One of the larger problems in HOAs/condos is getting owners to follow the CC&Rs, bylaws and rules. Some of the most typical violations by owners are the following: tenants not following rules, not getting ACC approval, failure to maintain landscaping, not putting away trash cans, parking, smoking, installing unapproved signs and flags and not paying assessments.
The following are some suggestions and legal options for enforcing your associations’ CC&Rs:
Courtesy Reminder Letter: The board or management company mails a courtesy letter or posts a notice on the property noting the violation and giving the owner a certain period of time to correct the violation. This letter, in most cases, results in the owner addressing the problem immediately.
Formal Violation Letter: In the event the violation is not corrected in a timely manner, the next step is for the board, management company or association attorney to send a formal violation letter threatening fines against the owner. Under Arizona law, after notice (the violation letter) and an opportunity to be heard (response letter from or appearance by the violator at a board meeting), an association or board of directors may impose reasonable monetary penalties on members for violations of the declaration, bylaws and rules and regulations of the association.
All letters to owners re: violations must have the following statement: “You have the option to petition for an administrative hearing on this matter in the Arizona Department of Real Estate pursuant to A.R.S. 32-2199.01 (this was formerly handled by the Department of Fire, Building and Life Safety).
Fines: An association can levy a reasonable fine against an owner for a violation of the Association’s CCRs, Bylaws or Rules after notice of the violation and an opportunity to be heard. Make sure to review our Cheat Sheet on Levying and Collecting Fines.
Self-help options: Some association documents also allow the association to correct a violation on a lot/unit, at the owner’s cost, if the owner fails to correct a violation in a timely manner (this is often referred to as “self-help”). If association documents allow the use of “self-help”, it is important that the association specifically follow the procedures outlined in the association’s documents prior to entering the lot/unit to rectify the violation.
Deed Enforcement, Fine and Notification Policies: Associations should adopt a deed enforcement policy and notify residents of this policy. This policy should outline the steps the association will take to address a violation (such as reminder notices, demand letters, fines and penalties, self-help, referral to an attorney, corrective action, filing of a lawsuit, etc.), as well as any fines which may/shall result as the continuation of the violation. Associations should also consider placing reminders in the association’s newsletters or mailings to the owners regarding common violations (such as parking violations) and request that all owners comply by a certain date.
Lawsuits
Litigation: If litigation is the only alternative for an association to correct a violation, an association has the right to file an equitable claim for relief with the Superior Court, requesting an order for injunction. In most cases, the judge will order that the violating owner cease from taking action or require the owner to take action and the association will be awarded its attorneys’ fees and costs for filing the lawsuit.
If litigation is the only method by which an association can compel compliance with the governing documents, an association has the right to file a claim in superior court, asking the court to order that the owner bring the property into compliance by correcting the violation. This type of case requires an evidentiary hearing before the judge where the association has to provide witnesses and exhibits showing the violation and the association’s attempts to have the violation corrected without having to resort to court action. In most cases, once the judge enters an order requiring compliance, it will also enter judgment in favor of the association for its attorneys’ fees and costs incurred, although the amount awarded for attorney fees is discretionary on the judge’s part.
State of Arizona Department of Real Estate “ADRE” Option
What type of cases does ADRE hear? Architectural design review matters, maintenance issues, increase of assessments, etc.
An association also has the option to file a complaint against an owner in the Arizona Department of Real Estate. The Arizona Department of Real Estate will set a hearing with an administrative Law Judge. The Association can request that the Administrative Law Judge order the owner to comply with the governing documents. However, the remedies in this department are limited and the association will not be able to recover attorneys’ fees.
In 2016, the Arizona Legislature passed legislation moving the Homeowners Association (HOA) Dispute Process to the Arizona Department of Real Estate (ADRE). The Arizona Office of Administrative Hearings (OAH) will accept all cases as referred by the ADRE, and schedule a Hearing date before an Administrate Law Judge (ALJ).
Here’s some quick information on this process:
SUBMITTING A PETITION
- All Petitions must be in writing on the form approved by ADRE.
- Only an owner or association may Petition the Department for a hearing
- The Department cannot accept Petitions (complaints) filed by or against renters, non-owners, directors, representatives, other homeowners or community management companies
FEES
- A single issue complaint is $500. (The new reduced fee is effective July 1, 2016); each additional issue complaint is $500.
- Filing fees are NON-REFUNDABLE, except when the petition is dismissed at the request of the Petitioner before a hearing is scheduled, or by stipulation of the parties before a hearing is scheduled. A.R.S § 32-2199.01 (B).
- The prevailing party is reimbursed their filing fee if applicable.
Here’s some informal comments on this process:
- Sometimes there is insurance coverage.
- The ALJ will not award attorney fees.
- The ALJ has the authority to levy a civil penalty — in our experience they typically do not do so.
- A motion to dismiss is sometimes an effective way to get rid of the case quickly.
In conclusion, there are lots of different options for how to proceed against owners who aren’t complying with your association’s documents. Mulcahy Law Firm, P.C. is here to help you navigate this process. Please contact Beth Mulcahy, Esq. (602-241-1093 / bmulcahy@mulcahylawfirm.com) for a free phone consultation on any enforcement issue in your association.
