2016 Legislative Update
All new legislation here will be in effect on August 6, 2016
House Bill 2172: Adds section 33-1817 (3) to the Planned Community Act. Does not apply to condominiums.
Architectural Review Standard
- An association shall not unreasonably withhold the approval of an owner’s construction project’s architectural designs, plans and amendments.
PB&J: This is already the law. Whether a particular ARC decision is “unreasonable” is determined by a judge or a jury. They essentially are empowered to second guess the Board. The word “unreasonable” is vague and subjective. Please know that many judges and most juries in Arizona do not favor homeowner associations.
House Bill 2592: Adds section 10-3708(F) to the Arizona Nonprofit Corporation Act. Applies to both planned communities and condominiums.
- If an association is conducting a member vote via written ballot without a meeting, the association may provide notice to the owners that the vote shall be conducted by electronic means, including an online voting system.
- The written ballot can be delivered electronically if the online voting system 1) authenticates the voter’s identity, 2) authenticates the validity of the vote to ensure that it was not altered in transit, 3) transmits a receipt to the voter, and 4) stores electronic votes for recount, inspection, and review. The initial notice must include a reasonable procedure by which an owner may obtain and cast a ballot via some other form of delivery, including U.S. mail and fax. The
PB&J: This new legislation represents a shift toward moving elections toward a fully electronic process. If an association begins using an online voting platform, it must be sure to continue to allow voting via other forms of delivery at the request of the member. This new law will save some money.
House Bill 2341: Revises A.R.S. §36-136(I)(4)(a). Applies to both planned communities and condominiums.
- Exempts an association holding a social event, like a potluck, from rules relating to food preparation, serving, and storage of food and drink.
PB&J: The association may hold informal, noncommercial social events without the regulation of the state.
House Bill 2106: Amends section 33-1242(B) of the Condominium Act and section 33-1803(C) of the
Planned Community Act.
- A member who receives a written notice of violation now has a longer grace period of twenty-one (21) days to send a response via certified mail regarding the notice of violation. The law currently provides for a grace period of ten (10) days.
- If the Owner sends the response via certified mail within 21 days, the Association is required to respond with the following information: 1) the provision of the community documents violated, 2) the date of the violation or the date the violation was observed, 3) the first and last name of the person who observed the violation, and 4) the process the owner must follow to contest the violation.
PB&J: If the association includes the information in paragraph 2 above in the original notice of violation, this new legislation should not have much of an impact on the association. Associations may wish to add the provisions of paragraph 2 into their initial “Friendly Reminder” notice to the Owner. If all of the information is contained in the original notice, the association does not have to wait the 21 days to proceed. On the other hand, if the association does not include this information in the original notice, the association must wait 21 days to proceed. Owners rarely send in the request by certified mail therefore this certified mail provision is rarely implicated. These provisions only apply to violations related to the condition of the property, not the behavior of the owner or a resident.
House Bill 2382: Amends A.R.S. §33-440. Adds section 33-1817(A) to the Planned Community Act. Does not apply to the Condominium Act. Does not apply during the period of Declarant control without the written consent of the Declarant.
- An amendment to the declaration may apply to fewer than all of the lots and the amendment is deemed to conform to the general design of the community if: 1) the amendment receives the affirmative vote of the number of eligible voters as prescribed in the declaration and 2) the amendment receives the affirmative vote or written consent of all of the owners of the lots to which the amendment applies.
- Amendments must be recorded thirty (30) days after the adoption of the amendment.
- Amendments are effective immediately upon recordation of the instrument in the County in which the association is located, notwithstanding any other provision in the declaration
PB&J: Arizona courts have previously held that a non-uniform amendment must be approved by 100% of the Owners. Now, the association can pass a non-uniform amendment that affects fewer than all of the lots without a unanimous vote of the owners. If the association’s declaration requires 75% of the owners to vote in favor of an amendment for passage, then to pass a non-uniform amendment, 75% of all of the owners must vote in favor of the amendment for passage, as well as 100% of all of the owners affected by the amendment.
Amendments will now be effective immediately upon recordation in the County Recorder’s Office.. This provision will supersede any duration or periodic renewal clause in the declaration to the contrary.
Senate Bill 1498: Amends sections 33-1242 and 33-1250 of the Condominium Act and sections 33-1803 and
33-1812 of the Planned Community Act.
Voting, Late Fees, and Administrative Complaint Rights
- Late charges may only be imposed after the association has provided notice that the assessment is overdue or has provided notice that the assessment is considered overdue after a certain date.
- With a notice of violation, the association must provide an owner notice of his option to petition for an administrative hearing the matter with the Department of Real Estate.
- If there will be voting at a members’ meeting, and absentee ballots are provided, the completed ballot and envelope and any related materials shall contain the name, address, and either the actual or electronic signature of the person voting.
- If the community documents allow secret ballots, only the envelope or any non-ballot related materials shall contain the name, address and either the actual or electronic signature of the vote.
- Ballots, envelopes, and related materials, including sign in-sheets, shall be retained in electronic or paper format and made available for member inspection for at least one year after completion of the election.
PB&J: Most associations are likely already notifying owners that a late fee will be charged if the assessment is not paid by a certain date, and this provision should not affect most associations.
Arizona law currently provides for an owner to file a petition with the Department of Fire, Building, and Life Safety against a homeowners association. Under the budget that the Arizona legislature recently passed, this administrative complaint process will move to the Arizona Department of Real Estate. Most homeowners are likely not aware of this complaint process, and the new law requiring the association to notify owners of this option will likely increase the number of complaints filed. Realtors are often hostile to associations. We can speculate that associations will be met with more hostility on this shift.
The new provisions related to ballots will allow the association to more easily authenticate validity of the ballots and streamline the election process.
Senate Bill 1449: Adds A.R.S. §13-3729, and amends A.R.S. §28-8242 and §28-8280.
- Provides that a person may not operate a model airplane or drone if the operation is 1) prohibited by a federal law or regulation or 2) interferes with law enforcement or emergency operation.
- A person who operates an aircraft in the air, on the ground, or on the water in a careless or reckless manner that endangers the life or property of another is guilty of a class 1 misdemeanor. In determining whether the operation was careless or reckless, the court shall consider the standards of safe operation prescribed by federal statutes.
- A city, town, or county generally may not adopt any ordinance that relates to the ownership or operation of a drone.
PB&J: The private operation of drones is a relatively new trend. There a few laws that currently regulate the private use of drones. This statute takes steps towards this type of regulation, by providing that an operator may not use a drone in a manner that endangers the life or property of another. There are many issues left to be addressed, such as privacy issues associated with flying a drone over another’s property within an association.
The U.S. Federal Aviation Administration (“FAA”) recently published rules for the commercial use of small drones. These rules provide that the drone must always remain within sight of the pilot, and the drone may only be operated during daylight hours. The rules also provide for a maximum altitude of 400 feet. The FAA rules apply only to the use of commercial drones.
Senate Bill 1248 : Amends A.R.S. §§ 9-499.04, 11-005 and 44-1799.08.
Breed Based Dog Regulations
- A city or town may regulate the control of dogs if the regulation is not specific to any breed.
PB&J: Cities and towns may no longer enact or enforce regulations that are specific to dangerous breeds such as pit bulls, bull mastiffs, and rottweilers. Associations may continue to regulate and prohibit dangerous breeds. Associations may no longer rely on city and town ordinances restricting dangerous breeds as an enforcement tool. Although it does not apply to associations, this is another example of our legislators passing bills that have no basis in fact. There are many reputable studies that compile data regarding dog attacks. Some breeds simply attack more than others. An open question is whether cities and towns can prohibit wolf hybrids.
Senate Bill 1496: Amends section 33-1243 of the Condominium Act and section 33-1813 of the Planned
Removal of Directors
- If at least one, but fewer than a majority of the directors are removed by the members, the vacancies shall be filled as provided in the community documents.
- If a majority of the directors are removed by the members, or if the community documents do not provide a method for filling board vacancies, the association must hold a separate election for the replacement of the removed directors within thirty (30) days of the special meeting to remove the directors.
- If a director is removed, he is not eligible to serve on the board again until after the expiration of his term, unless the community documents provide for a longer period of ineligibility.
- The association must retain all documents related to the removal process and election for at least one year.
PB&J: This new legislation prevents the remaining directors from appointing new directors if a majority of the directors are removed. An election must be held, allowing the members to exercise their votes. This is a welcome improvement to the statute.
Senate Bill 1350: Adds A.R.S. §9-500.38, A.R.S. §11-269.15 and A.R.S. §15-1650.01.
Limitations on Regulation of Vacation Rentals and Short-Term Rentals.
- Cities, towns, and counties have the right to tax online vacation rentals.
- Cities, towns, and counties cannot prohibit, restrict the use of, or regulate vacation and short-term rentals, unless for a health, safety, or welfare purpose.
PB&J: This new legislation prevents cities from prohibiting short term vacation rentals. Associations may no
longer rely on city and town ordinances restricting short term vacation rentals as an enforcement tool. Associations may continue to prohibit shorter term rentals. This rental restriction must be in the declaration. An association cannot prohibit short term vacation rentals via rule or resolution.
BROWN | OLCOTT “PB&J”