Arizona Supreme Court Provides Homeowners a Legal Tool to Push Back on HOA Amendments Passed by Majority

HOA Law

Amendments to a Homeowners Associations’ Covenants, Conditions, and Restrictions, can be challenged, even if the amendment was passed by a majority of the homeowners and duly recorded. On March 22, 2022, the Arizona Supreme Court published its decision for Maarten Kalway v. Calabria Ranch HOA, LLC. The case involved a dispute between an H.O.A. and a homeowner after the H.O.A. amended its governing documents to impose new limitations on the homeowner’s ability to improve their property.

Despite an HOA’s broad power to amend its CC&Rs under both the provisions of the original declaration and by statute, the Arizona Supreme Court recently rejected several amendments to a homeowners associations’ Covenants, Conditions, and Restrictions. In Kalway, the Arizona Supreme Court held that H.O.A.s do not have unlimited power to amend their CC&Rs. Kalway provides strong arguments for homeowners to push back on unexpected changes to H.O.A. covenants, conditions, and restrictions for unforeseen changes. 

The Kalway Court decided whether revisions and amendments of CC&Rs are enforceable even when the changes were approved by the majority of homeowners in the H.O.A. It stated that its decision is dependent on whether the original declaration has given “sufficient notice of the possibility of a future amendment.” Consequently, the H.O.A. had to prove that the changes were reasonable and foreseeable by showing that the original declaration contemplated the amendments that the H.O.A. wanted to make and ultimately impose on the homeowners. The Court further stated that the reasonability and foreseeability can be proven not only by the explicit words in the original documents but also by the way the documents were presented to the homeowners.

While the case only discusses the provision that prohibits certain limitations of improvements allowed in a property, homeowners are expected to follow suit as this case can apply to other unexpected changes the H.O.A. attempts to enforce. The Kalway Court’s decision expands homeowners’ ability to hold their H.O.A.’s accountable to representations it has made in the preliminary stages of buying a home since the Arizona Supreme Court’s decision in Dreamland Villa Community Club, Inc. v. Raimey in 2010.  Having provided a more restrictive standard for challenging new policies, the Dreamland Court prohibited their enforcement only when they “create affirmative obligations where the original declaration did not provide notice to the homeowners that they might be subject to such obligations.”  Thus, one can expect this ruling by the Court in Kalway by other homeowners to be used as a tool to push back on unexpected changes to H.O.A. policies.