Real Estate Law

Kalway v Calabria Ranch HOA, CV-20-0152-PR, AZ Supreme Court, 3/22/22  In this case, we are asked to decide the extent to which a homeowners’ association (“HOA”) may rely on a general-amendment-power provision in its covenants, conditions, and restrictions (“CC&Rs”) to place restrictions on landowners’ use of their land. Although CC&Rs are generally enforced as written, we interpret such restrictions to reflect the reasonable expectations of the affected homeowners. Construing such provisions narrowly, as with any restrictive covenant on real property, we hold that a general-amendment-power provision may be used to amend only those restrictions for which the HOA’s original declaration has provided sufficient notice.

Examining the extent to which a homeowners’ association may rely on a general-amendment power provision in its covenants, conditions and restrictions (“CC&Rs”) to place restrictions on landowners’ use of their land, the Arizona Supreme Court held that the provision may be used to amend only those restrictions for which the HOA’s original declaration has provided sufficient notice. A.R.S. § 33-1817(A) permits the amendment of CC&Rs by a majority vote if such voting scheme is specified in the original declaration. But that declaration must give sufficient notice of the possibility of a future amendment; that is, amendments must be reasonable and foreseeable. The Court held that an HOA cannot create new affirmative obligations where the original declaration did not provide notice to the homeowners that they might be subject to them. It must give notice that a restrictive or affirmative covenant exists and that the covenant can be amended to refine it, correct an error, fill in a gap, or change it in a particular way. Future amendments cannot be entirely new and different in character, untethered to an original covenant. Applying those principles, very few of the challenged amendments here survive because they failed to provide notice of the challenged amendments.