Attorneys are frequently asked if there are limitations on the authority of Homeowners Associations (“HOA”). The answer is yes. The authority of an HOA is limited and there are a number of statutory restrictions on HOAs. The following are illustrative:
- For Sale Signs.
Subdivisions frequently have restrictive provisions which prohibit or attempt to prohibit “for sale” or “for sale by owner” signs. These restrictions are largely unenforceable. Arizona law effectively prohibits HOAs from prohibiting “for sale” or “for sale by owner” signs provided they meet industry standards in terms of size. The validity of this statue has been upheld by the Arizona Court of Appeals.
- Transfer Fees.
HOAs sometimes attempt to impose “transfer fees” on the sale of townhomes, condominiums or homes subject to restrictive covenants. Again, law largely renders these fees uncollectable. There are exceptions to this statute and consultation with an attorney would be appropriate when faced with a transfer fee issue.
III. Solar Energy.
One of the more interesting limitations on HOA authority comes in the area of solar energy. Restrictive covenants often attempt to limit or prohibit visible exterior installations, which might include solar panels or satellite dishes. Arizona law preempts restrictive covenants that “effectively prohibit” the installation or use of a “solar energy device,” which is defined to include the collection or transfer of solar energy “to provide heating, to provide cooling, to produce electrical power, to produce mechanical power, to provide solar daylighting or to provide any combination” of these.
An interesting case from the Arizona Court of Appeals interprets the legislature’s protection for solar installations, Garden Lakes Community Association v. Madigan. The case arose when two homeowners, acting unilaterally, installed solar energy panels on their roofs. The Garden Lakes Association sued to enforce the restrictive covenant requiring all solar energy devices installed to be (1) integrated into the roof design, (2) concealed from public view, and (3) approved by the architectural design committee prior to installation. The homeowners defended on the basis that the Garden Lakes Association lacked the authority to enforce the restrictions because the restrictions “effectively prohibited” solar energy devices in violation of Arizona’s statute.
The Court of Appeals set forth 10 factors that may be utilized to determine if the restrictive covenants “effectively prohibit” the installation or use of solar energy devices. These factors include:
- Content and language of restrictions or guidelines;
- Conduct of the homeowners’ association in interpreting and applying restrictions;
- Whether architectural requirements are too restrictive to allow solar energy devices as a practical matter;
- Whether feasible alternatives using solar energy are available;
- Whether alternative design will be comparable in cost and performance;
- Feasibility of making required modifications;
- Extent to which property is amenable to required changes;
- Whether decisions previously made by homeowner or prior owner are responsible for limiting or precluding installation of solar energy devices;
- Location; and
- Whether restrictions impose too great a cost in relation to what typical homeowners are willing to spend.
The court stated, “The overall inquiry should be on the motivation of the average homeowner within the association community to install solar energy devices given the financial burden and potential loss of solar efficiency proposed by the restrictions.” The court focused on the effect of alternative designs on performance and cost of compliance. The court concluded that the Garden Lakes restrictive covenants effectively prohibited the installation and use of solar energy devices because complying with the association’s restrictions would be too expensive and would interfere with the solar energy devices’ efficiency.
The court also stated that “homeowners continue to bear the burden to prove” that restrictive covenants “effectively prohibit them from installing and using solar energy devices.” Arizona’s statute does not eliminate the power of an HOA to impose aesthetic and architectural restrictions on the installation and use of solar energy devices. The decision does clearly limit the ability of an HOA to enforce its restrictions regarding use and installation of solar energy devices. Consultation with an attorney would be appropriate when faced with a solar energy device issue. FBN
By Frederick M. “Fritz” Aspey
Frederick M. “Fritz” Aspey is a founding member of Aspey, Watkins & Diesel, pllc. He is in general practice with an emphasis in business, real estate and commercial litigation. AWD is a full service law firm helping people and businesses of Northern Arizona since 1975.