HOA and condo association foreclosure in Arizona

HOA and condo collection rules in Arizona, step by step

• Which law covers your community

  First step

  The Arizona Condominium Act applies to every condo in the state, no matter when it was created. The Planned Communities Act applies to all planned communities, with narrow exceptions such as timeshares and some owners groups formed before 1974 that cannot enforce use or appearance rules.

  A.R.S. §§ 33-1201, 33-1801

• Only assessments create the foreclosable lien

  From the day an assessment is due

  The association has an automatic lien for assessments from the day they are due. Fees, charges, late charges, fines and interest are "member expenses" or "unit owner expenses" and cannot be part of that lien. To collect those, the association must sue, win a judgment and record it, and that judgment lien cannot be foreclosed.

  A.R.S. §§ 33-1256(A), (B), 33-1807(A), (B), 33-1802

• 30-day certified letter before collection

  At least 30 days before an attorney or collector is hired

  Before the association can send your account to an attorney or outside collection agency, it must mail you a bold or all-capitals notice by certified mail saying your account is delinquent and giving you 30 days to pay or make approved arrangements. The notice must say who to contact to discuss payment.

  A.R.S. §§ 33-1256(L), 33-1807(L)

• Late fee caps and how payments are applied

  A payment is late at 15 days

  In a planned community, late charges are capped at the greater of $15 or 10 percent of the unpaid assessment, and only after notice that the assessment is overdue. Unless you direct otherwise, your payments go first to assessments, then to late charges, collection costs and court-awarded attorney fees on those assessments, and only then to fines and other charges.

  A.R.S. §§ 33-1803(A), 33-1807(K), 33-1256(K)

• Foreclosure only after 18 months or $10,000

  Measured on the day the case is filed

  The association can foreclose only if you have been and remain behind for 18 months or owe $10,000 or more in assessments, whichever comes first. For a special assessment of $10,000 or more, only the 18-month rule applies. The board must make reasonable efforts to talk with you and offer a reasonable payment plan before it files.

  A.R.S. §§ 33-1807(A), 33-1256(A)

• Foreclosure is like a mortgage foreclosure

  Must start within 6 years

  The lien is foreclosed in the same manner as a mortgage on real estate, and the lien ends if the association does not start enforcing it within six years after the full assessment came due. Arizona's homestead exemption chapter does not apply to this lien. The court can award costs and reasonable attorney fees to the winner.

  A.R.S. §§ 33-1807(A), (D), (G), (I), 33-1256(A), (D), (G), (I)

• Your mortgage comes first

  Any association lien

  Arizona gives associations no super priority. A recorded first mortgage or first deed of trust comes ahead of the association's lien, and so do property taxes. If your lender forecloses, the association is paid from any surplus only after the lender.

  A.R.S. §§ 33-1807(C), 33-1256(C), 33-812

Common questions in Arizona