HOAs Covenants, Conditions and Restrictions
October 19, 2015
Augustus H. Shaw IV
Shaw & Lines, LLC
Many of the questions submitted to me regard how a HOA may enforce the Covenants, Conditions and Restrictions (CC&Rs). As such, I have decided to briefly explain how HOAs may enforce their CC&Rs. Enforcement of a HOA’s CC&Rs may be effectuate in two types of actions, which are the imposition of fines and the filing of a lawsuit seeking Injunctive relief.
Imposing a fine for the violation of a HOA’s CC&Rs is the most common means of gaining compliance in HOAs in Arizona. Under A.R.S. §33-1803, which applies to Planned Communities (the Condominium Act, the Arizona Statute that applies to condominiums, does not contain a provision on the imposition of fines. As such, one must look to the CC&Rs of the condominium to determine whether the imposition of a fine may be effectuated), a HOA may fine an owner who is in violation of the restrictions so long as the following criteria are met:
1. The fine is “reasonable”;
2. The fine is imposed after notice and an opportunity to be heard; and
3. The notice of the fine must contain a statement regarding how the fine will be enforced.
The amount of fines must be reasonable. This means that the fine amount set must be reasonable in regard to the violation. For example, a $1000 fine for weeds in the front yard would likely be considered unreasonable.
Additionally, many HOAs mistakenly impose fines for violations of the restrictions without providing the violating owner an opportunity to be heard before the HOA’s board of directors. This problem may be corrected by informing the owner, in the fine notification, that if the owner wishes to discuss the fine with the HOA’s board of directors, he may do so. Please note that an opportunity to be heard must only be provided. If an owner does not take the opportunity to be heard, the fine may be imposed.
Finally, an owner must be informed as to how a HOA intends to collect the fine if the owner refuses to pay the fine. Recent changes to the laws affecting homeowners associations have removed imposed fines from the association’s assessment lien unless an association’s documents otherwise provide. This means that fines may no longer be automatically included in a notice of claim of lien or in a pay-off statement developed when an owner sells or conveys his property unless the association obtains a valid judgment and records said judgment. Also, lots may no longer be foreclosed due to delinquent fines.
Arizona has long established that enforcement of restrictive covenants may be effectuated through the seeking of an injunction, which is a civil lawsuit asking a judge to order a noncompliant homeowner to comply with the restrictive covenants.
An injunction should be used when fining is either inappropriate or ineffective, meaning, an injunction should be used in situations where either immediate compliance is required (situations involving health and safety) or situations where fining becomes ineffective (i.e. the owner is ignoring the fines).
Many CC&Rs allow HOAs to recover the legal fees used to obtain the injunction if the Association prevails in the suit. The fees would be recouped through requesting that the court award attorney’s fees to the prevailing party.
To hear more about this topic, join Augustus Shaw at our annual HOAs Seminar on Friday, October 30, 2015 at our Gilbert Campus. Credit: 3 hrs. Disclsoure Tuition: $40
Augustus Shaw is currently the managing member of Shaw & Lines, LLC. His practice includes advising community associations, non-profit corporations and other clients requiring general real estate, bankruptcy and litigation representation. You may contact Augustus Shaw by email at firstname.lastname@example.org, or by phone at (480) 456-1500.