The state of Arizona has a six-year statute of limitations for taking legal action in a breach of contract case. The law also allows insurance companies in the state to shorten the statute of limitations in which a policyholder can file a breach of contract lawsuit in some circumstances, so there is a chance that, depending on the type of claim being filed, the statute of limitations could be as brief as just a year or two.

There are some breach of contract cases that can occasionally arise between homeowners and HOAs, with either side acting as the plaintiff. Let’s take a look at one of the more common examples of such a scenario: a homeowner filing a breach of contract lawsuit against an HOA for failure to follow its CC&R rules (those being covenants, conditions and restrictions).

Here’s some information from our attorneys specializing in HOA law in Arizona.

CC&R lawsuits and breach of contract

All homeowners in a homeowners association automatically become members of the HOA upon purchase of their home. In these areas, the purchase of a home acts as a contract to pay the HOA fee and abide by all rules set by the HOA (the aforementioned CC&R rules).

CC&Rs can be broad and wide-ranging, including restrictions such as where you can park (and how many cars you can park), pet ownership, noise limitations, landscaping or exterior improvements and other such restrictions. HOAs also provide amenities such as snow removal, pools, landscaping, common areas (and repairs to those areas) and other recreational areas as a sort of “give back” for the restrictions the community has in place.

Homeowners do have the right to object to CC&R rules if they believe them to be unfair, but if the rule is to be changed, the homeowner must gather support from other members to approach the board of directors and request adjustments to the rules. Individual members of the board of directors can also attempt to make changes to rules from within the organization.

A failure of either party to abide by the rules agreed to in the contract that exists between HOA members and the HOA itself can result in a breach of contract lawsuit. Homeowners can sue the HOA, and vice versa.

HOAs can file lawsuits against homeowners who do not pay their required fees or who do not abide by the CC&R rules. Homeowners, meanwhile, have several grounds on which they can file a lawsuit against an HOA:

• Breach of fiduciary duty: In such a case, the homeowner alleges the HOA failed to properly and prudently manage the association’s affairs and finances.
• CC&R violations: The homeowner can file a lawsuit against the HOA for breaking its own rules it set for residents.
• Negligent care and maintenance: If common areas fall into disrepair and the HOA does not take reasonable steps to make repairs or keep up with maintenance, a homeowner could file a lawsuit alleging negligent care and maintenance, especially if someone was injured as a result of that negligence.

For more information about breach of contract lawsuits under HOA law in Arizona, contact Goodman Law Group today.