April 11, 2005
The Arizona Legislature is close to adopting a new set of homeowners association reforms that would make it easier to remove board members, replace proxy voting with absentee ballots and tell potential home buyers in plain English about certain rights they give up when joining an association.
A series of proposals approved by the House of Representative has been combined into a single measure, HB2154, awaiting debate in the Senate. Key lawmakers say the bill likely will pass because of widespread support from reform advocates and the HOA industry, two sides that usually are at each other’s political throats.
"This one is a little staggering with the ease that it has passed," said Sen. Jim Waring, a Republican whose district includes western Scottsdale, Cave Creek and Carefree. "Frankly, you just don’t see that on (HOA reform). It is always contentious."
But there’s still plenty of frustration out there. Many HOA reform advocates are angry that key lawmakers never allowed committee votes on more sweeping changes they claim would provide homeowners further protection from abuses of power by associations and their management companies.
"This isn’t democracy," said Fred Fischer, a reform proponent from Gilbert. "Every bill should be voted up or down on its individual merits. No single person should be able to block (a bill)."
Reform advocates had hoped to build on momentum from last year’s legislative session when several significant changes were approved to eliminate the ability of HOAs to seize homes from owners who fail to pay fines, and to make HOA boards more accountable to regular members.
About two dozen bills related to HOA reform were introduced in the House this year. But only a handful emerged from committees chaired by Rep. Chuck Gray, R-Mesa, and Rep. Michele Reagan, R-Scottsdale. Most measures were blocked to avoid unintended consequences, Reagan said.
Gray has gambled by combining several proposals into a single bill late in the legislative session. In previous years, allencompassing bills failed because attacks from different groups against individual provisions would snowball and remove too many votes in favor of the overall proposal.
So far, HB2154 isn’t facing the same problem. Various HOA groups continue to debate language revisions, but say they support the underlying concepts.
Key features of the bill include:
• Making a simple majority at an association meeting enough to recall sitting board members. Currently, each HOA decides how many votes are required to remove board members. But most HOA contracts call for a minimum 75 percent. Calling a special meeting to discuss such recalls would require signatures from 10 percent of association members or 1,000 people, whichever is less.
• Eliminating all voting by proxy, in which an association member grants another a person the general power to vote for him. Instead, associations would have to print and mail absentee ballots to members.
• Requiring associations to apply a member’s payments toward regular dues first, and then toward any unpaid fines. Reform advocates say some associations are using a "loophole" in a law passed last year to apply payments to fines first, because associations can still foreclose on homes for unpaid dues.
• Changing a required written statement that goes to potential home buyers so it is clear they would waive their homestead exemptions if they join an HOA. The state’s homestead exemption protects the value of a home, up to $150,000, from foreclosure proceedings.