A recent Arizona Court of Appeals case helps answer this question for Associations in Arizona– Laveen Meadows Homeowners Association v. Carlos Mejia, 1 CA-CV 18-0276
The Laveen Meadows Homeowners Association (“Association”) filed a foreclosure lawsuit against a homeowner for unpaid assessments and other amounts. The homeowner did not respond to the lawsuit so the Association applied for a default judgment. The defendant then remitted payment for $5,000, which covered the entire balance of unpaid assessments. The defendant argued that this payment eliminated the Association’s right to foreclose and asked that the default judgment be set aside.
The Superior Court provided that because the Association “had the grounds to…seek foreclosure at the time of the complaint,” the Association was allowed to continue with the foreclosure action for the remaining amounts owed. The Superior Court also denied the motion to set aside the default judgment. Defendant appealed, alleging that pursuant to ARS §33-1807(A), the judgment should be void because the Court lacked jurisdiction to foreclosure. ARS §33-1807 allows an Association to foreclose if delinquent assessments total $1,200 or are delinquent for one year, whichever occurs first.
The Arizona Court of Appeals analyzed ARS §33-1807(A) regarding whether the Association’s right to foreclosure on delinquent assessments is determined at the commencement of the foreclosure lawsuit or at the time the foreclosure judgment is entered. The Court looked at the plain language of the statute, and provided that the Arizona statute “does not expressly eliminate the foreclosure remedy if an owner makes a payment to reduce or eliminate the unpaid assessment balance.” The Court agreed that the Association had a valid default judgment and found the Association was entitled to its attorneys’ fees and costs as the prevailing party.
Interestingly, the Arizona Legislature amended ARS §33-1807(A) after this case, and added the words, “as determined on the date the action is filed,” which now makes it more clear that the Association’s right to foreclosure is based on the date the lawsuit is filed.