House of Representatives

SB 1034

Superior court clerk; removing receivables

Sponsor: Senator Smith

DPA S/E	Committee on Retirement and Government Operations
X	Committee on Appropriations
	Caucus and COW
	As Passed the House

The House Rules Committee passed the underlying bill, which mirrors HB 2275 that was signed by the Governor on March 6, 2001.

The Retirement and Government Operations Committee adopted a strike-everything amendment that established the Performance Based Personnel System.

The proposed strike-everything amendment to SB 1034 makes numerous changes to the statutes that govern planned community associations.

History

Community associations are commonly referred to as homeowners' associations [HOAs], even though they technically are governed by two different chapters of law. Title 33, Chapter 9, the Condominium Act, applies to all condominiums created after January 1, 1986. Title 33, Chapter 16, first enacted in 1994, applies to all planned communities [single-family homes].

The Homeowner Association Study Committee met at various valley locations during the 2000 interim. The Speaker of the House of Representatives and the President of the Senate created the study committee to review the effectiveness of Arizona laws in ensuring the protection of homeowners' rights. In addition, the committee was asked to study the different types and policies, examine the role of management companies, and discuss potential remedies for disputes involving homeowners and their HOAs.

The proposed strike-everything amendment to SB 1034 makes numerous changes to the Condominium and Planned Community Association provisions of law.

Provisions

· Exempts condominium and planned community associations from the Nonprofit Corporations Code and clarifies they are subject to their respective codes. [10-11602]

· Upon organization of the condominium unit owners' association, the following provisions of law relating to HOAs are applicable regardless of any CC&R provision to the contrary: a) the management of the condominium; b) amendments to the declaration; and, c) the rights of secured lenders. [33-1201]

· Authorizes removal of board members during the period of declarant control. [33-1202 and 1243]

· Strikes the option to require a greater majority than a 2/3 vote in order to amend the declaration. [33-1227]

· Clarifies that an amendment to the declaration may be prevented in order to protect the rights of the secured lenders. [33-1229]

· Defines affiliate of a declarant, declarant, development rights, member, special declarant rights, unit and unit owner to conform the language in both Acts. [33-1802]

· Conforms the statutes regarding amendments to the declaration. [33-1808]

· Prohibits an association from terminating utility services, including water and electricity. [33-1256 and 33-1807]

Board of Directors and Appeal Committee

· Requires the board to provide a summary of the budget to all unit owners regardless of anything to the contrary in the declaration. [33-1243]

· After notice and an opportunity to be heard, allows the board to assess a reasonable monetary penalty for a violation of the declaration, bylaws or rules of the association. [33-1243 and 33-1803]

· Allows an association member to appeal the board's decision to a separate Appeal Committee consisting of three persons. Establishes the process and procedures for appointing its membership. [33-1243 and 33-1803]

· After notice and an opportunity for the member to be heard, requires the Appeal Committee to report its decision to the board and the affected member. This decision may only be overturned in an open meeting by a unanimous vote of the board, and becomes final unless either party files a court action. [33-1243 and 33-1803]

Developer Control and Voting Rights

· Terminates the period of declarant [developer] control as follows:

- 400 units or less, after the sale of 75% of the units.

- 400 - 1000 units, after the sale of 80% of the units.

- 1001-2000 units, one year after the sale of 90% of the units.

- 2000 or more units, one year after the sale of 95% of the units.

- Two years after all declarants have ceased to offer units for sale, except as outlined. [i.e. delays caused by obtaining government permits, approvals or moratoriums] [33-1243 and 33-1809]

· Allows the unit owners to remove a board member by a 2/3 vote of all persons present and entitled to vote when there is a quorum of at least 25% of the eligible voters. [33-1243 and 33-1809]

· Requires all members of the board to act reasonably, in good faith and according to the CC&Rs. [33-1243 and 33-1803]

· Stipulates there is no requirement to have a reserve fund, except to the extent and as specifically provided for in the CC&Rs. [33-1243 and 33-1809]

· Requires 90 days' notice [currently 30 days] to the appropriate party when there will be a cancellation of a contract or lease agreement. [33-1245 and 33-1809]

· Requires the board to allot a specific period of time during their meetings for members to speak, but authorizes time limits. [33-1248 and 1804]

· Clarifies the exceptions to the open meetings provision. [33-1248]

· Specifies the proper notice of meetings. [33-1248 and 33-1804]

· Clarifies the manner in which a proxy vote may be revoked [in writing or by public, verbal revocation]. Allows the proxy to include the unit number. Requires the ballot count and the results to be conducted with members present. The board must retain ballots/proxies at least 30 days and may contract with a government entity to administer elections. [33-1250 and 33-1810].

· Prescribes an additional procedure for a person to become a candidate for the board. The person must submit a signed petition with 10% of the voters' signatures [with address and lot/unit number] or 25 total signatures, whichever is less. Names must appear on the ballot in alphabetical order. [33-1250 and 33-1810]

Assessments and Liens

· Limits the annual increase for regular assessments to 20% higher than the previous fiscal year, unless the CC&Rs provide for a lower limit. The assessment may be set higher by a majority vote of the quorum present at an association meeting. [33-1256]

· Requires an HOA to furnish a statement of any unpaid assessments to an escrow agent. [33-1256 and 33-1807]

· Specifies the information that must be submitted to the County Recorder. Subject to the recordation requirement, makes a lien effective from the time the assessment, late charge and interest become due. A monetary penalty, fee or charge for a violation of the CC&Rs is a lien only after the Appeal Committee makes such a decision, or if the member fails to appeal an assessment for a violation. [33-1256 and 33-1807]

· Stipulates the lien must be released within 30 days after proper satisfaction. The association is liable for a minimum $1,000 or the actual damages, whichever is more. Further, the association is liable for attorney's fees and costs, if all of the following conditions are met:

- The owner gives written notice that the lien is satisfied and that 30 days have lapsed.

- The notification includes the recording information and pertinent receipts.

- The association fails to release the lien within 10 business days after receiving the aforementioned information. [33-1256 and 33-1807]

Financial and Other Records

· States that a unit owner may inspect and copy all financial and other records if the person gives written notice [at least five business days] and the request is in good faith for a proper purpose. [33-1258 and 33-1805]

· Specifies the HOA is not required to disclose financial and other records if the disclosure would result in a violation of local, state or federal law. [33-1258 and 33-1805]

· Allows the Board to charge the reasonable cost of preparing and reproducing the copies of the records. [33-1258 and 33-1805]

· States the provisions do not in any way limit the power of a court. [33-1258 and 33-1805]

· Requires the HOA or unit owner to provide a copy of the CC&Rs to the prospective purchaser within 10 days after receiving from the seller [via certified mail or hand-delivery] the written purchase agreement, unless otherwise agreed to in writing by the parties. Allows the buyer to rescind the purchase for failure to receive a copy before the end of that 10^th day, unless otherwise agreed to by the parties. Further, the purchaser may rescind the contract within five days after receiving the CC&Rs if the terms of the documents are unacceptable, unless there has been an acknowledged receipt and acceptance of the CC&Rs before executing the purchase. If there is a recission, there shall be a full refund of all earnest/deposit monies. The HOA may charge the reasonable cost for copying the required documents. [33-1260 and 33-1806]

· Makes the HOA responsible for providing the disclosure statements, rather than the unit owner when the association is less than 50 units. [33-1260 and 33-1806]

· Establishes the disclosure statement shall include a statement that all owners are eligible to serve on the board of directors of the association. [33-1260 and 33-1806]

· Upon request of a prospective purchaser, requires the HOA to permit review of minutes of meetings and to attend the related meetings as well. [33-1260 and 33-1806]

· Beginning January 1, 2002, an HOA shall not charge more than $200 for the disclosure statement information unless a greater dollar amount is approved by a majority of the HOA voting members in which a quorum is present in person or by proxy. [33-1260 and 33-1806]

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45th Legislature

First Regular Session 3 April 17, 2001

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