Love ‘em or hate ‘em, HOA’s and the laws surrounding them can be confusing. Here is a quick overview of some of the laws pertaining to HOA’s. This is not a complete list. If you or your client has an issue with an HOA, discuss the problem with and ask questions of, a real estate attorney familiar with HOA law in Arizona.
Arizona Open Meeting Law (ARS 33-1804/Condo ARS 33-1248)
Arizona law requires all meetings of associations, their board of directors and regularly scheduled committee meetings to be open to all association members (or their representatives). Meetings must be held in Arizona. Members and their representatives must be allowed to attend and speak at these meetings. The board of directors may place time limits, but a member must be permitted to speak before the board takes action on an item under discussion. The board must allow a reasonable number of people to speak on each side of the issue.
The board can go into closed executive session to discuss the following topics:
• Legal advice from an attorney
• Pending or contemplated association litigation
• Personal (includes financial and health) information regarding an association member, employee or contractor employee.
• Job performance, compensation, health records or complaints of association employees or employees of association contractors.
• Unit owner’s appeal of a violation or penalty assessed by the association (unit owner may request a public meeting).
Meeting agendas must be provided to all members in attendance. If an emergency meeting was held, the reason for the emergency meeting must be in the minutes and the minutes must be read at the next meeting and approved by the board. A quorum of the board may meet by phone if there is a speaker phone available in the meeting that allows all those in attendance to hear everyone speaking at the meeting. Any quorum of the board, meeting informally to discuss association business, must comply with open meeting requirements even if no action is taken. If in doubt as to whether open meeting law applies, assume it does and abide by open meeting law provisions.
Owners may tape and/or video open board meetings, but the board may adopt reasonable rules.
Solar Energy (ARS 33-1816/ARS Section 33-439)
Associations may not prohibit the installation and use of a solar energy device. The association may however adopt rules regarding placement of the device as long as the rules do not prevent the installation, impair the function or negatively affect the cost of the solar energy device. Planned Communities and Condominiums cannot adopt rules that effectively prohibit the use or installation of solar energy devices.
Mail-In or Absentee Ballots (ARS 33-1812/Condo ARS 33-1250)
Proxy voting in prohibited at termination of developer control of the association. Votes by members may be in person, mail-in ballot, absentee ballot, email or fax. Mail-in and absentee ballots have requirements:
• Ballot must set forth proposed action
• Ballot must provide a way to vote for or against the proposed action
• Ballot is valid for one specific election or meeting
• Ballot must specify time and date ballot is due to the board of directors to be counted. That date must be at least 7 days after the mail-in ballot is delivered to the member.
• The ballot must say how many votes need to be returned in order to meet quorum requirements and what percent is required in order to approve the proposed action.
• Completed ballot and envelope must have name, address and signature of the property owner.
Annual Audit (ARS 33-1810/Condo ARS 33-1234)
The board of directors must conduct an annual audit, review or compilation of the association’s books. It must be completed no later than 6 months after the end of each fiscal year. The report must be available to members within 30 days of completion. Association documents dictate if the audit/review must be completed by a CPA or bookkeeper.
Foreclosure (ARS 33-1807/Condo ARS 33-1256)
Associations may only foreclose if assessments are delinquent a minimum of 1 year or if the owner owes $1200 or more (whichever happens first).
Removal of Directors & Board Members (ARS 33-1813/Condo ARS 33-1243)
Petition for removal requires:
1,000 or fewer members: petition must be signed by 25% of the eligible voters or 100 votes, whichever is less and presented to the board.
More than 1,000 members: petition must be signed by 10% of the eligible voters or 1,000 votes, whichever is less and must be presented to the board.
Special Meeting: A special meeting must be called, noticed and held within 30 days of receipt of the petition.
Quorum: Removal quorum must be equal to at least 20% of the votes or 1,000 votes (whichever is less) present in person at the meeting. (some exceptions)
% Required to Remove Director: Directors may be removed with or without cause by a majority vote of the members voting at the meeting held for that purpose provided a quorum is present.
Board of Directors must keep records of the removal meeting for at least 1 year and must allow members to see those records upon request. The attempt to remove a board member may only be attempted once in a term. If less than a majority of the board is removed, the vacancy/vacancies will be filled according to association documents. If a majority of the board is removed, the association will hold a special election no later than 30 days after the removal.
HOAs may not appoint a Director who has been removed to fill a board vacancy.
Flag Display (ARS 33-1808 (A) (B)/Condo ARS 33-1261
Associations cannot prohibit display of:
• The American Flag (Federal Flag Code)
• An official flag or replica of the US Army, Navy, Air Force, Marine Corps, Coast Guard (Federal Flag Code)
• POW/MIA flag
• Arizona State flag
• Arizona Indian Nations flag
• Gadsden flag (“Don’t Tread on Me”)
Associations may limit the number of flags displayed at one time to two flags and limit the height of the flagpole to the height of the house. Associations must allow installation of the flag pole in either the front or back yard.
Fines & Penalties (ARS 33-1808/Condo ARS 33-1261)
Associations may not record a lien against a property for unpaid fines and penalties. Associations may impose a reasonable fine for violating by-laws and rules of the association after giving notice to the owner and providing an opportunity for the owner to be heard. Associations can enforce payment of fines by (must do all three):
• Filing a lawsuit against the owner
• Obtaining a judgment against owner
• Recording the judgment at the County Recorder’s office
Recording the judgement provides the association with a lien effective at conveyance. The association may choose to garnish wages, rent or a bank account held by the property owner.
For Sale/For Lease Sign (ARS 33-1808/Condo ARS 33-1261)
Associations cannot prohibit, or charge a fee for the use or placement, of temporary, commercially produced “for sale”, “open house”, “for rent/lease” sign or a sign rider on an owner’s property. HOAs cannot prohibit “For Sale by Owner” signs. Sign riders must conform to industry standards.
Member Inspection of Association Books/Records (ARS 33-1805/Condo ARS 33-1258)
All financial and other records of the association must be made available to members. There are some exceptions having to do with privileged information from an attorney and private/ personal information.
Owners are entitled to see association records regarding contemplated litigation. Associations cannot charge a fee for making the books and records available to members, but they can charge $.15/page for copies. Associations must make the records available within 10 days of receiving the member’s records request.
Response to Notice of Violation (ARS 33-1242/Condo ARS 33-1803)
Associations must give a give notice to a homeowner. Homeowners have 21 calendar days to respond to the notice in writing.
Architectural Review (ARS 33-1817)
Association architectural committees, Design Review committees or other committee that performs review functions, cannot unreasonably withhold approval of a construction project. HOAs may be liable if the review board fails to make a reasonable approval.
HOA Late Fees
HOAs must notify a homeowner of prior to applying a late fee to the owner’s account.
Amendments to the CC&Rs
CC&Rs may be amended by the HOA. The amendments would then need to be approved by eligible voters.
Political Activities
Associations may not prohibit circulation of political petitions. HOAs can limit activities to particular times and may require the identification of the person, candidate or ballot issue.
HOAs must allow the display of political signs. The Association may regulate the time period before and after the election for sign display, size and number of signs.
Open House
HOAs cannot limit open house hours except before 8am and after 6pm. HOAs may allow open house sign in the common areas.
Commercial Signage
HOAs may not modify or revoke prior approval of commercial signs on land zoned commercial.
Tenant Information
HOA’s are limited in the information they can request from tenants. HOA’s may require:
Tenant’s name
Contact info for adult tenants
Duration of lease
Vehicle description
License plate
HOA’s cannot not require:
Rental application
Credit report
Lease agreement
Personal information
The tenant to sign a waiver or other document limiting the tenant’s due process rights
Roadways
HOA’s may not regulate a public roadway if the HOA declaration was recorded after 12/31/14.
HOA’s cannot prohibit a temporary, cautionary sign regarding children at play. HOA’s cannot prevent children of residents from playing on streets with a speed limit of 25mph or less under the jurisdiction of the HOA.
HOA’s must allow residents employed by public service or public safety agencies to park on a street or driveway. The vehicle must be necessary for emergency services, maintenance of electrical, water or telecommunication infrastructure.