Is this legal?

[Andrea Finkelstein]

Hi. 

I have owned several townhomes in AZ. One property recently changed management companies. I received this present today seen below (on the heals of a $5k special assessment divided monthly into just a few short years). I'm wondering if a simple board of director's vote could add a lease management clause with an annual management fee, or if there would need to be a quorum and majority vote? If this seems wrong, what does anyone recommend I do. I do a great job of vetting and managing my annual tenants and have never had issues. In addition, I don't want the mgmt co. to see my leases, as I don't think they have that right or need. Thanks in advance for any advice. 

The Village at West Meadow Townhomes HOA 4545 N 67th Ave Phoenix, Az 85033 2550 E Rose Garden Ln, #71384 Phoenix, AZ 85050 July 18, 2024 RE: Introductory Letter to Village at West Meadow Townhomes HOA Homeowners

Dear Village at West Meadow Townhomes HOA Homeowners, The Village at West Meadow Townhomes HOA Board of Directors has instructed PMI Phoenix Valley to initiate the Leasing Management Program for all homeowners. This program will be enforced to ensure compliance with the community's governing documents and to maintain the quality of life for all residents. Purpose of the Leasing Management Program The primary purpose of the Leasing Management Program is to regulate and monitor leasing activities within the community.

This program aims to: 1. Maintain the residential character of the community. 2. Ensure that all tenants are aware of and comply with the community's rules and regulations. 3. Protect the property values and overall quality of life for all residents. 

Leasing Management Program Overview 

The Leasing Management Program will involve the following activities: 

• Annual review of all units via the tax assessor database to identify potential "hidden" leasing situations. • Creation and maintenance of a list of all units/owners approved for leasing. 

• Creation and maintenance of a leasing waiting list for homeowners requesting to lease their units. 

• Creation and maintenance of a list of tenants' names and contact information. 

• Inclusion of tenants in the association website with "renter" level access. 

• Inclusion of tenants in the violation system, including sending notices to them when needed. 

• Regular monitoring of approved leases to ensure proper actions are taken at the leasing expiration and renewal dates. 

• Preparation of quarterly reports for the Board of Directors outlining the current status of the leasing program. 

• Coordination with the Association attorney as needed for enforcement of the leasing provisions. 

• Assessment and collection of costs for this program from the leased units by the authority of the Community Covenants, Conditions, and Restrictions (CCRs), $150/year.

Requirements for Homeowners with Leasing Agreements Homeowners with leasing agreements must provide the following information:

1. Homeowner Offsite addresses and contact information. 2550 E Rose Garden Ln, #71384 Phoenix, AZ 85050 2. Contact information for the management company and tenant, as applicable. 3. Management contracts and tenant lease agreements, as applicable. Requirements for Homeowners without Leasing Agreements/Tenants Homeowners without tenants do not have any additional requirements at this time. We appreciate your cooperation and understanding as we implement this program to maintain the integrity and quality of your community. If you have any questions or concerns, please do not hesitate to contact our office. Sincerely, Jim Bell, Owner PMI Phoenix Valley

[Walter Moneypenny]

Quote from @Andrea Finkelstein:

Quote from @Walter Moneypenny:

Note: this is not legal advice but an interpretation as an HOA manager for more than 20 years before becoming a Realtor. I can say that what they are doing is good and bad. I believe I located the CC&R's on the Recorder's website. I would read your CC&R's under sections 7.2 and 7.8. It looks like rentals shorter than 30 days are prohibited under 7.8. The Board cannot just change the leasing requirements by themselves to allow STR's. The CC&R's would need to be amended, and per Section 10.2 of the CC&R's I located, it is nearly impossible to amend the document.

It looks like the Board outsourced part of the enforcement to a 3rd party company. A few management companies I worked for in the past had full time employees just dealing with leases and trying to obtain information from owners. I would imagine that the company they hired can monitor all of the STR websites for listings. I looked at airbnb and found a listing in the neighborhood that has a nightly rate, obviously in violation of the CC&R's. I suggest you read the entire Section 7 about Use Restrictions. It looks like the Board can adopt rules about enforcement.

The good part is that they are giving tenants the ability to see things. Most management companies will not deal with tenants.

 Thank you so much for your response. My question didn't pertain to short-term rentals as I only lease on annual leases at this location. In addition, the third party is the actual management company for the association, who was newly hired after they decided to do away with the old one. I would love to hear your comments knowing this additional info. Thanks again! 

Hi again,

The management company can definitely do that to assist the Board in lease enforcement. I worked for companies that had full time people that did aspects of this. As mentioned by another reply, there is a specific law ARS 33-1806.01 speaks to the matter. I would check to see if the $150 is too high based on the wording of the statute. The statute also uses the word "notwithstanding" which would mean whatever the CC&R's say, the law overrides it. In my experience, the Board is looking to get rid of the STR's. They also may want to get a handle on how many rentals in general there are.