602-274-6369The below is a summary of significant actions taken by the Arizona legislature as concerns legal issues facing homeowners and homeowner associations. It is important to speak to an experienced lawyer who understands this area of law for additional clarification.
2008 Legislative Session:
A.R.S. § 33-1201
Condominium Act Now Covers All Communities
This bill expanded the Arizona Condominium Act (A.R.S. § 33-1201, et seq.) to cover all condominiums regardless of when they were created. Under the prior law, the Act fully applied only to condominiums created after January 1, 1986, while earlier condominiums were covered only to the extent it did not conflict with the association's governing documents or the Act's predecessor.
2009 Legislative Session:
The 2009 legislative session introduced a number of bills of interest to both homeowners and homeowner associations, although many of these bills target specific groups. Please note that, although some of these bills made progress before the Arizona State Legislature, none of these bills have passed as of the date of this update. The Arizona State Legislature adjourned on July 1, 2009. This bill summary does, however, provide insight into the current trends in homeowner association legislation.
HB 2034
Limits on HOA Authority Over Public Roadways
Would have barred homeowner associations from regulating roadways, easements, or other areas dedicated to or under a governmental entity's authority, potentially limiting an association's ability to enforce roadway parking rules in certain circumstances. Passed the Arizona House of Representatives but failed in a Senate committee.
HB 2625
Proposed HOA Membership Opt Out
Would have allowed a homeowner to opt out of mandatory membership in a planned community by recording a notice of intent. The opt-out would apply only to that specific owner and would not carry over to future purchasers of the property.
HB 2141
Solar Screens and Shade Structures
Would have permitted the installation of solar screens or shade structures within a planned community.
HB 2391
90 Day Deadline After Declarant Control Ends
Would have required homeowner associations to adopt bylaws and complete the steps needed to incorporate and function within 90 days after the Declarant's (developer's) period of control ended.
HB 2430
Mandatory Association Registration
Would have required planned communities and condominium associations to register with the Arizona Secretary of State and provide certain information, including contact details for the association.
HB 2454
Homeowner Petitions to Amend Governing Documents
Would have allowed homeowners to circulate petitions proposing amendments to their association's community documents.
HB 2514
Protection for Emergency Radio Antennae
Would have prohibited planned communities from restricting the installation of amateur radio station emergency communications antennae and related structures of reasonable height and dimensions.
HB 2518
Rainwater Catching Devices Allowed
Would have permitted the installation of rainwater catching devices designed as a water-saving measure.
HB 2542
Energy Saving Home Improvements Protected
Would have permitted the installation of certain energy saving devices in a planned community, including awnings, shutters, clotheslines, energy saving lighting, and attic and garage fans.
Again, the legislature appears concerned with energy saving issues (HB 2141, HB 2518, and HB 2542), homeowner rights and oversight (HB 2454 and HB 2625), and association operations and transparency issues (HB 20343, HB 2391, and HB 2430). The bills proposed are largely “homeowner” friendly by placing limitations on a homeowner association’s restrictions and authority to regulate. Although these bills did not pass during this legislative session, it appears that Arizona’s congressmen and congresswomen are concerned with protecting homeowner rights.
2010 Legislative Session:
With the 2010 regular legislative session now ended, below is a recap of some of the bills that may be of importance to real estate owners:
HB 2766
Foreclosure Notice Required in New Leases
Requires a landlord to give a tenant specific notice of foreclosure when a lease is entered into after a foreclosure action has started. Failing to do so can result in a damage award against the landlord. Does not apply to multi-family units of 4 or more connected units.
HB 2626
Lender Contact Required Before Foreclosure
Requires certain lenders to contact borrowers about options to avoid foreclosure on their principal residence at least 30 days before recording a notice of trustee's sale. Applies only to certain loan types on properties with a first deed of trust recorded between January 1, 2003 and December 31, 2008, and carries a delayed repeal date of December 31, 2013.
SB 1202
New Rules for Excess Trustee's Sale Proceeds
Changes the post-trustee's-sale process for distributing excess proceeds, including requiring the trustee to notify the trustor by certified mail at all known addresses and requiring the trustor to send a conformed complaint copy to all parties entitled to notice. The trustor can be dismissed without prejudice after filing the complaint and a certificate of mailing. The bill also adds notice requirements and a longer response time for applicants seeking the proceeds.
HB 2768
Limits on Property Transfer Fee Covenants
Generally prohibits enforcing real property provisions that bind successors in title to a property or require a transfer fee paid to a Declarant or third party upon transfer of an interest in the property. Nonprofit associations existing solely to support recreational activities, which covers most homeowner associations, are an important exception.
HB 2345
Broader Protection for Sale and Open House Signs
Expands sign protections to cover open house signs and 'for lease' signs, not just 'for sale' signs, in planned community and condominium associations, though not on association common areas. Also prohibits associations from restricting open house hours except before 8 a.m. or after 6 p.m.
HB 2371
Pools and Spas Added to Home Inspections
Expands the definition of a home inspection to include pools and spas as components requiring visual inspection under rules adopted by the Board of Technical Registration.
Perhaps most surprising though was what was not passed in the realm of Arizona’s real property law. The Arizona State Legislature did not revisit changes to the anti-deficiency statute (A.R.S. § 33-814), which prevents a lender from obtaining a deficiency judgment after a trustee’s sale on certain properties.
As you may recall, last year, a bill was passed that had a huge impact on the anti-deficiency protections afforded to a large class of property owners. This bill would considerably limit those protections, but before it could into effect, the Legislature repealed it and reinstated the “old” language. Because of apparent concerns about the repeal and reversion, the Legislature subsequently repassed a repealing bill in November 2009. But, the legislative history of that bill shows an attempt to resolve concerns about the over-inclusive language of the initial bill were discussed. If passed, this amended language would have impacted construction loan deficiencies, particularly with regard to “spec” homes. Although no bill on this issue was passed during the last legislative session, with home prices still low and many homeowners “underwater” on their loans, we probably have not heard the last on this issue.
To learn more, contact The Bainbridge Law Firm, L.L.C., to arrange for a consultation with an attorney. Call our law firm at 602-274-6369.
