Lawyer Warns of Lingering Debt Traps in Popular New Arizona HOA Law

Arizona homeowners associations (HOAs) now have a statutory duty to act reasonably when exercising their discretionary powers. But a Phoenix attorney who represents homeowners says the measure leaves a serious problem unresolved: collection charges that can turn missed payments into mounting debt.

Gov. Katie Hobbs signed House Bill 4011, sponsored by Rep. Beverly Pingerelli, R-Peoria, on June 4. The bill took effect on Sept. 12. It applies to associations in planned communities and condominiums. The law says associations must exercise discretionary powers fairly and neutrally, without favoritism or arbitrary treatment.

In a September analysis, the Mulcahy Law Firm, which represents community associations, said the measure largely puts existing case law into statute and reinforces best practices rather than creating an entirely new standard.

The new statute does not set out a specific procedure to ensure reception of delinquency notices or to require acceptance of assessment payments.

Jonathan Dessaules, a Phoenix attorney who represents homeowners in HOA disputes, told Arizona Globe that billing problems and collection practices can leave homeowners owing far more than they expected.

“In many cases, the HOAs work with management companies, and when they switch from one management company to another, your account gets turned off, your auto-payment gets turned off, but you don’t find out for six or seven months. And by then, you owe thousands of dollars in late charges and attorney fees,” Dessaules said. “That’s one practice that, in my opinion, really harms homeowners.”

Dessaules said he sees clients who believed they were current or whose payments may have been going to the wrong place. He cautioned against treating his experience as proof that the problem is industry-wide.

“I’m not suggesting that it’s industry-wide, but I meet a disproportionate number of people who aren’t aware that they’re delinquent or who believe they are making their payments, but those payments might be going somewhere else,” he said.

“Sometimes the HOA sends statements to old addresses,” Dessaules said. “I have one client who bought a house, moved in, and her welcome letter came to the address she is living in, but everything after that went to her old address.”

Once an account goes to collections, he said, homeowners may find their automatic payments shut off and checks returned rather than applied to their assessments.

“Well, what if that lawyer is taking those checks, looking at them, and just sending them back to you? That is happening quite regularly, with some law firms here in town,” he said.

Arizona law generally requires application of payments received on a homeowner’s account to unpaid assessments first, unless the owner directs otherwise. For delinquent common-expense liens, it requires a certified notice sent to the address the owner provided to the association at least 30 days before the association authorizes an attorney or certain outside collectors to begin collection activity. Before filing a foreclosure action, the board must make reasonable efforts to communicate with the owner and offer a reasonable payment plan.

Separate laws increased the foreclosure thresholds for planned communities in 2025 and condominium associations in 2026. An association generally may seek to foreclose a common-expense lien if an assessment or a portion remains unpaid for 18 months or unpaid assessments reach $10,000, whichever comes first. For a special assessment with an initial value of $10,000 or more, only the 18-month threshold applies.

Dessaules said a higher threshold doesn’t necessarily solve the problem for a homeowner with rejected payments while collection costs continue to grow. He described a hypothetical owner who owes $200 a month learns they must pay an additional $1,600 in collection charges while waiting for acceptance of their monthly payment.

In that situation, he asked, “what does it matter if the foreclosure threshold is $1,200, $10,000, or more?”

“There has been a failure on the part of the state legislature to address the abuses that are taking place,” Dessaules said. He said further legislation should do more to ensure that notices and charges actually reach the people responsible for paying them.

Pingerelli did not respond to a request for comment by press time.