AZHOC - Arizona Homeowners Coalition
Voice for homeowner rights and justice.

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Reserve study

Is there a requirement under Az law by which an HOA must follow the maintenance schedule included in the reserve study? Also is there a requirement to collect monies from all members to pay for repairs and priodic maintenance?

1 Response

  1. Dennis Legere

    John;

    First let thank you for your generous contribution to the upkeep of this website. It is only with contribution from homeowners like you that we can maintain this website active and to support our ability to reach out to homeowners and help them in these communities.

    There are no Arizona state laws addressing Reserve studies or reserve accounts. Having said that the fundamental concepts of these communities is that the association has an obligation to maintain the common property, and the homeowners have an unconditional obligation to pay for that maintenance. That maintenance includes the short term annual maintenance and the long term maintenance, upkeep and replacement if necessary. To do this, it is my belief that the association has a fiduciary responsibility to the community to understand what the long term needs of the community are and how to ensure that when the need arises that adequate funds are available to pay for that maintenance or upgrade. This is impossible without some sort of reserve study and a conscience plan on how to fund those long term needs. Far too many associations have a reserve study then either fail to fund it adequately or worse yet keep using the funds in the reserve funds as a slush fund for things that are not on the long term plan. Additionally some associations simply use the strategy that the reserves should be kept as low as possible and if a large project is needed than a special assessment will be the way used to fund the project. The problem with this strategy is that all the burden to fund the repair is placed on the shoulders of any homeowners who happen to live in the community at that time. All the previous homeowners get a free ride. This is simply unfair and irresponsible. To answer your question directly there are no state regulations mandating the funding of a long term maintenance plan, but if the association does have one than yes the homeowners are obliged to fund that plan. You all have a right to question the plan or to hold the association accountable to living up to their commitments to that plan. This is a condition of pay me now or pay me latter but all homeowners will be required to pay their share of those expenses.

    In 2016 I drafted proposed legislation to define basic fundamental requirements for reserve studies and funding plans including limitation of managing this plan and funds, however I could not find a legislator willing to sponsor such a bill. Obviously AACM and CAI would oppose any such legislation because it would actually help HOA boards do the right thing for their communities. Clearly the community managers and attorneys are already doing such a great job at advising these associations across the state and they do not need and help from the state??????

    Dennis

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