A recent case in the Arizona Supreme Court dealt with some HOA regulations—specifically, monetary caps per unit or lot.
The defendant in the case, Associa Arizona, moved to dismiss the lawsuit filed by Zenai LLC, based on the entire lawsuit having been “based on an alleged violation of the Arizona Planned Community Act… which does not apply to the facts of the case because the dispute involves a condominium.”
In addition, Associa argued that the plaintiff misread state statutes in arguing the resale disclosure charges are capped at $400. In fact, the statute referenced by the plaintiff does not apply to bulk sales, which means the obligation to disclose in such circumstances does not apply to bulk sales, the $400 limit does not apply and the $1,200 penalty that would be levied against Associa for failure to disclose would not apply.
In essence, the very statute referenced by the plaintiff does not support the claim it makes—instead, it defeats it.
The plaintiff’s own statement of facts in the lawsuit indicates the plaintiff owned “13 condominium units within a 44-unit complex,” and that “a single buyer purchased all 13 of the plaintiff’s condominium units within a single transaction.” During the process of the escrow transaction, Associa charged an HOA Processing Fee of $5,200 to the plaintiff, including a $400 fee for each of the 13 units.
Associa claims the plaintiff either misread or misunderstood the language of ARS section 33-1806(c). In that section, the aggregate amount of fees is limited to $400 for the preparation of a resale disclosure statement, but this limit is per unit, not per transaction, as the plaintiff attempted to argue. Essentially, the plaintiff believed that rather than paying the $5,200 total processing fee for the 13 properties, it should only have to pay $400 total, because it was a single transaction.
The law reads as follows: “A member shall mail or deliver to a purchaser or a purchaser’s authorized agent within ten days after receipt of a written notice of a pending sale of the unit.”
In Associa’s motion to dismiss, it points to this section as evidence that disclosures are to be made on a per-unit basis, not a per-transaction basis. Several pieces of information must also be included with each unit:
- A statement of whether part of the unit is covered by insurance that the association maintains
- A statement of whether the records the association has reflect improvements or alterations made to the unit that violate the declaration
- A statement of any case names and numbers for pending litigation involving the unit in question
For more information about this specific element of HOA law and regulations and to learn more about the process of selling and buying units in an HOA, we encourage you to contact an experienced HOA lawyer at Goodman Holmgren Law Group with any questions you may have, and we’ll be happy to discuss them with you. Reach out today to arrange a meeting!