2026 Arizona Homeowner’s Coalition Legislative Update #2 – comments
Here are a few comments on your proposals. I am the President of a self-managed HOA in Mesa. Our dues are almost exactly equal to our expenses + reserve contributions/homeowners.
Section 2 (1)
I have the same issue as I expressed last year with this proposal. Using any fixed number that ignores inflation and ignores reserve study results is counter-productive. I remember 12% inflation and have seen 20-50% increases in insurance costs. I understand that a simple majority of homeowners can vote to ratify an increase above that amount, but it seems to codify the exception as the process. What exactly happens if an HOA can’t raise the dues enough to cover expenses (not to mention adequately fund the reserves)?
2(a)- Reserves as committed expenses – I like the intent of this but I’m afraid HOAs would just shift a portion of their “reserve contributions” to “contingency” in their budgets to allow for necessary budget overages. For example, we budget our insurance annually but we do not know what the actual amount is until late February of each year.
3(b) – Oversight – In self-managed HOAs, we do not have volunteers available to follow contractors around to meet these clause. When work is complete, we check to make sure it’s done, but we don’t have the skills or resources to provide oversight to the work.
3(d) – Audit – Is this requiring that an audit be conducted on the previous year between year-end and the annual meeting? Our last audit took 6 months. I like the idea but I don’t see it as practical.
33-1254- Surplus Money – Your summary made this sound like HOAs would be required to refund surplus money to homeowners. Sending out refund checks could be prohibitively expensive. However, the actual text does allow for a simple majority vote as to what to do with the surplus (which is how we handle it each year). This year, 85% of our homeowners voted to put an excess into the reserve fund.
33-1250 – Paper Ballots – Why, in 2026, would anyone want to require paper ballots? You refer to online voting as illegal but I’m sure you know that many attorneys disagree with that opinion. Here’s what our attorney sent us:
Arizona Revised Statutes 33‑1812 (for planned communities) and 33‑1250 (for condos) require HOAs to allow:
• In‑person voting
• Absentee ballots
• “Other forms of delivery,” including email and fax
That phrase — “other forms of delivery” — is what makes online voting legal. It gives HOAs the authority to use electronic voting platforms as long as ballots are delivered securely and meet statutory requirements.
33-1248 (B). Open meetings; exceptions: I thought this is already the law. The executive sessions exceptions allow for discussion of topics but any vote necessary must be in the open meeting.
33-1242 Enforcement: The changes appear to be intended to make it more difficult to fine homeowners for violations. I don’t have a specific issue with the wording, but my concern is that there is no mechanism for enforcement of fines in Arizona. Fines are strictly voluntary so changes to these rules don’t have much effect (in our HOA). Once a homeowner drops out of being “a member in good standing” there is no way to enforce a fine. This puts HOAs and HOA boards at increased risk.
33-1256 Liens – I have so many issues with these proposed changes in this section that I don’t know where to start. If budgets are fixed and reserves are committed expenses, where does this new expense come from? We would need to add a potentially large “potential bad debt” line item to our budget. I think allowing homeowners to go a year-and-a-half without paying dues before there is any recourse is untenable.
33-1260 Resale – These changes seem to imply that the HOA is somehow involved in the sale of a home within the HOA. In our case, we often do not find out about sales until after they have closed and the new homeowner is moving in. Normally we do get contacted by title companies or realtors but we almost never get contact information for prospective homeowners before a sale. I am 100% in favor of getting all of the required documentation to prospective homeowners, but I don’t see any way that this section enables that process.
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I’ll try to address each of your concerns.
Last year, I tried to link the assessment increase to the CPI, and everyone went ballistic. I tried to give associations more leeway this year with 5%. Remember, this is a year-over-year limitation. If you increased your assessment 5 % this year, you can do it again next year. Many will say 5% year over year is way too high and they cant afford that type of increase, no matter what you do someone will not be happy. I tried to be reasonable for both sides of the equation if association board can’t manage their expenses within 15% over three years they should all step down and let someone who understands fiscal prudency take over. It was well past time when the board actually had to try sharpening their pencils to manage costs to stay within the resources available. If anyone ever had to manage their own funds, they should understand that you do not have an unlimited supply of money, and it’s past time board members should think like that.
Boards would be free to do just that but understanding that if they divert too much money to contingency they will have to give that back to homeowners at the end of the year. It’s not your money, it’s theirs.
As for oversight, your excuses are weak at best. It’s your job to do just that, this bill does not tell you what or how you do it, only that you have a responsibility to make sure that the association gets exactly what it contracted for. If you bid to trim 10 trees and paid for 10, but the contractor only trimmed 7, is that OK?
Surplus money, if you actually read the language, it says refund or credit to next year’s assessments. It costs you nothing to credit any surplus proportionally to every homeowner’s account. As you state it also allows you to put the question to a vote of the members to see if the community would apply any surplus to reserves.
This bill does not require any audits. Existing law has stated that every association must do either an audit, review, or compilation within 180 days of the end of the fiscal year.
Paper ballots. Because it has been the law for the last 10 years. The story provided in the very broad interpretation of “or other forms of delivery” is just completely false and inappropriate. What those same lawyers also never tell you or explain is why 33-1812 and the equivalent Condo statute also specifically excludes ARS-10-3807 from use in these communities in the law since 2005. 10-3807 includes written ballots without a meeting and online voting for NPC’s. The broad interpretation of one clause cannot make meaningless a specific provision within the law itself. The lawyers position is that they are right until someone sues the association and a court proves them wrong, banking on the fact that homeowners will not sue the association to enforce the law.
Open meeting. You are correct that this has been the law since 2010, but once again, attorneys tell the association that “consideration” includes taking action despite the clear expectations of section 1 and the clear expectation of the policy statement that any interpretation must be in favor of open meetings.
fines. Not the case at all the association is allowed to write their own enforcement and fine policy and schedule, as long as the fines are commensurate with the significance of the violation. A $1,000 fine for leaving a trash can out too long is totally inappropriate. As well as a fine policy that applies the same fine for all violations. The bill does restrict when a fine can be repeated and when a fine can be escalated. The association has extensive fine capability you simply cannot deny a member the ability to vote or access thru the security gate. You can also apply interest on the fine, not to exceed 20% per year, until the fine is paid. You also have the ability to apply a lien on the property for those fines; you just can’t collect on that lien until the home is sold, which is existing law.
Unbudgeted expenses, you’ve totally missed the point on this section. If you have unbudgeted expenses, you can provide for a supplemental assessment to pay for those expenses but you need homeowner approval first. Speak to your people explain the situation and what you have done to try and accomodate those unexpected expenses within the budget. Homeowners may not like it, but they will understand. The reason this is necessary is that board from across the state if they get unbudgeted expenses simply take money from the reserve accounts to pay for those operating expenses. This is not only wrong but violate IRS laws on the separation of operating and reserve accounts.
This has been the law for 20 years. if you are larger than 50 homes. The seller must tell you when he has agreed to an offer to sell a contract. You then have 10 days to provide the disclosure information to the buyer. Failure of the buyer to get the required information could result in both the association and the seller being sued. This is exactly why I speak to so many homeowners who never received the required information before they closed on the home.
I also live in a self-managed HOA, so it can be done. I help by doing any electrical or irrigation work for the common property.
Dennis
Dennis