Law page for more information. Or contact us today.

If you liked this article, you might also like reading our blog about rental restrictions and collecting fees.

The Issue with HOA Codes of Conduct in Arizona

Codes of Conduct are all the rage in HOAs and condominium communities. Some associations are even attempting to insert these Codes of Conduct into their bylaws, declarations, and other governing documents.

There's just one major flaw with Codes of Conduct -- they are invalid and unenforceable. 

Consider what appears to be a fairly innocuous Code of Conduct:

1. Board Members shall act in the best interests of the Association as a whole. Board Members serve for the benefit of the entire community, and shall, at all times strive to do what is best for the Association as a whole.

2. No Board member shall willingly misrepresent facts to advance a personal cause or influence the community to advance a personal cause.

3. Board members shall use their best efforts at all times to make reasonable decisions that are consistent with the Declaration, Bylaws, and other governing documents of the Association, and to be familiar with all such documents.

4. Board Members shall set high standards for themselves as Association representatives. Board Members shall hold themselves to the highest standards as members of the Association, and shall in all way comply with the provisions of the Association’s governing documents and the relevant law.

5. Board members shall at all times work within the Association’s framework, refrain from unilateral action, and abide by the system of management established by the Association’s governing documents and the Board. The Board shall conduct business in accordance with relevant law and the Association’s governing documents, and shall set upon decisions duly made, and no Board Member shall act unilaterally or contrary to such decisions.

6. Board Members shall behave professionally at meetings. Board members shall conduct themselves at all meetings, including Board meetings, annual meetings of the members and committee members, in a professional and businesslike manner. Personal attacks against other Board Members, Association member, residents, officers, management, or guests are not consistent with the best interests of the community and will not be tolerated. Language at meetings shall be kept professional. Though differences of opinion are inevitable, they must be expressed in a professional and businesslike manner.

7. Board Members shall not defame or disparage any other Board Member, Association member resident, vendor, Association agent or third-party.

8. Board members shall not harass, threaten or otherwise intimidate aby other Board Member, Association member, resident, vendor, Association agent, or third-party.

So what's wrong with it?

Everything.

Literally, everything. Notably, the Code of Conduct does not state who gets to decide what constitutes the “best interests of the Association,” what is “best for the Association as a whole,” or what constitutes a "willing misrepresentation" or a “personal cause.” Who gets to decide whether these standards are met? If your answer is "the rest of the board," then you've just identified one of the biggest problems with Codes of Conduct - they are subjectively and arbitrarily enforced by those who hold power to keep dissenting voices or the opposition from speaking up. Who decides what is disparaging? Truthful statements can be disparaging. Who decides whether someone is feeling harassed, threatened, or intimidated?

Also, keep in mind that board members owe fiduciary duties to the associations that they serve. And these fiduciary duties often require board members to review documents, conduct investigations, and ask hard questions. The above Code of Conduct, however, suggests board members are prohibited from conducting such an investigation if they believe the “system of management” is not functioning properly or that they could violate the Code of Conduct by conducting an investigation if a majority of the board decides there's nothing to investigate? 

When Codes of Conduct are included in bylaws, declarations, or other governing documents, they take on added problems. An association’s governing documents form a contract between the association as a whole and its members. Bylaws, like declarations and the other governing documents, also constitute part of this contract.

Basic rules of contract interpretation, therefore, apply when interpreting them. A fundamental rule of contract construction is that contract provisions cannot be enforced when the terms are too vague or uncertain. Codes of conduct that purport to require individuals to conform behavior to certain subjective standards, such as using “best efforts at all times to make reasonable decisions,” setting “high standards” and “hold themselves to the highest standards as members,” to name but two, are too vague and indefinite because they do not allow individuals, such as Plaintiff, to conform her conduct to the rule or know what conduct would constitute a violation.

Other terms that fall into the “too vague to be enforced” category include similar subjective terms that are “obscure and indefinite in meaning as a matter of law.” A contract provision is not enforceable “[i]f the essential terms are so uncertain that there is no basis for deciding whether the agreement has been kept or broken.”

An objective standard is impossible to employ since the determination of such violations is, by their nature, subjective and impossible to calculate on an objective standard. How does an individual know whether she or he is meeting the standard or what behavior violates it? The fact that the majority apparently gets to make the decision unilaterally further underscores the invalidity and unenforceability of Bylaws disqualifying owners based on the subject determination of an individual’s conduct.

Put another way, how does a member possibly confirm his or her behavior to the code of conduct against what objective measure is it to be tested? How does a member know she or he is acting “in the best interests of the Association” or striving “to do what is best for the Association as a whole”? What if a majority of the board believes a board member is not pursuing the “best interests” of the Association because she or he believes that the Association’s best interests diverge with what the majority of the board believes or wants? Also, what is the penalty for violating it and who gets to decide?

Subjective rules might be great for kids on the playground but they have no place in a quasi-governmental association. 

Read more about HOA law by going to our HOA law page or schedule a consultation with one of our highly experienced attorneys for questions and inquiries. Or, continue reading to our next blog about Foreign Court definition.

It can feel like there’s a mountain of paperwork in buying or selling a new home. But one document that shouldn’t go unnoticed is a Seller Property Disclosure Statement, often referred to as the SPDS, or ‘spuds’. 

In this article we share exactly what an SPDS is and why it’s so important in real estate.

What is a Seller Property Disclosure Statement (SPDS)?

The SPDS is a document used when buying or selling a home which is designed to protect both parties. It gives the seller the opportunity to disclose insight into the condition of the property, providing a lot more information for the buyer to consider during the home inspection period. This includes any known defects or damages that have occurred during the seller’s time in the home.

Sellers are legally obligated by law to disclose all known material facts about a property to the buyer. While a Seller Property Disclosure Statement is not required, it is extremely advised to do so.

To make matters easier, the SPDS is divided into six sections:

Ownership and General Property

Here the seller must provide information about the property including the address and occupancy and ownership details.

Building and Safety Information

This section details the physical aspects of the property which must include any past or present issues as well as improvements that have been made. 

Utility Information

Types of utilities offered such as gas and electricity, and which suppliers currently provide them.

Environmental Information

This section covers environmental hazards, issues related to soil settlement, erosion, drainage and noise, and odors, or nuisances in the surrounding areas.

Sewer and Wastewater 

Information regarding the type of treatment available for sewer and wastewater.

Other Conditions and Explanations

Here the seller can disclose any other miscellaneous information not covered in the previous sections that may affect the value of the property or the buyer’s decision in purchasing.

The SPDS must be delivered within five days of contract acceptance by the seller. From here, the buyer has five days to cancel the contract and receive a full refund.

Why SPDS is important

A Seller Property Disclosure Statement not only streamlines the process of buying and selling a property (avoiding back and forth questioning in regards to the property’s condition). It also protects the seller from future liability. 

Failure to disclose accurate, up to date information can account for unavoidable real estate lawsuits. Therefore the completion of a SPDS is highly encouraged.

Should you share your SPDS with your home inspector?

Ultimately, yes. While sellers are responsible for disclosing all known property facts within a Seller Property Disclosure Statement, buyers are the party responsible for verifying the information. It’s therefore crucial to share this document with your home inspector for further investigation, particularly if there are any areas of concern. 

For example, if mold is reported within the property, you will want the inspector to check for any additional damage to walls or flooring. 

Looking for real estate legal support?

Based in Arizona, the Dessaules Law Group has considerable experience in all aspects of real estate law, representing landlords and tenants, buyers and sellers, borrowers and lenders, and homeowners.

Contact our attorneys today to learn more about our real estate services.

Cash Buyers for Houses

If you own a home, chances are you know what I’m talking about. A voicemail pops up in your inbox from a number you do not recognize. Or maybe it’s a text. Here’s one I pulled from my voicemail recently:

Hey, we’re interested in buying your property as-is. If you’re open to an offer, please let us know as soon as possible. Thank you.

In writing this article, I found four copies of this identical voicemail from four different numbers and four different Arizona area codes, all left in a span of three days. Sometimes the messages take on a far more personal tone:

Hey, this is Carla. I’m calling you to see if you’re interested in selling your property. I’m looking to make a fair cash offer. I will buy your house in as-is condition. If you’d like an all-cash offer…

I found two different identical messages from “Carla.” Identical. No, I don’t think her name is Carla and I’m not looking to sell my home. But I receive a lot of these messages.

Sometimes, I receive one a day. Some weeks are lighter but others are heavier. I once called one of these numbers, out of curiosity or boredom, only to confirm my suspicion that a “fair offer” meant “lowball offer.” But I did get to listen to ten minutes of why I should accept such a lowball offer for my house. “Because when we sign this contract, we’re partners. And you’d want to be fair to your partner, right?”

Very rarely do these calls identify the address they’re interested in purchasing. The is because “Carla” is often a prerecorded message left on your voicemail in violation of federal law.

Telephone Consumer Protection Act

The federal Telephone Consumer Protection Act prohibits telemarketers from using an automated dialing system or an artificial or prerecorded voice without your prior express consent. This means that, unless you’ve expressly consented in advance, each time that someone leaves a message for you, they are violating the law. Proving these cases, however, is not easy. You generally need proof of multiple calls with an identical message (to prove the prerecorded voice).

A consumer who receives these calls may be entitled to statutory damages of at least $500 per violation. A court may, in its discretion, increase the amount of the award to an amount “equal to not more than 3 times the amount available” where the violation was committed “willfully” or “knowingly.”

This means that you may be eligible for $1,500 per violation. The cases are often conducive to class action treatment given the common scheme that is employed. You do not need to have your number listed on the National Do Not Call Registry in order to have a claim, but it helps prove a willful or knowing violation if it is.

If you are tired of receiving these calls and want to do something about it, give us a call today to schedule a consultation.

Representative Kevin Payne wrote a guest commentary in the Sun City Independent entitled “PCA bill designed to protect Sun City.” A copy is here: https://yourvalley.net/yourvalley/your-life/payne-pca-bill-designed-to-protect-sun-city/.

Representative Kevin Payne writes that Recreation Centers of Sun City’s compliance with the Arizona Planned Community Act would put Sun City’s 55-plus age restriction in jeopardy. This is simply not true. Nothing in the Planned Community Act jeopardizes Sun City’s age restrictions.

 Every retirement community in Arizona is subject to and complies with the Planned Community Act. They do so without jeopardizing their age-restricted status. The Planned Community Act makes all Sun City owners “members” of the Recreation Centers of Sun City (“RCSC”), with the right to attend and speak at all RCSC board and committee meetings, including closed-door workshop sessions. It also gives every homeowner the right to vote, recall board members, and inspect RCSC’s records. In 2018, the Maricopa County Superior Court determined that RCSC must do these things. 

 The fact that the Planned Community Act’s protections apply to Sun City owners in no way jeopardize Sun City’s age restrictions and it is disingenuous for your elected representative to even suggest such a thing. Other communities that have restrictions in recorded documents, such as Sun City West, are free to enforce age restrictions provided they are in recorded documents. To be clear, Sun City’s age restrictions are set forth in RCSC’s Facilities Agreements and the various sets of CC&Rs recorded against Sun City properties. No one is attempting to take away Sun City’s age restrictions. Nor could they do so under the Planned Community Act. If someone tells you that the Planned Community Act will strip away Sun City’s age-restricted status, they are lying to you.

 In fact, the Planned Community Act contains several provisions that help retirement communities enforce their age-restrictions. Because the age restriction requirements are recorded against all Sun City homes, there is no risk of Sun City being “the next Youngtown.” Youngtown’s age restrictions were not set forth in recorded declarations or agreements; Sun City’s are. These are nothing but untrue scare tactics to avoid RCSC having to act with transparency. While it is unfortunate RCSC is engaging in such a disinformation campaign, it is disheartening that your elected representative would also stoop to this level.

 Representative Payne also falsely states that the Planned Community Act would require RCSC to open its doors to everyone. However, RCSC’s Facilities Agreements make clear that it gets to decide which of its members can use its facilities and the Planned Community Act does not interfere with this right. All the Planned Community Act says is that everyone, whether you are allowed to use the facilities or not, can attend and participate in meetings, look at documents, and vote to challenge RCSC decisions with which they don’t agree. What is wrong with that?

 Finally, Representative Payne is apparently uneducated when he states that RCSC does not foreclose. It has filed many foreclosure actions over the years and its Facilities Agreements give it the right to foreclose after just ninety (90) days. One of the many homeowner protections in the Planned Community Act is that RCSC would have to wait at least a year before it is able to foreclose and not just 90 days. We ask again: What is wrong with that?

 We do not understand where Representative Payne has received his misinformation or why he feels the need to drum up fear by spreading this misinformation. Rather than supporting a bill that will remove RCSC from the Planned Community Act based on the lies and deceptions that you have heard, you should encourage RCSC to honor the protections the law affords you. We urge you to contact your representatives and set the record straight!

Representative Payne’s bill, HB 2374, is deeply flawed and his continued defense of it consists of nothing more than simply regurgitating RCSC’s false talking points. Write your representatives and senators to lodge your opposition to HB 2374.

For more information about HOA Laws, check out our HOA Law page.

If you are looking for representation schedule a consultation with one of our attorneys.

Related Articles:
HOA President Accused of Embezzlement, Nevada Jury Awards $20 Million Against HOA for Failing to Maintain Swingset

The failure to maintain and repair can cost an HOA. In this case, the failure to repair a known faulty swing set will cost an HOA $20,000,000.00.

The swingset in question failed on four previous occasions. Despite spending over $100,000 per year on landscaping, repairs, and maintenance, the HOA refused to pay just $150.00 per month for a monthly inspection and maintenance plan repeatedly recommended by the swingset’s manufacturer. The plaintiff suffered a crushed skull and other permanent injuries.

An HOA's duty to maintain and repair common areas is its central function. 

Read the full article here:

 https://www.reviewjournal.com/local/jury-awards-20m-in-las-vegas-case-involving-playground-injury/

Or you can read my recap and takeaways:

The civil suit was filed by a teenager, Carl Thompson, who suffered a traumatic brain injury in a playground accident in 2013. Thompson, then 15, was using a swingset at Lamplight Village at Centennial Springs when the 42-pound metal crossbar broke, landing on his head and causing severe injuries.

The jury held the Lamplight Village at Centennial Springs Homeowners Association (HOA) responsible, awarding $10 million in compensatory damages for pain and suffering and $10 million in punitive damages.

Thompson, now 20, experiences headaches, memory loss, movement problems, and an increased risk of dementia.

The HOA had reportedly ignored warnings and declined inspection plans, despite previous incidents with the swingset.

This incident underscores the importance of proactive safety measures within homeowners' associations.

HOAs should prioritize regular inspections and maintenance of communal facilities to prevent accidents and injuries. The case highlights the potentially severe consequences of neglecting safety warnings and failing to invest in necessary repairs.

HOA members, you CAN advocate for thorough safety protocols, ensuring proper funding for maintenance, and holding the association accountable for negligence. This accident emphasizes the need for HOAs to prioritize the safety of community amenities and allocate resources responsibly, not only to protect residents but also to avoid legal consequences that can result from inadequate care of shared spaces.

If you feel like your HOA is ignoring their duties to keep you safe, make sure to reach out!

If you liked this article, you might also like to read about Kevin Payne and HOA President Accused of Embezzlement.

For more information about HOA Laws, check out our HOA Law page or schedule a consultation with one of our attorneys.

The Fair Debt Collection Practices Act (“FDCPA”) was adopted to “eliminate abusive debt collection practices by debt collectors….” 15 U.S.C. § 1692(e). Debt collectors include lawyers and law firms regularly engaged in the collection of debts through litigation constitute debt collectors for purposes of the law. Heintz v. Jenkins, 514 U.S. 291, 299, 115 S.Ct. 1489, 1493, 131 L.Ed.2d 395 (1995).

A debt collector’s behavior is measured according to a “least sophisticated debtor” standard, which “ensure[s] that the FDCPA protects all consumers, the gullible as well as the shrewd… the ignorant, the unthinking, and the credulous.’” McCollough v. Johnson, Rodenburg & Lauinger, LLC, 637 F.3d 939, 952 (quoting Clark v. Capital Credit & Collection Serv., Inc., 460 F.3d 1162, 1171 (9th Cir. 2006)). The FDCPA is a strict liability statute that “makes debt collectors liable for violations that are not knowing or intentional.” Reichert v. National Credit Systems, Inc., 531 F.3d 1002, 1005 (9th Cir. 2008).

Absent evidence of a bona fide error, courts have held that a debt collector violates the Fair Debt Collection Practices Act as a matter of law where it misstates the balance owed, misrepresents the legal status of a debt, pursues a non-existent debt, or collects or garnishes more than the amount owed. 

Although a debt collector can violate the FDCPA in numerous ways, most violations fall into one of the following two categories. We will address additional FDCPA violations in subsequent blog posts.

False and Misleading Misrepresentations.

A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt. This includes, but is not limited to false representations as to:

(A) the character, amount, or legal status of any debt; or

(B) any services rendered or compensation which may be lawfully received by any debt collector for the collection of a debt.

(3) The false representation or implication that any individual is an attorney or that any communication is from an attorney.

It also prohibits debt collectors from representing or implying: that nonpayment of a debt will result in arrest or imprisonment or the seizure, garnishment, attachment, or sale of any property or wages of any person (unless such action is lawful and the debt collector or creditor intends to take such action); threats to take actions that cannot legally be taken or that are not intended rot be taken; false representations or implications that the consumer committed any crime or other conduct in order to disgrace the consumer; and falsifying documents to make it appear they are authorized, issued, or approved by courts, officials, or the U.S. or state agencies.

This section of the FDCPA generally prohibits using false representations or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer. 

Unfair or Unconscionable Means.

A debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt. This includes:

1. Collecting amounts (including any interest, fee, charge, or expense incidental to the principal obligation) that are not expressly authorized by the agreement creating the debt or permitted by law.

2. Accepting a check or other payment instrument postdated by more than five days (unless such person is notified in writing of the debt collector's intent to deposit such check or instrument not more than ten nor less than three business days prior to such deposit).

3. Soliciting postdated checks or other postdated payment instruments for the purpose of threatening or instituting criminal prosecution.

4. Depositing or threatening to deposit any postdated check or other postdated payment instrument prior to the date on such check or instrument.

5. Taking or threatening to take any nonjudicial action to effect dispossession or disablement of property if (a) there is no present right to possession of the property claimed as collateral through an enforceable security interest; (b) there is n present intention to take possession of the property; or (c) the property is exempt by law from such dispossession or disablement.

6. Communicating with a consumer regarding a debt by postcard.

Violations of the FDCPA carry penalties, including statutory and actual damages as well as attorneys' fees and court costs.

 If you like this article, you may also find these topics interesting: HOA Law, HOA Defense and Consumer Rights, Civil Litigation and Appeals, Bankruptcy. Or, continue reading to our next blog about how HOA codes of conduct are impossible to enforce.

Arizona law prohibits a lender from filing a lawsuit to collect on a home loan where the loan represents “purchase money,” that is, money used to purchase the property. This includes purchase money loans that are technically denominated as “home equity lines of credit” taken out at the time of the original purchase of the home. It also includes first, second, and even third mortgages where the money was borrowed as part of the purchase of the property.

Consider the following illustration: You buy a $300,000.00 house. It is structured as two loans in what is commonly called an “80-20” transaction, meaning that the first loan is 80% of the purchase price, or $240,000.00, and the second loan is 20% of the purchase price, or $60,000. Because both of these loans are considered purchase money loans, the lenders cannot sue the borrower to recover the money in the event the borrower defaults. This is true even if the borrower has refinanced the original loan to get a better interest rate or other terms (note: the same may not be true, however, if the borrower has refinanced in order to withdraw some equity). This is also true even if the lender calls the second loan a “home equity line of credit.”

A common scenario in today’s real estate market is that the first mortgage forecloses. Ordinarily, this leaves the second lender without any remedy because they cannot file a lawsuit seeking to recover the difference. A number of lenders, however, are either unaware of, or deliberately ignoring, this prohibition by filing improper lawsuits. In many cases, the original loan has been sold to a different bank and the new bank fails to do its due diligence to determine whether the loan is a purchase money loan before filing a lawsuit. Because borrowers are unaware of the rules, in many cases they do nothing and let the lenders obtain substantial default judgments against them. Judgments to which the lenders otherwise would not be entitled except the borrower has forfeited his or her right to defend the lawsuit! In many cases, you may be entitled to recover your attorneys’ fees and costs if you are forced to defend such a lawsuit.

Don’t become a victim of predatory collection practices on the part of unscrupulous or unknowledgeable banks. If a bank has sued you on a second loan, we strongly advise you to consult with a lawyer to determine your legal rights. Contact the lawyers at the Dessaules Law Group today at 602-274-5400 to schedule a consultation.

The prevalence of foreclosures in the real estate market has had several unexpected repercussions to distressed homeowners who have made the decision to walk away from their home.  Banks appear to be unable, incapable, or unwilling to handle the volume of foreclosures, so a distressed homeowner may continue to own his or her home for months, and occasionally even years, after receiving a Notice of Trustee’s Sale (rather than the 90-days stated in the Notice).

Because you are legally responsible for payment of assessments until you are no longer the owner, it is important that you continue to pay your HOA assessments until you have received confirmation that there is a new owner (most commonly in the form of a Trustee’s Deed Upon Sale).  Many people who make the mistake of thinking that they can simply return the keys to the bank or that the Notice of Trustee’s Sale means they no longer own the property get a rude awakening after a few months: A hefty bill for unpaid assessments from the HOA that in all likelihood includes collection costs such as attorneys’ fees.  The HOA also may file a lawsuit to collect those assessments.  Because such collection actions almost always increase the amount you are obligated to pay, it is important to make sure that you continue to pay your assessments until the trustee’s sale is completed.

Many distressed homeowners are turning to bankruptcy as a solution, logically thinking that it simultaneously eliminates their personal obligation to pay HOA assessments and creates the vehicle for walking away from their home.  Ordinarily, the bank will seek, and obtain, permission from the bankruptcy court to conduct the trustee’s sale and notice the trustee’s sale.  Then, the homeowner is discharged from bankruptcy and is able to start fresh without being weighed down by the debts.  At least this is how it is supposed to happen.

But what happens if the bank postpones that trustee’s sale or, as we are commonly seeing, simply cancels it for whatever reason.  One possible reason for the bank to postpone or cancel the sale is that it has too many foreclosures and does not want to take on the added cost of HOA assessments, so it decides to hold off on the foreclosure, thus leaving you responsible for assessments.  The HOA does not care that the bank is dragging its feet, but you should—you remain obligated to the HOA until you are no longer the owner!  So while the discharge may have eliminated your personal liability for past assessments, the HOA can, and will, begin to charge you for assessments that accrue after you have been discharged from your bankruptcy.  So it is important for a distressed homeowner who has filed for bankruptcy to stay abreast of the trustee’s sale and not simply assume that the bank has followed through with its stated intention of foreclosing.

The distressed homeowner is not without possible remedies against the bank.  Call us to schedule a consultation with an attorney to discuss these possible remedies or read more about it on our Bankruptcy page.

Homeowner and condominium associations are increasingly adopting policies for shutting off water or other utilities where an owner has fallen behind in his or her assessments, owes fines or penalties for violating the governing documents, or is supposedly refusing to follow rules.  Although people who own in a homeowner association generally are obligated to pay assessments, associations commonly use these water shut-off policies in order to force members to pay assessments, fines, penalties or other charges that they may not owe.  These owners often face an unfair choice: Pay what we tell you to pay or live without water. 

What many homeowners do not know is that such policies in many cases may be unenforceable. There is no reported case in Arizona that authorizes a homeowners association to shut off water or other utilities. The determination of whether the policy is enforceable depends on several factors, including (a) an association’s governing documents, (b) Arizona’s planned community and condominium laws, (c) the history of the policy and its enforcement, and (d) whether the association is seeking to collect assessments or fines and penalties.  In many cases, the water shut off policy is not enforceable and can be successfully challenged in court.

In most cases, we find that the application of these factors provides fertile ground for challenging a shut-off policy.  While this is especially true where the association does not pay for the utility that is the subject of the shut-off policy, the association does not necessarily gain the right to shut off essential services even if it pays for the utilities.

Please understand that we are not advocating you to refuse to pay assessments.  Assessments have been called the “lifeblood” of a homeowners association and an association has every right to collect assessments…provided that the assessments are valid and it does so within the law.  If you believe that assessments are invalid, we strongly encourage you to seek legal representation to learn about your rights and obligations.  We recommend you seek legal counsel before taking any action.  Although many people believe that they can simply stop paying assessments, it is our experience that this is not the wisest course of action and many people who stop paying assessments quickly regret it.

Courts cannot, and should not, condone a homeowner who has refused to pay valid assessments.  But the courts also should not condone a homeowners association that has exceeded its lawful powers and seeks to use unlawful collection tactics.  And, in many cases, the association is using the threat of water shut off to force a homeowner to pay disputed fines or penalties. 

An Association’s Governing Documents Rarely Permit the Disconnection of Water of Other Utilities.

Although many associations will argue that their governing documents (CC&Rs and Bylaws) in general provide sufficient authority for shutting off utilities, this is rarely the case. Unless an association’s CC&Rs explicitly creates the right to shut off utilities as a collections tactic, then no such right exists.   Even if the CC&R’s provide such an explicit right, that provision may be found to be unlawful.

The CC&R’s constitute a contract between the Association and the homeowners. In most cases, the governing documents spell out the rights and remedies of the association.  Rarely do these enumerated rights include the ability to shut off water or other utilities for non-payment.  Rather, they generally permit an association to commence legal action for damages or foreclosure (if applicable) and on occasion may also allow the association to suspend certain rights and privileges, such as the right to vote.  If the right to shut off water is not expressly spelled out in the CC&Rs, then it is not part of your contract with the association.

Nor can the right be inferred or implied from a general right to collect assessments or charge fines. One court addressing this question has decried this “extra-legal means of enforcement,” holding that the association, in that case, lacked the legal right to shut off a homeowner’s water.  See Western v. Chardonnay Village Condominium Ass’n, 519 So.2d 243 (1988).  In general, the absence of express language authorizing utility shut off, and the inclusion of specific language spelling out the methods for collection of unpaid assessments, as if often the case, defeats any argument that such an implied right exists.

The association’s CC&R’s generally do not give it the right to employ collection tactics such as shutting off the water, disconnecting utilities, or prohibiting parking any more than the association could threaten to change the locks on your house or condominium.  And an association does not have the right to change the locks on your house or condominium.

Arizona Law Does Not Permit the Disconnection of Utilities.

Arizona law also does not authorize the disconnection of water or other utilities.  Arizona’s statutes governing condominiums and planned communities generally restrict exclusive an association’s remedy for non-payment of assessments to commencement of a civil action for damages and/or foreclosure of its lien (where applicable).  Nothing in Arizona’s Planned Communities Act or Condominium Act allows an association to disconnect these essential services any more than it could change the locks on your home.  Simply put, an association does not have the authority under Arizona law to deny water or other utilities as a means of collecting for past due assessments or penalties.

Arizona courts have analogized homeowners associations to landlords in many respects.  See Martinez v. Woodmar IV Condominiums Homeowners Ass’n, Inc., 189 Ariz. 206, 941 P.2d 218 (1997).  A homeowners association has no greater right to shut off water or other utilities than a landlord.  And a landlord generally cannot shut off essential utilities in Arizona—even where the landlord pays for those utilities—as a means of compelling payment of rent.  See A.R.S. § 33-1364.  Thus, the fact that the homeowners association might pay the utility bill as a common expense does not necessarily create the right to shut off that utility to a non-paying homeowner.

The disconnection of essential services also arguably raises serious due process concerns.  The Condominium Act and Planned Community Act both require commencement of legal process in order to collect past due assessments or fines.  Where an association has received a specific grant of power under the statute, a collection policy that circumvents the legal process provided, and avoids the judicial oversight inherent in the legal means set forth in the statute, offends basic concepts of due process.

The History and Application of the Policy Is a Crucial Question.

Even if state laws and an association’s governing documents permit shutting off utilities, one should examine the history of the policy and how it is being enforced.  Consider the following questions:  Was the policy adopted in a properly noticed, open meeting? Was the policy communicated to the homeowners?  Is the policy uniformly enforced? Unless you can answer, “yes,” to each of these questions, the homeowner may have valid grounds for challenging the policy.

Policies that are discussed and adopted in closed, private meetings by a select handful of homeowners subvert Arizona’s open meeting statutes (A.R.S. §§ 33-1248 and 33-1804), and are invalid and unenforceable. Although the open meeting statutes do not explicitly spell out the remedies for their violation, the statutes would be meaningless if actions taken during a closed or secret meeting are valid. Even if the policy was adopted in a properly noticed, open meeting, the failure of the association to disseminate the policy to homeowners could render the policy otherwise unenforceable.

Such policies, however, are almost never enforced uniformly or objectively.  The policy is often enforced only against those designated as troublemakers or outsiders, or delinquent board members may exempt themselves or their friends from the harsh application of the policy; or the policy may be enforced arbitrarily or capriciously.  Any evidence that the policy is not enforced on a uniform and non-preferential basis renders the policy enforceable.  It also violates an association’s duty to treat all homeowners equally and fairly.

Is the Association Shutting Off Water as a Fine or Penalty?

The non-payment of assessments, as discussed above, should not be condoned and Arizona law provides remedies for the non-payment of those assessments.  In many cases, an association has threatened to shut off water or other utilities as a means of forcing a homeowner to pay disputed fines, penalties, or fees.  The nature of the monetary amount that is the subject of the collection effort is a crucial factor that must be considered in challenging the water shut off policy.

Although it is our position that water shut-off policies are almost always unenforceable, the challenge to the policy is strengthened where the alleged delinquent balance includes disputed fines, penalties, and charges other than just assessments. The rationale common employed by an association defending a water shut-off policy is that assessments are used to pay the utilities.  This rationale is absent where the balance consists, in part or whole, of fines or penalties for alleged (and unproven) CC&R violations.

Arizona law distinguishes between assessments and fines.  For example, a homeowners association has the statutory right to foreclose where the unpaid assessments exceed $1,200.00 or have not been paid for more than one year, the association generally does not have the right to foreclose for violation fines or penalties.  If an association cannot foreclose if you paint your house the wrong color or leave your trashcan out overnight, why should they be allowed to shut off your water in order to force you to pay fines and penalties that you dispute and may not even be valid!

Conclusion.

In many cases, a policy that allows the association to deny essential utilities or access to your unit is subject to challenge.  Because every case is unique, you should not rely on this article as legal advice specific to your situation.  But if you are faced with threats of having your water shut off, you should immediately consult a lawyer.

Don’t be a victim or abusive practices. Seek legal assistance and learn more about your legal rights on consumer fraud.

So you find yourself behind in your HOA assessments. The HOA lawyers are circling. Maybe they've threatened a lawsuit or already filed it? You call the HOA to try to find out how much you owe, but they just send you to the attorneys. You call the attorneys and leave countless messages. Or maybe they speak to you, but the amount they tell you that you owe is a lot more than you owed...because the HOA has added late fees, collection fees, and a ton of attorneys' fees to your account. It feels like an excessive amount to charge for a letter or two. You want to bring your account current, if only to avoid foreclosure, but you don't have the outrageous amount they're demanding that you pay. So what do you do?

Pay your assessments. Sit down, calculate the unpaid assessments that you owe, and send in a check for the full amount of the unpaid assessments. If you cannot afford to pay, in full, the assessments that you owe, pay what you can. Write "Assessments" on the memo line of the check. Then, deliver the check in person (and get a receipt) or send it by certified mail so you have a record of the check being sent. It sounds silly, but also make a copy of the check and, if possible, video yourself putting the check into the envelope and sealing the envelope (it is amazing how many times the HOA has claimed it never received a check). 

If they refuse to accept the check, send it back to them. If they tell they cannot accept "partial payments," resend the check to them and instruct them, in writing, to apply your payments to unpaid assessments. Document and keep everything. Make them accept your assessments. If they keep rejecting it, keep sending it back in, keeping or taking photographs every time of the envelopes come to you.

Your payment -- or attempted payment -- of assessments is a valuable defense if your HOA decides to file a foreclosure lawsuit. You might not be able to avoid a lawsuit, but at least you can prepare to defend the lawsuit. Imagine yourself in court six months or a year later when the HOA wants to sell your home at a sheriff's sale to collect unpaid assessments. If you have records showing every time you paid or attempted to pay those assessments, it very well may be the difference between losing and saving your home!

Check out HOA Law, Real Estate to know more about your legal rights.