2013 Legislative Update

Will become effective on September 13, 2013
Senate Bill 1454: An Omnibus Bill that changes several provisions of the Planned Community Act, the Condominium Act, and several other statutes that affect community associations. We are addressing them in order of importance to our existing clients:

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Voting by Email and Facsimile Delivery
SB1454 amends section 33-1250 of the Condominium Act and section 33-1812 of the Planned Community Act. SB1454 provides that in addition to providing for voting in person and by absentee ballot, the association may provide for voting by some other form of delivery, including the use of electronic mail and facsimile delivery.

Votes cast by absentee ballot or other form of delivery, including the use of electronic mail and facsimile delivery, are valid for the purpose of establishing a quorum.

PB&J: Associations must continue to provide for voting in person and by absentee ballot. The above provisions allow that an association may also provide for voting by other forms of delivery, including the use of electronic mail and facsimile delivery. We advise that the Association require Owners to fill out a form similar to the attached specifically authorizing use of a particular email address by the Association for contacts with the owner. We advise that if an association allows for voting by email, the association require the entire ballot be scanned and emailed to properly authenticate the ballot. It is not inconceivable that a person could log onto, or hack into, the voter’s computer and vote by email.

Rental Property
SB1454 adds section 33-1260.01 to the Condominium Act and section 33-1806.01 to the Planned Community Act. SB 1454 places several new restrictions on community associations. A property owner may use his or her property as a rental property unless prohibited by the Declaration. The property owner shall use the property in accordance with the Declaration’s rental time period restrictions. PB&J: If an association’s Declaration does not prohibit rentals, and the association wishes to do so, the association must amend the Declaration. The association may not prohibit rentals via resolution or rule.

A property owner may designate, in writing, a third party to act as the property owner’s agent with respect to all association matters relating to the rental property. On delivery of the written designation, the association is authorized, but not obligated, to conduct association business with the designated agent. Any notice given to the designated agent constitutes notice to the property owner.

PB&J: If the property owner designates an agent in writing, the association may conduct association business with the designated agent. Associations are not obligated to do so, and may continue to deal directly with the property owner.

Associations are prohibited from requiring a property owner or designated agent to disclose any information regarding a tenant other than:

The name and contact information for any adults occupying the property;
The time period of the lease, including the beginning and ending dates of the tenancy;
A description and the license plate numbers of the tenants’ vehicles; and
If the planned community is an age restricted community, a government issued identification that bears a photograph and that confirms that the tenant meets the community’s age restrictions or requirements.
SB1454 provides that an association is prohibited from doing any of the following:

Requiring a copy of the tenant’s rental application, credit report, lease agreement, rental contract, or other personal information;
The association may acquire a credit report on a person in an attempt to collect a debt.
Requiring the tenant to sign a waiver or other document limiting the tenant’s due process rights as a condition of the tenant’s occupancy of the property;
Prohibiting or otherwise restricting the property owner from serving on the Board of Directors based on the property owner not being an occupant of the property;
Imposing a fine of more than fifteen dollars ($15.00) for incomplete or late information requested pursuant to Section 4 above.

An association may not charge more than twenty-five dollars ($25.00) as an administrative fee for each new tenancy, but not for the renewal of an existing lease. The administrative fee shall be paid within fifteen days of the postmarked request.

Except for the administrative fee, the association may not assess, levy, or charge a fee or fine, or otherwise impose a requirement on a rental property any differently than on an owner-occupied property.

Any attempt by an association to charge a fee, penalty, assessment or charge other than the twenty-five dollar ($25.00) administrative fee or the fifteen dollar ($15.00) fine voids the administrative fee and voids the requirement to provide information pursuant to Section 4 above. PB&J: To assist our clients in complying with these new restrictions, we have attached a Tenant Information Form and Rental Rules that conform to the new legislation. The new restrictions will make it difficult for associations to participate in local crime free programs. The new legislation makes clear that an association may not require the Owner to provide a criminal backround check. Associations that wish to prohibit certain criminals from renting must perform the checks themselves.

Office of Administrative Hearings
SB 1454 amends the administrative hearing procedures provided for by A.R.S. §41.2198.01 concerning violations of the association’s governing documents or violations of the statutes that govern condominiums or planned communities.

If a petition is dismissed at the request of a petitioner before a hearing is scheduled, the filing fee shall be refunded to the petitioner. If a petition is dismissed by stipulation of the parties before a hearing is scheduled, the filing fee shall be refunded to the petitioner. PB&J: The filing fee for the administrative hearing process is high, and under current law, nonrefundable. A petitioner may be more willing to work with an association to resolve the dispute if they are aware that the filing fee will be refunded upon voluntary dismissal of the petition.

Political Signs in Condominiums
SB 1454 amends section 33-1261 of the Condominium Act. These provisions do not apply to planned communities.

A condominium association shall not prohibit the indoor or outdoor display of political signs in the common element ground adjacent to the Unit or the Unit Owner’s property, including any Limited Common Elements allocated to that Unit.

A condominium association may continue to prohibit the display of political signs earlier than seventy-one (71) days before an election and later than three (3) days after an election. A condominium association may regulate the size and number of political signs. However, the association may not be any more restrictive than any applicable city, town, or county ordinance that regulates the size and number of political signs on residential property. If there is no such ordinance, the association shall not limit the number and size of political signs, except that the total aggregate dimensions shall not exceed nine square feet.

A political sign is defined as “a sign that attempts to influence the outcome of an election, including supporting or opposing the recall of a public officer or supporting or opposing the circulation of a petition for a ballot measure, question, or proposition or the recall of a public officer.”

PB&J: Please observe that a condominium association’s regulations may not be any more restrictive than any applicable local ordinance. If there is no applicable local ordinance, the condominium association may not regulate the number and size of political signs. Unit Owners may place signs on the “common element ground adjacent to the Unit.” The Merriam Webster dictionary defines ‘adjacent’ as, “having a common endpoint or border.” We advise that a condominium association allow political signs only on the common element ground immediately bordering the Unit.

Small Claims Actions; Management Services
SB1454 amends A.R.S. §22-512 relating to small claims actions. The changes will apply to planned communities and condominiums that have contracted the management services of any lawfully formed entity.
SB1454 allows the employees of the association and the employees of the management company to act on behalf of the association by:
Recording a Notice of Lien or Notice of Claim of Lien of the association against an Owner’s property if: The individual is specifically authorized in writing by the association to record liens on behalf of the association and is a certified document preparer; The recordation of liens is not the primary duty of the individual; The association is the original party to the lien and the lien right is not the result of an assignment of rights; and The lien right exists by operation of law pursuant to A.R.S. §33-1256 or A.R.S. §33-1807 and is not the result of obtaining a final judgment in an action to which the association is a party. Appearing on behalf of the association in a small claims action if: The individual is specifically authorized in writing to appear on behalf of the association; Appearing in small claims actions is not the primary duty of the individual; and The association is an original party to the small claims action. PB&J: Employees of an association or employees of a management company may lawfully record a Notice of Lien Notice of Claim of Lien in a collection action and may lawfully appear in small claims court actions on behalf of the association. Requirement of a Planned Community Prohibited SB1454 enacts A.R.S. §9-461.14 and A.R.S. § 11-810 relating to municipalities and counties. SB 1454 prohibits any municipality or county from requiring a developer to establish a planned community. Developers cannot be penalized because a new development does not constitute or include a planned community. A municipality or a county may require a developer to establish a planned community to maintain private, common, or community owned improvements that are approved and installed as part of the plat or development plan. The municipality or county shall not require that an association be formed or operated for any other purpose. A developer is not prohibited from establishing a planned community pursuant to and under the authority of the Planned Community Act. Developers and associations are not prohibited from requesting and entering into maintenance agreements with municipalities or counties. PB&J: These provisions demonstrate the Legislature’s hostility toward planned communities, Architectural Control Committees, and use restrictions. Despite the new legislation, developers will continue to create planned communities that include use restrictions and Architectural Control Committees. We believe that quality developers prefer to build these types of planned communities and will continue to do so. If a community appears shabby because there is no architectural control or any use restrictions, the developer will have a hard time getting top dollar for its product. Senate Bill 1302: Amends the Planned community Act by making minor grammatical and technical changes to A.R.S §33-1817. SB1302 does not apply to condominiums. SB 1302 clarifies that the complicated design review process for the new construction of a main residential structure on a lot or rebuilds of a main residential structure on a lot only applies: In planned communities that have enacted design guidelines, architectural guidelines, or other similar rules; If the association documents permit the association to charge the member a security deposit; and If the association requires the member to pay a security deposit to secure completion of the member’s construction project or compliance with approved plans. PB&J: The design review process outlined in A.R.S §33-1817only applies to new construction and rebuilds in planned communities if the governing documents authorize and require a security deposit. The design review process also only applies if the association has adopted architectural guidelines. We advise our clients that every community should adopt architectural guidelines, design guidelines, or other similar rules. Senate Bill 1278: Adds Section 33-1818 to the Planned Community Act. SB1278 does not apply to condominiums. Although effective on September 13, 2013, SB1278 will only affect communities for which the Declaration is recorded after December 31, 2014. Subsection 1 provides that after the expiration of the period of Declarant control, an association has no authority over and shall not regulate parking on any roadway that has been dedicated to or is otherwise held by a governmental entity. Subsection 2 provides that this provision will only apply to associations for which the Declaration is recorded after December 31, 2014. PB&J: Associations established after December 31, 2014 will not be permitted to regulate publicly dedicated roadways within their communities. Municipalities will have the sole obligation of regulating publicly dedicated roadways. So, if an Owner is parking a boat, RV or similar vehicle on the roadway, the association should contact the municipality for a solution. It is not clear whether SB1278 will affect associations that record an Amended and Restated Declaration after December 31, 2014. Until such time as the courts provide further guidance on the interpretation of the statute, we advise our clients not to record an Amended and Restated Declaration. → Click for PDF