HOA claim of a loss in property value

A recent Arizona appellate court case provides some light on the alleged “loss of property value” argument generally made by HOAs in response to a homeowner’s action. In this straight-forward decision (Mason v. Whisper Ranch HOA,  CA-CV 2015-0053 (Ariz. App. Div. 2 (2015)) a homeowner objected to the addition of a detached garage by his neighbor, claiming among other things, a loss in his property value.

In spite of the approval of the HOA, the plaintiffs sued the neighbor and HOA were sued. In a memorandum decision, which means no new law was involved, the court held that the plaintiff failed to document the alleged decrease in his property value. Damages, which this was one, must be documented as to the amount. However, the appellants had to first prove damages which could only be shown by numbers. (If damages were acknowledged by both parties and a method of calculations cannot be applied, then a general number may be used).

How can the loss in value be calculated? Well, one can use real estate “comps” – comparative values – to set a value of the property. While this can be debated because of so many and, ifs or buts, it’s the only acceptable rational method. But then, can this method be used to show a loss in value (or increase for that matter)? Can a panel of “experts” be used to arrive at a change in value? Fat chance!

Must the plaintiff wait to get a bona fide offer? If so, does he have a bona fide offer before the neighbor’s new garage?

Even if the neighbor painted his house pink, how do you decide the loss in value, if any? (I am aware of a homeowner in Phoenix who did paint his house pink in an angry response to commercial development next to his property. His home did sell after, I’m sure, his price was reduced by the amount required to repaint the house an acceptable and conforming color. No impact on neighbors.)

Of, course, the HOA has other grounds for suing, like nonconformity to the overall aesthetics of the HOA.   The point is, make the HOA prove any loss in value!

Published in: on November 25, 2015 at 9:33 am  Comments (3)  
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3 CommentsLeave a comment

  1. I never see appraisers or agents adding/subtracting value because the subject property and/or comps are located near a pink house…and there is nothing in appraisal requirements to make adjustments due to the neighbor having weeds in their yard.

  2. Exactly, make the HOA prove a loss in value when they sue owners, for example, because the sage green paint she used is called summer sage not mohogany sage…the abuse on owners is horrible, yet HOAs continually sue owners and don’t seem to have to prove a loss in value, just that the owner didn’t follow overly restrictive rules.

    • In regard to proving, the HOA will claim the right to decide what’s good for the community and how the community should look. The defense to this assertion would be to claim it is an arbitrary and capricious decision because the HOA could not claim any damage, like loss of value. Such decisions are generally held not to be valid and unenforceable.

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