Homeowners with unkempt front yards just caught a bit of a reprieve from the Arizona Court of Appeals. A recent decision by the court makes it more difficult for homeowners associations to levy fines.
Beth Mulcahy, an attorney whose practice is centered on representing community associations, explained the impact of the ruling to attendees at a recent HOA summit held by the city of Chandler.
The workshop draws residents who serve on HOA boards as well as many who do not. Chandler Mayor Jay Tibshraeny, alongside Chandler City Council members and Police Chief Sean Duggan, were on hand and addressed the crowd.
The typical complaint HOAs deal with is the neighbor who allows weeds to proliferate in the front yard. “In the past, what associations would do is first reach out to the owner. If that didn’t work they would levy fines,” Mulcahy said.
That has changed in recent months.
“It’s become more and more difficult for associations to levy fines for violations. This case almost puts it on the brink of making it impossible.”
Mulcahy was referring to the Turtle Rock HOA vs. Linda Fisher case heard in Phoenix and decided last October. The decision resulted in the reversal of a nearly $4,000 fine the HOA imposed on Fisher and is binding on all HOAs in Arizona.
“When I first started in 1995, it was easy to levy fines,” Mulcahy said. “We just had to give notice, and if the owner didn’t pay the fines, we could put a lien on the property.”
Under the new ruling, HOAs are required to adopt and publish a schedule of “appropriate” fines and make it available to homeowners. Fines imposed prior to the publication of the schedule are not enforceable. Mulcahy offered to provide a schedule of fines HOAs could adopt and cautioned that the schedule must be approved by the board at an open meeting.
Even if an HOA has a validly adopted list of fines, she said, the burden of proof is with the association to prove damages.
“If you can’t show through testimony or affidavits, we can’t collect,” Mulcahy said. “When we provide photographs and affidavits from neighbors, that’s sufficient to prove it to the judge.”
An example of proving damages could be an affidavit from homeowners claiming that they couldn’t get a good price when selling their house because a neighbor isn’t maintaining his property.
The HOA must prove that the offending homeowner is in violation of the community’s bylaws, and the offender must be notified and given an opportunity to respond prior to levying the fine.
“Reaching out to the owner should be the first line of defense,” Mulcahy said. “Many times when you do that, you find out about extenuating circumstances such as an illness or an elderly person.”
She pointed to community resources and non-profits that can address those circumstances. She also touched on the possibility of mediation, though “both sides have to agree to come to the table to talk.”
And for those sticky situations where common areas are damaged, Mulcahy recommended reaching out to the offender/homeowner first. “If they refuse, you can put a lien on their property, but you need to have good documentation if you’re going to go that route. One mistake I see is that associations don’t take pictures before they fix the damage.”
For the habitual stinker who leaves trash cans out, the first course of action should be to send a letter, Mulcahy said. “The key is to tell them up front what the charges are going to be if the violations continue and give them a way to be heard.” Associations that communicate well have the fewest problems, she told the crowd.
This isn’t the first year Mulcahy has addressed Chandler’s HOA summit. Last year she spoke about short-term rentals vis-a-vis HOAs.
Chandler City Council member Terry Roe, who said he once served on his HOA, urged attendees to be patient in their dealings with neighbors and all things HOA.
“Let’s be decent. What do we all want? We want compliance, we want a nice community, we want to be able to be proud of our community,” Roe said.
Maybe it’s a good thing. Maybe the HOA can not pick who they will harass as easily anymore. Been battling my HOA because of mystery fees, and fines. No one seems to know what is going on when my cars get tagged for towing, or fees appear on my account.
I do not approve of any neighbor thinking that they have a right to fine another neighbor. It is a childish, bullish way to behave. No adult buys into a community to be “fined” by someone. All homeowners are equal whether they are on a Board or not. While on one hand Ms. Mulcahy advises talk first, she is also very quick to say take photos and get statements from neighbors so you are covered and can win in court. This is NOT a way to handle any community. When this type of advice is followed, only the attorneys win via their billings and litigation costs homeowners money. Communication is the key to a united harmonious community, not fines. Until I bought in an HOA, I never heard of “fines”. Homeowners need to unite and not buy into a fining epidemic that hurts the homeowners, the elderly, children … it is destroying neighborhoods, people’s lives and their health. Avoid HOA type attorneys that promote any type of fining and talk to your neighbor. Communication is key to solving issues.
HOAs do not have authority to fine. People have given in to this because it is difficult for single homeowners to fight. First, fining is a governmental function and HOAs are NOT governments – they are private corporations typically run roughshod by unaccountable management companies and HOA attorneys. Second, there is no “associational standing” for an HOA to claim entitlement for fines based on alleged damages to other parties. The HOA corporation itself is not harmed by tall grass, etc. Another homeowner is not really harmed either but even if they were the HOA corporation does not have associational standing to collect damages (liquidated or otherwise) from the targeted victim. Such a claim inherently requires the participation of the individual allegedly damaged members and thus is not associational standing subject matter. Moreover, the claim is being asserted by an organization against its own member and thus is not associational standing subject matter. The origin of “fining” was really for management companies and HOA attorneys to entangle assessments with fines and other junk fees to be paid to these vendors. Management companies would apply any payments to these fines and junk fees to leave the homeowners “in arrears” on assessments – which in turn would generate a “late fee” for not timely paying assessments. These vendors would advise the boards to adopt resolutions requiring any payments made by homeowners to be applied last to the actual assessments in order to gin up more junk fees. These management companies contract with the HOA to receive “late fees” as part of their compensation. The aligned vendors (management company and HOA attorney) would then use the threat of foreclosure to collect the junk fees. The trade group for management companies and HOA attorneys is Community Associations Institute (CAI). This trade group has lobbied against the Fair Debt Collection Practices Act being made applicable in HOAs. (See, e.g., CAI’s Public Policies) Why? Because in a multiple debt situation (e.g., assessments plus fines) the FDCPA says they have to apply payments as instructed by the homeowner. Deliberately misapplying them to generate junk fees for the management company and attorney is part of a fee pyramiding scheme more commonly known as the “priority of payment scam” and has been so prevalent that state after state (including Arizona and California) have had to adopt laws outlawing the practice. There is no basis for an HOA to be able to “fine”. As noted above it is not a governmental body. In addition the industry players (CAI) always argue these are “contracts” the homeowners “agreed to”. But case law in every state prohibits “fines” and “penalties” in a contractual relationship. Moreover the industry folks can’t seem to explain why homeowners can’t reciprocally fine the HOA corporation. Quit playing the game of “reasonable fines” and coming up with schedules as if private “fining” were legitimate. This is an industry approach to trying to preserve a practice that should be recognized as completely unlawful to begin with. The HOA has the same remedy as the homeowners – go to court. All the excuses the HOA vendors make for “fines” fail to hold water.
I’m dealing with this now in Turtle Creek. Can anyone help. ?
Julie- contact me please. I’m having the same issue in TC