Arizona Supreme Court lets HOAs sue builders over homes they do not own
Arizona Supreme Court lets HOAs sue builders over homes they do not own
2026-09-10 · Arizona · Courts
An Arizona homeowners association may sue a builder for construction defects in homes the association does not own and never bought. The Arizona Supreme Court so held on July 29, 2026 in Gallery Community Association v. K. Hovnanian at Gallery, LLC, a published opinion authored by Justice Montgomery.1
Chief Justice Timmer dissented, joined by Justice King.
The obstacle the case removed
Arizona's implied warranty of workmanship and habitability is a creature of contract. It runs to a home buyer, including a subsequent purchaser, and it has traditionally required the plaintiff to stand in a purchaser's shoes. An association is not a purchaser. It buys nothing from the builder, and in most communities it does not own the houses.
That left associations in an awkward position: the entity with the resources, the standing motive and the professional management to pursue a defect claim across an entire subdivision was the one entity arguably unable to bring it.
What the court held
The question, as the opinion frames it, was “whether, by enacting A.R.S. § 33-2002, the Legislature has authorized a homeowners' association to bring such a suit regarding both common areas it owns and properties owned by individual homeowners.”
The answer was yes:
We hold that, because § 33-2002 and related statutes encompass a cause of action for construction defects arising out of a failure to adhere to community workmanship standards, the Legislature has modified the common law to authorize homeowners' associations to bring what constitutes an implied warranty suit.
Two features of that sentence carry the weight. The court did not find privity or reinterpret the common-law warranty; it held the legislature displaced the common-law limits by statute. And the authorization reaches both categories of property — common areas the association owns, and homes it does not.
What it changes for boards and managers
The defect claim is now an association-level asset. Where a construction defect runs across a subdivision — a stucco system, a roof detail, a grading or drainage problem repeated house after house — the association can pursue it as a single action rather than depending on individual owners to sue separately or not at all.
That makes it a fiduciary question, not just a legal option. Once a claim is available to the association, a board that knows of a systemic defect has to decide whether to pursue it, and to document that decision. From September 12, 2026 that decision is also taken under the new statutory duty to act reasonably in the exercise of discretionary powers.
Statutes of limitation and repose still govern. Nothing in the decision extends Arizona's eight-year statute of repose for construction defects, or the shorter limitations periods that run from discovery. Recognising who may sue does not lengthen how long they have.
The purchase-and-sale documents matter less than they did. Because the authorization is statutory, it does not depend on the association holding an assignment from each owner. That said, assignment remains a live route: the Supreme Court held in Pointe 16 Community Association v. GTIS-HOV Pointe 16, LLC (September 4, 2025) that an anti-assignment clause barring transfer of “this Agreement and the rights of Buyer hereunder” does not bar assigning accrued claims for damages to the association.2
Read together, Gallery and Pointe 16 give Arizona associations two independent routes to a builder: the statutory action, and assigned claims that survive standard anti-assignment language.
The dissent is worth reading
A dissent from the Chief Justice joined by another member of the court is not a footnote. The disagreement goes to method: whether § 33-2002 — a statute about who may bring a “dwelling action” and the procedure for it — should be read as having silently created a substantive cause of action that the common law withheld.
A 3–2 statutory-construction holding is not settled beyond legislative reach. Construction-defect liability is among the most heavily lobbied areas of Arizona law, and two 2026 bills on the subject — SB 1450 and HB 4045 — were introduced and died, one of them first-read a single day before the session ended.
What to watch next
A legislative response. The most likely 2027 bill in this area is one narrowing what Gallery recognised. That is a prediction about nobody's individual case and merely an observation about where the pressure now sits.
How the two routes interact. Where an association sues under the statute and owners have also assigned claims, the overlap between association recovery and individual recovery for the same defect is not mapped.
Insurance. A recognised association-level claim against a builder changes what an association's own coverage and the builder's carrier are arguing about, and defect claims are already a driver of Arizona association premium pressure.
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