New HOA Laws Coming Your Way...

ATTENTION ALL: The governer has signed six new bills that affect HOAs, which will become law in July 2011.  There is an additional bill pending signature on her desk.  Starting in July, owners will have express authority to record HOA meetings.  This has been an issue of contention in many HOA communities, as homeowners have sought to record the meetings, yet HOAs have prohibited them from doing so.  We support this law, as it provides the homeowner with another tool to record what his or her HOA is doing.  We know that sometimes minutes do not always reflect exactly what happened at any particular meeting.

The second law concerns open meetings.  It requires HOAs to open all committee meetings to the membership.  It also requries the HOA allow owners to speak after specific agenda items are discussed, and clarifies the type of meeting minutes the HOA is required to keep.  This law also allows the HOA to hold closed meetings to discuss a member's appeal of a violation or fine, and sets forth some additional regulations relating to HOA meetings.  Again, we are largely in favor of this law.  We believe HOAs should be operating in the most transpararent manner possible.  Opening committee meetings is a definite plus, as often committees make decisions that shape a homeowner's life in the HOA.

The third law re-establishes an alternative forum for HOAs and owners to resolve disputes, the Office of Adminstrative Hearings.  Melanie McKeddie of our firm served as counsel for the homeowner in the case that ended this process the last time due to unconstitutionality.  Although we are in favor of some less formal, and less expensive forum for homeowners, we do not believe the current bill will pass the constitutionality test.  Unless and until our legislature enacts some sort of regulatory scheme for the HOA, we do not believe the OAH process will be upheld.  We maintain that regulation is what is needed, and is necessary for the goal of providing alternative dispute resolution for HOA disputes.

The fourth law limits the HOAs abiltiy to charge transfer fees (fees charged on sale), and holds the HOA to some of the information that is provided as part of the sale relating to assessments owed.  We are in favor of this law.  We have seen transfer fees skyrocket to having no rational relationship to the administrative fees incurred in preparing the paperwork associated with a sale.  We also believe the sale is the time for the HOA to assert any claims for assessments due.

The fifth law concerns the types of flags owners can display without regulation by the HOA.  As this relates to free speech and expression, we are in favor.

The sixth law restricts the HOA from interfering with politics.  The HOA cannot prevent people from going door to door to promote a candidate, subject to reasonable restrictions.  Again, we like free speech and the freedom to engage in the political process, so we support this law as well.

The final bill that is not yet law concerns for sale signs. HOAs will be prohibited from charging fees in relation to for sale signs, and imposes penalties for a violation of the owner's right to have for sale signs.  We support this law as well, as we believe in freedom of speech.  We do not believe HOAs should be regulating signs that owners place in their yards, especially if just simple for sale signs.

Some of these laws will result in significant chagne for the homeowner.  If you live in a HOA, please educate yourself about your rights, and the limiations on the HOA's rights.  Use caution in participating in the OAH for dispute resolution, as we fear the process will likely be overturned as unconstitutional. 

Please feel free to comment if you have any specific questions. 

Did you know:

Did you know that the HOA is not the only one that can enforce CC&Rs?  Homeowners are also entitled to enforce CC&Rs against violators and the homeowner can ask the Court to make the HOA pick up the tab for the homeowner's expenses.

How to find an HOA attorney:

Always ask your attorney what his or her experience with HOAs is.  Most HOA attorneys in Arizona represent HOAs, but will represent homeowners.  The McKeddie Law Firm's founding partner, Melanie C. McKeddie, began her practice representing homeowners.  Where an attorney that represents HOAs might not be willing to press the HOA on certain issues, Ms. McKeddie is.  When choosing an HOA attorney be sure that you choose one that is willing to make the hard arguments in favor of the homeowner and is not afraid to damage a reputation built on representing the HOAs.

Do I have to pay my HOA asessments even though I am short selling or going through a foreclosure?

The short answer is yes.  Homeowners' Associations (HOAs) have the power to collect assessments through statute and the Declaration/CC&Rs applicable to the community you live in.  Typically, the Declaration/CC&Rs provide that the obligation to pay assessments is a personal obligation, and as such, any unpaid assessments can follow you, even after you leave the community.  The HOA can get a money judgment against you, even though you no longer own the home. 
In addition, the HOA's assessments are not tolled during your short sale negotiations.  The HOA has no obligation to cooperate or work with you, as the bank may be doing.  When you reach the point of closing (finally!) on that short sale, the HOA can, and likely will assert a claim for any unpaid assessments.  This can hold up your sale. 
Our advise is to ALWAYS pay your assessments.  Other than Uncle Sam (taxes), a HOA is perhaps the worst creditor out there.  Unlike a bank, if your home is foreclsed on, the HOA's deficiency judgment does not go away.  Our laws, as they currently exist, do provide some protections from banks, but none from HOAs.