Dennis, thank you, as usual, for the very informative reply. And, yes, our CM is quite UN-knowledgeable about our CCRs and AZ HOA law, … sadly so.

Fish7,

If the association is only billed for septic systems inspected, then they can only assess you for one septic system. Contest the charge directly to the board. If the association takes on an expense like this for economies of scale they can only pass that expense onto the owner that use the service. This is not a common expense necessary to maintain the common area. it is totally different so while common expenses are payable irrespective of your use of the common area this is totally different. Your community manager s too stupid to figure this out so appeal directly to the board.
Dennis

prairiebelle,
You are actually in luck this last legislative session I drafted and negotiated a bill that was passed into law to address this very subject. This bill HB-2158 becomes effective September 24 of this year. The bill does several things but one of those things is to ensure that homeowners are allowed to use community facilities to hold meetings to discuss community issues and invite outside candidates and non-members to speak to the members. While the association can establish rules for the use of the facilities they cannot create rules that are different than any other use of the facility. Your example is classic. if they established a rule that required a fee if non-members are present, they would have to apply that rule across the board without exception. They cannot allow use of the facility without fee if non-members are present for some cases but not for others. That is known as arbitrary and capricious and unreasonable, and totally invalid. The law does limit the number of non-members to one non-member per member present. It states that each member can invite one non-member to attend and speak.

Assuming that you are a Planned community (HOA) the association owns the common property not the members and they can write rules for the use of their common property, but those rules must be applied equally and fairly across the board. Specific exceptions can be applied reasonably but cannot be used to censor or to weaponize the use of the facility against certain homeowners or groups of homeowners.

Dennis

Thank you Dennis. A couple of questions then–is it legal for the Board to approve and then move money from Reserves Account and into the “capital fund”. Are they playing with semantics?
Here is a copy of what they have in the minutes:
Finance and Budget – 2022-2023 Budget
Motion to approve the following items based on recommendations from the Finance-Budget
Committee:
1. Approve the proposed operating budget developed by SCOV Association Management and
approved by the Finance-Budget Committee for the coming fiscal year (2022-2023) that results in
annual dues of $2,245, an increase in annual dues of $110 (5.2% per home).
2. Approve the reallocation of $1,000,000 that was planned as annual dues contribution to the Asset
Reserve Fund into the Capital Fund.
3. Approve Capital Budget expenditures for fiscal year 2022-2023 of $49,800.
4. Investigate, communicate and vote (as required by the governing documents) on community
options to fund future Capital Improvement Projects. (Schulz/Mashburn)
Motion passed unanimously.

I am sure some way it is legal, but then to ask us to raise our capital contriubution fee which they say is going to be used for future improvement (not maintenance), from Reserves and then threaten a special assessment does not seem right. How many accouts with the word “Capital” should an association have?

Lastly, I will get my request in for records. Is here a way to title it and should I mention the statute? Can I email this to each Board memeber and the Treasurer or just the General Manager, or should I mail it certified? Thank you!

Andre,
unfortunately, you are subject to the covenants that run for your community whether you like them or not. Part of that is the requirement to submit exterior modification for design review and approval. What your association is doing is totally unreasonable, however. Have you contested the violation directly to the board and asked for a hearing before the board on this issue? If not, do so today and request that the hearing be held in open session. Walk around your community and note every house that does not comply with the current paint scheme. You have a board of directors but most violation notices come from the community manager and not the board. Community managers are for the most part incompetent and have very little knowledge of the law.

While I know of no specific case law relative to paint colors there are many high profile cases on the ability of the association to impose design standards and the limitations of those standards. The most significant are from the Nevada Supreme court Moretto v Elk Point and from Connecticut Appellate court Grovenburg v. Rustle Meadows. While those cases do recognize the indirect ability of associations to impose design standards not in the CC&R’s thru reference of an ARC, but that power is very limited. Your associations paint pallet is totally unreasonable and serve no purpose toward protecting the property value of the community, and would be considered invalid under the Restatement of Law property Servitudes and the cited court cases.

Dennis

Richard,
The way that the Arizona law was written in 2014 clearly established that association have no right to regulate streets that are municipality owned. It allowed a grandfather clause for associations that contained restrictions in their CC&R’s but that exception was eliminated if the association modified and recorded an amendment for any reason. You association lost their ability to impose parking restriction in 2021 when they amended their CC&R’s. The municipality is free to post parking restriction on their streets along with speed limits and any other restrictions that have withing their codes. They can also enforce those restriction using police.
I’ve already gotten a sponsor and will be introducing legislation to eliminate the grandfather clause and prevent all association from imposing parking restrictions on public streets.
Dennis

Martia,

An association has two basic financial accounts an operating account that they use for their budgeted annual expenses and a reserve account that is used for long term maintenance and capital improvements. You can ask the association bank statement for both accounts. It they divide the reserve account into normal reserves for long term maintenance and a capital improvement then ask for all three. You can also ask for all transactions from the reserve accounts in the last year there should be very few. The association has 10 business days to provide you access to that information under Arizona law. The association has no obligation to provide a report that does not already exist but if it exists within their accounting system it is a financial record subject to a records request. If they claim that such a report does not exist, then ask them how they are living up to their fiduciary duties to the association to for oversight of that project?
While the association is free to move money between the two reserve accounts, they cannot move money between reserve accounts and operation accounts under IRS regulation, with a few yearend exceptions.
Reserve studies are a valuable tool but not a requirement, Most commercial reserve study firms are a waste of money with a lot of show and very little substance. The real issue is to understand your long-term maintenance needs and how much they will cost when needed. The reserves then have to be managed to ensure that when a maintenance project is needed adequate funds will be available in the reserves to do the maintenance. To do this you have to make some assumptions on inflation cost which in a time like we are in now is often difficult, that is why these plans need to be reviewed at least every three years, but not more often then that. I’ll also point out that if the association did a reserve study that is a record and subject to records request provisions of the law.
Dennis

Angela,
First you have to realize that the community manager is not the HOA, it iWorks for the HOA. You cannot audit the community manager but you can get the financial records of the HOA. I’ve worked hard over the years to improve the open meeting and board election laws but more work needs to be done. Current laws require that all board meetings must be noticed 48 hours in advance and open to all residents. All meetings of the members must be noticed between 50 and 10 days prior to the meeting to elect members of the board of directors. You have a right to know who is currently on the board and to contact them about concerns. While the board of directors can fill vacancies in the board for the remainder of unexpired terms they cannot elect new board members only the homeowners can.
Where do you begin the community manager is usually the point of contact for all homeowners . Write or call him/her and get the names of the current board members. Attend the next board meeting and ask questions. You have the right to speak on any issue before the board before the board votes on that issue. If you want to see financial records like monthly income and expense statements a simple email to the community manager is all you need. The association has 10 days to provide you access to that information under the law.
Dennis

One more question: presuming the request must be made in writing, is it made by the homeowner or a homeowner rep (attorney)? And is it submitted to the property manager or management company, and can it be emailed or must it be by post?

Thank you.

Thank you.

If a homeowner has General meeting minutes in their possession, what restrictions are on that homeowner, or the minutes, that could or would prevent those minutes from being shared — either by hand as a physical copy, or by email as a PDF— with other homeowners?