Thank You Dennis, understood burden of proof is on the petitioner. Was rooting around Nevada Revised Statutes looking at another issue running across this: TITLE 10 – PROPERTY RIGHTS AND TRANSACTIONS; Chapter 116 Common-Interest Ownership (Uniform Act) 116-1112 Unconscionable agreement or term of contract. https://www.leg.state.nv.us/nrs/NRS-116.html#NRS116Sec1112 : I had been looking for cases nationwide off and on for a bit under UNREASONABLE therefore UNENFORCEABLE. The Nevada statute introduced me to UNCONSCIONABLE that translates to unreasonable.

Joseph,
While common law establishes that any unconscionable restriction or covenant included in the declaration is invalid and unenforceable the the appellate or Supreme Court has never specifically established as case law the validity provisions of the restatement of law property servitudes section 3.1 into case law for Arizona. The court has applied this concept to individual and specific cases based on the facts of that case alone. If a specific provision of the declaration is challenged on the basis that it is unconscionable and you are able to prove that point then you will get the ruling that you seek from the court, but remember the burden of proof is yours. The associations does not have to prove that it is legitimate.
Dennis

Ann,

While I do not know exactly what your CC&R’s stipulate relative to changing common elements, I can only assume that the board correctly interpreted the CC&R’s to require a vote of the members. Why the board refused to bring such an issue to the members is probably because the board members are all tennis players, and they don’t want to lose the courts. The members have the right to petition for a special meeting to conduct any business of the members. Such a petition would require the signature of 25% (236 members) or any lower number specified in the community documents of all the members in the community. Upon receipt of such a petition the board must then call and hold the special meeting of the members to decide to remove the tennis courts or not. Before anyone proposes such an action you should have a clear picture of what it would cost to do that and return the space back to green space. Also remember that the courts are a feature that may have factored in the decision of many of the residents to buy homes in your community. Removing that feature may negatively impact the resale value of every home in the community whether you use them or not. Someone looking to buy a home may want to look at communities that have tennis courts or other similar features. You have to weigh all of these factors in making this decision.

Dennis

Lori,

Unfortunately, the law does not currently require that the association provide the agenda to board meeting prior to the meeting, I’ll be working on changing that to require the agenda to be provided along with the notice of the meeting 48 hours prior to the meeting. Currently the law requires that the association provide any member present at the meeting an agenda for that meeting. That is a little late for those people that had no idea what the board was planning to discuss. This is again an example of a commonsense issue where it simply makes sense that an association would provide its members the agenda for the meeting to help those members decide if they should attend or not. There is a difference between what any community should do to conduct its business for the community and what it must do under the law.

Dennis

Thanks Dennis. You rock!

Kathy,

This type of editorial error is what is known as a Schrivener’s error in contract terms. The declarant has the right under the law to correct this error with an amendment to the CC&R’s without the approvals of the members. Typically, these issues are identified very early in the life of the community when the declarant still has the voting rights alone necessary to satisfy the declaration amendment requirements, so this prior point is moot. While the error does not impact the validity of the recorded covenant it should be corrected at the earliest opportunity. If allowed to fester without being corrected it could subject the association to legal challenges in the future. The longer the issue remains the more difficult the process will be to change the CC&R’s to correct the obvious error.

Dennis

Understood, Dennis! Thank you!

Sorry to pull you deeper into the weeds of this situation, Dennis, but here I am again!

I have gone back through the language of ARS 33-1805 (A). What I see now when I read it with new eyes is that the only thing that must be provided in writing is proof that a person is the designee of an association member when the designee is making the request. The language is repeated two more times after the opening sentence and the structure of the sentence remains exactly the same each time: ” member or any person designated by the member in writing”. What this leads me to believe is that the request for records need not be, specifically, in written form; that the law leaves room for a person to present in person to their association’s representative, whether that be the Board Secretary, Board Treasurer, Board President or the Community Manager/Management Company.

Could I possibly be correct in this interpretation?

The IRS tax issue depends on how exactly you are classified by the IRS. common interest communities can be classified as either 501(c)4 or 7 organizations and are tax exempt but still must file a form 990. This classification is very rare and any organization that was fortunate enough to get this classification on initial application needs to ensure that they still qualify periodically. If audited and the IRS discovers that you no longer qualify you could face significant tax consequences and penalties for the last three years of returns. The Majority of these communities are classified under Section 528 of the tax code where they are not classified as tax exempt, but a significant amount of their income is exempt from taxation while other portions of income are not. Under that code these communities have the annual option to file their return using form 1120 or 1120H that classifies their income differently and applies different tax rates to non-exempt income. This is very complicated, and I would venture to bet that most if not all associations have no clue of the tax implications and are doing this wrong.

Dennis

Again, many many thanks!!!