Categories
Legislative Updates

2019 Legislative Update

2019 Legislative Update All new legislation here will be in effect on August 27, 2019, unless specifically stated otherwise below Senate Bill 1531

Amends section 33-1256 of the Condominium Act and section 33–1807 of the Planned Community Act.

Lien for Assessments

  1. The time to initiate a lien foreclosure is extended from three (3) years to six (6) years after the full amount of the assessments become due.
  2. Beginning August 27, 2019, the Association must send a notice at least thirty (30) days before sending a delinquent account to an attorney or collection agency. The notice must be sent to the Owner’s address provided to the association, certified mail, return receipt requested, and may be included with other correspondence sent to the Owner regarding the Owner’s delinquent account. The notice must be either boldfaced type or all capital letters and include the contact information for the person that the owner may contact to discuss payment. The notice must include the exact language below:

YOUR ACCOUNT IS DELINQUENT. IF YOU DO NOT BRING YOUR ACCOUNT CURRENT WITHIN THIRTY DAYS  AFTER THE DATE OF THIS NOTICE,

YOUR ACCOUNT WILL BE TURNED OVER FOR FURTHER COLLECTION PROCEEDINGS. SUCH COLLECTION PROCEEDINGS COULD INCLUDE BRINGING A FORECLOSURE ACTION AGAINST YOUR PROPERTY.

  1. BeginningJanuary 1, 2020except for associations with less than fifty (50) homes and that do not have a third party management company, an association must provide a statement of account instead of a periodic payment book. The statement of account must be sent with the same frequency that assessments are provided for in the declaration. The statement of account must include:
  2. a.  The current account balance; and
  3.  The immediately preceding ledger history. If the association offers the statement of account by electronic means, the Owner may opt to receive the statement electronically. The association may stop providing these statements if the account is sent to an attorney or collection agency. After collection activity begins, the Owner may request the statement by written request to the attorney or the collection agency. These requests must be fulfilled by the attorney or the collection agency. The statement of account provided by the attorney or collection agency must include all amounts claimed to be owing to resolve the delinquency, including attorney fees and costs, regardless of whether such amounts have been reduced to judgment.
  4. An agent for the association may collect on behalf of the association directly from the Owner the assessments and other amounts owed by cash or check, by mailed or hand–delivered bank drafts, checks, cashiers, or money orders, by credit, charge or debit card or by other electronic means. For any form of payment other than for cash for mailed or hand–delivered bank drafts, checks, cashier’s checks or money orders, the agent may charge a convenience fee that is approximately the amount charged to the agent by a third–party service provider.

PB&J: 1. This new legislation is intended to provide the owners with more time to enter into payment plans and to ensure that the owner is aware of exactly what is owed to the association. The extension of the lien foreclosure deadline will provide the association with more time to foreclose on its lien. Upon resale, title companies will now be permitted to collect six (6) years in delinquent assessments.

  1. 2.BeginningAugust 27, 2019, this law firm will be required to verify that the thirty–day notice was sent to an Owner at least thirty (30) days prior to opening a collections account. Beginning January 1, 2020, this law firm will be required to verify that statements of account were sent in accordance with this statute prior to opening a collections account.
  2. The new legislation requires that the thirty–day notice be sent via certified mail. Serial debtors often refuse to sign for and accept certified mail as they know it means “bad news”.  This law firm advises also sending the thirty-day notice via regular mail to preemptively refute any claims that the Owner did not receive the thirty–day notice.  The cost of the certified mail will likely be addressed in the management contract.  It is this law firm’s opinion that this charge is also a cost of collection that may be passed on to the Owner.  There is no requirement that it be the “final notice”. An association may send the thirty–day notice with the first or second notice.

Associations will now be required to provide statements of account instead of periodic payment books. While this will increase costs for the association, this requirement will not go into effect until January 1, 2020, giving associations and their management companies time to plan for and implement this requirement. The management companies will likely address the increased mailing and labor costs in their contracts with the associations. The statement of account must include the current balance and the immediately preceding ledger history. The statute does not define “immediately preceding ledger history.”  It is this law firm’s opinion that this means one preceding period, but that the statement of account might include at least two periods to be safe.

Associations are permitted to provide the statement of account electronically, if the Owners opt–in. This will save considerable time and money for both the associations and their management companies. We advise that the association send a negative notice to the owners to opt–in – such that if the owner does not respond he or she is automatically enrolled to receive electronic statements. The association may also treat owners who have signed up for auto debit for payment of assessments as having opted in to receive electronic statements. The association must have a good e–mail address to do so. It is this law firm’s opinion that the mailing costs are a cost of collection as that term is used in most CC&Rs and Arizona statutes. We advise that Owners who opt in for electronic delivery may be charged a lower fee for providing the statement.

Most CC&Rs require uniform assessments. If owners who opt–in for electronic delivery are charged less that owners who do not, it can be argued there are non–uniform assessments. To avoid that legal challenge, please create a separate collection cost and not lump it into the regular assessment.

The statement of account must be sent at the same frequency as the assessments are charged. If an association’s declaration permits, associations may save costs caused by the statements by changing the frequency of assessments to quarterly, semi–annually, or annually. Changing the assessments from monthly to annually can have a significant impact on the association’s cash flow, and this law firm suggests that it may be more prudent to change to either quarterly or semi–annually.

  1. 4. Associations may accept payment in most forms of legal tender, and may charge a fee to the Owner equal to that charged by the credit or debit card

House Bill 2672:  Amends A.R.S. §§9–500.39, 11–269.17, 42-1125.02, 42–2001, 42–2003, and adds §42–5042

Short Term Rentals

  1. 1. The owner of a short-term rental must provide the city or town with contact information for the owner or the owner’s designee who is responsible for responding to complaints in a timely manner in person, over the phone or by email at any time of the day before offering the property for
  2. 2. Within thirty (30) days after a verified violation, a city or town shall notify the department of revenue and the owner of the short–term rental of the verified violation, and whether a civil penalty was imposed.
  1. 3. A short–termrental may not be used for nonresidential uses, including for a special event that would otherwise require a permit or license, or for a retail, restaurant, banquet space or other similar
  2. 4. The property may not be rented without a current transaction privilege tax licens The owner must list the current transaction privilege tax license number on all advertisements.

PB&J: This new legislation provides cities and towns with more authority to regulate short–term rentals. The cities and towns will be able to more effectively address problem behaviors of short–term tenants. Associations may report violations to the city or town, or to the Department of Revenue.  This will provide associations with additional options when dealing with short–term rental problems.

Senate Bill 1309:  Amends A.R.S. §§12–551, 12–1611, 12–1612, and 12–1613

Judgment Renewals

  1. 1. Provides that judgments may be renewed, except judgments that were entered on or before August 2, 2013 that were not renewed on or before August 2, 2018.

PB&J: In 2018, the legislature passed a bill that provided that judgments were now valid for ten (10) years, increased from five (5) years. This year’s legislation clarifies that to qualify, a judgment reaching its expiration date must have been renewed on or before August 2, 2018.

Arizona Registrar of Contractors

  1. 1. Provides that planned communities and condominiums are eligible for an award from the Residential

Contractors’ Recover Fund if both:

  1. The builder or developer transferred control to the association; and
  2. A licensed residential contractor’s failure to adequately build or improve a residential structure or appurtenance caused damage to the common elements within the complex.
  1. 2. Provides that the maximum award from the Residential Contractors’ Recover Fund is $30,0000, but that in no case may an award may not exceed the actual damages suffered as a direct result of a contractor’s violation.
  2. 3. The statute of limitations for an action for judgment that may result in collection from the Residential Contractors’ Recovery Fund is two years after the date of the commission of the act by the contractor. The claimant must notify the Registrar of Contractors of the commencement of the action within thirty (30) days. The Registrar may intervene and defend the action.

PB&J: The Residential Contractors’ Recovery Fund provides for financial protection to residential owners for work performed by licensed contractors. Associations did not previously qualify to recover monies from this fund. This new legislation allows for associations to recover up to $30,000.00 if a licensed contractor did not adequately complete work to a residential structure so that the common area/common elements were damaged.

House Bill 2151:  Amends A.R.S. §§12–1567, 22–247, and 22–525

Satisfaction of Judgment

  1. 1. A Satisfaction of Judgment must be filed within forty (40) days of the judgment has been paid in full, in Superior or Justice Court, and thirty (30) days after the judgment has been paid in full in Small Claims Court.
  2. 2. If the prevailing party fails to file a satisfaction of judgment, the opposing party may file a motion to compel satisfaction of the judg If the motion is granted, the judgment is deemed satisfied.

PB&J:  This new legislation creates a new deadline for a judgment creditor to file a Satisfaction of Judgment after a judgment is paid in full. This will prevent the judgment creditor from leaving the judgment on record indefinitely, possibly affecting the judgment debtor’s credit.

House Bill 2230:  Amends A.R.S. §§12–1574 and 12–1577

Writs of Garnishment

  1. 1. Awrit of garnishment may be served on any banking corporation by certified mail, return receipt requested, at the garnishee’s regular place of business, or to the garnishee’s statutory agent, or at a location designated by the garnishee. The effective date is the day of rece

PB&J: A judgment creditor is now permitted to serve a writ of garnishment on a banking corporation by certified mail. This helps to simplify the garnishment process and saves costs for the judgment creditor.

Construction Defects

  1. 1. Amendsthe Purchaser Dwelling Act to provide that, at the onset of a claim alleging construction defects, the subcontractors must be provided notice of the cla
  2. 2. Providesthe purchaser with the option of having the original subcontractor perform the repairs, or a different subcontra  If the homeowner selects a different subcontractor, the new subcontractor’s liability is limited only to that subcontractor’s scope of work.
  3. 3. Establishes a streamlined process for construction defect claims, by allowing for the bifurcation of the dwelling actions to dismiss claims without merit, release parties without fault, and assign remaining responsibility based on the relative degree of fault of a defendant or third–party defenda
  4. 4. Establishes proportional liability for developers by limiting the scope of permissible indemnity agreements, ensuring that responsible parties pay their respective share of any loss to the extent of fault.
  5. 5. Allows a court to award attorney fees to the prevailing party for each contested iss Provides guidelines for the court to consider when determining whether attorneys’ fees are reasonable.  Allows for the recovery of expert witness fees in cases involving a single homeowner.

PB&J: This new legislation is intended to create a more accelerated and streamlined process for the resolution of construction defect claims that is more efficient, fair, and convenient for the parties. It is intended help the contractors to identify and make the repairs to avoid a costly and complex litigation. The addition of the attorney fee and expert witness fee provisions will help to prohibit the incurrence of excessive fees.

House Bill 2687:  Amends the Condominium Act, sections 33–1228

Termination of Condominium

  1. 1. Atleast thirty (30) days before recording a termination agreement, the Board must hold a regular or special meeting, at which a person or entity that purports to have the agreement of at least 80% of the votes, shall either produce 1) copies of a signed notarized statement for each Owner that has executed a termination agreement or 2) a signed termination agreement that includes a sufficient number of Unit Owners.
  2. 2. TheBoard may not take action by written consent or any other method that does not provide for an actual meeting that is open to all unit owners.
  3. 3. Any termination agreement that is recorded without compliance of the above provisions is inva
  4. 4. The fair market value of the Unit will also include the pro rata share of any monies in the association’s reserve fund and the operating account and an additional five percent of that total for relocation costs
  5. 5. A UnitOwner may obtain a second independent appraisal at the Unit Owner’s expense, and if it differs from the Association’s appraisal by 5% or less, the higher appraisal is fina If it is more than 5% higher than the amount   determined by the Association’s appraiser, the Unit Owner shall submit to arbitration, at the association’s expense, and the arbitration amount is the final sale amount.  As part of the arbitration process, the appraisers shall fully disclose their appraisal methodologies and shall disclose any other transaction occurring between the buyer and the sellers.

PB&J:  This new legislation provides some additional protections for the Unit Owners in the termination of a condominium.  It provides for more transparency regarding the vote to terminate the condominium.  The Unit Owners will also be entitled to their pro rata shares of the reserve fund and operating account upon termination of the condominium

Senate Bill 1094:  Amends sections 33–1801 and 33–1802 of the Planned Community Act

Definition of Planned Community

  1. 1. Does not apply to condominiums.
  2. Provides that the Planned Community Act does not apply to a nonprofit corporation or unincorporated association or owners association that was created before January 1, 1974 and that does not have the authority to enforce covenants related to the use, occupancy, or appearance of the lots, unless a majority of all of the members elect subject the corporation or association to the Planned Community Act.
  3. The majority of all of the Members may elect to subject a nonprofit corporation or unincorporated association that has the power to assess members to pay the costs and expenses incurred in the performance of obligations created by recorded covenants for a real estate development to the Planned Community Act. If approved, a Notice of Election must be recorded with the County Recorder.  The Notice of Election is effective on the date of recordation. A Notice of Election may be rescinded in the same manner as an election.

PB&J: This new legislation clarifies which nonprofit corporations and owners associations will be subject to the laws contained in the Planned Community Act. It allows corporations and associations that would otherwise be exempt to elect to subject the corporation or association to the Planned Community Act. This legislation was passed for a specific community (Sun City in Maricopa County) that does not have architectural controls

Categories
Legislative Updates

2018 Legislative Update

2018 Legislative Update

All new legislation effective as of August 3, 2018

House Bill 2262Amends sections 33-1228 of the Condominium Act.

Condominium Termination

  1. In the event of a termination of a condominium, the unit owners’ interests are valued at the fair market values of their units, limited common elements, and common element interests, plus an additional five percent (5%) of the total amount for relocation costs forowner-occupied units.
  2. The association shall select an independent appraiser to determine the total fair market value.
  3. The determination of the independent appraiser shall be distributed to the unit owners and is final unless disapproved by unit owners within sixty days.
  4. Any unit owner may obtain a second independent appraisal at the unit owner’s expense, and if the appraisal amount differs from the association’s appraisal amount by five percent (5%) or less, the higher appraisal is final.
  5. If the amount determined by the second appraiser is more than five percent (5%) higher than the association’s appraisal amount, the unit owner shall submit to arbitration at the association’s expense, and the arbitration amount is the final sale amount.
  6. An additional five percent of the final sale amount shall be added for relocation costs forowner-occupied units.

PB&J:  This new legislation adds an additional five percent (5%) to the final sale price of a unit in the event of termination for owner-occupied units.  Tenant occupied or unoccupied units will not receive the additional funds.  This will help to assist owners with moving expenses in the event of termination. This legislation also increases the time period for review of the association’s independent appraisal from thirty (30) to sixty (60) days, thus allowing the owners additional time to obtain an independent appraisal.

Senate Bill 1465:  Amends A.R.S. §36-2061.

 

Sober Living Homes

  1. The Arizona Department of Health Services is required to to certify and license each sober living home in Arizona using rules and minimum standards adopted by a recognized national organization.
  2. The licensure of a sober living home is for one (1) year.  Any person operating a sober living home without a license shall pay a civil penalty of up to one thousand dollars ($1,000) for each violation.
  3. A sober living home must comply with all federal, state, and local laws.

PB&J:  Under the Fair Housing Act, an association must allow sober living homes within the community.  Prior to this legislation, sober living homes in Arizona were largely unregulated.  Associations have had difficulty enforcing violations of the community rules with improperly run sober living homes.  This new legislation provides standards and guidelines for the operation of a sober living home.

 

House Bill 2240:  Amends A.R.S. §12-1551.

 

Judgment Renewal

  1. Provides that judgments are now valid for ten (10) years, increased from five (5) years.

PB&J:  Allows an association an additional five (5) years to collect on a judgment before renewal. PBJ provides renewal at no cost to the Association.

Categories
Legislative Updates

2016 Legislative Update

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

  1. 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.

Electronic Voting

  1. 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.
  2. 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.

Potlucks

  1. 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.

Enforcement Procedure

  1. 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.
  2. 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.

Declaration Amendments

  1. 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.
  2. Amendments must be recorded thirty (30) days after the adoption of the amendment.
  3. 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 alof 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

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.

Unmanned Aircraft

  1. 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.
  2. 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.
  3. 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

  1.  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

Community Act.

Removal of Directors

  1. 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.
  2. 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.
  3. 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.
  4. 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.

  1. Cities, towns, and counties have the right to tax online vacation rentals.
  2. 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”

Categories
Legislative Updates

2017 Legislative Update

2017 Legislative Update

All new legislation here will be in effect on August 8, 2017

House Bill 2411: Amends A.R.S. §33–440. Amends sections 33–1804, 33–1806, and 33 1812 of the Planned Community Act. Amends section 33-1248, 33-1250, 33-1260 of the Condominium Act

Open Meetings

  1. Homeowners generally no longer need to give advance notice or request permission before making an audio or video recording of a meeting.
  2. The Board may require advance notice or prohibit audio or videotaping by those attending only if the Board records the meeting and then makes the recording available upon request. The Board also may not restrict use of the recording as evidence in a dispute resolution process.
  3. All meeting notices, both for meetings of the Members and Board meetings, must include the date, time, and place of the meeting.
  4. A notice of any annual, regular, or special meeting must state the purpose for which the meeting is called.
  5. Before entering into any closed portion of a meeting, or on a notice stating that a meeting will be closed, the Board must identify the section of the open meeting statute that authorizes the Board to close the meeting.
  6. Emergency meetings may only be called for matters that cannot the wait the forty–eight (48) hours required for notice. At the emergency meeting, the Board may only act on emergency matters.
  7. This legislation reiterates that it is the policy of this State that meetings be conducted openly and that notices contain all information necessary to inform the owners of the matters to be discussed at the meetings. Provides that owners may speak before a vote of the Board or Members is taken. Provides that both the Directors and Community Managers must take the policy in favor of open meetings into account.

PB&J: This new legislation strengthens the public policy that all associations should conduct their affairs in an open and transparent manner.

This legislation allows owners to record all open meetings without first providing notice to the Board. This law firm recommends that all Boards assume that everything that is said in an open meeting is being recorded and may end up on the internet – and behave accordingly. The Board may prohibit recordings if it records the meetings and makes those recordings available upon request. This law firm does not recommend recording every meeting. It can be cumbersome for every meeting. the association to maintain, store, and make the recordings available upon request. The recordings would also become discoverable if the association were sued.

This legislation provides that all meeting notices, for both meetings of the Members and Board meetings, must include the date, time, place, and purpose for which the meeting is called. This requirement also applies to closed executive meetings.  Additionally, before entering into the closed portion of a meeting, or on the notice of a closed meeting, the Board must identify the section of the open meeting statute that authorizes the Board to close meeting.

The permitted topics include; 1) Legal advice from an attorney 2) pending or contemplated litigation, 3) personal, health, or  financial information about a member, employee, or contractor of the association, 4) matters related to the job performance of, compensation of, or specific complaint against an employee of the association or a contractor of the association and 5) discussion of a member’s appeal of a violation or a penalty imposed by the association. We advise the Board that it is easiest to add the statue reference to the notice.

The legislation is not clear whether a Board may address additional topics that were not included in the original notice as they arise. This law firm suggests that if additional topics do arise, the Board may address that topic in the interest of efficiency.The Board should then provide notice to the members at the next open meeting that it discussed additional topics.

It is probably easiest to add a check the box table to the meeting notice.

□ Legal advice from an attorney

□ Pending or contemplated litigation,

□ Personal, health, or financial information about a member, employee, or contractor of the association.

□ The job performance of, compensation of, or specific complaint against an employee of the association or a contractor of the association.

□ Discussion of a member’s appeal of a violation or a penalty imposed by the association.

Arizona law currently provides that an association may hold an emergency meeting on a matter that cannot wait until the next regularly scheduled meeting. This legislation provides that emergency meetings may only be held on business than cannot wait the forty–eight (48) hours required to give notice to the members. The legislation is silent on specific topics that would be considered an emergency. It is up to the Board to determine what can and cannot wait forty-eight (48) hours. This law firm recommends that Boards take care not to abuse this statute. Emergency meetings should be reserved for matters that truly cannot wait forty–eight (48) hours. A circumstance that threatens personal injury, waste of assets (broken pipe) or property damage if not addressed for forty hours is an emergency.

 

Voting & Secret Ballots

  1. Repeals the requirement enacted in 2016 requiring the envelope and related materials used for returning an absentee or mail–in ballot to contain the name, address, and signature of the person voting.
  2. If an association uses secret ballots, only the envelope must contain the name, address, and signature of the person voting.

PB&J: In 2016, the legislature passed a requirement that all envelopes and related materials used for returning an absentee or mail–on ballot contain the name, address, and signature of the person voting. This created a lot of confusion. The 2016 requirement did not provide a remedy if the envelope was not signed, but the ballot was otherwise in compliance and could be authenticated. This new legislation makes the voting and ballot authentication process much easier. As long as the ballot is signed and contains the name, address, and signature of the Member it should be counted, If an association uses secret ballots, the envelope must still be signed, and the ballot should not be signed. Members quite rightfully do not want to place signatures on the exterior of a mailed envelope. To make it easier for Members to return  to secret ballots in compliance with this legislation, this law firm recommends that a two–envelope system be used.

Resale Disclosure

  1. Provides that an association may charge an owner a fee of not more than an aggregate of four hundred dollars to  compensate the association for the costs incurred in the preparation and delivery of a statement or other documents furnished by the association for the purposes of resale disclosure, or other services related to the transfer or use of the property.

PB&J: This legislation includes costs related to the delivery of disclosure statement or package in the cap of $400.00. An association may no longer charge an owner $400.00 for the disclosure statement or package and additional fees for the delivery of the disclosure statement or package.

Senate Bill 1060:  Amends section 33–1803 of the Planned Community Act and section 33–1242 of the

Condominium Act.

Administrative Complaint Process

  1. 1.        Arizona lawprovides that an owner may file an administrative complaint against an associa In the Arizona Legislature’s 2016 budget, the legislature moved this administrative complaint process from the department of Fire, Building, and Life Safety to the Real Estate Department. This bill makes a technical change updating the statue to reflect and formalize the jurisdictional change to the State Real Estate Department.

PB&J:  This legislation makes a technical change to formalize that the Arizona Department of Real Estate will have jurisdiction over homeowners association administrative complaints. Realtors are often hostile to associations. We can speculate that  associations will be met with more hostility on this shift.

Categories
Legislative Updates

2015 Legislative Update

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.

Annual Report

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

the Developer.

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.

Vexatious Litigants

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.

Judgment Liens

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

feet.

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.

 

Categories
Legislative Updates

2014 Legislative Update

2014 LEGISLATIVE UPDATE EFFECTIVE AS OF July 24, 2014

SENATE BILL 1482: 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:   → Click for PDF

Voting by Email and Facsimile Delivery

  1. SB1482 amends section 33-1250 of the Condominium Act and section 33-1812 of the Planned Community Act. SB1482 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.
  2. 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 and for ease of disclosure in the event a Member asks to see the ballots. Also, tt is not inconceivable that a person could log onto, or hack into, the voter’s computer and vote by email. Voting by email may be cumbersome and not practical for large associations. It does however open the door to voting on a website. There are vendors who will set up a site with adequate measures to ensure authenticity and reliability of the votes.

Rental Property

  1. SB1482 adds section 33-1260.01 to the Condominium Act and section 33-1806.01 to the Planned Community Act. SB 1482 places several new restrictions on community associations.
  2. 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.
  3. 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. The designated agent may not vote at elections or serve on the Board. 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.
  4. Associations are prohibited from requiring a property owner or designated agent to disclose any information regarding a tenant other than:
    1. The name and contact information for any adults occupying the property;
    2. The time period of the lease, including the beginning and ending dates of the tenancy;
    3. A description and the license plate numbers of the tenants’ vehicles; and
    4. 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.
  5. SB1482 provides that an association is prohibited from doing any of the following:
    1. Requiring a copy of the tenant’s rental application, credit report, lease agreement, rental contract, or other personal information;
      1. The association may acquire a credit report on a person in an attempt to collect a debt.
    2. 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;
    3. 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;
    4. Imposing a fine of more than fifteen dollars ($15.00) for incomplete or late information requested pursuant to Section 4 above.
  6. 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.
  7. Except for the administrative fee, and fees related to the use of recreational facilities, 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.
  8. 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.
  9. SB 1482 does not prohibit an Owner from using a Crime Free Addendum as part of a lease. The new legislation directs Owners to abate criminal activity on the property.
  10. The Association may lawfully enforce a provision in its governing documents that restricts the residency of persons who are classified as class two or three sex offenders. PB&J: SB 1482 restricts the information that an association may require an Owner to provide about his or her tenants. SB 1482 does not put any limitations on information that an association may require from the tenants themselves. So, if an association asks for additional information from a tenant, such as number of pets, there is an argument that the request will not violate the new statute.

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 background check. Associations that wish to prohibit certain criminals from renting must perform the checks themselves. Associations may restrict the residency of class two or three sex offenders, but only if the community documents contain that restriction.

Office of Administrative Hearings

  1. SB 1482 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.
  2. 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

  1. SB 1482 amends section 33-1261 of the Condominium Act. These provisions do not apply to planned communities.
  2. A condominium association shall not prohibit the indoor or outdoor display of political signs on a Unit Owner’s property, including any Limited Common Elements that touch the Unit, other than the roof, but including doors, walls, and patios.
  3. 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.
  4. 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.
  5. 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.

Small Claims Actions; Management Services

  1. SB1482 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.
  2. SB1482 allows the employees of the association and the employees of the management company to act on behalf of the association by:
    1. Recording a Notice of Lien or Notice of Claim of Lien of the association against an Owner’s property if:
      1. The individual is specifically authorized in writing by the association to record liens on behalf of the association and is a certified document preparer;
      2. The association is the original party to the lien and the lien right is not the result of an assignment of rights; and
      3. 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.
    2. Appearing on behalf of the association in a small claims action if:
      1. The individual is specifically authorized in writing to appear on behalf of the association; and
      2. 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 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

  1. SB1482 enacts A.R.S. §9-461.14 and A.R.S. § 11-810 relating to municipalities and counties. SB 1482 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.
  2. 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.
  3. 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. The legislation is frankly rather silly.

Nuisance Abatement

  1. SB1482 amends A.R.S. § 12-991 to provide that if a planned community or a condominium association is affected by a nuisance, the association has standing to bring an action in superior court against the owner, the owner’s managing agent, or any other party responsible for the property to abate and prevent the nuisance.
  2. A.R.S. § 12-991(A) defines a nuisance as, “residential property that is regularly used in the commission of a crime is a nuisance, and the criminal activity causing the nuisance shall be enjoined, abated, and prevented.” PB&J: If a resident is engaging in criminal activity, an association may now bring an action against the owner of the property to require the owner to abate the criminal activity. This section provides associations with an additional option when dealing with high crime rates and problem tenants.

HOUSE BILL 2477: Amends section 33-1807 of the Planned Community Act and section 33-1260 of the Condominium Act.

    1. A.R.S. §33-1807 and A.R.S. §33-1260 provide that associations must provide certain mandatory disclosures upon resale. Associations may charge certain fees for this disclosure. HB 2477 provides that certain transactions are exempt from these mandatory resale disclosures, including:
      1. A sale in which a public report is issued for subdivided lands pursuant to A.R.S. §32-2183, and a sale in which a public report is issued for a timeshare pursuant to A.R.S. §32-2197.02; and
      2. When the transfer of title has only nominal actual consideration for the transfer of residential property between:
        1. Husband and wife, or ancestor of the husband and wife; and
        2. Parent and child, including natural adopted children and their descendants; and
        3. Grandparent and grandchild; and
        4. Natural or adopted siblings.
      3. When the transfer of title is for no consideration or nominal consideration:
        1. By a subsidiary to its parent or from a parent to a subsidiary; and
        2. Among commonly controlled entities; and
        3. From a member to its limited liability company or from a limited liability company to a member; and
        4. From a partner to its partnership, or a partnership to its partner; and
        5. From a joint venturer to its joint venture, or a joint venture to its joint venturer; and
        6. From a trust beneficiary to its trustee, or a trustee to its trust beneficiary; and
        7. From any of the above to a single purpose entity in order to obtain financing.
      4. On recordation of the deed, and at no additional charge, the new Owner shall provide the association with the changes in ownership, including the Member’s name, billing address, and phone number. Failure to provide the information shall not prevent the member from qualifying for the exemption.

PB&J: New Owners will be required to notify the association of the change in ownership, which will help to eliminate confusion when family members or other entities use quit-claim deeds to transfer property among themselves. The Association will no longer be permitted to charge the disclosure fees in any of the above scenarios. HOUSE BILL 2141: Amends A.R.S. §42-13404 relating to the taxation of Common Areas within planned communities. HB 2141 applies to planned communities only.

  1. HB 2141 adds a new section to this statute that provides that a County Assessor must automatically consolidate common area parcels within the same taxing district for tax purposes.
  2. If, after further review by the County Assessor, the parcel does not meet the definition of a Common Area, the County Assessor may revoke the valuation, and value the parcel according to standard appraisal techniques. If revoked, the association retains the right to request the common area valuation. PB&J: Planned communities are no longer required to apply to the County Assessor for Common Area parcel consolidation. Planned communities may still request consolidation.

SENATE BILL 1184: Amends section 33-1802 of the Planned Community Act. SB 1184 does not apply to condominiums.

  1. SB 1184 amends the definition of a planned community to, “a real estate development that includes real estate owned and operated by or real estate on which an easement to maintain roadways or a covenant to maintain roadways is held by a nonprofit corporation or unincorporated association of owners, that is created for the purpose of managing, maintaining or improving the property and in which the owners of separately owned lots, parcels or units are mandatory members and are required to pay assessments to the association for these purposes. PB&J: SB 1184 expands the definition of a ‘planned community’ to include property owners’ associations that do not own any common areas but maintain the roadways within the community pursuant to an easement or a covenant. These types of associations will now be subject to all of the provisions contained in the Planned Community Act.