HOA bill would provide $500 forum for complaints

Article Courtesy of The Arizona Republic

By Cary Aspinwall

Published June15, 2006


Gilbert Rep. Eddie Farnsworth is one of the driving forces behind a proposed law to give members of homeowners' associations a new forum for complaints.

House Bill 2824, which could be signed into law by the governor this week, would allow homeowners and HOAs to take their cases to dispute resolution before a judge in the Office of Administrative Hearings.

It's a bill that Farnsworth says would be a cheaper, faster and more efficient solution for homeowners than having to take on their association in Superior Court, and vice versa.

Currently, most homeowners have to file legal claims against their homeowners' associations in Superior Court, which often costs upwards of $10,000.

"It's a huge barrier to most people," Farnsworth said. "There's no reasonable forum for homeowners to go to with problems."

If HB 2824 passes, homeowners and HOAs could have their cases heard before an administrative law judge for a filing fee of $500. Cheaper than taking a case to Superior Court but expensive enough to prevent homeowners from filing nuisance suits, Farnsworth said.

It's something that could help restore the balance of power from HOAs to homeowners, because under Arizona law, HOAs have the power to file liens and foreclose for unpaid dues.

Not all residents of homeowners' associations are thrilled about the legislation. Some are worried that this could be another barrier for boards trying to enforce rules that residents agree to when they purchase in an HOA.

Some attorneys also oppose the bill, because it could impact their ability to collect on legal fees of HOAs taking homeowners to Superior Court, Farnsworth said.

"Well, that's just too bad," he said. "Not all attorneys out there abuse the system, but those who do it rack up tens of thousands of dollars in legal fees."

In a recent Superior Court case, HOA attorney Augustus H. Shaw IV was chastised by a judge for tacking on almost $6,500 in legal fees and penalties to one homeowner's past due bill. The homeowner owed $343.02 in past dues, but her association's attorney sent her a bill for $6,825. The judge called it "an example of the risk to the public of abusive litigation practices run amok." Shaw's HOA advice column in the Community sections of The Republic was dropped last month.

A Gilbert homeowners' association made headlines in 2003 when it tried to foreclose on the home of a terminally ill single mother for $363 in past due payments. Her bill ballooned to more than $2,000 when legal fees were tacked on, and Mayor Steve Berman helped gather private donations to pay her bill.

The dispute resolution system would give homeowners in those situations somewhere to go if they can't afford a battle in Superior Court, Farnsworth said.