FAQs about SB 1062: The HOA For Sale Sign LegislationBy K. Michelle Lind & Tom Farley

SB 1062 went into effect on September 19, 2007, and provides for a significant change in the statutes governing homeowner’s associations (HOA). As a result of SB 1062, a homeowner living in an HOA governed by these statutes will be permitted to display an industry-standard size for sale sign on the owner’s property, even if such signs are prohibited in the HOA governing documents.  The legislation has raised questions and some HOAs have developed creative interpretations of the new law. However, although there is some confusion about what authority an HOA  governed by these statutes has regarding for sale signs, affected homeowners now have a right that they absolutely did not have prior to the passage of the legislation.

What is the language of the legislation?

The statutes (A.R.S. §32-1261 and §32-1808) now read in pertinent part: 

 A.R.S. 32-1261 Flag display; for sale signs; applicabilityA.  Notwithstanding any provision in the condominium documents, an association shall not prohibit the outdoor display of any of the following:1.  The American flag . . .  B.  The association shall adopt reasonable rules and regulations regarding the placement and manner of display of the American flag . . . The association rules may regulate the location and size of flagpoles but shall not prohibit the installation of a flagpole.  
C. Notwithstanding any provision in the condominium documents, an association shall not prohibit the indoor or outdoor display of a for sale sign and a sign rider by a unit owner on that owner’s property, including a sign that indicates the unit owner is offering the property for sale by owner. The size of a sign offering a property for sale shall be in conformance with the industry standard size sign, which shall not exceed eighteen by twenty-four inches, and the industry standard size sign rider, which shall not exceed six by twenty-four inches.

 A.R.S. 33-1808.  Flag display; political signs; for sale signsA.  Notwithstanding any provision in the community documents, an association shall not prohibit the outdoor display of any of the following:1.  The American flag . . . B.  The association shall adopt reasonable rules and regulations regarding the placement and manner of display of the American flag, the military flag, the POW/MIA flag, the Arizona state flag or an Arizona Indian nation’s flag. The association rules may regulate the location and size of flagpoles but shall not prohibit the installation of a flagpole. C.  Notwithstanding any provision in the community documents, an association shall not prohibit the indoor or outdoor display of a political sign by an association member on that member's property, except that an association may prohibit the display of political signs earlier than forty-five days before the day of an election and later than seven days after an election day. An association may regulate the size and number of political signs that may be placed on a member's property if the association's regulation is no more restrictive than any applicable city, town or county ordinance that regulates the size and number of political signs on residential property. . .  D.  Notwithstanding any provision in the community documents, an association shall not prohibit the indoor or outdoor display of a for sale sign and a sign rider by an association member on that member’s property, including a sign that indicates the member is offering the property for sale by owner.  The size of a sign offering a property for sale shall be in conformance with the industry standard size sign, which shall not exceed eighteen by twenty-four inches, and the industry standard size sign rider, which shall not exceed six by twenty-four inches. END_STATUTE

Does the legislation apply to every HOA in existence?

No, as Legislative General Counsel Kenneth Behringer noted in a memorandum addressing the law, all the HOA statutes in general (A.R.S. §33-1201 et. seq. - condominiums and A.R.S.  33-1801 et. seq. – planned communities), including this legislation apply to all planned community HOAs, to any condominium HOA that was formed on or after January 1, 1986 and to condominium HOAs formed before that date that do not have anything in the condominium documents that conflict with the statutes. 

Does the legislation apply only to HOAs formed after September 19th?

No, the legislation applies to currently existing HOAs governed by the statutes and states “notwithstanding any provision in the community documents. . .” As Legislative Counsel noted, “This language makes it clear that the Legislature was aware that some HOAs had restrictions on for sale signs and that the Legislature intended to limit the authority of the associations in regard to these limitations.”

Does the legislation apply to gated communities?

Yes, the legislation applies to all condominium and planned community HOAs governed by the statutes.

Does the legislation allow sign riders?

Yes, the legislation specifically allows a for sale sign and a sign rider to be displayed on an owner’s property.

What are the size limitations for the for sale sign and sign rider?

The for sale sign may not exceed eighteen by twenty-four inches and the sign rider may not exceed six by twenty-four inches.

Does the legislation apply to for rent signs?

No, the legislation applies only to for sale signs.

Does the legislation allow for sale or directional signs on HOA common areas?

No, the legislation allows only indoor or outdoor display of a for sale sign on the owner’s property. The point of the legislation was to allow a property owner to place a standard sized for sale sign on their solely owned property. Thus, common areas are not impacted by this bill and sign prohibitions in common areas are still enforceable.

Does the legislation allow an HOA to regulate color or content of for sale signs? 

The legislation specifically allows rules and regulations regarding the placement, manner of display, location and size of flags, flagpoles, and political signs, but does not contain similar language allowing rules and regulations regarding placement, posts, etc. of for sale signs.  Therefore, there is a credible argument that the HOAs governed by the statutes cannot require a uniform community design for sale sign. If the legislature intended for these HOAs to further regulate signs beyond size, they could have expressed that desire in SB 1062 by amending the bill to allow for the HOA to adopt rules and regulations to regulate areas outside of sign size. The significant cost of production of community mandated signs was discussed as the legislation moved forward as a detriment to property owners. The intent of the legislation was to allow property owners to use a for sale sign as long as the size was not greater than the dimensions listed in statute. At least one homeowner has retained counsel to challenge an HOA that is attempting to regulate the color/content of the homeowner’s for sale sign.  AAR is supporting the legal challenge and will monitor any litigation that may result.  In addition, AAR is actively involved in other efforts to clarify this issue. 

Can the HOA prohibit the employing broker’s name on the for sale sign?

The ADRE Commissioner’s Rules, A.A.C. R4-28-502, require that all advertising must identify in a “clear and prominent manner the employing broker's legal name or the licensed dba name.”  If a governed HOA refuses to allow the employing broker’s name on the sign, it is arguably effectively prohibiting the sign altogether, which would violate the statute.  

What should the listing broker tell a seller about this new legislation?

The listing broker should discuss the new law and some of the questions that have been raised with the seller. Thereafter, the broker and the seller can decide how best to proceed in regards to the placement of a for sale sign on the seller’s property. 

How can a seller challenge an HOA’s interpretation of the legislation?

The seller should be advised to consult legal counsel. Thereafter, the seller may choose to try to resolve the issue with the HOA informally. If informal discussions do not result in a resolution, the seller may choose to file a lawsuit for injunctive relief and damages or file a complaint with the newly formed HOA dispute resolution department (for more information go to www.dbfs.state.az.us/OA/Downloads/HOA%20Package04012007.pdf).

AAR General Counsel Michelle Lind is a State Bar of Arizona board certified real estate specialist and the author of Arizona Real Estate: A Professional’s Guide to Law and Practice. 

AAR Governmental Affairs VP Tom Farley is the association’s lobbyist and primary legislative advocate. Note: This article is of a general nature and may not be updated or revised for accuracy as statutory or case law changes following the date of first publication. Further, this article reflects only the opinion of the authors, is not intended as definitive legal advice and you should not act upon it without seeking independent legal counsel.