HOA Rules and Regulations-Fines Cannot Become a Lien Against a Home
Question: We recently purchased a home in a nice Queen Creek community. Within a month after closing, we got a bill for $1,200 in HOA fines. The HOA had fined our seller $1,200 for violating the CC&Rs by not removing a basketball goal from his driveway. We immediately removed the basketball goal. The HOA is still demanding payment of the $1,200 in fines from us. How can we be liable for $1,200 in fines when we had no knowledge of any fines when we bought our home?
Answer: Delinquent HOA dues and assessments can become an automatic lien on a home. However, recent changes in Arizona law provide that a delinquent fine for a basketball goal, for leaving a garage door open overnight, or any other violation of the CC&Rs, cannot become an automatic lien on a home. Here, the HOA’s claim would only be personally against the previous owners of your home for their failure to pay the fine for the basketball goal and never against your home. Therefore, as the new homeowner, you should have no liability for the $1,200 in HOA fines owed by the seller for the basketball goal, and the property cannot be automatically burdened by this fine. Typically these delinquent fines are attended to by the HOA when the home is sold which keeps an HOA from having to collect from a now non-member, prior owner.
Note1: A “state action” is required for an HOA to have the authority to place an automatic lien on a property within its membership. Bourne Valley Court Trust v. Wells Fargo Bank, (9th Cir. Aug. 12, 2016). There are two Arizona statutes, A.R.S. § 33-1256 for condos and A.R.S. § 33-1807 for planned communities, that authorize assessments of HOA dues, assessments, and late fees relating to those dues or assessments only. These Arizona statutes constitute a “state action” and give an HOA “jurisdiction” to place an automatic lien for delinquent HOA dues and/or assessments. A.R.S. § 22-512 (C)(1)(c). There are no similar Arizona statutes, however, authorizing the recording of a lien for delinquent fines for other CC&R terms or a violation of HOA rules and regulations.
Importantly, a delinquent fine stemming from an HOA rules and regulation violation, like having a basketball goal, can give an HOA a cause of action against the delinquent member for a breach of the CC&Rs in the amount of the fine and late fees. A judgment against the member for the fine and fees stemming from an HOA rules and regulation violation could then become a lien on the delinquent member’s property.
Note2: Under Arizona law, an HOA may not issue a fine until it first offers you a hearing before the board of directors. If the HOA fails to provide you an opportunity for a hearing before the fine is imposed, the fine is illegal and not enforceable.