Challenging HOAs could get easier

House and Senate pass bill requiring review of complaints

by State Office of Administrative Hearings


Article Courtesy of The East Valley Tribune

By Howard Fischer

Published June 9, 2006


People who live in planned communities or condos may soon have an easier — and cheaper — way of challenging the actions of the associations that govern them.


On Thursday, the Senate voted 18-3 to approve legislation allowing residents to seek a hearing to overturn some rulings made by homeowners associations. The measure goes to Gov. Janet Napolitano.

Kevin DeMenna, who lobbies on behalf of association boards and managers, said he will seek a veto.

He called the measure “legislation by anecdote,’’ arguing that it’s a solution without a problem.

The outcome will have widespread implications: DeMenna said most new homes being purchased are in planned communities governed by HOAs.

But Rep. Eddie Farnsworth, RGilbert, who crafted the measure, said opposition from the associations should be expected.

“They will do everything they can do to maintain absolute power on their side to coerce homeowners into complying with their demands regardless of the truth or validity of the claim,’’ he said.

Farnsworth said the legislation is designed to level the playing field between associations with deep pockets and individual property owners.

“The only forum that exists right now to address any of these grievances is in the superior court,’’ he said.

The problem, Farnsworth said, is that it costs up to $10,000 to hire a lawyer to file the lawsuit and fight the court battle.

Sometimes the dispute involves only a few hundred dollars of disputed fees or assessments.

Farnsworth said the current situation puts the HOAs in control because they know it’s not cost effective for individual members to sue.

The new measure spells out that homeowners can instead seek review through the state Office of Administrative Hearings.

That process is not only less formal, said Farnsworth, but also cheaper.

He pegs the cost of settling the typical dispute at about $500. And HB2824 was crafted so the person seeking the review would have to pay whatever costs the state agency incurs.

Farnsworth said the fee will screen out those with frivolous complaints.

DeMenna said it’s a mistake to believe the proposed law would actually save money. He pointed out that an appeal would be an option for whichever side loses the administrative hearing.

“It almost certainly will end up in superior court,’’ he said.

DeMenna also said the legislation is being driven by “pure politics,’’ and without proof of a real problem. He said this legislation and similar measures are being driven by “an isolated number of anecdotes.’’

That, said Farnsworth, is not true. He said most homeowners support the measure because it allows them recourse to settle a dispute without going to court.

There is some precedent for the measure: An identical procedure already exists for landlord-tenant disputes.

EXPLANATION: If you are not familiar with Arizona politics: You'll see the name DeMenna often mentioned in the article. DeMenna is actually the lobbyist for the Community Associations Institute who tries the same boring story as usual: There are really no problems in HOAs. Just a few disgruntled homeowners are blowing it all out of proportion. It really sounds like an old broken record!