Arizona Supreme Court Clarifies HOA Authority and Anti-Assignment Clauses: Pointe 16 Community Association v. GTIS-HOV Pointe 16, LLC

By Anjali Patel

HOA Law

When you buy a home in a planned community or a condominium in Arizona, you are not just purchasing real estate. You are also entering into a binding relationship with the homeowners’ association, governed by a legal document known as the Covenants, Conditions, and Restrictions (CC&Rs). Arizona courts treat CC&Rs as contracts between the HOA and the homeowner, and that means the words on the page have real consequences when disputes arise.

A new Arizona Supreme Court decision, Pointe 16 Community Association v. GTIS-HOV Pointe 16, LLC (No. CV-24-0182-PR, Sept. 4, 2025), illustrates exactly why these contracts matter. While the case began as a construction defect dispute, it ultimately raised questions about the authority of HOAs, the rights of individual homeowners, and the meaning of anti-assignment clauses.

The Background of the Pointe 16 Case

Pointe 16 is a townhome community in Phoenix. After moving in, homeowners began to allege serious construction defects in both the individual units and the common areas. To streamline the process, a majority of the homeowners signed assignments that transferred their claims to the HOA so the association could pursue them collectively in court.

The developer, GTIS-HOV Pointe 16, LLC, and the builder, K. Hovnanian, tried to block the claims. They argued that the homeowners’ purchase agreements contained an anti-assignment clause that prohibited any transfer of rights without the developer’s consent. The clause stated: “This Agreement and the rights of Buyer hereunder may not be assigned or transferred by Buyer” without consent.

The trial court agreed with the developer and builder and dismissed the case. The Arizona Court of Appeals upheld the dismissal. The Arizona Supreme Court reversed, and in doing so, clarified the difference between a homeowner’s rights under a contract and a homeowner’s claims for damages after a breach.

What the Court Said

The Court explained that anti-assignment clauses generally stop a buyer from transferring the contract itself, such as transferring the identity of who the builder is obligated to perform for. However, those clauses do not necessarily stop homeowners from assigning their claims for damages after a breach has occurred.

A key part of the Court’s analysis was the prefatory language of the anti-assignment clause. The clause began with the statement that it existed “in view of the credit qualifications, processing and other personal matters considered hereunder.” In plain English, that meant the clause was aimed at protecting the developer’s interest in knowing who the buyer was, what their credit looked like, and ensuring that the developer was dealing only with that specific buyer during the sales process.

That context mattered. The Court concluded that the clause was written to prevent a change in who the developer was obligated to perform for during escrow, not to block the assignment of claims for damages after a breach of warranty.

In Pointe 16, the homeowners did not attempt to transfer their purchase agreements. Instead, they assigned claims for damages based on alleged breaches of the implied warranty of workmanship and habitability. That distinction was decisive. The Supreme Court emphasized that claims for damages are different from contract rights, and the anti-assignment clause at issue did not bar the assignments.

As a result, the homeowners who signed the assignment documents gave the HOA full authority to pursue their construction defect claims. Homeowners who did not sign kept their own claims. This opt-in feature highlights the balance between collective HOA action and individual homeowner rights.

Why This Matters for HOAs in Arizona

It is not uncommon for HOAs in planned communities and condominiums to take the lead in construction defect claims. Litigation is costly, and coordinating claims through the HOA can provide efficiency and leverage. The Pointe 16 decision reinforces that HOAs can serve this collective role, provided homeowners choose to assign their claims.

The ruling also underscores that HOA authority in Arizona is not automatic. An association’s power in litigation often depends on the trust and consent of its members. When homeowners sign assignments, they empower the HOA to act. When they do not, those rights remain with the individual owners. For HOA boards, this means both responsibility and accountability.

Why This Matters for Contract Review

The case is also a lesson in contract drafting and interpretation. The Arizona Supreme Court made clear that intent matters when interpreting restrictive clauses. By pointing to the prefatory language, the Court showed how the stated purpose of a clause can narrow its scope.

Many homeowners assume that clauses in CC&Rs, such as anti-assignment provisions or mandatory arbitration clauses, always apply directly to them. In reality, many of these provisions were written to protect developers during the build-out phase of a community, not to govern routine disputes between homeowners and their association.

In Pointe 16, the developer tried to use the anti-assignment clause to block claims, even though the clause was not written with post-construction defect litigation in mind. The Supreme Court rejected that interpretation. The decision highlights the importance of context. Clauses that appear to restrict rights may not apply in the way homeowners or even boards assume.

Because Arizona law treats CC&Rs as contracts between the HOA and the homeowner, careful review is essential. Professional guidance can help homeowners and associations understand which provisions apply, when they apply, and how courts are likely to interpret them.

Broader Lessons on Anti-Assignment Clauses

The ruling has significance beyond HOA disputes. Anti-assignment clauses are common in business contracts, real estate transactions, and construction agreements. The Arizona Supreme Court’s reasoning in Pointe 16 reinforces that such clauses will often be read narrowly.

If a contract drafter intends to prevent the assignment of claims for damages after a breach, the contract language must be explicit. Otherwise, courts are likely to allow those claims to be transferred. Businesses, developers, and contractors should take note when reviewing or drafting contracts.

Practical Takeaways for Homeowners and HOAs

For homeowners, the case is a reminder that buying into a planned community or condominium means agreeing to both individual ownership rights and the collective authority of the HOA. You may be asked to decide whether to pursue claims individually or to allow the association to act on your behalf.

For HOA boards, the decision underscores that authority to pursue claims often comes directly from members. Courts will uphold that authority when it is validly given, but they will also hold boards accountable for how it is exercised.

For developers, builders, and businesses, the decision is a warning that anti-assignment clauses and other boilerplate provisions may not be as broad as they appear. Careful drafting and careful review are essential to protect contractual interests.

Conclusion

The Arizona Supreme Court’s decision in Pointe 16 Community Association v. GTIS-HOV Pointe 16, LLC is about more than construction defects. It is a case about the relationship between contract language, HOA governance, and individual homeowner rights.

One of the Court’s most important points was its focus on the prefatory language of the anti-assignment clause. Because the clause was written to address the developer’s concerns about credit qualifications and who the buyer was during the sales process, it did not extend to block claims for damages after a breach. That reasoning shows how courts look closely at context and intent when interpreting contract restrictions.

The decision reinforces that CC&Rs are contracts in Arizona, and like any contract, they deserve careful review and understanding. For homeowners and HOAs, it is a reminder that collective authority and individual rights often overlap, and sometimes conflict. For businesses and developers, it is a reminder that contract clauses must be drafted with precision if they are to accomplish what the drafter intended.

If you are a homeowner, HOA board member, or developer facing questions about CC&Rs, rights vs. claims, or HOA disputes in Arizona, professional guidance can help you understand your rights and responsibilities. For more information regarding HOA laws, rules and regulations in Arizona click here.