HOA of Vacant Lots: Is This legal?

HOA was created in 1960. There was no expiration date on the document and no instructions about when the HOA would turn over to the homeowners. Subdivision went bankrupt with only a few houses built and no infrastructure built on 90% of the lots.

15-years ago I bought 50-lots in this subdivision at a tax lien sale and was going to develop the lots myself. Along comes a bunch of investors who bought up all the other lots not owned by lot-owners -- some of whom bought in the 60's. The "majority owners" (with all the votes -- so they can impose anything on us)revived and rewrote the CC&Rs, started making us pay dues and assessed our lots for improvements -- putting in streets, sewers, electricity, water, etc.

I went along with it because it seemed fair. I sold three lots to a homebuilder, paid the assessments ($22k each) and made a nice profit.

These majority owners went bankrupt during the housing bust (cost the bank $35-million) and along comes some new majority owners.

They are charging HOA dues and foreclosing on lot owners who refuse to pay. They, through a proxy company are also (illegally in my opinion) foreclosing on the delinquent assessments. The reason I say it's illegal is because the assessments are over six-years old. The assessments expired under statutes of limitations / latches.

With the way the economy is now, it will be maybe 20 years before all the lots in the subdivision can be sold to homebuilders.

Why should we be required to pay dues?! Dues on 50-lots is bankrupting me: more than $3000k/year! I live like a dog, I could have a nice vacation in Europe with $3000!

The original intent for the revived HOA was to fairly develop the lots. The original intent of the original HOA was something different. None of the original buyers expected to have to pay for development.

First, a history lesson:

In the 1960’s Arizona was the land fraud capital of the world. Developers would purchase a large parcel in the middle of nowhere, put up some street signs, and start selling lots from offices in places like New York and Chicago. The lax real estate laws of that era permitted the developers to make unsupported claims about the property. Those who purchased signed promissory notes for astronomical amounts. The notes were sold immediately to investors who, under the holder-in-due-course doctrine of the day, could not be held accountable for the developers fraudulent claims.

Many of the developments of that era have never had a single home built as there were no utilities and often no roads to the subdivision. To this day it is possible to find street signs planted in the desert without any other indications that a subdivision was intended to be placed here.

As to the question at hand:

Raquel, I think you tried a get-rich-quick scheme that backfired. You said you intended to develop the fifty lots and sell them yet fifteen years later you sold only three. You claim that $3000 in assessments is bankrupting you. I have to ask how you intended to pay for developing fifty lots on such a tight budget.

I think that on the face of it you could successfully challenge the majority property owners’ re-born HOA but this will require an action in Superior Court. I would expect a minimum expense of about $20,000 and that seems to be beyond your reach.

As for the foreclosures on old unpaid assessments, you lack any standing to challenge those actions.

'it seemed fair at the time....'

so, sell out and move on down the road

Actually, the limitation on HOA assessments is even shorter:

“A lien for an unpaid assessment is extinguished unless proceedings to enforce the lien are instituted within three years after the full amount of the assessment becomes due.” ARS 33-1807(F)

If the HOA sues, you have a defense.