Many Arizona homeowners are surprised to discover that Arizona law allows a homeowner’s association to foreclose on a homeowner in certain situations. This is not true of all states and was not the case in Arizona until the relatively recent amendments to the Arizona Revised Statutes. To avoid losing your home to the homeowners’ association, you must understand what rights and obligations you have.
Fortunately, Arizona law does not allow a homeowner’s association to foreclose on a homeowner for unpaid penalties. Instead, the law distinguishes between assessments and penalties, allowing foreclosure actions based on liens for unpaid assessments, but not penalties.
Dues are defined as the regular fee charged by a homeowners association to maintain the community. If an owner does not pay such assessments, and if the assessments remain unpaid for one year or the unpaid amount exceeds $1,200, the HOA will have a lien on the home that can be enforced. Under Arizona law, an HOA’s lien for unpaid assessments is automatically enforced, and many homeowners don’t realize until it’s too late how much trouble non-payment can result.
Fines, unlike assessments, are penalties charged by the HOA for violations of HOA CC&Rs or other governing documents. Common fines stem from failing to maintain landscaping, leaving trash cans outside, and parking in off-limits areas. Unpaid fines do not result in an automatic lien and require the HOA to sue the landlord in court and obtain a judgment before the lien can be entered. However, even after obtaining such a judgment and filing a lien, the HOA cannot attempt to foreclose on the home for unpaid penalties.
Despite the homeowners association’s right to execute an appraisal lien, it often doesn’t make sense for the HOA to proceed with such an action. Although HOA liens take precedence over many obligations, such liens will generally be secondary to the primary mortgage on the home, so if there is not enough equity to pay off the mortgage and satisfy the lien, foreclosure may not be warranted. mortgage. Homeowners should understand, however, that failure to pay assessments can result in the loss of their home, and that HOAs can file for foreclosure even when such action is not financially justified.
The statutes governing the rights and obligations of homeowners and HOAs are complicated, and homeowners facing a collection action by their HOA should contact an experienced Arizona HOA attorney as soon as possible. In many cases there are meritorious defenses, but they must be opposed before a court can render an adverse decision.