Arizona Curtails HOA Complaints with 400% Fee Increase

Quite unexpectedly, as of this morning, the Arizona Dept. of Building, Fire and Safety increased the non-refundable filing fee from $550 to $2,000, effective until April when it will once again be reviewed. This is outrageous, and an attempt to stifle homeowner justice as revealed by my case summaries. It reminds me of the 1950s Poll Tax in the South to prevent blacks from registering to vote.

Word is from BFS that, out of some 7,000 - 8,000 a year heard by OAH (Office of Administrative Hearings), the 22 cases to date in the first 5 months during which OAH could hear HOA disputes are overburdening the judges, who need to spend extraordinary amounts of time finding out how to make a decision on HOA disputes. So, these 22 cases require a 400% increase in order to provide justice to homeowners against HOAs, while all other civil complaints can be funded out the state coffers. This is outrageous! This is an attempt to coverup problems created by pro-HOA legislation and unconscionable adhesion contracts known as CC&Rs.

In 2004, when a bill was proposed to have JP courts decide the disputes, fears of outlandish costs that would overpower the JPs caused the bill to be defeated. Well, it turns out to be just some 50 cases for the year. I guess HOAs are just to much for our system of justice to handle, whether JP or OAH, and we should just let HOAs continue to be independent principalities operating outside the Constitution and state laws.

OAH adjudication has been working to bring justice to homeowners against abusive HOAs. OAH has had the additional benefit to expose the types of injustice, and attitudes of HOA boards and attorneys that are quite contrary to their pronouncements before the legislature and the media of a democratic community working to create vibrant, harmonious communities.

This filing fee increase should and must be paid for from state coffers to remove this scandalous bar to justice

Arizona HOAs Subject to Claims for Restitution

The new Arizona experiment in HOA justice by means of the administrative judge resolution of disputes has been hailed as a leveling of the playing field. Homeowners now have a relatively inexpensive and less formal procedure to obtain justice against an HOA board's disregard of the laws and governing documents.

ALJ decisions can now have a financial impact on HOAs if they lose cases that involved the collection of fines and other charges against the homeowner, and were found to be in violation of the law or governing documents. In case 07F-H067004-BFS, not yet decided, the homeowner petitioner asked for punitive damages and restitution. The ALJ ruled that punitive damages were out, but restitution was permitted, depending on the facts. This ruling was based on a 1993 Arizona Appeals Court opinion (Cactus Wren v. The Department of Building, Fire and Safety, 869 P.2d 1212) affirming the decision by the administrative hearing officer.

Of the twenty-two complaints filed against HOAs to date, six have been decided: HOAs won 3 cases, the homeowner 1 case, and 2 cases were "split decisions" going to one and the other on the separate case complaints. The cases are being heard before the Office of Administrative Hearings (OAH)where HOA attorneys do not automatically get fees paid if they win, and where the Administrative Law Judge may penalize the HOA up to $500. This should make HOA boards think twice about filing suits urged on by the attorney, and attempt to reach an agreement with the alleged violator.

No longer can HOA boards file suits or frivolous fines without being subject to financial penalties. The HOA boards are now being held accountable for their actions by the state. This will have an impact on homeowners not involved in the case when such actions by their boards cause them to reach into their pocketbooks to foot the bill. Now, perhaps the homeowners, usually denoted as "apathetic homeowners", will feel the need to watch over their boards.

Mass Selling of HOAs Required Authoritarian Governance

I've written many times about the mass merchandising -- the large-scale promotion and selling -- of HOAs to the public. I've commented on the bible for this program, the Urban Land Institute's Technical Bulletin #50, The Homes Association Handbook of 1964, funded by the special interests and your federal government. (See Part I in, Handbook).

It is clear that the creators of this housing model,

1) desired the mass acceptance of HOAs across the country,

2) realized that they must tie HOAs strongly to equitable servitudes with the favorable protections it offered the developer as the creator of the CC&Rs,

3) that constructive notice rather than a signed contract, was the strong mechanism to allow for the mass selling to average Americans,

4) that other forms or model of housing development -- the business entity known as the housing cooperative where people buy shares in the co-op that owns the real estate -- that relied on contract law would not protect the developers' interests,

5) the obsession for uniformity and conformity to developer created "laws", the covenants running with the land, in order to maintain their obsession as to what makes a beautiful landscape (Levittown with curved roads),

6) that an authoritarian regime, the business corporate form of governance, was necessary, with lip service to democracy, to maintain the developer's plan for larg-scale acceptance of HOAs, and

7) that a different sales pitch was prepared for the different parties: carefree living and property value protection to buyers; profit protection for lenders and developers (forecosure and equitable servitudes); and affordable housing subdivisions at no-cost to the municipality.

A review of the complaints and problems with HOAs can be traced back to one or more items in the above statement. Ask yourself,

1. Why is there an obsession with one set of CC&RS and the acceptance of ex post facto laws, when the US Constitution prohibits them?

2. Why is there the need to foreclose on nonpayment of fines and assessments, if not to punish the homeowner and to preserve the HOA that has very little at risk? In this manner, they could mass sell "protection" to developers and lenders.

3. Why have the special interests, and the leading national lobbyist, CAI, strongly opposed recognition of HOAs as a government, and their insistence on HOAs as a business?

4. Why were no bill of rights included?

5. Why is there a focus on "community" rather than on "business"?

6. On equitable servitudes and not contract law?

7. Do I own, in reality, my home as my private property when my neighbors can control my rights without my approval?

8. Why are the courts still defining what my rights are under the CC&RS, long after I thought I had a "sealed" agreement?


Mass merchandising, like selling appliances, required a nonnegotiable acceptance of terms and conditions that are common in the world of commerce, but has no place when it comes to a person's home and the surrender of civil and constitutional rights. With a person's home, the CC&Rs must be viewed as an adhesion contract that is unconscionable and against public policy.

HOA Takes Owner Property by Valid Amendment, Without Owner Consent

One of the first complaints, OAH # 07F-H067007-BFS (2007), heard before an administrative law judge in Arizona’s new experiment in bringing justice to HOA disputes involved a homeowner who filed a complaint about the taking of his sidewalk property of some 20 years - among other things. The HOA amended the CC&Rs and appropriated homeowner sidewalks since, it was argued by the HOA, the HOA was already maintaining them as required by the CC&Rs. There were no deeds signed by any homeowner, just an amendment deemed valid since it met all the requirements of the CC&R amendment procedure.

The decision failed to acknowledge that the homeowner at his hearing raised the question of the validity of portions of the lengthy amendment to the CC&Rs. The ALJ did not address the purpose and validity of the amendment in his decision, which stated that the homeowner failed to “present any substantive evidence” and that,

“[S]uch concerns [by Petitioner] are ultimately irrelevant to the determination of this matter, which involves not the substance of the amendments but the manner in which those amendments were adopted”.

See complete analysis at Sidewalk.

HOAs and the Business Judgment Rule: Bad Law

Should the business judgment rule (herein “BJR”) rather than the alternative, reasonableness test for decision-making be the standard for HOA board actions? The courts grant HOA boards broad rights over homeowners by currently holding that the board is the best decider of what's good for the HOA, not the courts, regardless of any test of the reasonableness of actions. We believe that the rational for this position was reached by faulty analysis and a bias toward treating the HOA government as the best arbiter of “the stability of the common living arrangement.”

We believe this holding deprives homeowners of their due process rights, especially when board the decisions relate to rules and regulations regarding use of private property and the conduct of the homeowner.

Read more at Judgment.