400% fee increase by the state agency has now stifled homeowners filing complaints

April 20, 2007

By George K. Staropoli (View author info)

In Arizona as of September 22, 2006, homeowners were able to file a complaint against their HOA through the Office of Administrative Hearings, an independent state agency for a flat $550 filing fee. The OAH holds less formal hearings without requiring the Rules of Civil Procedure as in civil court. The HOA attorneys have a decided advantage with knowledge of these 100 plus rules covering of 200 pages of legalese.

On February 15, 2007 all of this changed when the Director of the filing agency, Dept. Fire, Building and Life Safety unilaterally increased the filing fee to $2,000. Under the Arizona statutes, a formal request for review has been submitted. Here's a summary of homeowner success.

The HOA complaint filing fee increase to $2,000 has had its effect: HOA complaints have come to a halt.

In the first 5 months, from Sept to Feb, 24 complaints were submitted or just about 5 per month. Since the increase, only 2 complaints have been submitted in the past month, with one submitted 2 days after the fee increase. The action of the Director of DFBS has put a stop to the voice of the legislature: a leveled playing field at attainable costs for homeowners with complaints against their HOA.

Of the 13 decisions to date, the homeowner won 6, the HOA 5 and 2 were split (we can add them to both for a 8/7 win ratio). Homeowners do have legitimate complaints that are being denied by an high bar in terms of a cost born upfront by the homeowner alone, like the poll tax of the 1950s in the South.

A 3rd case was added today since the fee increase. Usually, it takes 3 - 4 weeks between filing at DFBLS and opening at OAH.

So,

weekly ratio 9/21 - 2/15 (150 days; 24 cases): 1.1 cases per week.
weekly ratio 2/15 - 3/21 (34 days; 3 cases): .6 cases per week.

By next Friday, 3/30, 4 new cases will be needed to maintain the pre-increase ratio. Only 3 cases were filed in the first 5 weeks of the new period.

Homeowners will still file, but as I believe they will, on a reduced basis because the cost/reward benefit favors filing even at $2,000. If the vlaue to the homeowner is $10,000, say in money spent on new construction, and the HOA wants you to remove it at additional costs, the homeowner has no choice but to sue.

However, to file to get, for example, HOA records will not happen -- it's pure economics. But the violation is still there going unpunished, the homeowner is being denied justice, and there is no deterrent to stop further violations by the board.