Templar: State should just stay out of HOAs’ business

Two years ago, the Legislature tried to level the playing field between homeowner associations and individual members by authorizing state hearing officers to take up their quarrels.

Read Le Templar's blog, 'What I Know'

The proposal from Rep. Eddie Farnsworth, R-Gilbert, seemed to solve a thorny problem for lawmakers — how to settle fights between homeowners and their HOA boards outside of a courtroom, without creating an new state agency or making government even bigger.

But Farnsworth’s novel and cost-effective approach was tossed out earlier this month as unconstitutional.

Maricopa County Superior Court Judge Margaret Downie ruled Oct. 2 that having hearing officers step into these private contract disputes without actually creating an state agency to regulate HOAs usurped the traditional role of the courts. So the Legislature violated the separation of powers implied by the state constitution, Downie said.

The state attorney general’s office hadn’t decided last week whether to appeal Downie’s ruling. But many of the people involved in passing the 2006 law are already contemplating their next move.

“Because of what we thought we had fixed isn’t (fixed), it absolutely will be an issue in the next legislative session,” said Sen. Chuck Gray, R-Mesa.

Pat Haruff, president of Mesa-based Coalition for Homeowners Rights and Education, wants lawmakers to accept that proper oversight is required. A new state agency could work, but a less costly choice might be a special unit within the attorney general’s office. A special, low tax on HOAs and their individual members could raise $3 million a year, Haruff said.

“This needs to stop somewhere, before it gets really ugly again,” she said.

On the other hand, Gray said he’d like to return to his previous proposals to somehow encourage more HOA cases to be filed with justices of peace. While part of the judiciary, justice courts don’t require lawyers and cases are usually resolved faster.

“Starting a new state agency and funding it in these economic times is a nonstarter,” Gray said.

But many HOAs still believe this is about politics, not good state policy.

Scott Carpenter, whose law firm argued the winning case before Downie, said the state hearing officer process worked better than many associations had feared. But there always was that underlying question of whether it was constitutional. It seems a court challenge was only a matter of time.

Rather going back to the drawing board, Carpenter suggested lawmakers should stop interfering with private contracts and just let the courts do their job.

“Even after 10 or 15 years of this discussion, I still haven’t seen any statistical or empirical evidence that would demonstrate this is a problem that justifies a new set of regulations,” Carpenter said.

Le Templar is senior opinion writer for the Tribune. He can be reached at (480) 898-6474 or ltemplar@evtrib.com.