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

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Business Judgement Rule

Can a homeowner file a complaint with the AZ Department of Real Estate regarding a Board decision that in the homeowner’s opinion violates the business judgement rule? I don’t want to get too specific, but...
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Audit

I asked my HOA for a copy of the audited financial statement. They said they do not need to do one, but did send me a copy of the Tax Compilation. Our CCRs state 14.4...
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  • From Carol Payne on Marijuana use in community

    Dennis,

    The problem isn’t so much with homeowners as it is with the rental units. Since we do have the power to adopt reasonable rules to address and protect the community, how do we get the tenants of the rentals to be respectful of the community? Do we issue violations to the homeowners? I’m assuming in their lease agreement there is a sub-section that deals with smoking whether it’s cigarettes or marijuana. Many landlords require their tenants to sign a crime free addendum. Nobody is trying to play God but some of the residents don’t like the fact that people are openly smoking marijuana on the premises and they feel uncomfortable. Where do we stand when it comes to rental units abusing their “medical need”? Thank you.

    Go to comment
    2019/10/07 at 7:32 pm
    • From Dennis Legere on Marijuana use in community

      Carol;
      Your community documents would define the expectations of your association relative to requirement for owners that lease their units. Typically they require that the renters comply will all association rules and regulations. The homeowner is the person that the association will hold accountable for any violations of the community documents. It will then be up to the homeowner to decide what to do with the renter. As I mentioned earlier whether other homeowners like or dislike what other homeowners do that is legal is irrelevant. You have no right to impose your will on others. What you do have the right to do, is ask the association to adopt rules to limit the impact of these individuals on your ability to enjoy your property and the community common property with the potential health concerns from second hand smoke no matter what the source of that smoke. If the association choses not to act on this issue, unfortunately your only recourse is to remove the current board and elect a new board with a greater understanding of how this issue impacts you and other homeowners in the community.

      Dennis

      Go to comment
      2019/10/08 at 1:16 pm
  • From Dennis Legere on Marijuana use in community

    Carol;

    Obviously if the homeowners have legitimate medical marijuana cards, they have the legal right to use the product on their property. Ask them simply to verify that they have the license to use the product, and then ask them nicely to limit their use to certain times of the day that will not impact immediate neighbors.

    Under Property servitudes common law compiled in the Restatement of Law Third property servitudes section 6.7, the association has the rights as stated below:

    (2) If the declaration grants a general power to adopt rules, the common interest community also has the ability to adopt reasonable rules designed to protect community members from unreasonable interference in the enjoyment of their individual lots or units and the common property caused by use of other individually owned lots or units.

    What this says is that the association has the right to adopt rules even if they are not specifically authorized in the CC&R’s to prevent one home owner from doing things that impact other homeowners ability to enjoy their home or the common property. Those rules should be based on that direct impact and focus only on limiting the homeowners use of marijuana when the neighbor windows and doors are closed or when the adjacent homeowners are not on their patio’s or in the immediate vicinity of them. Or something to that affect. You cannot limit them from using the product that is medically necessary for their well being. You can only establish rules that prevent that use from negatively impacting their neighbors.

    Don’t try to play God here, or even judge these people because of their medical need. What you believe or how you stand on that product is irrelevant here, you have absolutely no right to impose your beliefs or will over anyone else. If you believe that the incidental intake of that product is a detriment to your health and welfare than you have the right to ask the association to take action to protect your health and the health of your family on this issue.

    Dennis

    Go to comment
    2019/10/07 at 5:34 pm
  • From Dennis Legere on Sketchy Vote

    Shawn
    You are absolutely correct. There is a clear disconnect between the policy statement and the actual language in the statute. This is the classic example of attorneys interpreting the law in a fashion that it was never intended to be used because they can. And they know that even if someone challenges the board based on their advice that they simply make more money even if they lose and they are proven wrong. That is why I’ve been trying to close those loop holes for so long. For homeowners to have a chance of knowing what the board is doing they must get the agenda before the meeting and not simply at the meeting. People have families to raise and cannot go to every board meeting in case they discuss something important to the community. This has all been a plan to keep homeowner in the dark about what the board is doing or planning. This is coupled with the practice of not allowing homeowners to speak during the meetings or worse yet badgering any homeowner who dares to ask a question or to question the actions of the board.

    We have a long way to go to get truly open and participatory board meeting, but that has and will continue to be our primary objectives. But if we can get the homeowners in this state to unite with us we can get our laws changed to work for the homeowners paying all the bills instead of for the HOA industry that makes incredible profits based on their influence with the legislators and the Governor.

    Dennis

    Go to comment
    2019/09/24 at 6:11 pm
  • From Shawn on Sketchy Vote

    Thank you, Dennis. I appreciate your time and your insight.

    I was hoping that ARS 33-1248 (E)(1) would help, when combined with the policy statement in subsection (F).

    (E)(1) “The agenda shall be available to all unit owners attending.”

    (F) “It is the policy of this state as reflected in this section that all meetings of a condominium, whether meetings of the unit owners’ association or meetings of the board of directors of the association, be conducted openly and that notices and agendas be provided for those meetings that contain the information that is reasonably necessary to inform the unit owners of the matters to be discussed or decided and to ensure that unit owners have the ability to speak after discussion of agenda items, but before a vote of the board of directors or members is taken. Toward this end, any person or entity that is charged with the interpretation of these provisions, including members of the board or directors and any community manager, shall take into account this declaration of policy and shall construe any provision of this section in favor of open meetings.”

    However, it looks like there is plenty of weasel room for the unscrupulous Board. The real kicker is that the Board is basically a lame-duck Board. They are going to lay waste to our finances and then leave. Frustrating, but I assume that I am preaching to the choir on this one!

    I am glad that I encountered your web site. I will pass the word around my community, and hopefully we can increase your numbers.

    Thanks again,
    Shawn

    Go to comment
    2019/09/24 at 3:24 pm
  • From Dennis Legere on Sketchy Vote

    Shawn;
    Unfortunately Arizona statutes only require that meeting of the board be noticed. I’ve been trying for years and have an additional proposal to require that the board post the agenda of the meeting along with the notice of the meeting so that members have a chance to see that such an issue is to be discussed and then they can decide to go to the meeting to voice their input into that decision making. As I’ve always said The board advisors, attorneys and community managers tell the board what they can do but never advise them of what they should do. Even if the board has the sole authority to approve such an expenditure they should as part of their responsibility to treat members fairly provide for a public question and answer session to at the very least let the community know that they are even considering such a move.

    What makes these issue even more egregious is the fact that for most association these decisions are not support with resources available in the capital reserve fund or worse yet money is available but all dedicated to other long term maintenance, other than the project being considered. This is nothing short of total breach of the fiduciary duty of the board to the community members. They take money from you for use on some projects in the future but then divert that money to do something altogether different leaving the communities long term needs under funded.

    The only real issue before you is whether you community documents allow the board to make such expenditures with community input and vote. If you documents require this then they violated those documents even though they did not violate the law. If you have the community documents in an electronic format you could send them to me and I’ll look them over for you. Send it to help@azhoc.org.

    What you and your community can do right now is join our coalition and help me and us fight for better laws that protect our fundamental rights as homeowners and help board make decisions based on what is right for their communities and not just on what they can and cannot do,

    Thanks
    Dennis

    Go to comment
    2019/09/24 at 12:31 pm
  • From Dennis Legere on Member HOA The Ranch at Prescott

    Joe;

    Good question. The association must provide access to any association record that is not confidential as defined in the 4 open meeting exceptions. The fifth open meeting exception is an exception only if the individual homeowner choses to make it so. There is no requirement for associations to reveal homeowners e-mail addresses or phone numbers, and most associations treat that as confidential information. Which in my mind is appropriate unless the individual homeowners have elected to make their information public.

    I believe that your question may also included the issue of the association board needing to disclose any e-mails between board members or individual homeowners. Most HOA attorneys will advise their clients that if they simply chose to not make board correspondence a record then they can avoid the record request for these correspondence based solely on the claim that they are not records. This is absolute crap. If the board conducts any correspondence involving community business it is subject to the open meeting laws and a discoverable record of the association. These records are routinely subpoenaed in any case involving the courts and are treated by the courts as community records. The open meeting laws clearly define a meeting as any assembly of a quorum of the board, where community business is proposed, discussed, deliberated or acted upon either in person or by technological means. E-mails are technological means as are conference calls. Any such meeting I’m not providing legal advise here simply stating the clear and precise definition of a meeting and the direct position of the Arizona Attorney General from a 1997 and 2005 published opinion. This is why most HOA attorneys will also advise their board to use a community email account rather than their personal e-mail account because they know that if the board uses their personal e-mail account for community the entire account information is discoverable by the court and the parties involved including any personal e-mails totally unrelated to community business. This is another case where HOA attorneys talk out of both sides of their mouth, telling board that they don’t have to provide e-mails to homeowners request for records all the time knowing that they will have to disclose that information to any court at any time.

    Dennis

    Go to comment
    2019/09/15 at 12:53 pm
  • From Jack on Can HOA restrict street parking on public street?

    My HOA has restrictions for overnight parking on streets–which I support. However, the community is over run with street parking which is a safety hazard. Aside from the occasional email, the HOA is not enforcing these rules despite repeated requests. How can I get the HOA to start fining residents here?

    Go to comment
    2019/09/14 at 7:34 pm
    • From Dennis Legere on Can HOA restrict street parking on public street?

      Jack;
      First does your association own the streets or are they city owned? Does your association have CC&R parking restrictions other than overnight parking restrictions? The first question is important because if the association owns the streets they are common property and the association can create rules to protect and manage that property. If the city owns the streets than any association based restriction must be in the CC&R’s and even those will be void if the association amends their CC&R’s for any reason. (based on a law passed in 2016)
      For comment purposes I’ll assume that the streets are common property and the association rules are limited to overnight parking. The first thing I would do is take pictures over several nights of the violators. Get a group of your neighbors that feel the same way about the abuse and attend a board meeting and raise the issue, providing the board the pictures. Inform them of your safety concern especially if the parking could cause safety equipment like fire trucks or ambulances difficulty in navigating thru your community.

        Ask them nicely to address and resolve the problem.

      If they fail to respond file a formal complaint to the board requesting that they enforce their own rules and the CC&R’s or you will be forced to file a petition to the Department of Real Estate to have a judge force them to enforce their rules. Give them a specific time limit to act like 14 day. Again if they fail to act then file the petition to ADRE I’ll help with that if you like but I’ll need to see your CC&R’s and rules. This is cut and dry and the judge will force the association to either change their rules of provisions in their CC&R’s or to enforce them. Failure to comply at this point would result in contempt of court charges and they could go to jail.
      Dennis

      Go to comment
      2019/09/15 at 5:56 am
  • From Dennis Legere on Secret ballot vs Absentee ballot; good or bad for me?

    Morgan;

    By law your association must allow voting in person at a meeting AND by absentee ballots for those who cannot attend that meeting. That has absolutely nothing to do with secret balloting or not. The law simply clarifies that if the association’s governing documents allow secret ballots the processing requirements for absentee ballots changes. You can have absentee balloting with or without secret ballots, and you can have secret ballots even with absentee ballots.
    Your association and community manager should actually take the time to read the law before they make statement to the community. I’ve often stated that despite all the rhetoric from AACM and CAI about how they train and certify all the community manager, they fail to mention in their training how to actually find and read the law. If they did we would probably have many fewer problems in these communities.
    I’ve failed to understand how absentee balloting will impact the transparency of your board? Whether it’s in person voting or absentee voting election integrity is a big deal in these communities, so the voting method is not the problem but rather the integrity of the vote counting process is, and needs to be addressed in statutes as I’ve proposed for this coming session.

    Hopefully this answers your question.
    Dennis

    Go to comment
    2019/09/13 at 4:02 pm
  • From Dennis Legere on Lack of Landscaping of Community Areas

    John;

    Before you even consider legal options remember one thing the management company works for the board alone and not the homeowners and they have no responsibility to respond to homeowner complaints. They should but they don’t. The landscapers were probably hired by the management company and not the board directly other than to sign the contract. The board is the only entity bound by contract that is established via the CC&R’s for the community to maintain and protect the common property for the uses and enjoyment of all members of the association. Complain to the board directly along with pictures and as many of your neighbors as you can get.

    NEVER ACT ALONE. this will allow the board to simply treat you as a disgruntled homeowner, and an antagonist. You cannot believe the attacks that boards have made on individual homeowners based on simple request for them to do their job.

    If the board refuses to consider or act on the communities request for proper maintenance. Than you could generate a petition to remove the offending or the entire board members. Remember one thing the boards duties are to act in the best interest of the association and the members as a whole, they have no responsibility to make everyone happy. If they make a conscious effort to provide the best landscaping service that the community can afford then that is their job and why you put them in those positions to make those decisions. Very seldom will all community members agree with every decision that the board makes, or doesn’t make but as long as the decision was made based on what they believed was best for the community you cannot fault them for that decision. What you do in that case is present your case for better landscaping along with support from many of your neighbors recognizing that nothing is free and there may be higher cost associated with more active landscaping.

    If all this fail and as an absolute last resort you could sue your board for breach of contract, on their failure to protect and maintain the common area. Suits of this nature could run up 10;s of thousands of legal cost and the only people that actually win in these cases will be the attorneys. Win or lose the homeowners will end up paying the bills for this litigation. Which could far out weigh the cost of improved landscaping.

    In closing let me make one thing abundantly clear. You are unconditionally bound to pay your assessments under risk of losing your home. NEVER, NEVER, NEVER USE YOUR ASSESSMENT AS PROTEST AGAINST THE BOARD ACTIONS OR INACTIONS. You will always lose in the end and your association’s attorney will be able to buy another new boat or vacation home.

    Thanks
    Dennis

    Go to comment
    2019/09/13 at 8:11 am
  • From Dennis Legere on Board

    Joseph;

    That depends on what you are referring too. Boards do this every day, The board has the ultimate responsibility for everything related to the association. However they can hire a management company to perform some of those duties like paying the bills or collecting assessments from the homeowners, or managing code enforcement. They also routinely create committees of the board to handle code enforcement, or architectural control, or budget preparation or long term capital planning, etc. etc.

    I cannot really answer your question unless I know specifically what you are concerned about and what exactly you governing documents say about delegation of authority.

    Dennis

    Go to comment
    2019/09/12 at 2:49 pm