Arizona SB1330 restores lost homestead protection in HOAs

The opponents to SB1330 give the false impression that the HOA foreclosure right operates fairly against all homeowners with unpaid assessments. It does not!  The opponents imply that all homeowners with unpaid assessments will be foreclosed on.  This is untrue! Only those with sufficient equity will be foreclosed on. The homestead exemption restores a more equitable treatment of homeowners. 

In 2004 CAI falsely told legislative committees that foreclosing at near fair market values would hurt the HOA. Just this month, CAI attorney lobbyist Ekmark informed Republic readers as to how the HOA gets its money from foreclosures, with the obvious realization that: 

1) contrary to its 2004 argument, the higher the sale price, the more the equity available to the HOAs’ junior lien, and

2) the HOA can only get money when the equity from the sale exceeds any mortgage.

As a matter of good public policy, the imposition — the  mandating — of the  statutory lien created by ARS 33-1807(A)  (“The association has a lien . . .”), acts against the good, hard working people of Arizona who have over the years paid their debts and created substantial equity in their homes.  Who are they? The elderly and seniors are among them.

Those who have large mortgages to pay off, either because of a recent home purchase or a refinancing of their mortgage, escape the application of ARS 33-1807 and will not be foreclosed on. Why? It’s quite simple: there’s probably no equity for the HOA to collect its debt.  So, the state imposed lien operates selectively against only a specific class of good people in Arizona  — those who have a substantial stake in their homes. 

This is not good public policy!

However, the intent and purpose of the Homestead Exemption Act was, and is, to protect these good people from a loss of their homes.  The right of the HOA to foreclose operates unfairly against homeowners and must not be allowed to circumvent the homestead protection.  The claim of a “consensual lien” is arguable, given the status of the laws, and the manner in which material information has been withheld from the homebuyer both in the sales transaction and by the failure of agencies of the states to protect the consumer, as charged by their enabling acts.

The Legislature must remove the public policy that operates unjustly in practice, and that allows HOAs to unfairly foreclose on selective homes.  PASS  SB1330!