“For the times they are a-changin’”[1]
The Arizona Supreme Court opinion in Kalway[2] is, in my view, a landmark opinion supporting and protecting individual property rights of homeowners in HOAs that are subject to a broad, procedural CC&Rs amendment procedure. The boilerplate CC&Rs in an intentional denial of fundamental property rights strip away eminent domain protections by ignoring the content of CC&Rs amendments — anything and everything goes!
Referring to AZ statute 33-1817(A) that allows amendments solely based on a majority vote of the members, the Court stated:
“But § 33-1817(A) does not displace the common law, which prohibits some amendments even if passed by a majority vote. The original declaration must give sufficient notice of the possibility of a future amendment; that is, amendments must be reasonable and foreseeable.”
The Court cited its 2010 opinion in Dreamland,[3]
“We agree that these cases tend to support the homeowners, in that each refuses enforcement of a new covenant that markedly changed the obligations of the implicated lot owners. . . . in those cases where courts disallowed the amendment of covenants, the impact upon the objecting lot owner was generally far more substantial and unforeseeable than the amendment at issue [in the case before it] “
I had addressed these concerns regarding the Dreamland decision in my 2009-2010 Commentaries that provide details on these substantive issues.[4]
Although not stated were issues of due process, equal protection of the laws, and eminent domain takings — not raised in the initial complaint or appeal, so the courts did not offer a direct opinion — this opinion strikes at HOA eminent domain takings of homeowner property rights. It also dealt with the question of homeowner notice (due process) and unexpected and unreasonable modifications to the CC&Rs (lack of equal protection under CC&Rs private eminent domain rights).
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The above represents my perspective as a longtime 22-year homeowner rights advocate and activist. CAI Arizona has a different perspective favoring HOAs and their decisionmakers, the board of directors.[5]. Its presentation starts with the overall court opinion.
“Based on this recent case law, CC&R amendments must be reasonable and foreseeable in order to be enforceable. In other words, community associations can no longer amend CC&Rs to create new obligations where the original CC&Rs did not provide owners notice that they may be subject to the new obligations.”
But then adds its spin and advertising appeal:
“Please note that these amendments are specific to Calabria Ranch and its CC&Rs. In other words, an amendment that the Arizona Supreme Court found invalid in the Calabria Ranch case may be found valid for a different community association. Again, we strongly recommend consulting with the CHDB team to analyze your community association’s specific CC&Rs and any proposed, or previously adopted, amendments.”
Looking at the tremendous value toward HOA reform, the Court’s opinion would apply to any instance where the broad conditions — no notice and unexpected and unreasonable — apply, above and beyond those specific amendments dealt with in Kalway. I’ve found the most prevalent are unexpected and unreasonable amendment modifications, and a failure to provide notice to the homeowner that abounds in the CC&Rs. It falls into those discretionary areas where the CC&Rs are silent, which the Court has declared doesn’t give the BOD unlimited rights.
This opinion presents a powerful tool, a powerful argument before the courts and before state legislatures when seeking HOA substantive reforms.
Yes, and how many times can a man turn his head
And pretend that he just doesn’t see?
The answer, my friend, is blowin’ in the wind
The answer is blowin’ in the wind
(Bob Dylan, Blowin’ In the Wind, 1963)
Notes
[1] Bob Dylan, “For the times they are a-changin’” (1964). It’s interesting to note the coincidences of publication years for this song and The Homes Association Handbook.
[2] Kalway v. Calbria Ranch, CV-20-o152-PR (Ariz. March 22, 202).
[3] Dreamland Villa Community Club, Inc. v. Raimey, 224 Ariz. 42, 51 ¶ 38 (App. 2010).
[4] HOA principalities where there’s no ex post facto or eminent domain protections and AZ court ends open-ended “ex post facto” HOA amendments.
[5]
HOA Constitutional Government 