Tag: lien

AZ bill returns homestead protection against HOA claims.

We must make the injustice visible. We must provoke until they respond and change the laws.[1]

Arizona alert – strike everything HB 2648 (2024)  returns homestead protections against HOA claims.  

“ARS 33-1807 and 33-1256. “B. THE COMMON EXPENSE ASSESSMENT LIEN PRESCRIBED BY THIS SECTION IS NOT SUBJECT TO THE HOMESTEAD EXEMPTION.”

Let’s go back into the forgotten history of the homestead exemption in Arizona, starting in 2004,[2] 2007[3] and 2023.  The issue was and is the use of statutes to mimic the common boilerplate of the CC&Rs:   Statutory vs consensual lien. “A 12 item list is presented mimicking the CC&Rs, a common tactic to legitimize contractual challenges to the governing documents.”[4]

In 2004, still learning the ropes, I did not follow up on the state actors controversy based on the ARS statutes saying (my emphasis), “‘The association has a lien on a unit for any assessment.” 

“Representative Farnsworth made quite clear that ARS33-1807(A), which opens with, ‘The association has a lien . . . . is a statutory lien and not a consensual lien – the homeowner has no choice in the matter whatsoever.” (emphasis added).”

This can only be interpreted as a mandatory statute making the HOA an arm of the state, acting in place of the state – a state actor.[5] No, and, if, or buts! It is not a consensual lien if mandated by the state!

A second argument raised many times subsequent to 2004 questions the validity of a genuine consensus – “an agreement to be bound.”  In short, the argument raised in Common Sense[6],

“First, the application of contract law to the CC&Rs agreement reveals the many invalid aspects of the CC&Rs as a bona fide contract.  It is obvious from a simple review of contract law.  Yet, courts have held that the CC&Rs are a contract or are to be interpreted as a contract, and have even analyzed the meanings of CC&Rs in the same manner as a contract. But, the courts do not question the validity of the CC&RS contract with respect to contract law.  The courts resort to equitable servitudes law, which simply requires the acceptance of a deed in order to bind the home buyer to the CC&Rs sight unseen.”

On this point alone, HB2468 must be strongly supported. The controversy of statutory vs consensual is avoided to the relief of homeowners.

It is the Achilles heel of CAI’s reason for being  — cruel foreclosure and no homestead exemption as a punishment to coerce obedience.

Notes

[1] Mahatma Gandhi, fighting for India’s independence from British rule, 1948.

[2] HOA Homestead Exemption Exclusion (SB1470) (2023) (A 2004 look back and a comment by Fred F).

[3] See, The constitutionality of legislation: AZ Gov. vetoes homestead exemption bill (2007);

Arizona SB1330 restores lost homestead protection in HOAs (2007).

[4] See, All state “may/shall” statutes imply HOAs as state actors.

[5] See in general, Are HOA state actors created by statutory use of shall/may? (Section 2, paragraphs 5 +). (2019).

[6] HOA Common Sense, No. 4: Consent to be governed

NC reform bills need your support

Three very material and important bills seeking meaningful HOA reforms are before the North Carolina General Assembly (legislature): H311, S312, and H542.  (See ‘There is no oversight’ Proposed bills call for changes to HOAs in North Carolina). These bills address the two categories of reform legislation as I have defined them: constitutional and operational.

It has been my experience over some 23 years that reform legislation falls into two categorical levels: constitutional seeking to change the systemic HOA scheme, and operational seeking to apply the existing day-to-day laws and governing documents in a fair and just manner.

The average homeowner does not quite understand the broader constitutional issues but well feels the effects of the current day-to-day conditions. AN example of operational reform would be to change the time frame or approval percentage of an existing covenant. It’s a procedural change.

H311,

An act to establish a community association oversight division in the office of the attorney general.  In short, the AG is authorized to investigate HOA wrongdoing and to take remedial action including legal action, if so determined. The division is a rulemaking body —  adopt and change rules —  to carry out its authority. It is a constitutional 14th Amendment due process and equal protection of the laws bill.

S312,

An act that requires notice of liens and the ability to foreclose. A lengthy bill to inform the homeowner that a lien has been placed on his property and the right to work out a repayment plan. While the right to foreclose is removed, the HOA can proceed with legal action to obtain payment of the debt, like garnishment, etc. It has a constitutional aspect in removing the right to foreclose – seen as a special law for a special entity, the HOA – and an operational aspect with respect to the procedures to follow in attempting to collect the unpaid assessments.

H542,

An act placing a limit on foreclosure and notice of a lien. The lien notice is similar to S312. The bill also sets a $2,500 minimum, or 1 year of unpaid assessments not paid within 30 days. It is an operational bill dealing with everyday procedures.

I prefer S312 over H542 since HOA foreclosure rights are unreasonable, against good public policy, and whose purpose is to serve as a punishment.  What right does a private entity, that has not advanced any hard cash like a bank, have to receive foreclosure payments far in excess of the HOA assessment debt that also includes exorbitant attorney payments not found in the public sector?

[Please feel free to repost with proper credit].

HOA Homestead Exemption Exclusion (SB1470)

`Please pass SB 1470, homestead protection for the people.

History of Homestead Exemption HOA Exclusion (SB1470)

In 2004 ARS 33-1806(3)(h) was added to the mandatory disclosure requirements, requiring a buyer to sign an acknowledgment that he agrees to the loss of his homestead exemption (now $400,000). Just one year later, in 2005, the statute was again amended to remove any reference to the loss of the homestead exemption.  In 2007 Governor Napolitano vetoed the homestead exemption bill on a flimsy argument – to many subjects.

Today, ADRE (real estate dept)  still does not inform consumers of the loss of their homestead exemption.

In 2007 I wrote, in part,

“They [CAI] raise the issue of a consensual agreement, the unsigned CC&R ‘agreement,’ which, under Arizona statutes, is an exception to the application of the homestead protection.  The author of the S/E amendment to the bill, Representative Farnsworth, made quite clear that ARS33-1807(A), which opens with, ‘The association has a lien . . . .’ (emphasis added), is a statutory lien and not a consensual lien – the homeowner has no choice in the matter whatsoever. 

“Any reference to a consensual lien must come from a voluntarily entered agreement, and, not from a statute. Our concern here is the alleged CC&Rs consensual agreement that may contain a provision for an agreement to a lien for unpaid assessments and the right to foreclose.  No CC&R that I have been made aware of mentions a surrender or a consent to the loss of the homestead exemption.  No real estate purchase agreement that I am aware of mentions an agreement to surrender the homestead exemption. The CC&Rs have been held as binding, not as a consensual agreement per se, but by the application of the doctrine of constructive notice, or the simple posting to the county clerk’s office.” 

This is the Legislature’s second chance to restore the equal protection of the laws to homeowners in HOAs. There is no justification for denying homestead protection when.

Resources

ARS Title 33, -Ch. 8

 33 – 1101. A. Any person the age of eighteen or over, married, or single, who resides within the state may hold as a homestead exempt from attachment, execution and forced sale, not exceeding $400,000 in value, any one of the following:

1. The person’s interest in real property in one compact body upon which exists a dwelling house in which the person resides.

2. The person’s interest in one condominium or cooperative in which the person resides.

33-1103. Homestead exemption; extent of exemption; exceptions

A. Real property that is subject to the homestead exemption provided for in section 33-1101, subsection A is exempt from involuntary sale under a judgment or lien, except in connection with:

1. A consensual lien, including a mortgage or deed of trust, or contract of conveyance.

33- 1256; 33 – 1807. A. The association has a lien on a unit for any assessment levied 14 against that unit from the time the assessment becomes due.

SB1470 (Feb. 13, 2023)

C. Subsection B of this section does not affect the priority of

10 mechanics’ or materialmen’s liens or the priority of liens for other

11 assessments made by the association The lien under this section is not

12 subject to chapter 8 of this title.