2015 LEGISLATIVE UPDATE
SENATE BILL 1091: Amends section 33-1813 of the Planned Community Act and section 33-1243 of the Condominium Act.
Procedure for Removal of Director
1. Will be effective on December 31, 2015. Members may petition to call a Special Meeting of the Members to vote on the removal of one or more Directors. SB 1091
amends the procedure by providing that only Members eligible to vote may:
a. Sign the petition to call a Special Meeting of the Members;
b. Count towards the quorum requirement at the Special Meeting of the Members; and
c. Vote on the removal of a Director(s) at the Special Meeting of the Members.
PB&J: Only Members eligible to vote at the time of signing the petition or at the time of the Special Meeting of the Members may participate in the removal process. An Association must be careful to follow the procedure in its Declaration for deeming a Member ineligible to vote. Some Declarations provide that a Member is automatically ineligible to vote if that Member is delinquent or in violation of the use restrictions, while other Declarations require a hearing prior to declaring a Member ineligible to vote.
House Bill 2084: Amends A.R.S. §10-11622, sections 33-1803 and 33-1807 of the Planned Community Act, and sections 33-1242 and 33-1256 of the Condominium Act. Applies to both Planned Communities and Condominiums.
1. Effective on July 3, 2015. Provides that all Associations must attach and submit with its annual report to the Arizona Corporation
Commissions a separate statement containing:
a. The name of its designated agent or management company;
b. The address and phone number for the Association; and
c. The website and fax number of the Association, if any.
2. If the designated agent or management company changes, the Association must file an amended statement reflecting those
changes within thirty (30) days of that change.
3. Removes requirement that an Association record a notice with the county recorder’s office containing its name, address, telephone number, and recording information of Declaration.
PB&J: These changes will allow title companies to easily locate contact information for the Association. These changes will allow the title company to obtain resale disclosure information in a more timely manner.
House Bill 2578: Amends A.R.S. § § 12-1361, 12-1362, 12-1363, 12-1366, 33-2001, and 33-2002, and repeals 12-1364. Applies to both Planned Communities and Condominiums.
Purchaser Dwelling Actions
1.Effective on July 3, 2015. Provides that, before bringing a construction defect case, the Association must:
a. Provide written disclosure to the members describing:
i. The nature of the action and relief sought;
ii. The expenses and fees that the Association anticipates will be incurred in the lawsuit;
iii. The impact that the lawsuit will have on the values of the homes within the Association, whether or not they are subject to the alleged construction defect.
b. Provide the Developer with written notice of the alleged construction defects and with an opportunity to repair or replace the
alleged construction defects; and
c. Demonstrate that the Association has complied with the statutory requirements for bringing a construction defect case against
2. Removes the requirement that a notice of claim must be provided ninety (90) days before filing a case and provides that:
a. Upon receipt of a notice of claim, a Developer has a right to repair or replace the alleged construction defects;
b. Within sixty (60) days of receiving the notice of claim, the Developer shall send the Association a response.
The response may include a notice of intent to repair or replace alleged construction defects, or an offer of monetary
compensation. The Association may file a case if the Developer does not provide a response within sixty (60) days
of the notice of claim;
c. A notice of intent to repair or replace alleged construction defects must describe in reasonable detail all repairs or
replacements that the Developer intends to make and a reasonable estimate of the date by which the repairs or replacements
will be made;
d. The Association may reject an offer of monetary compensation. The Association may not reject an offer to repair or
replace alleged construction defects. The Association must allow the Developer reasonable access to inspect and perform
repairs or replacements;
e. The Association must offer the Developer a reasonable opportunity to repair or replace defects. Repairs and replacements
must be coordinated within thirty (30) days of Developer notice of intent. Developer shall make reasonable efforts to make
repairs or replacements within thirty-five (35) days after the notice of intent, or within ten (10) days of
receipt of required permits, whichever is later;
f. The Developer shall use reasonable care and shall complete repairs or replacements within a commercially reasonable
time period for the repairs or replacements being performed. The Developer is
not liable for access issues or unforeseen events that are not caused by the Developer or its contractors;
g. The Developer is not entitled to a release or waiver in exchange for repair or replacement. The Association may
file a case against the Developer after repairs or replacements are completed. The case may include any claim for inadequate
repair or replacement.
h. Repair and replacement efforts are admissible as evidence; and
i. The Association may file a case if the Developer does not follow statutory requirements. A case filed by the
Association shall be dismissed if the Association does not follow statutory requirements.
3. Notice of alternative dispute provisions must be conspicuously provided in the
contract for the sale. A disclosure statement on the face of the contract must
disclose the alternative dispute provision in bold and capital letters of at
least twelve-point font. The disclosure must include the location of the
alternative dispute resolution procedures within the contract of sale or CC&Rs.
PB&J: The Association is required to disclose the construction defect claim to the members before the Association can bring a construction defect case. The disclosure must include a description of the defect(s) and the relief that will be sought. The disclosure must also include an estimate of all attorneys’ fees, witness fees, costs of court, and other costs that the Association anticipates will be spent on the lawsuit. The Association must inform the members of how the value of the property within the Association will be impacted by the lawsuit.
This bill removes the prior ninety (90) notice requirement for construction defect cases. The Developer now has sixty (60) days to respond to the Association’s Notice of Claim. A major new change is that the Developer now has a right to repair or replace the alleged construction defects. The Association may not refuse an offer to repair or replace the alleged construction defects. The Developer must give the Association written notice of its intent to repair or replace. This notice must be given within sixty (60) days of the Association’s Notice of Claim. The Association cannot file a construction defect case while the Developer is repairing or replacing the alleged construction defects. The Association can file a construction defect case if the Developer does not respond within sixty (60) days of the Associations Notice of Claim.
The Association must allow the Developer access to the community to inspect and to perform repairs or replacements. The Developer is required to perform repairs and replacements in a reasonable and timely manner. When repairs and replacements are completed, the Association may bring a construction defect case against the Developer. The construction defect case may include claims for inadequate replacements or repairs.
The Association is obligated to demonstrate that it has complied with the statutory requirements for bring a construction defect case. A construction defect case shall be dismissed if the Association fails to comply with the statutory requirements. The Developer is also required to comply with the statutory requirements. The Association may file a construction defect case against the Developer if the Developer fails to comply with the statutory requirements.
This bill requires that all purchase contracts must have a disclaimer on their face providing the location of any alternative dispute procedures in the CC&Rs. The disclaimer must be in bold, capital letters of at least 12-point size font.
SENATE BILL 1048: Amends A.R.S. § § 12-302 and 12-3201. Applies to both Planned Communities and Condominiums.
1. Effective on July 3, 2015. Provides that a waiver of court fees or costs shall not be
granted for a pro se litigant who has been previously declared a vexatious
litigant by any court (except for a family court).
2. If an applicant who is granted a deferral or a waiver is later found to be a vexatious litigant, the court shall order the applicant to pay
the deferred or waived fees and costs.
3. A party may request that the party’s opponent be declared a vexatious litigant. If the request is denied, that party may make an
amended request if the party obtains new information or evidence that is relevant to the determination.
4. A vexatious litigant is one who repeatedly files court actions, unreasonably delays court proceedings, brings frivolous lawsuits,
engages in the abuse of discovery, engages in a pattern of making unreasonable, repetitive and excessive requests for information,
and/or repeatedly files documents, motions, or requests for relief.
PB&J: A pro se litigant is a litigant that is not represented by an attorney. Many Associations have encountered vexatious litigants or “sue happy” Owners. These are the Owners who file a lawsuit over every small grievance he or she has with the Association, or frivolously defend a collections claim by filing any type of motion he or she can think of, rather than working out a reasonable settlement. This statute allows courts to impose sanctions on these individuals.
House Bill 2311: Amends A.R.S. § § 33-961 and 33-962. Applies to both Planned Communities and Condominiums.
1. Will be effective on December 31, 2015. Provides that the clerk of a Justice Court shall issue a certified copy of any judgment upon
request. On issuance of the certified copy of the judgment, it may be recorded and executed upon in the same manner as a judgment
of the Superior Court.
PB&J: Justice Courts have jurisdiction over all claims of $10,000.00 or less. Unless the Association has filed a foreclosure complaint, most collections lawsuits are filed in a Justice Court. Currently, an Association is required to transfer a Justice Court judgment to the Superior Court before it may record that judgment. This new statute provides that Justice Court judgment may be recorded without first transferring the judgment to the Superior Court. This statute will allow the Association to record its Justice Court judgment much sooner.
Senate Bill 1163: Amends A.R.S. § 11-819. Applies to both Planned Communities and Condominiums.
Regulation of Home-Based Businesses
1.Effective July 3, 2015. Allows for installation of doors, shelving or display racks in home.
2. Allows for temporary display of sign during business hours. Sign can’t be larger than 2 feet by 2
3. Resident must be properly licensed.
PB&J: A resident with a proper license may add shelving and display racks. During regular business hours a properly licensed resident may display temporary signs up to 2 by 2 in size. The Association must review “Residential Use” and other provisions in the Declaration. The Association may be more restrictive than the zoning regulation.
BROWN | OLCOTT “PB&J”