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Very well stated.
As I mentioned in several posts, laws governing HOAs vary from state to state. As HOAs have become more common, states are making and revising laws to limit their powers. Just as it is illegal to discriminate based upon race or religion, HOA covenants cannot countermand Federal, state or local laws. If state law limits the power of an HOA (such as the flag flying provision mentioned), regardless of what the HOA documents state, state law prevails.
Contract law is enforced through the courts when there is a disagreement. In Arizona fines can be enforced through the courts, but state law requires specific notification and an opportunity for the member to contest the fine. A lein can be placed against the property; however the lein cannot be foreclosed for fines owed. What this basically means is that if ownership of the property transfers (sold, inherited, etc.), the lein (past due assessments and fines) must be satisfied. The HOA's lein is superior to all other leins except a first mortgage (yes, it is superior to a 2nd mortgage). An HOA can additionally bring suit against a member for monies owed, be they fines or assessments. The prevailing party is entitled to have all their attorney and court costs reimbursed by the non-prevailing party. Meaning that if the HOA takes you to court and wins, you pay all of their costs as well as your own. If you win, the HOA pays your costs. Whether an HOA would take a member to court would likely rest upon advice from their attorney as to the liklihood of prevailing or not.
I am not an attorney, but I have been president of my HOA for the past two years, and on the board for 4 years; I am considered our document "guru" and the one who contacts our attorney when we feel we need legal advice. FWIW, we do not have the authority to dictate paint colours or landscaping for homes, our limitations on animals are based upon city code (and if there was ever an issue would let the city enforce the violation). We do require that all animals be caged, cooped or penned in a manner that they do not run at large.