Arizona Bill Would Make it Easier for HOAs to Take Your Home

Legislation Update
January 10, 2017

Currently, Arizona homeowners associations can foreclose on owners if they fail to pay their dues for a year or get behind by $1,200 — whichever comes first.

But a bill introduced by one of Arizona's most powerful Republican senators would allow HOA foreclosures after six months, with no minimum debt.

Sen. John Kavanagh, R-Fountain Hills, the primary sponsor of Senate Bill 1080, said six months of avoiding payments is a serious infraction.

"Tell a landlord that not paying him for six months isn't a big deal. It is a big deal," he said.

But the proposal already has opponents.

"This is a dangerous bill," said Dennis Legere of the Arizona Homeowners Coalition.

Legere's grassroots group has fought for homeowner protections against HOAs at the Legislature for the past several years. When Kavanagh introduced the bill late Monday, the group began organizing its opposition.

Legere said the bill would make it easier and faster for HOAs to turn to foreclosure instead of working out a payment plan or taking other, less severe steps to recoup the funds.

"(Foreclosure) should be the absolute last resort, not the first," Legere said.

A 2017 Arizona Republic investigation found HOAs are foreclosing on a record number of homeowners. Since 2015, HOAs have started foreclosure actions on more than 3,000 Phoenix-area homeowners.

Kavanagh told The Arizona Republic on Tuesday that he plans to amend the bill to apply only to "smaller HOAs," which he said face a disproportionate burden when a homeowner stops paying assessments.

Assessments are used to maintain the community and can cover costs for things such as maintenance expenses for community pools and parks.

Kavanagh did not define "smaller" — he said he's still gathering feedback from stakeholders — but used an HOA with five homes as an example.

"If you've got five units and one stops paying, it creates a hardship for the other four," he said.

About half of Valley homeowners live in a community run by one of Arizona's 9,000 HOAs. They vary widely in size.
HOA attorney and member of the Central Arizona chapter of the Community Associations Institute Joshua Bolen called Kavanagh's legislation a "compromise."

"Instead of making the process about a dollar amount, it (the legislation) makes it about how long the a person has been delinquent," he said. "I don't think this bill will encourage or discourage HOA foreclosures."

Arizona real estate analyst Tina Tamboer said the legislation could hurt the housing market.

"If a homeowner only has six months, then they will have a harder time selling to avoid foreclosure," said Tamboer, who is senior housing analyst with the Cromford Report.

Source: azcentral.com

Additional Resource:

Arizona State Legislature (SB 1080 full text)

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