Reference Title: homeowners' association dwelling actions

AN ACT
AMENDING TITLE 33, ARIZONA REVISED STATUTES, BY ADDING CHAPTER 17; RELATING TO HOMEOWNERS' ASSOCIATION DWELLING ACTIONS.

Be it enacted by the Legislature of the State of Arizona:

Section 1. Title 33, Arizona Revised Statutes, is amended by adding chapter 17, to read:

chapter 17 Homeowners' Association Dwelling Actions

article 1. General provisions

33-1901 . Definitions

IN THIS CHAPTER, UNLESS THE CONTEXT OTHERWISE REQUIRES:

1. "COMMUNITY DOCUMENTS" MEANS CONDOMINIUM DOCUMENTS AS DEFINED IN SECTION 33-1202 OR COMMUNITY DOCUMENTS AS DEFINED IN SECTION 33-1802.

2. "DWELLING" MEANS A NEWLY CONSTRUCTED SINGLE FAMILY OR MULTIFAMILY UNIT DESIGNED FOR RESIDENTIAL USE AND PROPERTY AND IMPROVEMENTS THAT ARE EITHER OWNED BY A HOMEOWNERS' ASSOCIATION OR JOINTLY BY ALL OF THE MEMBERS OF A HOMEOWNERS' ASSOCIATION. DWELLING INCLUDES THE SYSTEMS, OTHER COMPONENTS AND IMPROVEMENTS THAT ARE PART OF A NEWLY CONSTRUCTED SINGLE FAMILY OR MULTIFAMILY UNIT AT THE TIME OF CONSTRUCTION.

3. "GOOD FAITH" MEANS HONESTY IN FACT IN THE CONDUCT OR TRANSACTION CONCERNED.

4. "HOMEOWNERS' ASSOCIATION" MEANS AN ASSOCIATION AS DEFINED IN SECTION 33-1202 OR 33-1802.

5. "HOMEOWNERS' ASSOCIATION DWELLING ACTION" MEANS ANY ACTION FILED BY A HOMEOWNERS' ASSOCIATION AGAINST THE SELLER OF A DWELLING ARISING OUT OF OR RELATED TO THE DESIGN, CONSTRUCTION, CONDITION OR SALE OF THE DWELLING.

6. "SELLER" MEANS ANY OF THE FOLLOWING:

( a ) ANY PERSON, FIRM, PARTNERSHIP, CORPORATION, ASSOCIATION OR OTHER ORGANIZATION THAT IS ENGAGED IN THE BUSINESS OF BUILDING OR SELLING DWELLINGS.

( b ) ANY PERSON, FIRM, PARTNERSHIP, CORPORATION, ASSOCIATION OR OTHER ORGANIZATION THAT PERFORMS FUNCTIONS RELATING TO OR FURNISHES THE DESIGN, SPECIFICATIONS, SURVEYING, PLANNING, SUPERVISING, TESTING, CONSTRUCTING OR OBSERVATION OF THE CONSTRUCTING OF A DWELLING.

( c ) A REAL ESTATE BROKER OR SALESPERSON AS DEFINED IN SECTION 32-2101.

33-1902 . Homeowners' association dwelling actions; conditions

A. NOTWITHSTANDING ANY PROVISION TO THE CONTRARY IN TITLE 10, CHAPTER 39 OR CHAPTERS 9 AND 16 OF THIS TITLE AND IN ADDITION TO ANY REQUIREMENTS PRESCRIBED IN THE COMMUNITY DOCUMENTS OF A HOMEOWNERS' ASSOCIATION, A HOMEOWNERS' ASSOCIATION MAY FILE A HOMEOWNERS' ASSOCIATION DWELLING ACTION ONLY AFTER ALL OF THE FOLLOWING HAVE OCCURRED:

1. THE BOARD OF DIRECTORS HAS PROVIDED FULL DISCLOSURE IN WRITING TO ALL MEMBERS OF THE ASSOCIATION OF ALL MATERIAL INFORMATION RELATING TO THE FILING OF THE ACTION. THE MATERIAL INFORMATION SHALL INCLUDE A STATEMENT THAT DESCRIBES THE MANNER IN WHICH THE ACTION WILL BE FUNDED AND A STATEMENT DESCRIBING ANY DEMANDS, NOTICES, OFFERS TO SETTLE OR RESPONSES TO OFFERS TO SETTLE MADE EITHER BY THE ASSOCIATION OR THE SELLER. THE MATERIAL INFORMATION DESCRIBED BY THIS PARAGRAPH SHALL BE DISTRIBUTED TO ALL MEMBERS BEFORE THE MEETING DESCRIBED IN PARAGRAPH 2 OCCURS.

2. THE ASSOCIATION HAS HELD A MEETING OF ITS MEMBERS AND BOARD OF DIRECTORS FOR WHICH REASONABLE AND ADEQUATE NOTICE WAS PROVIDED TO ALL MEMBERS IN THE MANNER PRESCRIBED IN SECTION 33-1248 OR 33-1804, AS APPLICABLE.

3. THE BOARD OF DIRECTORS OF THE HOMEOWNERS' ASSOCIATION AUTHORIZES THE FILING OF THE ACTION.

B. IF THE NOTICE REQUIRED BY SUBSECTION A, PARAGRAPH 2 OF THIS SECTION IS PROVIDED TO THE HOMEOWNERS' ASSOCIATION'S MEMBERS LESS THAN SIXTY DAYS BEFORE THE EXPIRATION OF A STATUTE OF LIMITATIONS AFFECTING THE RIGHT OF THE ASSOCIATION TO BRING A HOMEOWNERS' ASSOCIATION DWELLING ACTION, THE STATUTE OF LIMITATIONS IS TOLLED FOR SIXTY DAYS. THE HOMEOWNERS' ASSOCIATION MAY MEET THE REMAINING REQUIREMENTS OF SUBSECTION A OF THIS SECTION DURING THE TOLLING PERIOD.

C. NOTWITHSTANDING ANY PROVISION TO THE CONTRARY IN TITLE 10, CHAPTER 39 OR IN CHAPTERS 9 AND 16 OF THIS TITLE AND IN ADDITION TO ANY REQUIREMENTS PRESCRIBED IN THE COMMUNITY DOCUMENTS OF A HOMEOWNERS' ASSOCIATION, THE BOARD OF DIRECTORS OF A HOMEOWNERS' ASSOCIATION OR ITS AUTHORIZED REPRESENTATIVE SHALL DISCLOSE IN WRITING TO THE MEMBERS OF THE ASSOCIATION A PLAN THAT DESCRIBES THE MANNER IN WHICH THE PROCEEDS OF A HOMEOWNERS' ASSOCIATION DWELLING ACTION, WHETHER OBTAINED BY WAY OF JUDGMENT, SETTLEMENT OR OTHER MEANS, HAVE BEEN OR WILL BE ALLOCATED. THE PLAN SHALL BE DISCLOSED WITHIN THIRTY DAYS AFTER THE ASSOCIATION RECEIVES THE PROCEEDS OF ANY HOMEOWNERS' ASSOCIATION DWELLING ACTION. THE PLAN IS NOT BINDING ON THE HOMEOWNERS' ASSOCIATION, BUT THE BOARD OF DIRECTORS OR ITS AUTHORIZED REPRESENTATIVE MUST DISCLOSE ANY MATERIAL CHANGES TO THE PLAN TO THE MEMBERS OF THE ASSOCIATION WITHIN THIRTY DAYS OF MAKING THE CHANGES.

D. A HOMEOWNERS' ASSOCIATION SHALL PREPARE AND PRESERVE FOR A PERIOD OF FIVE YEARS RECORDS THAT ARE ADEQUATE TO DEMONSTRATE ITS COMPLIANCE WITH THIS SECTION.

E. A DIRECTOR WHO ACTS IN GOOD FAITH PURSUANT TO THIS CHAPTER IS NOT LIABLE FOR ANY ACT OR FAILURE TO ACT PURSUANT TO THIS CHAPTER. IN ANY ACTION FILED AGAINST A DIRECTOR ARISING OUT OF ANY ACT OR FAILURE TO ACT PURSUANT TO THIS CHAPTER, A DIRECTOR IS PRESUMED IN ALL CASES TO HAVE ACTED IN GOOD FAITH. THE BURDEN IS ON THE PARTY CHALLENGING A DIRECTOR'S CONDUCT TO ESTABLISH BY CLEAR AND CONVINCING EVIDENCE FACTS THAT REBUT THE GOOD FAITH PRESUMPTION.

33-1903 . Applicability of chapter

THIS CHAPTER APPLIES ONLY TO HOMEOWNERS' ASSOCIATION DWELLING ACTIONS. THIS CHAPTER DOES NOT APPLY TO:

1. ACTIONS FILED BY INDIVIDUAL MEMBERS OF A HOMEOWNERS' ASSOCIATION AGAINST A SELLER.

2. CLAIMS FOR PERSONAL INJURY, DEATH OR DAMAGE TO PROPERTY OTHER THAN A DWELLING.

3. COMMON-LAW FRAUD CLAIMS.

4. PROCEEDINGS BROUGHT PURSUANT TO TITLE 32, CHAPTER 10, WHETHER FILED BY A HOMEOWNERS' ASSOCIATION OR BY INDIVIDUAL MEMBERS OF A HOMEOWNERS' ASSOCIATION.

APPROVED BY THE GOVERNOR APRIL 26, 1999.

FILED IN THE OFFICE OF THE SECRETARY OF STATE APRIL 26, 1999.