Arizona Supreme Court Expands HOA Authority in Warranty Claims

PHOENIX, Ariz. (September 8, 2025) – The Arizona Supreme Court has ruled that homeowners may assign construction defect and warranty claims to their homeowners’ associations (HOAs), a decision that could reshape how property disputes are handled across the state.

The unanimous opinion in Pointe 16 Community Association v. GTIS-HOV Pointe 16, LLC held that while contracts may restrict the assignment of contractual rights, they do not necessarily prevent the assignment of claims for damages once a breach occurs. Writing for the Court, Justice Kathryn H. King explained that “an assignment of rights under a contract is different than an assignment of accrued claims for damages arising from a breach of that contract.”

The ruling sends the case back to the trial court, where the Pointe 16 HOA will now have the ability to pursue defect claims against the developer on behalf of homeowners.

The decision has sparked debate in Arizona’s housing industry. In an article for Trend Report this month, Jackson Moll of the Home Builders Association of Central Arizona and David Godlewski of the Southern Arizona Home Builders Association cautioned that the ruling could expand construction defect litigation and further burden housing affordability. They pointed to recent legislative reforms intended to curb excessive lawsuits, including Arizona’s 2015 law granting builders the right to repair alleged defects before litigation, and a 2019 statute limiting the recovery of attorney fees, which are often the primary driver of litigation costs.

“Construction defect lawsuits remain a significant barrier to building more attainable housing, especially townhomes and other ‘missing middle’ products,” Moll and Godlewski wrote. “If HOAs are allowed to take over claims for homes they don’t own, insurance costs will rise, and those costs will be passed directly to Arizona buyers.”

With the state already struggling to balance affordability and supply, the Supreme Court’s decision is expected to shape both construction practices and future policy debates around Arizona’s defect laws.

Click here for the full Trend Report article, Construction Defect Lawsuits Threaten Arizona’s Housing Reforms by Jackson Moll and David Godlewski.