Wait, You Want An HOA?! Restricting Implied Common-Interest Communities

By: Neal McConomy

While the butt of many jokes and a thorn in the side of some property owners, homeowners associations (“HOAs”) serve the vital function of collecting and disbursing funds to care for and maintain common areas of residential developments. Without HOAs, neighborhood open spaces, parks, and other amenities risk falling into disrepair through a type of tragedy of the commons, wherein residents use such amenities but refuse to subsidize care and maintenance for these common areas believing someone else will pony-up the funds. HOAs, when properly organized and managed, avoid this problem by ensuring everyone pays their fair shares for the common areas.… Read More »

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Arizona Supreme Court Confirms a Prevailing Homeowner Can Recover Fees on Implied Warranty Claims

By Rick Erickson

On August 9th, in Sirrah Enterprises, L.L.C. v. Wunderlich, the Arizona Supreme Court settled the question about recovery of attorneys’ fees after prevailing on implied warranty claims against a residential contractor.  The simple answer is, yes, a homeowner who prevails on the merits can recover the fees they spent to prove that shoddy construction breached the implied warranty of workmanship and habitability.  Why?  Because, as Justice Timmer articulated, “[t]he implied warranty is a contract term.”  Although implied, the warranty is legally part of the written agreement in which “a residential builder warrants that its work is performed in a workmanlike manner and that the structure is habitable.”

In other words, a claim based on the implied warranty not only arises out of the contract, the claim is actually based on a contract term.… Read More »

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Appeals of Rulings by The Registrar of Contractors Must Be Timely Filed in Superior Court.

By Rick Erickson

Recently in Johnson v. Arizona Registrar of Contractors, the Arizona Court of Appeals affirmed dismissal of a homeowner’s late appeal of an adverse decision by the Registrar of Contractors (“Registrar”).  After successfully pursuing a complaint to suspend a roofing contractor’s license, the homeowner tried but failed to get her roofing repair costs from the Registrar’s Recovery Fund.  The homeowner sent her appeal to the Registrar.  However, the governing Arizona statute, A.R.S. § 12-904(A), clearly required the homeowner’s appeal to be filed in Superior Court, not with the Registrar.  Once the homeowner realized her mistake, her appeal to Superior Court was a day late. … Read More »

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Common Law Indemnity Claim Affirmed on Justifiable Beliefs

By Rick Erickson https://www.swlaw.com/people/rick_erickson

Yesterday, the Arizona Court of Appeals issued an interesting opinion in Hatch Development v. Solomon. Hatch illustrated two key points in real estate and construction litigation: (1) a contractor’s indemnity does not always require an expressly written obligation; and (2) when facts are undisputed that a contractor is solely at fault for a construction defect, a property owner can be indemnified after paying a neighboring property owner for damages caused by the contractor’s defective work.

Hatch was a homeowner who hired Solomon to install sewer lines. After installation, heavy rain led to muddy water in the sewer lines, suggesting a defect in the installation. … Read More »

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Transfer of Property Title to a Holding Company Did Not Divest Landowner of Owner-Occupant Status Under A.R.S. § 33-1002(B)

By:  Richard G. Erickson

Recently, in Marco Crane & Rigging Co. v. Masaryk, 703 Ariz. Adv. Rep. 29 (Dec. 30, 2014), the Arizona Court of Appeals established that a subcontractor on a residential project has no lien rights against an owner-occupant, even though the homeowner transferred the property’s title to a holding company (an Arizona limited liability company) after the subcontractor commenced work.

In other words, the lien protections afforded to owner-occupants are determined, at the latest, when a contractor records its lien.  After the contractor commences work and records its lien, the homeowner’s actions in negating owner-occupant status do not divest the homeowner of statutory protections against lienholders. … Read More »

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