Background
SunBird Golf Resort is an age-restricted (55+) community of approximately 1,600 homes in Maricopa County, Arizona, governed by the SunBird Golf Resort Homeowners Association. The community sits adjacent to a separately owned golf course. The 2015 CC&Rs that governed the community when Jimmie Klatt purchased his home in 2018 expressly excluded the Golf Course from the Association’s common areas and stated that neither the Association nor its members would be responsible for golf course operation and maintenance costs.
In 2021, a majority of SunBird owners approved an amendment to the CC&Rs creating a capital improvement fund for common areas “including the Golf Course.” The amendment applied only to future lot purchasers, requiring them to pay a $300 capital improvement assessment upon acquiring a SunBird property. Klatt sued in September 2023, arguing the amendment was unenforceable under the Arizona Supreme Court’s 2022 decision in Kalway v. Calabria Ranch HOA, LLC, because the 2015 CC&Rs gave no notice that the Association could ever be authorized to financially support the Golf Course.
The Maricopa County Superior Court granted summary judgment for Klatt, declared the amendment void and of no force and effect, and awarded Klatt attorneys’ fees and costs. The Association appealed, challenging both Klatt’s standing and the application of Kalway.
The Court’s Holding
The Court of Appeals affirmed on all grounds. On standing, the court held that Klatt had a justiciable interest as a lot owner with a contractual relationship to the Association under the CC&Rs. His interest in the marketability of his property — which would now be encumbered by the $300 assessment upon sale — was concrete and not merely speculative. The court also found the Association had waived its standing argument by failing to raise it in the superior court.
On the merits, the court applied Kalway and rejected the Association’s argument that the decision was inapplicable because the amendment targeted only future purchasers rather than existing owners. The court reasoned that an amendment affecting the terms under which existing owners can sell their property is still a restrictive covenant that burdens those owners, regardless of who technically bears the payment obligation upon transfer. Because the 2015 CC&Rs plainly prohibited using Association funds for Golf Course expenses, an amendment authorizing such support was neither reasonable nor foreseeable under Kalway.
The court further noted that the Association failed to argue on appeal that the superior court erred in finding the amendment unreasonable and unforeseeable, thereby waiving that issue. Attorneys’ fees on appeal were awarded to Klatt as the prevailing party under A.R.S. § 12-341.01.
Key Takeaways
- Under Kalway, HOA CC&Rs amendments must be both reasonable and foreseeable in light of the original declaration; amendments that are “entirely new and different in character, untethered to an original covenant” are unenforceable.
- An amendment that imposes obligations only on future purchasers still legally affects existing owners by encumbering their ability to sell, giving current homeowners standing to challenge it.
- A lot owner has standing under Arizona’s declaratory judgment statute to challenge the validity of a CC&Rs amendment based on the contractual relationship created by the CC&Rs, and that standing cannot be defeated merely because the owner is not yet subject to direct payment.
- Arguments not raised before the superior court — including standing challenges — are waived on appeal in Arizona HOA disputes.
Why It Matters
This decision extends Kalway‘s foreseeability requirement into a context the Arizona Supreme Court had not expressly addressed: CC&Rs amendments structured to bind only future buyers. HOAs in Arizona may not insulate amendments from challenge simply by limiting their application to new purchasers, since such amendments still alter the legal and economic position of every existing owner who may one day sell. The ruling reinforces that majority-vote amendment power has constitutional and contractual limits rooted in the reasonable expectations of homeowners at the time of purchase.
For practitioners advising HOAs, the decision signals that amendments introducing entirely new financial obligations — particularly those tied to entities expressly excluded from the original CC&Rs — face a high risk of invalidation under Kalway regardless of how they are structured. Counsel should carefully audit existing CC&Rs before drafting amendments that expand an association’s financial scope, and should ensure any such changes are tethered to obligations already contemplated in the governing documents.