ARIZONA STATE SENATE
Forty-seventh Legislature, Second Regular Session
FACT SHEET FOR S.B. 1008
condominiums; planned communities; foreclosure limitation
Purpose
Prohibits a homeowners’ association (HOA) from foreclosing on a lien for delinquent assessments of less than $5,000.
Background
Condominium and planned community HOAs are regulated by statute. Condominium HOAs and their boards of directors have been regulated in Arizona since 1986. Laws 1994, Chapter 310 established regulations pertaining to the formation and operation of master planned community HOAs.
An HOA is a common interest organization to which all the owners of lots in a planned community or owners of units in a condominium must belong. The four defining characteristics of an HOA are: 1) all owners are automatically members; 2) governing documents create mutual obligations; 3) mandatory fees or assessments are generally levied against owners and used for the operation of the association; and 4) owners share a property interest in the community.
Statute allows a lien to be placed on a unit for any unpaid assessment, late fees, collection fees, attorney fees and other costs incurred with respect to the unpaid assessment. The lien may be placed on the unit from the time the assessment becomes due and authorizes the foreclosure of the HOA’s lien in the same manner as a mortgage on real estate. Liens for assessments are not subject to the homestead exemption protection.
There is no fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Limits an HOA’s ability to foreclose on a lien for assessments to liens which totals $5,000 or more in unpaid assessments.
2. Makes technical changes.
3. Becomes effective on the general effective date.
Prepared by Senate Research
January 23, 2006
NS/ac