he Arizona Supreme Court has limited the powers of homeowners associations to amend covenants retroactively when those amendments would unfairly surprise buyers who were not on notice of them when they bought their properties. Kalway v. Calabria Ranch HOA, LLC, 506 P.3d 18 (Ariz. 2022). In this case, the homeowners association adopted new restrictions on owners’ abilities to convey or subdivide their lots, restricted the size and number buildings permitted on each lot, and reduced the maximum number of livestock permitted on each lot. The court held that the original declaration must give “sufficient notice of the possibility of a future amendment; that is, amendments must be reasonable and foreseeable.” Thus owners cannot be retroactively forced to join a community club if not put on notice of that possibility in the declaration. Here, most of the amendments created “new affirmative obligations” such as limiting garage space to 40% of the dwelling, limiting excavation, changing allocation of voting rights, limiting the location of non-dwelling structures, requiring all improvements to be pre-approved, and more.
The case is unusual because most cases hold that those who buy property subject to a homeowners association sacrifice many rights to their neighbors who have the power to amend the covenants unless the declaration limits the amendment power. Here, by contrast, the court suggests that owners have strong expectations that there will not be regulations other than those included in the declaration at the time they purchase despite the association’s power to amend the covenants.
