5419 E. Piping Rock Road
Scottsdale, AZ 85254
Contact: George K. Staropoli
To date, I’ve seen the recommendations, presumably drafts, from Senator Smith and Representative Foster. In one month the committee as a whole is to make public its study results.
Mr. Staropoli, president of CAPGH, says that he is disappointed since many of the recommendations already exist in law and several major issues have been ignored. While they reflect an attempt to improve the conditions, and include some meaningful recommendations, for homeowners in those associations whose boards of directors violate state laws, and the association’s governing documents, they do not provide for meaningful relief in a very important area: enforcement.
There are no provisions for enforcement of existing state laws against association boards, directors, and management firms let alone provisions for enforcement to be included in any new legislation. There are no provisions for redress by filing a complaint with the Attorney General or county prosecutor’s office. There are no fines, penalties or suspensions against directors, management firm personnel or attorneys. Mr. Staropoli feels strongly that, ”By failing to provide for effective enforcement of state law, the recommendations of these legislators continue to allow these abusive boards of directors, and individual directors, to act with impunity in total disregard for the laws of the State of Arizona”. Without these enforcement provisions, these abusive boards of directors and individual directors will continue to deprive citizens of Arizona of their constitutionally guaranteed civil liberties.
Furthermore, Mr. Staropoli says, “It is unconscionable that these legislators will continue to allow wayward boards to make use of homeowner funds to defend their illegal acts while the innocent homeowner must use his own funds.” There is no provision to balance the power and might of association boards since they have an unequal and unjust access to homeowner funds. In a civil government, like a city or town, there are means to bring action against illegal and unethical behavior of government officials without expensive law suits that produce no penalties to the offending HOA boards of directors.
Professor Evan McKenzie in his book, Privatopia, states
"CIDS [HOAs] currently engage in many activities that would be prohibited if they were viewed by the courts as the equivalent of local governments."
Furthermore, associations have been violating the federal fair debt collections act, FDCPA, because courts have upheld this fallacious interpretation that buying an HOA controlled property is a private contract. However, the Federal 7th Circuit Court of Appeals has held that homeowner associations are required to comply with this act. And in Arizona, in Caron V. Maxwell, 48 F. Supp 2d 932, the court held that HOA dues were “debt” under FDCPA and that clients of attorneys are liable for their attorney’s violations.
Mr. Staropoli is further disappointed because these recommendations fail to acknowledge the validity of the complaints of abuse by association boards of directors and the deprivation of homeowner civil liberties as guaranteed under federal law. These grievances were presented to the committee in person at the hearings or by means of emails or letters. We were told that over 1,200 emails were received by one legislator alone. These legislators have failed to indicate how their recommendations would provide a solution to grievances of these homeowners. And, furthermore, many serious complaints are not addressed by these recommendations.
Hopefully, by the time the committee as a whole makes its final recommendations in December, Mr. Staropoli hopes to see more meaningful recommendations for effective legislation to alleviate the conditions many homeowners suffer under the oppressive government of the association’s board of directors.
1. of the private government nature of HOAs and their governing bodies, the homeowners association;
2. of the restrictions on homeowners’ civil liberties and;
3. of the lack of effective enforcement of state laws and the governing documents under the “private contract” interpretation of HOAs
encl: Sen. Smith & Rep Foster’s recommendations
Nov 21, 2000
Representative Foster Jay DiBenardo Scott Higginson
A. Enforcement of Open Meeting Laws.
1. Currently there are no penalties associated with violating
association open meeting laws. It would be beneficial to add
some sort of penalty.
2. Change statute to require developer run associations to comply
with open meeting and open record laws.
3. In statute require all associations to hold at least one annual
B. Annual Financial Reports
1. In statute require associations to produce an annual report to
be made available at the annual meeting and an executive
summary to be included with the associations assessment
billing statement following the annual meeting.
C. Election Procedures
1. An associations board should be an elected board of actual
residents; not a developer appointed board when a developer
relinquishes control of a planned community.
2. Develop a standard process for removing board members
D. Proxy Voting
1. Statute needs to provide a mechanism for overriding an
associations bylaws regarding proxy voting. Members should
always have a democratic method to change the make-up
of the associations board.
E. Statutes pertaining to association
1. This section of statute does not provide for a cap on
increasing association fees. However, most association CC&R's
address the CAP, but for those that do not, this section
of statute should be amended to reflect the cap language
in the Planned Community Association statute.
2. Both the Condo and Planned Community association statutes
need a provision detailing the process for amending an
3. Examine use restrictions for all types of associations.
4. Add language that will prohibit an association board from
shutting off a homeowners utilities.
1. Private Property Rights Ombudsman
b. Education Clearinghouse
c. Funding. Look into the possibility of a 90/10 board.
G. Relinquishment of developer run associations
1. Developers control some developer run associations until 100%
of the lots are sold. It would be beneficial to put into
statute a requirement that once 75% of the lots are sold
in a developer run association that control of the association
is turned over to the board.
2. Once the board is turned over to the residents (at 75%), a
one lot - one vote rule should be implemented.
3. End the Class A and Class B voting system.
4. Some developers construct temporary corporation. These
corporations become defunct once the developer moves on,
which limits their liabiliity for any type of defect litigation.
5. Ensure developer run associations fund 100% of an associations
6. Prohibit the developer from offering unreasonably low
assessment rates as a marketing tool. This practice
perpetuates under funding association treasuries.