Ethics: Candor to the Legislature

The CAI Arizona chapter continues to make misguided constitutional arguments in opposition to SB 1330, a bill that attempts to restore the application of the homestead exemption to homeowners living in HOAs.  This right was removed by the CAI promoted legislation in 1996 without offering any legitimate government interest as to the justification to exclude HOAs.  The AZLAC [Arizona Legislative Action Comm.] believes the Legislature did not do anything insidious or wrong in 1996 by creating a statutory lien for planned communities.”*  This 1996 legislation was an unconstitutional government intrusion into private contracts.

  

CAI argument*

Advocate response

1.      In conclusion, SB1330 is unconstitutional as it would impair the contracts that create consensual lien rights in communities that are governed by CC&Rs that create liens.

  

No, it restores the 1996 intrusion into contracts. CAI acknowledges that the legislature created a statutory and not a consensual lien.

2.      SB1330 requires that the homestead exemption protection be applied to ANY association liens for condominiums and planned communities. The key word in this bill is ANY.  SB1330 states that the Homestead Exemption applies against “any lien of the association.” SB1330 would impair the contract by telling associations the provisions in their CC&Rs are no longer enforceable or applicable. It is clear that the “obligation” to pay assessments secured by a consensual lien would be “impaired” by this bill.

The CAI attorneys are attempting to create reasonable doubt with alternate, implausible interpretations of the meanings of simple sentences. The exact wording of the bill** does not make the “exemption” per se applicable to any association lien — that any HOA lien is subject to the exemption protection. 

Rather, the bill simply applies the homestead exemption LAWS of Chapter 8, Article 1, title 33 to HOA liens. That is, the homestead laws prior to 1996, whatever they stated, are in effect, and Article 1 clearly excludes any consensual liens from any exemption.

Yet CAI while agreeing that the HOA has a consensual lien, believes, somewhat perplexingly, that SB1330 modifies rather than applies Article 1. This item 2 argument is bogus and without merit.

3.      Arizona statute (A.R.S. 22-1103) acknowledges that property owners can consent to giving up the homestead protection. “The homestead…is exempt from process and from sale under a judgment or lien except a consensual lien, including a mortgage or deed of trust.”  Condominium and planned community liens are consensual and Arizona courts have upheld this for decades.

Yes, that’s correct. But SB1330 acknowledges the exclusion of consensual liens by the application of the Homestead Exemption laws of Chapter 8, Article 1. Actually, ARS 33-1103 contains the quoted material, not 22-1103.

 

Notes:

*    AZ CAI Call for Action email of May 4, 2007.

**  “The homestead exemption protection prescribed in chapter 8, article 1 of this title applies against any lien of the association.”

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Published in: on May 6, 2007 at 4:43 pm  Leave a Comment  

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