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 Dennis Legere on Ventana Lakes POA Board Threatening Homeowner with Trespassing

    Laurel;

    Unfortunately not yet in Arizona. California recently enacted a law that would mandate what you ask, and prevent boards from interfering in homeowners rights to free speech and to assemble peacefully. Arizona has no such protection, and while as corporations the fundamental protections of the constitution do not apply in these associations. Under Property Servitude’s common law the association can apply no restriction on the homeowners that are unconstitutional or that violate public policy. Public policy would include the fundamental freedom of speech and freedom to assemble. However one would have to challenge the association in court to leverage this case law.
    The association owns all the common property in a planned community, you identified your community as a POA, and Property Owners associations are all planned communities. As such they can establish rules for the use of those facilities. But those rules must apply to anyone using the facility and cannot be selectively enforced only on one group. If they allow any group of homeowners to use the facility they must allow any other group of homeowners to do the same. While they can absolutely prevent any outside group from using the facilities, if your group of property owners were to invite me to speak to you, the association has no right to restrict that meeting.

    There are no Arizona Laws governing this situation so to bring an issue before the Administrative Law Judge the association would have to be violating one of your community documents. I would have to actually see your documents to comment on that possibility. You are however free to take the association to court in either Superior court or Federal Court. You should absolutely consult with an actual attorney before you considered such an action.
    The comment about only the board can tell homeowners about HOA law or HOA business is absolute crap, most HOA boards don’t even know that state laws exist protecting homeowners. If you can read you can understand the law, you do not need an attorney to tell you what it say or especially a board member to tell you what it says. Give your advocate our contact information. I would like to meet him or her.
    The only way for these communities to take back control of these communities is to band together, learn about what their rights are and correspondingly learn about what their responsibilities to the association are. While the board has absolute power in these communities it is only the homeowners that can elect a board and can conversely remove any board member with or without cause. To do so however you must band together and demand a board that listens to the community and treats them with respect and dignity.

    You can absolutely run one of these communities without denying the homeowners their fundamental constitutional rights. This is still the USA and not some third world dictatorship trying to suppress the masses to stay in power.

    Dennis

    Go to comment
    2019/08/23 at 4:33 pm
  • From Dennis Legere on No access to community clubhouse

    Carol;

    While you all could simply call the community manager every time anyone in the community wanted to access the clubhouse for any reason, they would simply tell you that they could not drive to your complex to do that, and the real issue is to make the board pay the consequences of their actions to limit/prevent access to the community property. With the proximity of the annual elections a petition could be a waste of time unless you want to eliminate the entire board. What you can do is test the waters in the community on this clubhouse access issue. If enough people are upset than putting in a new board will be easier especially if you have viable candidates to fill the vacancies. Most communities only fill expired terms for board members so if the true instigators of this policy are not up for reelection than waiting for the election may not help you. You may get new members on the board but if the existing members outnumber the new members they will have to fight a losing battle until the new members get a majority. If the people you want to get out have their terms expire this year than doing anything before the election will be a waste of time. Even if they are removed they can run again for the following term. The law only prevents a removed board member from serving on the board during the remainder of his/her current term. Focus your energy on getting this issue in front of as many community members as possible. Load the next board meeting with as many community members as possible. Demand that access to the common area be returned to all community members that are current on their assessment and do not have unresolved delinquencies. If the board refuses then let me know and I’ll help you and your community work out a strategy for action that will get you your rights back.

    Dennis

    Go to comment
    2019/08/13 at 2:25 pm
  • From Carol Payne on No access to community clubhouse

    Dennis,
    Thank you for your response. I will bring this up at the next board meeting in two weeks. I will give them an opportunity to address this issue properly and if their response is inadequate, start the process to go higher up the chain. If need be circulate a petition to remove the board. Our next board member election is in October and a few of us are gearing up to run. Some of us homeowners would love to be able to call a board member, even if there is an emergency since they’re the only ones with access or keys to areas that have been restricted to homeowners. But we can’t because the board members have refused to give us their phone numbers or email addresses. They were questioned on that issue at a board meeting 5-6 months ago and the excuse was they’re all too busy in their personal lives. They have deferred everything to the community property management company and the property manager. None of this is acceptable behavior in my estimation.

    Go to comment
    2019/08/13 at 1:51 pm
  • From Dennis Legere on No access to community clubhouse

    Carol;

    Have you or your neighbors pointed this issue out to your board or to the management company? This could simply be a technical issue with the security access system. The board has absolutely no right to limit access to common property to unit owners that actually own that property who have done nothing wrong. If I were you or any other of your neighbors i would call a board member any and every time I wanted to access the clubhouse, for any reason, even just to show guest or to use the rest room. They cannot refuse to let you in if you have done nothing wrong, it is after all your property. Give the board an opportunity to fix this issue but if they refuse to address the issue than I would recommend that you file a petition to the Department of Real Estate relative to their violation of your CC&R’s. If you chose to go this route, I’ll help you with the process. An administrative law judge will force them to change this policy

    While you can ask them to resign, I’ve never known this to actually work. You can circulate a petition for a special meeting of the community for the purpose of removing the entire board. You would need the signatures of 25% of the community on that petition and if you get that the board must call the meeting and hold the vote. A simple majority of those present and by absentee ballot decides the issue.

    Their reaction to the issue in the past was inappropriate. They cannot punish the entire community for the actions of one person. They are entitled to establish rules on the use of the clubhouse for meeting or events including getting prior approval and clean up requirements etc., but they cannot limit simple access to the facility if someone has not done anything wrong.

    Dennis

    Go to comment
    2019/08/13 at 5:53 am
  • From Carol Payne on No access to community clubhouse

    Dennis,
    The complex I live in is a condo complex, not a planned community. The CC&R’s state:
    1:6 Portions of the Project for which title is held by all of the owners as tenants in common, including the recreational common area.
    I’ve owned since March of 2018 and do not have access to the clubhouse nor does my key card work electronically to access the clubhouse, only the pool and jacuzzi. Neither do any of my neighbors key cards work to access the clubhouse. And we are not behind on our HOA dues either. Apparently this has been going on for a number of years. Do we have the right to ask the members of the board who have been serving on the board for five plus years to step down as this has been happening on their watch? And yes they are using common property for their sole and exclusive use, while only allowing homeowners access if they let us in to use the clubhouse. And yes I do believe there is more to this story but as a relative newcomer I get only second hand information from long time homeowners. Thank you.

    Go to comment
    2019/08/12 at 8:54 pm
  • From Dennis Legere on No access to community clubhouse

    Carol;

    I apologize for the delay in responding to your earlier message for some reason i was not notified that the question was there. To answer your question i actually need more information. Is your community a condominium or a planned community like an HOA? Why is that important, you may ask it is relative to who actually owns the common property of the club house. In a condominium the association represented by the board does not own any of the common property, the unit owners awn it all collectively. While the board can establish reasonable rules on the use of the common property they cannot restrict access to the facility to all other members of the community. In a Planned Community the association as represented by the board actually owns the common property, and not any of the individual homeowners. That board does have the authority to ban use of the common areas based on violations of the CC&R’s or non-payment of assessments.

    I’ve a feeling that there is more to this story than what had been mentioned in your question. I cannot ever in my wildest dreams imaging that a community would stand still and allow a board to ban everyone from the use of the common property that was granted them in the contract they entered when they bought their individual homes or units for 10 years without removing that entire board from office. Nor can I imagine any board actually doing such a thing. Taking common property for their sole and exclusive use. While i continue to be amazed every day with what a board can attempt to do under the guidance of their community managers and attorneys that are absolutely illegal, so i should never assume that anything is not possible.

    If you provide me more specific details of what is going on in your community either in this public forum or directly to my help@azhoc.org email. I’ll be better able to answer your question.

    Thanks
    Dennis

    As I alluded earlier in either type of community a board can and has legally banned individuals from access to community property based on unpaid fines or unpaid common area assessments.

    Go to comment
    2019/08/12 at 3:07 pm
  • From Carol Payne on No access to community clubhouse

    I’ve not received an answer to my inquiry July 24, 2019 as to whether is is legal to restrict access to the community clubhouse for at least 10 years to homeowners. Only the board members have access. Thank you.

    Go to comment
    2019/08/11 at 2:24 pm
  • From Dennis Legere on Dissolve HOA

    Elle;

    Good question. Every set of CC&R’s contain provision for dissolving the association and to lift all covenants and restriction on the units. You mentioned that you are in a condo. As a condo the association owns no part of the property. the unit owners own it all, either individually (for their specific unit) or collectively for all common property. Your CC&R’s again would precisely define what is individually owned property and what is common property. While you maintain your individual yards front and back they may not actually belong to you individually.

    Arizona Laws has a section specifically focused on the termination of Condominiums. The section is ARS 33-1228. We’ve made some significant progress in improving that particular statute in the last two years, it is still not where it needs to be but it is significantly better. As you alluded to the greatest issue in dissolving a condominium association is how to deal with the common property. You will definitely need to consult an attorney on how best to deal with the common property. The easy part is the community vote to dissolve the condominium association and the CC&R’s, call for the vote and if you get the required number of owners to agree with the action to dissolve the association it is done. The hard part is how to equitably deal with the ownership and maintenance of the common property. You will definitely need to consult with an attorney on how best to achieve the results that you want relative to either assignment or long term maintenance of common property.

    For example most likely the walls and roof of your existing units are currently defined as common property. You could simply reassign that property to the current unit owners and deed that property to them individually. You could try and transfer the streets and alleys to the local city or municipality and see if they will assume long term maintenance of those streets or alleys. Low probability of success in that option but it never hurts to try. You could also if everything else fails create a new organization simply to maintain the common property that is left (streets and alleys). You would be trading a Condominium for a planned community only without deed restrictions other than payment of fees to support maintenance of the smaller scope common area.

    I’ll gladly discuss this further with you or your community if you are serious about looking into the possibility of terminating your current Condominium.

    As for your comment about not having a meeting in three years, that is clearly a violation of the law that require a meeting of the member at least once each year.

    Dennis

    Go to comment
    2019/08/10 at 8:02 pm
  • From Dennis Legere on My HOA dues are for what?

    Cindy

    I totally understand your frustration. You are absolutely correct that the fact that you have had three different management companies in 6 years but the actual property manager does not change if very unusual. While property managers leave their companies all the time to go to other companies to have that happen simultaneously with the change in management companies for one community is suspicious at best. There may be something going on here that is, let me just say not in the best interest of the community. Somebody on the board likes this particular manager and is willing to change property management companies and all that is involved with that to stay with this person. This means changing the banking accounts and transferring all the community records etc. Whatever is going on here the relationship between this community manager and the board is very much too close. Your community needs to understand what is happening here and assure yourselves that your community is properly run. From what you describe competence is not a strong suit for this particular manager. Unfortunately your only recourse is to find out the facts of what is happening and ask the board that the community manager be changed. If the board refuses or if an individual refuses to remove the community manager than call for the removal of the board or that board member. The members elected the board and the members have the power to remove any board member or the entire board if they are not acting in the best interest of the community and its members.

    Dennis

    Go to comment
    2019/08/04 at 5:45 am
  • From Dennis Legere on Reserve study

    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

    Go to comment
    2019/07/27 at 12:05 pm
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