Can an Arizona HOA Sue the Builder? Two Supreme Court Decisions Changed the Answer

Construction defects in a planned community or condominium rarely stay confined to one unit. Roofs, stucco, drainage, and common area structures often fail across the project. The natural claimant then is the association. For years, builders argued that the association had no right to sue because the implied warranty of workmanship and habitability belongs to the individual homebuyer. Two Arizona Supreme Court decisions, one in September 2025 and one in July 2026, have now settled that argument.

Pointe 16: homeowners can assign their claims to the association

In Pointe 16 Community Association v. GTIS-HOV Pointe 16, LLC, 260 Ariz. 377, 575 P.3d 368 (2025), the purchase agreement provided that the agreement and the buyer's rights under it could not be assigned or transferred without the seller's written consent. A majority of the homeowners assigned their accrued defect claims to the association without that consent. The Supreme Court held that the anti-assignment clause did not reach those assignments. The implied warranty of workmanship and habitability is part of the contract, a claim for its breach sounds in contract, and contract claims are generally assignable.

The Court held that an anti-assignment clause must evidence an intent to prohibit the assignment of a specific thing, and that a reference to claims was notably absent from this one. The clause reached the agreement and the buyer's rights under the agreement. It did not reach accrued claims for damages for breach. A purchase agreement that names claims could produce a different result. If you have a question about the assignment clause in your contract, schedule a consultation with Patrick today.

Gallery: no common law claim, but a statutory one

In Gallery Community Association v. K. Hovnanian at Gallery, LLC, No. CV-24-0252-PR, 2026 WL 2180473 (Ariz. July 29, 2026), the association sued in its own name over defects in the common areas, which it owned, and in unit exteriors that it was obligated to maintain but did not own. The Arizona Supreme Court held that under Arizona common law, only a homeowner can sue for breach of the implied warranty of workmanship and habitability, and the association has no such claim of its own. But, the Court noted, the Legislature changed that result by statute. The Court held that A.R.S. § 33-2002 and related provisions encompass a cause of action for construction defects arising from a failure to adhere to community workmanship standards, and authorize associations to bring what constitutes an implied warranty suit without privity and without owning the units. Gallery vacated the Court of Appeals decision in the same case, reported at 261 Ariz. 291, 583 P.3d 69 (App. 2024).

Three options that should not be blended

After these Supreme Court decisions, an Arizona association still has no common law warranty claim of its own, yet now potentially has a statutory dwelling action claim. An association may also take assignments of the homeowners' accrued claims unless the purchase agreement specifically prohibits the assignment of claims. Each option has different requirements, different pre-suit obligations, and different exposure to the builder's defenses. Neither decision holds that an association must choose among them, and neither decision addresses the question. Which route fits a given community depends on the CC&Rs, the purchase agreements with the homeowners, and the pre-litigation notice history.

What this means for an owner

The implied warranty claim belongs to you, and you may be able to assign it to the association so the defects are pursued at the community level. The assignment is a real transfer of control and should be carefully considered and reviewed before it is signed. For an owner whose board has been hesitant to pursue the developer, these decisions clarify the board's options. For a board that wants to act, they define the path and its requirements.

Whether your community's documents support one of these options is a question to address at a meeting with Patrick. Nackley Law represents Arizona homeowners and associations in construction defect matters, statewide.