COVID-19 for HOAs

While the Covid-19 pandemic has created a lot of confusion, one thing is clear: it should not be used as an excuse to take advantage of others. Yet, this is precisely what some Homeowner’s Associations have been doing.

Over the last few months, many HOAs have refused to reopen common elements (including fitness centers, pools, dog parks, and other recreational facilities), unless the homeowners sign a blanket liability waiver. Signing a blanket liability waiver excuses the HOA from any liability for its own neglect. That means if someone trips and falls near the pool because the HOA failed to fix a hole in the surrounding cement, the HOA cannot be held liable. Lately, these HOAs have been citing COVID-19 as a justification for the waivers. In essence, the HOA is using the current pandemic to force homeowners to sign their rights away. Fortunately, these waivers are usually unenforceable.

Concerns

The Covenants, Conditions and Restrictions (“CC&Rs”) which govern most HOAs expressly give every homeowner an equal right to use and enjoy the common elements in the community. However, the HOA is tasked with maintaining and repairing those areas. HOAs are even required to insure the common elements in case there are accidents or injuries. The HOA is responsible for maintaining the safety of the common elements, not the homeowners.

While HOAs are afforded the right to impose reasonable restrictions on common element use (i.e. no swimming after midnight, social distance while using common areas), a blanket liability waiver goes far beyond what could be considered “reasonable.” It excuses the HOA from its maintenance obligations and subjects the homeowners to the HOA’s negligence.

Liability Waivers

Fortunately, in Arizona, liability waivers are often strictly construed against the drafter—the HOA in this case. That means a Court will interpret a waiver as narrowly as possible and resolve any ambiguities in favor of the homeowner. Additionally, the waiver is only valid if: (1) it does not contradict public policy; and (2) the waiver was actually bargained for.

If an HOA’s liability waiver takes protection away from a class of persons that it should be protecting, it is against public policy, and therefore unenforceable. And HOAs are responsible for protecting the homeowners. This is why the HOA has a duty to maintain and insure the common elements, while the homeowners have the right to enjoy the common elements. Blanket liability waivers run afoul of public policy because they expose homeowners to the very risks and liability that the HOA is tasked with managing.

HOA liability waivers that are not bargained for are also not enforceable. A liability waiver is nothing more than a contract between two parties. A contract is only valid if each party gives something up in exchange for the bargain. Savoca Masonry Co. v. Homes & Son Const. Co., 112 Ariz. 392, 394 (1975) (stating an enforceable contract requires consideration). In cases with blanket liability waivers, the homeowner is signing away any right to sue the HOA in exchange for access to the common elements—which the homeowner already has a legal right to access. This is often called an “illusory promise” where one party is agreeing to do something it is already required to do. Illusory promises are not enforceable. Shattuck v. Precision-Toyota, Inc., 115 Ariz. 586, 588 (1977) (“an illusory contract is unenforceable for lack of mutuality.).

Finally, the HOA cannot enforce a waiver that has no limits. An HOA has a duty to disclose all the facts that will impact a homeowner’s decision to sign, or not sign, a liability waiver. See Maurer v. Cerkvenik-Anderson Travel, Inc., 890 P.2d 69 (Ariz. App. 1994). That means the liability waiver has to explicitly state what risks the homeowner is agreeing to assume by signing. Yet, a blanket liability waiver generally excuses the HOA from liability without reference to any of the risks. This is another argument that a homeowner can use to invalidate a liability waiver.

Conclusion

Many HOAs are exploiting a global pandemic to skirt their legal obligations at the expense of homeowners. They accomplish this by forcing homeowners to sign blanket liability waivers to access common elements in the community. These liability waivers are often unenforceable because they go against public policy, they are not bargained for, and they are unlimited in scope.

Contact an HOA Attorney

Whether you have been denied access to the common elements of your community because you refuse to sign a liability waiver, or, worse, you have been injured due to the HOA’s neglect after signing such a waiver, an HOA attorney can help protect your rights. You may be entitled to actual damages, punitive damages, and attorney’s fees incurred in such a suit.

Our attorneys have substantial experience in HOA and contract law. We are prepared to help you, whether that means providing advice or taking on litigation. Please do not hesitate to reach out to us with your concerns.