Arizona has been one of the fastest-growing real estate markets in the country and most of the new residential developments are controlled by a Home Owners' Association, commonly known as an HOA. If you are in the process of considering the purchase of property, it's important to ask for information about a potential HOA governing that property. You need to be familiar with, and thoroughly understand the rules and regulations supported by the HOA and to know the monthly HOA fee. These fees are primarily for the maintenance required for the common areas.
Know Your CC&Rs
If you own, or are shopping for a condominium, which generally includes a shared ownership of common areas of the entire property, or a home in a planned community, it's likely to be governed by an HOA. The HOA can supply you with its governing documents, including Articles of Incorporation, Bylaws and all the HOA's rules and regulations, known as the Declaration of Covenants, Conditions and Restrictions, or what is generally called the CC&Rs. The CC&Rs are what you need to read and understand thoroughly before purchasing the property as there may be restrictions beyond your comfort level. If you already own the property, be sure you understand all the rules put forth in the CC&Rs to avoid fines and potential lawsuits.
Typical HOA Rules
Most HOA CC&Rs will include specific restrictions regarding your use of the property. These may include changes to your home's exterior, metal sheds in the backyard, landscaping style, displaying a flag in the front yard (even an American flag), pets, parking and the payment of assessments. The assessments are the shared cost of repair or an addition to the common areas, which may include resurfacing the parking lot or street within the development, new playground equipment or sprinkling system. Each homeowner will be assessed an additional fee to your normal monthly HOA fee for a specific time period.
The HOA may send a homeowner a written notice of an infraction of the HOA's rules and ask the homeowner to pay a fine or make changes to add-ons not allowed to your home. Under Arizona state law, the homeowner is entitled to a hearing before the HOA's board of directors, establishing due process before a fine can truly be assessed. If a hearing is not offered, the fine is not enforceable. An exception to this would be an actual lawsuit filed by the HOA against the homeowner. It's suggested to refrain from paying the fine until you are given the opportunity to defend the infraction in front of the HOA board.
Access to HOA Records and Meetings
If you are a homeowner in an HOA controlled property, state law offers you total and complete access to all HOA records, including current and past financial records and HOA meeting minutes. All HOA board meetings must be announced at least 48 hours prior, and open to all members of the HOA. An "official" HOA board meeting is any time two or more board members meet to discuss HOA business. There are a few exceptions--if legal advice is being offered from an attorney for the board or the HOA; a discussion of pending or potential litigation; a discussion concerning personal information about an HOA member, HOA employee or a vendor of the HOA; or a discussion regarding the job performance of anyone involved with the HOA. Otherwise, all board meetings should be open to all HOA members and members given the opportunity to speak about HOA issues at these meetings.
HOA Members' Rights
Because many HOAs have overstepped their true power over the years, and due to the exceptional growth in the number of HOAs over the last decade, the Arizona State Legislature passed several laws that went into effect in April 2007. These laws help define the actual limits of power the HOA and its board has over the homeowners and to make it easier for the homeowner to dispute HOA fines. Some of these areas have already been mentioned, but in addition, homeowners can now display "For Sale" signs in front of their property, where it was banned by most HOAs in the past, and with the advent of green energy options, most HOAs are now allowing solar panels to be placed on the roofs of homes in the development.