The Legislature, the Courts, Home Owner Associations, and Real Estate

sedona news

By Kathy Howe

I’m going to start out with some legislative issues first and then get to some incredibly important decisions that will affect real estate in Arizona.

HB 2612

Allows a real estate licensee to accept employment and compensation from an employer other than the employing broker under certain circumstances. Headed to the Governor for a signature.


Defines “wholesale” buyers and sellers. Lack of disclosure will allow for contract cancellation and earnest monies returned to a buyer if seller fails to disclose their status as a wholesale seller. If a buyer does not disclose to the seller that they are a “wholesale” buyer, the seller may cancel the contract and retain the earnest monies.


Home Owner Associations have some rough waters ahead of them due to the March 22, 2022 decision by the Arizona Supreme Court on Kalway v. Calabria Ranch HOA, LLC

From Justica US Law:

The Supreme Court held that a homeowners’ association (HOA) may not rely on a general amendment power provision in its covenants, conditions, and restrictions (CC&Rs) to place restrictions on landowners’ use of their land only as to those restrictions for which the HOA’s original declaration has provided sufficient notice…The superior court invalidated portions of the amended CC&RS. Plaintiff appealed, arguing that all of the amendments were invalid without unanimous consent. The Supreme Court reversed in part, holding that an HOA cannot create new affirmative obligations where the original declaration did not provide notice to the homeowners that they might be subject to such regulations.

Access to the entire Arizona Supreme Court documents: Click Here.

How will this affect Short Term Rentals? Click Here.

And then there is the legislature…

The following are bills that will affect Associations, including SB1168, which may or may not make it out of the legislature and on to the Governor’s desk. It’s important to remember that the Governor has let it be known that he does not want changes to the Vacation Rental laws. As it stands now, SB1168 is still alive with both licensing and fines. Rumors abound that it won’t pass as it is. Stay tuned.

On to those that have passed or are expected to be signed into law:


Heading for a final floor vote and then to the Governor’s desk is a bill which will add “a blue star or gold star service flag” to those flags which are already statutorily allowed by Homeowners in an Association.


If you live in an Association and want to put in artificial turf instead of real grass, your Association cannot ban you from doing it. The bill was signed by the Governor.


Prohibits a condominium unit owners association (COA) or a planned community association (HOA) from restricting an owner's ability to display an association-specific political sign, with outlined rules and exceptions, peacefully assembling in common areas, inviting a political candidate or a guest to speak to an assembly or posting notices regarding assemblies in common areas.

On to real estate…

With the rise in interest rates, those of us in real estate are being asked if this will “crash the market”, increase the inventory, or cause a recession. Let me allow a friend of mine, Melanie McFarland, a Pennsylvania appraiser who teaches nationally, to explain it to you as simply as possible:

“So, mortgage interest rates are now hovering around 5%. Did you know that the historical average of mortgage interest rates in the US is 8%? Do you know how rising interest rates affect your ability, as a buyer, to buy? They erode your purchasing power. Here's an example. In this example, our buyers are qualified by the lender to spend $1200 a month for PITI (principal, interest, taxes and insurance). We used $300 a month as a hypothetical amount for taxes and insurance. NOTE: if the property taxes are higher, OR if you have to pay Private Mortgage Insurance (because of a down payment less than 10%, this figure will change). That leaves $900 for principal and interest (P&I)

$900 for P&I @5% covers a mortgage of $167,653.

$900 for P&I @6% covers a mortgage of $150,112.

$900 for P&I @7% covers a mortgage of $135,277.

19% of your purchasing power has been eroded!

What does it mean? Despite low supply, buy now if you can.

If you are a seller, increasing rates will put downward pressure on prices.”

Kathy Howe, Uptown Sedona real estate educator and broker, not to be confused with an attorney

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