Dear Arizona Homeowners Coalition,

I recently prevailed in a lawsuit against my homeowners association and wanted to share what I believe is a significant gap in Arizona law that warrants legislative attention.

My HOA charged attorney fees directly to my homeowner account. After litigation, the court ruled that the HOA lacked authority to impose those fees and entered judgment in my favor. The court awarded me damages, attorney fees, costs, and interest.

However, the experience exposed a serious imbalance in the HOA system. The disputed charge was only $775, yet approximately $25,000 in attorney time was incurred litigating the matter. Although I prevailed and the court awarded attorney fees, the fee award was substantially less than the actual attorney fees incurred.

The practical effect is that a homeowner can prove that an HOA acted without authority and still suffer a significant financial loss simply because it is too expensive to challenge improper conduct. Most homeowners cannot afford to spend thousands of dollars to recover a relatively small charge, even when they are legally correct.

This creates a systemic imbalance:

• The HOA spends common funds and spreads litigation costs among all owners.
• The homeowner bears litigation costs personally.
• The homeowner is, in effect, paying for both sides of the dispute—personally funding their own attorney while also indirectly contributing to the HOA’s attorney through assessments.
• Improper charges often go unchallenged because the cost of litigation far exceeds the amount in dispute.

I would respectfully suggest consideration of legislation along the following lines:

“In any action involving a homeowners association, if a court determines that an assessment, fine, legal fee, attorney fee, or other charge imposed upon a homeowner was not authorized by the declaration, bylaws, rules, or Arizona law, the homeowner shall recover the reasonable attorney fees actually incurred in obtaining that determination unless the court finds extraordinary circumstances making such an award unjust.”

This proposal would not apply to every HOA dispute. It would apply only when a court determines that the HOA lacked authority to impose the charge in the first place. Such legislation would encourage associations to carefully evaluate whether charges are legally authorized before imposing them and would allow homeowners meaningful access to justice when they are required to challenge unauthorized charges.

I would welcome the opportunity to discuss my experience further and provide additional information regarding the case if it would be helpful.

Thank you for your work on behalf of Arizona homeowners.

Sincerely,

Tracy Phillips
Oro Valley, Arizona