Obligations of small HOAs in Arizona

Small or large, all homeowner associations share obligations and responsibilities to the owner members, the state and federal governments, and to the healthy financial and maintenance operation of the association. 

The value of every owner’s property, and often the ability to sell or refinance your HOA property may depend on keeping up with these obligations. 

Assessment collection: Set up regular billing and process for payment of owner assessments; deposit funds; collect delinquencies. 

Bill payment: All association bills, such as insurance, landscaping, or utilities, needs somewhere to send a bill and someone responsible for paying it.

Bookkeeping:  Association financial records must be kept beginning with turnover.  

Common area maintenance: Maintain grounds and buildings as defined in declaration; maintain, repair, and replace the common elements of the association. 

Budgeting:  A community budget should be made prior to the beginning of the next fiscal year.  Any changes to expenses should be included. 

Insurance:  Insurance policy for the association is required by state law and the association bylaws.

Annual meeting: A minimum annual meeting to record association business and governance decisions.  By law, meeting minutes and association records must be accessible by owners.

Record keeping: All association business records, communication, meeting minutes, and contracts must be kept and available for owner inspection upon request. 

Resale reporting: Processing of financial and other reporting for resale/refinances in the community, and adding new owners to the association for dues payment and communication. 

Reserve study:  HOAs with shared elements such as buildings or amenities must have a plan to maintain and fund repairs and replacement of those elements.

State registration annual renewals:  Your HOA is a small business and requires a business registration with the Secretary of State. 

Compliance:  Maintaining compliance with HOA bylaws and state laws, including new statutes that affect HOA governance in your state.

Tax filing:  Federal tax filing annually. 

These are the fundamentals of HOA operations, although your state may---and likely will---have additional obligations.   Find a list of requirements specific to your state here.

These are the laws that govern HOAs in Arizona:

Arizona Condominium Act, A.R.S. § 33-1201 et. seq.: The Act governs the creation, alteration, termination, and management of Arizona condominiums. The statute applies to all Arizona condominiums regardless of when the condominium was created. https://www.azleg.gov/viewdocument/?docName=https://www.azleg.gov/ars/33/01241.html

Arizona Planned Communities Act, A.R.S. §§ 33-1801, et. seq. The Act applies to all planned communities in the state of Arizona. It addresses records retention, member notices, voting, assessment collection, and foreclosure, among other things. See A.R.S. §33-1801 (Applicability; exemptions; voluntary election to be subjected to chapter) and §33-1802 (Definitions). https://www.azleg.gov/viewdocument/?docName=https://www.azleg.gov/ars/33/01801.htm

Arizona Nonprofit Corporations Act, A.R.S. §§ 10-3101, et seq.: The Act governs nonprofit corporations with regard to corporate structure and procedure. Arizona condominium associations may organize as profit or nonprofit corporations or unincorporated associations (A.R.S. §33-1241). Planned communities may organize as nonprofit corporations or unincorporated associations (A.R.S. §33-1802(1)). If a condominium or homeowners association is classified as a nonprofit, as with most Arizona associations, it will be governed by the Nonprofit Corporations Act.

These are the federal laws that apply to all HOAs in the United States:

https://www.hopb.co/federal-laws

The Community Associations Institute(CAI) is the international association for homeowner associations. CAI provides information, education and resources to the homeowner volunteers who govern communities and the professionals who support them. Arizona chapter: http://www.cai-az.org

This basic information abouts HOAs in your state is a helpful start, but should not be used as legal advice. If you have questions about interpreting your state’s legal requirements or the association’s governing documents, please contact an attorney in your state that specializes in community association law. Reach out for a referral if you’re not sure who to contact.

If you would like additional information about our small HOA management services, please contact us. We are here to help and have great resources for small HOAs!