It has been said that Arizona has more HOA’s per capita, than any other State. Always be very careful when suing your HOA. It is not uncommon for our Judges to uphold virtually any HOA act and then you are stuck with an HOA bill and possible lien on your home.  In a 2022 appeal in Kalway v. Calabria HOA, all lots in a residential subdivision were under 2015 recorded covenants, conditions, and restrictions “CC&Rs”.  The CC&Rs allowed for amendment “at any time by an instrument executed and acknowledged by the majority vote of the owners”.

In 2018, a proposed HOA amendment imposed new restrictions on how the lots could be used, the number and types of structures that could be built, and new enforcement codes

Later, one dissident owner sued the HOA. The non-consenting owner sought to invalidate the amendments.  The trial court struck down two of the new restrictions in their entirety and partially invalidated two others.

The dissident appealed. His lawyer argued that all the amendments were invalid because they were not passed with unanimous consent.  The court of appeals rejected this argument. In doing so, the court of appeals relied on an earlier court of appeals case, Dreamland Villa Community Club, Inc. v. Raimey, 224 Ariz. 42 (App. 2010), which required that the original CC&R declaration include notice that amendments on certain issues could be passed over the objections of a minority of property owners.  Applying that rule, the court of appeals concluded that the general-purpose statement of the original declaration was sufficient to provide notice. 

After a writ was granted, our Arizona Supreme Court adopted Dreamland as the controlling standard but disagreed with the court of appeals’ conclusion.  The Court began by noting that, although CC&Rs are generally enforced as written, they are a special type of contract where unknown terms beyond the range of reasonable expectation are not enforced. 

So, the CC&Rs do not have to give notice of the details of a future amendment they do have to give notice that a restrictive or affirmative covenant exists and that that covenant may be amended to change it in some way. In short, everyone lost, and one must always be careful and thoughtful when litigating with an HOA.

Feel free to call Bill Miller from Scottsdale, Arizona at 602-319-6899 if you need help in an Arizona Court proceeding for or against an HOA.

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