ARIZONA COMMUNITY ASSOCIATION COLLECTIONS GUIDE

Welcome to Arizona

With over 9,700 condos, HOAs, and co-ops, the state of Arizona has a massive number of common interest reality associations. According to CAI, an estimated 2.2 million Arizona residents live in a community association today. So, it's not surprising that Arizona is also one of the better-regulated states when it comes to community association collections.

By 2040 the community association housing model is expected to become the most common form of housing in Arizona. 

Currently, Arizona residents pay $2.4 billion a year to maintain their communities and 75,000 Arizonans serve as volunteer leaders in their community associations.

Before you read anything on this page about the laws governing Condo and HOA collections in Arizona, make sure you have read the governing documents for your association. The governing documents may be stricter than the state laws, and in those cases, the governing documents take precedence.

As a general rule, neither your management company or board members should attempt to make contact with delinquent homeowners in an attempt to collect the debt, beyond the initial courtesy letters. You need an attorney or a licensed collection agency to collect on your behalf.

How to improce HOA delinquencies

How to Reduce Your Condo/HOA Delinquency Rate

Are you living with the Consequences of nonpaying homeowners? If so, you need a better approach to collections for your community association!

This guide will will give you the same techniques that we use to help our clients reduce delinquencies, all but eliminate bad debt write-offs, and see significant savings on legal fees.

Arizona Collection Laws

Yes, Arizona has state laws pertaining to HOA and condo associations.

To better understand the laws for Arizona HOAs, please refer to:

To better understand the laws for Arizona condos, please refer to:

Arizona Condominium Act - § 33-1201. This Act governs the creation, alteration, termination, and management of Arizona condominiums. The statute applies to all Arizona condominiums regardless of when the condominium was created.

Unlike most states, Arizona depends on the Federal Fair Debt Collection Practices Act (FDCPA) as Arizona does not have it’s own statutes regarding collections.

No, but that does not mean that a management company cannot be in violation of the collection statutes. Collections are heavily regulated and anybody who attempts to collect debts should know what they are doing.

An HOA can collect as much as is legally owed to them in fees, violations, special assessments, administrative costs, and legal fees - as outlined in the governing documents of the association.

Arizona laws place no restrictions on what you can do with the money your association collects in past-due assessments. As long as the money is accounted for in the budget, aligns with the governing documents, and/or is approved by the board of directors it can be spent on any improvements or maintenance that is required by the association.

An association should always contact a delinquent owner to advise them regarding what is owed. Every owner is entitled to see their ledger and know how much they are owed. An owner may request their ledger at any time and an HOA should be willing and able to provide it to them. 

An association that publicly publicizes information about a homeowner's unpaid assessments potentially violates the federal Fair Debt Collections Practices Act which forbids disclosure of information to third parties relating to a debt (which includes HOA assessments).

Yes. Once a property has gone through probate and the court has decided who is the legal owner, all the past due fees are due and payable to the HOA unless the governing documents have a provision that says the debt rolls over to the association. Going forward, after probate has been settled, the new owner must pay their fair share.

It depends. Because Arizona is not a super lien state, a bank foreclosure will take priority over a community association’s lien and does not require the lender to provide any compensation to the association for unpaid assessments. 

So, if both a mortgage-holder and a community association are foreclosing on a property, chances are often slim that the HOA will be able to collect. This is because there is often no money leftover for the HOA to collect on their debts once a bank has been paid using the sale funds. However, Axela clients are able to take advantage of a service that tracks bank foreclosures through to sale. Once the sale has concluded, Axela can petition on behalf of the association to have first access to any excess funds left over after the mortgage lender has collected.

Yes. Foreclosure should be the last desperate attempt to recover the association’s money. An HOA should consider a merit-based collection agency to recover it’s delinquent money before moving to put people out of their homes. Notices should be given to a delinquent before any action is taken.

The traditional way to collect is to have the management company send a few courtesy letters to a delinquent owner and then send the file to the attorney for foreclosure. Arizona is considered a non-judicial foreclosure state, which means that the bank foreclosure process happens outside of the courtroom without a redemption period.

The best way to handle collections for HOAs is to engage the owners and be armed with all the information you can acquire. Know the equity in the unit, read and understand the governing documents, find out where the owner is, and then begin to engage in the collection efforts. Once again, this is a very heavily regulated industry so this should be done by professional and licensed companies. Once you engage with an owner, you may be surprised to see that most of them will cooperate and come to the table. You just have to ask them and be willing to work with them.

Yes. The board of directors has a fiduciary duty to collect these assessments and if the individual is not in bankruptcy there is nothing legally stopping them from the collection of delinquent assessments.

6 years. The statute of limitations periods for HOA claims are different for every state. In Arizona consumer debt such as HOA & Condo fees have a statute of limitations of 6 years. Arizona Revised Statutes § 12–548.

Yes. Arizona does not differentiate between an in-state and out-of-state owner from a collections perspective.

An HOA and Condo must be a properly registered corporation and up to date on all of their state and federal filings. There is no special registration required.

Yes. Late fees can be charged up to $15 or ten percent of the past-due installment whichever is greater.

If the file has not gone to the attorney it is advisable to contact the manager or treasurer of the association to get a copy of the delinquent ledger. Then review the ledger and if you can prove that you made payments that were not applied properly, advise the management company. If the file has been sent to a collection agency the law requires that the collection agency give the debtor 30 days to dispute the debt.

How The Future Collects

Secure Delinquencies

Traditionally a board of directors will have their management company send a delinquent file to an attorney for collections. The question is: Are attorneys collecting or merely foreclosing on your neighbors property? Are you receiving checks from your attorney from delinquent owners or titles to properties that you have to then monetize?

HOA collections should be about recovery, not punishment. At Axela Technologies we keep our eyes on the prize, and our only goal is to recover every cent that is owed to your association, period.

Advanced Technology

Collections is traditionally an outdated industry, relying on phone calls and threats to get the job done. At Axela, we believe that ethical collections is not only possible, but necessary if we are to succeed.

So we have brought our collections operation into the modern age with email, SMS, transparent reporting, and recorded calls our clients can review online. On the back end, our process relies on information gathering and prediction algorithms that help us determine the best way to approach each individual case, making sure we have access to all the facts.

Human Connection

Delinquent homeowners are real people with genuine problems that need to be addressed. We never forget that we are dealing with people’s homes and their very lives. 

Even in this digital age, the value of a real live human being cannot be underestimated. We combine our advanced technology with a human touch to construct a resolution that serves both the homeowner and the association. We do this by engaging them, listening to them, and helping them get on the right track. It’s good for the membership and great for your community association.

Why AXELA?

Axela Technologies provides no cost and no risk collections for community associations using best practice collections strategies, advanced proprietary technology, and highly trained customer service representatives. We are licensed in every state and compliant with the Fair Debt Collections Practices Act (FDCPA).

We are a specialized collections service which means a great deal in the community association industry. Understanding the nuances of how people fall behind in their maintenance fee payments and how to resolve their issues is a science and an art. At Axela Technologies we have what it takes to “move the needle” and recover 100% of what is owed to the association and the best part is that we are totally merit based. IF WE DON’T RECOVER YOUR MONEY WE DON’T GET PAID. A pretty simple concept but a bold promise at the same time.

Our proprietary software is second to none and we have the ability to keep the management and board of directors informed in real time 24/7. Our system never sleeps. The technology is fantastic and is only equaled by the people who will service your delinquent members and work with them to resolve their delinquency issues.

Schedule A Personalized Walk Through

In your free demonstration of Axela Technologies customer portal, you'll see how the process works for a delinquent owner and the transparency Axela provides into the collection process, with every action from our collections team being logged and documented for your review.