AZ bill automatically removes BOD if law not followed

Some good news for restoration of homeowner control of the boards failure to act in violation of state law.  Arizona bill HB 2607, Sess. L. Ch. 111 added this subsection regarding the removal of the board of directors.

Section 33-1243 for condos and 33-1813 for PUDs:

“(d) If all of the requirements of this subsection for calling a special meeting are met and the board of directors fails to call, notice and hold a special meeting within thirty days after receipt of the petition, the members of the board of directors are deemed removed from office effective at midnight of the thirty-first day.”

Of course, the homeowners must have a set of directors ready to take over and establish the election/appointment of the new board as party of the BOD’s records.

Thanks to Dennis Legere for his many efforts before the Arizona Legislature.

Decl. of Indep. from HOA government — 2000

At this time when advocates are urging homeowners to present reform bills to their legislature, this earlier post of mine revealed the problem dealing with the legislature from the very beginning.  This 2014 repost refers to my appearance before the Arizona HOA Hearing committee in 2000, which also appeared in Robert Nelson’s book (p. 102) published by the Urban Institute Press.   

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“In 2000, as a naïve and newbie to the politics at state legislatures, Arizona in particular, I addressed the HOA Study Committee on September 7^th (3^rd such meeting of unfulfilled 7) and submitted a statement titled, “HOMEOWNER’S DECLARATION OF INDEPENDENCE  from homeowner association governments.”  In it I quoted parts of the Decl. of Indep. And informed the committee that I had hoped that these hearings would bring forth a list of grievances for which homeowners were seeking redress. 

[In 2000 I testified – – -]

“And as in those times of 1776, a small, principled and dedicated group of citizens are seeking a redress of their grievances. They first looked to the existing government, the HOA Board, and failing to obtain satisfaction therein, must seek other means of redress – a radical change in the concept and legal structure of the homeowner association controlling document, the CC&Rs.

“Mr. Chairman, ladies and gentlemen of the Committee, at this time I had hoped that the citizens of Arizona would be able to present and enumerate their long list of abuses, and solutions to these abuses, similar to as is found enumerated in the Declaration of Independence, without the interference and obstruction by elements of these ‘oppressive governments.’  I see that this will not be the case.

“The people of Arizona only wish to be able to present their case before this Committee in a fair and just manner. However, sadly I feel that, because of the composition of the committee, the homeowners are actually being placed on trial; that they are being asked to justify their grievances before their oppressors” [CAI].

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Today, I think it would be helpful to adopt my statement and add those grievances that you feel need to be solved, and submit the entire package to your legislature and the media.  It would be your declaration from HOA governments, your petition for redress. Of course, the more signatures you have the better. 

AZ legislature fears HOA failures if homestead protection permitted?

Why is the exclusion of homestead protection for private HOAs a matter for  the AZ Senate FIN committee?  Is the committee afraid that HOAs will begin to fail in droves due to dead beat members retaining up to $400,000 in homestead exemptions if foreclosed on? (The HOA equivalent to public taxes).  That’s odd, because for years CAI has presented surveys that all is well in HOA-Land with a 70% – 80% member approval.  Or is there fear mongering going on again?

H’mmm.  Suppose now that the fear is real and down go the HOAs, mainly on the directors failure to manage the HOA’s funds.  Why then should HOAs get preferred treatment in violation of the Arizona Constitution, Article 2, Declaration of Rights? Let them fail as any other poorly run organization!

§32. Constitutional provisions mandatory. The provisions of this Constitution are mandatory, unless by express words they are declared to be otherwise.

§13. Equal privileges and immunities.. No law shall be enacted granting to any citizen, class of citizens, or corporation other than municipal, privileges or immunities which, upon the same terms, shall not equally belong to all citizens or corporations.

If the committee, and Legislature, proceed to withhold homestead protection then their act would be a clear violation of the AZ Constitution and subject to an easy challenge. It has happened in the past and the homeowners won! AZ Attorney General admits SB 1454 HOA to be invalid and without effect.

Dual HOA punishments: no homestead protection & foreclosure

The unreasonable HOA take all foreclosure right is a cruel and unusual punishment. (Courts finally realizing the gross injustice of HOA foreclosures). It is linked to the denial of the homestead exemption which in effect, crushes without exception the dastardly homeowner for not paying up! 

The Arizona Legislature is considering SB 1470 that attempts to restore homestead protection and correct this shameful treatment of good people. The opposition offers no justification, and the “general interest” argument is without merit as it denies fundamental rights. It’s a simple one-liner to be deleted. The case for the exemption was well stated in 2007 by California’s L. A. Times columnist Donie Vanitzian, JD,

“It is the titleholder’s personal asset that functions as a kind of perverse collateral, requiring the owner to pay assessments to the association-entity or lose his asset. . . . On purchase of that home and without anything more, the titleholder’s asset became a personal risk and personal liability for the owner. Instantly, the titleholder’s asset also became collateral for the association-entity.”

(California Common Interest Developments — Homeowner’s Guide, Donie Vanitzian, p. xviii, xix, Thomson – West 2006).

The Arizona 9 page, plus addendums, residential purchase agreement of some 400 lines does not inform the buyer that his home is security for the survival of the HOA. It is a statutory lien created by the state and not a voluntary agreement. On the other hand he is informed that his home is security for the mortgage.

Please protect the sanctity of the home and restore the homestead exemption to HOA homes.  Pass SB 1470!

HOA Homestead Exemption Exclusion (SB1470)

`Please pass SB 1470, homestead protection for the people.

History of Homestead Exemption HOA Exclusion (SB1470)

In 2004 ARS 33-1806(3)(h) was added to the mandatory disclosure requirements, requiring a buyer to sign an acknowledgment that he agrees to the loss of his homestead exemption (now $400,000). Just one year later, in 2005, the statute was again amended to remove any reference to the loss of the homestead exemption.  In 2007 Governor Napolitano vetoed the homestead exemption bill on a flimsy argument – to many subjects.

Today, ADRE (real estate dept)  still does not inform consumers of the loss of their homestead exemption.

In 2007 I wrote, in part,

“They [CAI] raise the issue of a consensual agreement, the unsigned CC&R ‘agreement,’ which, under Arizona statutes, is an exception to the application of the homestead protection.  The author of the S/E amendment to the bill, Representative Farnsworth, made quite clear that ARS33-1807(A), which opens with, ‘The association has a lien . . . .’ (emphasis added), is a statutory lien and not a consensual lien – the homeowner has no choice in the matter whatsoever. 

“Any reference to a consensual lien must come from a voluntarily entered agreement, and, not from a statute. Our concern here is the alleged CC&Rs consensual agreement that may contain a provision for an agreement to a lien for unpaid assessments and the right to foreclose.  No CC&R that I have been made aware of mentions a surrender or a consent to the loss of the homestead exemption.  No real estate purchase agreement that I am aware of mentions an agreement to surrender the homestead exemption. The CC&Rs have been held as binding, not as a consensual agreement per se, but by the application of the doctrine of constructive notice, or the simple posting to the county clerk’s office.” 

This is the Legislature’s second chance to restore the equal protection of the laws to homeowners in HOAs. There is no justification for denying homestead protection when.

Resources

ARS Title 33, -Ch. 8

 33 – 1101. A. Any person the age of eighteen or over, married, or single, who resides within the state may hold as a homestead exempt from attachment, execution and forced sale, not exceeding $400,000 in value, any one of the following:

1. The person’s interest in real property in one compact body upon which exists a dwelling house in which the person resides.

2. The person’s interest in one condominium or cooperative in which the person resides.

33-1103. Homestead exemption; extent of exemption; exceptions

A. Real property that is subject to the homestead exemption provided for in section 33-1101, subsection A is exempt from involuntary sale under a judgment or lien, except in connection with:

1. A consensual lien, including a mortgage or deed of trust, or contract of conveyance.

33- 1256; 33 – 1807. A. The association has a lien on a unit for any assessment levied 14 against that unit from the time the assessment becomes due.

SB1470 (Feb. 13, 2023)

C. Subsection B of this section does not affect the priority of

10 mechanics’ or materialmen’s liens or the priority of liens for other

11 assessments made by the association The lien under this section is not

12 subject to chapter 8 of this title.