HOA reform bill proposed
By GARIN GROFF
Article Courtesy of The East Valley Tribune
January 27, 2003 

 
An East Valley lawmaker is pushing a homeowners association reform bill that would block the groups from foreclosing on members who refuse to pay fines or their monthly dues.

Supporters and opponents agree the bill would dramatically cut the power of association boards to collect money but they are at odds as to whether that's a good thing.

Reform advocates argue the bill will curb abuse by power-hungry associations that levy fines for petty infractions and then force homeowners out of their houses if they don't pay resulting fines.

Opponents insist the bill is a deadbeat protection measure that would leave associations powerless to enforce rules or collect money from defiant members who don't pay for living in their communities.

Rep. Eddie Farnsworth, R-Gilbert, said he proposed HB 2307 to preserve private property rights.

"Should somebody lose their home because they didn't pay a fine on a garbage can that was left out or because they didn't mow their lawn exactly when an HOA said they should?" Farnsworth said. "There's no real monetary damage to the HOA."

Farnsworth and reform supporters argue for their bill with the story of a Peoria homeowners association that left a 77-year-old woman homeless when it foreclosed on her home. Westbrook Village forced the sale of Marie Brown's home in July 2001 after feuding with her for years because she refused to trim bushes in her yard. Brown refused to pay when the association trimmed the plants and billed her.

The unpaid bills were less than $4,000, but legal fees pushed the costs to more than $20,000. The association got that money by foreclosing on her home.

HOA reform advocate Pat Haruff said abusive associations often target elderly residents such as Brown who have plenty of equity in their homes but little cash.

"They never should have been able to take her home," said Haruff, an East Valley resident who leads a group called Coalition for Homeowners Rights and Education.
Opponents say those restrictions could cause financial ruin in associations and force them to become more aggressive.

The bill would give virtual immunity to homeowners who won't pay bills, said Scott Carpenter, an attorney who represents associations.

Though associations can garnish wages, retired homeowners would be untouchable especially if they plan to spend the rest of their lives there and would not sell for decades, Carpenter said.

"The result could be that everybody else has to pay more because a few people with finances set up in a certain way could not be touched," Carpenter said.

Associations will sue earlier and more often to keep liens current, he said.

Farnsworth said associations should rely on other existing remedies to collect fines and unpaid dues. They said associations should be able to garnish wages or get a lien, which would be paid when the owner sells.

He dismissed the idea that deadbeat homeowners especially those without wages to garnish would be numerous enough to cause substantial financial harm.

"If somebody is retired, that's going to be the exception rather than the rule," Farnsworth said.

Lawmakers took up homeowners association reform last year, proposing sweeping changes in a state with an estimated 10,000 associations. After intense debate and testimony from residents who cited abusive associations, the effort died.

Advocates are still pushing for reform, citing the case of a Phoenix man who seized control of two Valley associations last year in highly disputed elections. Jason Hope, 28, took over associations in Gilbert and west Phoenix, leaving both associations with two boards of directors, two management companies and two sets of fees.

The fight has prompted lawsuits, restraining orders and frustrations so deep that residents in each community said they wanted to disband their associations.

But Farnsworth and many HOA activists said they don't foresee other association reform bills this year.
They note last year's unproductive debate and solving an unprecedented state budget crisis.

Still, reform activist George Staropoli of Scottsdale said Farnsworth's bill will restrict what he sees as the most abused power of associations the ability to take property.

"That's legalized extortion," said Staropoli, president of Citizens Against Private Government HOAs. "You stop that and you will stop a lot of the horror stories."