Article Courtesy of  The Independent Newspapers

By Rusty Bradshaw and Jill R. Goodman

Published May 17, 2006

The Arizona Legislature passed three homeowners association bills regulating charges for records, flags in communities and vehicles parked on streets.

Passed into law by the Legislature were Senate Bill 1007 and SB 1055, as well as House Bill 2205.

Senate Bill 1007 limits fees condominiums or homeowners associations can charge for records, and stipulates that a meeting may be closed when pertaining to records of the HOA that are directly related to personnel, health or financial information.

SB 1055 requires condominiums and HOAs to permit the outdoor display of military, POW/MIA, Arizona state and Arizona Indian nations flags.

HB 2205 allows a resident to park a vehicle on a street or driveway if employed by a municipal utility and the vehicle is required to be available to the resident for employment purposes.

Desert Ridge Community Association Manager Jim Davis said he does not believe any of the passed bills will greatly impact Desert Ridge, but he said he still must review the final versions.

“I think all of them (bills) are just clarifying stuff that’s already being done,” Mr. Davis said. “It (passed bills) will affect different associations depending on their legal documents. There is no standard boiler plat for associations.”

Desert Ridge Homeowners Network Vice Chairman Nick Meris said he agreed with SB 1007.

“It (SB 1007) is a little more protection for homeowners and that’s generally what we’re looking for,” Mr. Meris said.

Mr. Meris noted he also liked SB 1055 because it allows people to honor those who have or are serving their country and recognize their accomplishments.

However, Mr. Meris said he favors limiting the size of the flag.

“I would hate to see the type of flag that covers the whole house,” Mr.

Meris said. “It doesn’t make a neighborhood look too great if its (the flag) too large.”

Mr. Meris was strongly against HB 2205 saying vehicles left out on the street will lessen the neighborhood’s beauty.

“I wouldn’t want any type of vehicle left out there,” he said. “Let them put it in the garage or let the city come out here and pay to extend those people’s garages.”

Dispute Hearings

A bill gaining momentum at the state capitol would provide an alternative hearing process for disputes between homeowners and homeowners associations.

The state Senate passed HB 2824 with amendments May 3 and now legislators from both branches are slated to negotiate changes to the bill that authorizes the Office of Administrative Hearings to conduct HOA grievance hearings.

Administrative law judges could impose civil penalties for violations.

Primary bill sponsors believe this would provide a quicker, cheaper way — other than hiring a lawyer and taking complaints to court — for homeowners to address problems with their HOA board.

“There’s a certain threshold you have to hit before it makes sense to defend your rights. It doesn’t make any sense to go and spend $10,000 to save $500,” said District 22 state Rep. Eddie Farnsworth (R-Gilbert).

District 6 state Rep. Pamela Gorman (R-Anthem) helped craft the bill over the summer hoping to address HOA reform on a statewide level without tampering with rules homeowners agree to by moving into an association.

“We didn’t want people to be able to harass their HOA because they didn’t like the contract, but if the contact is not being honored by the board, they need a place to go,” she said. “With all the HOA bills that were out there, I think this is the one that gave them the least amount of heartburn in the industry.”

Opponents believe the new law would lengthen the dispute time and end up costing associations more, which would dig into pockets of homeowners regularly paying their dues.

Curtis Ekmark, an HOA attorney and vice president of West Valley Homeowners Associations, fears “double litigations” with arguments going through this hearing process and then superior court, or vice versa.

“You still end up in Maricopa County Superior Court,” he said. “I can’t really see why that’s good for boards or anyone who lives in homeowners associations.”

According to the bill’s text, decisions by the administrative law judge cannot be appealed, but all parties can take conflicts — initially or after the decision — to superior court.

The Department of Building and Fire Safety, which would oversee hearing requests, would establish a fee based on the cost to do service.

Bill opponents also argue it does not offer enough time for many HOA boards to respond to complaints. The bill language allotted 10 days for a response at one point while lawmakers were discussing upping it to 30-45 days.

“For self-managed associations or even smaller law firms, if you’re on vacation, how do you respond in 10 days?” Mr. Ekmark said.

House Bill 2352, also alerted to its members by West Valley Homeowners Association, would protect homeowners’ equity up to $150,000 before a lien for unpaid HOA assessments or late fines is paid.

This Rep. Farnsworth-sponsored bill, which failed March 30 in the Government Committee, worried HOA advocates, who believe they need foreclosure power to collect unpaid fees and reinforce Covenants, Conditions & Restrictions. The legislation, reincarnated as SB 1183, also died.

The Gilbert lawmaker, who lives in an HOA, said associations deserve to be paid money they are owed, but the penalty for walking a dog without a leash should not be losing a home and equity, and the homestead exemption, if applied, should be applied equally to residents whether they live in an HOA or not.

Rep. Farnsworth’s sights are now on a hearing process as laid out in HB 2824.

The driving force for Rep. Gorman is the fact HOA membership is not optional in many communities anymore.

However, Rep. Gorman argues any amendment worth making will garner enough interest from homeowners. Many HOAs require a three-fourths vote to amend governing documents.