Arizona HOA Lien Foreclosure Thresholds and Priority

Two Arizona chapters carry nearly identical lien sections with different numbers in them. A.R.S. § 33-1256 governs condominiums under the Arizona Condominium Act, and A.R.S. § 33-1807 governs planned communities under Title 33, Chapter 16. Both give the association a lien from the moment an assessment becomes due, and both allow that lien to be foreclosed "in the same manner as a mortgage on real estate." The gate differs. A condominium association reaches the gate at one year of delinquency or $1,200, whichever comes first. A planned community association does not reach it until eighteen months or $10,000. An Arizona owner therefore needs to know which chapter the community was formed under before reading any figure, and the answer sits in the recorded declaration.

"Whichever occurs first" means the two tests run in parallel rather than in sequence. A condominium owner who misses a single $150 quarterly assessment and lets it sit for twelve months crosses the time test even though the balance is nowhere near $1,200, and an owner hit with a $1,300 special assessment crosses the dollar test within the first billing cycle. The statute fixes the measuring date as the day the foreclosure action is filed, so an association cannot rely on a peak balance that the owner has since paid down below the threshold.

Before that, the board "shall exercise reasonable efforts to communicate with the unit owner and offer a reasonable payment plan before filing a foreclosure action." Subsection L adds a separate, harder-edged step: at least thirty days before the association may turn the account over to an attorney or to an outside collection agency, it must send written notice, by certified mail with return receipt requested, in boldfaced type or all capital letters, using the exact wording the statute prints, warning that collection proceedings "could include bringing a foreclosure action against your property" and giving contact information for a person the owner can call about payment.

Fines are outside all of this. Subsection B says that notwithstanding anything in the condominium documents, unit owner expenses are not enforceable as common expense liens, and that the association gets only a judgment lien after it wins a civil suit and records the judgment. That judgment lien "may not be foreclosed and is effective only on conveyance of any interest in the real property." An Arizona association cannot take a home over unpaid violation penalties, late-fee-only balances or similar charges; it has to sue, win, record, and then wait for a sale or transfer to collect.

Arizona also gives its associations no super-lien. Subsection C places the common expense lien behind liens recorded before the declaration, behind a recorded first mortgage or first deed of trust, and behind real estate taxes and other governmental charges. An association foreclosure therefore buys the association a position junior to the bank, which is a large part of why so few are filed. Subsection D keeps mechanics' and materialmen's lien priority untouched and excludes the common expense lien from Title 33, Chapter 8.

Timing and paperwork rules round out the section. Under subsection F, recording the declaration is itself record notice and perfection, so no separate claim of lien ever appears in the county recorder's index and an owner will not receive a lien filing in the mail. Under subsection G, the lien is extinguished unless enforcement proceedings begin within six years after the full amount becomes due. Under subsection J the association must furnish a payoff statement within ten days of a written request, and if the request came from an escrow agency licensed under Title 6, Chapter 7, missing that ten-day window extinguishes the lien for any unpaid assessment then due. Subsection K forces every payment to be applied to assessments first, then late charges, then collection fees, then court-awarded attorney fees, before anything touches fines or penalties, unless the owner directs otherwise. Subsection N bars the association from transferring ownership or control of the debt, which closes off selling the account to a debt buyer.

Section 33-1256 does not reach every association: subsection O excludes timeshare plans and associations subject to Title 33, Chapter 20. The planned community counterpart at § 33-1807 carries no equivalent carve-out in the lien section itself, but Chapter 16 as a whole has its own exemptions in § 33-1801.

Foreclosure is a court case in Arizona, not a trustee's sale. § 33-721 requires mortgages of real property to be "foreclosed by action in a court," and because § 33-1256(A) directs that the common expense lien be foreclosed in the same manner as a mortgage, the association must sue in superior court, prove the delinquency, and obtain a judgment and sale order. The usual sequence is a delinquent account, the thirty-day certified-mail notice required by subsection L, referral to an attorney or collection agency, a civil suit for the money, and only then a foreclosure count once the one-year or $1,200 condominium trigger, or the eighteen-month or $10,000 planned community trigger, has been passed.

Subsection I lets the court award costs and reasonable attorney fees to the prevailing party, so a defence that succeeds can shift fees onto the association. Subsection H(2) preserves the association's right to take a deed in lieu of foreclosure instead. An owner's practical defences are all in the statute: that the balance and the elapsed time were both under the threshold on the filing date, that the balance is made up of fines rather than assessments and so is not a common expense lien at all under subsection B, that no payment plan was ever offered, that the thirty-day notice was never sent by certified mail in the required form, that the six-year window in subsection G has closed, or that the association missed the ten-day payoff statement deadline for a licensed escrow agency and extinguished the lien for the assessments then due.