2019 Summary of Pending Arizona Legislation regarding Community Associations

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1 Apr. 1, PENDING BILLS SUMMARY Page Summary of Pending Arizona Legislation regarding Community Associations The Arizona Legislature opened the Fifty-fourth First Regular Session on Monday, January 14, Our firm anticipates that there will be numerous community association bills introduced this legislative session. Every week during the legislative session, Mulcahy Law Firm P.C. will provide this summary of proposed bills impacting community associations. If you would like to be involved in the legislative process, please go to the Arizona Legislature website, to find lists of legislators, phone numbers, and calendars regarding committee work. Or, please feel free to contact Beth Mulcahy, Esq. any time with questions regarding the status of bills or the legislative process. Please stay tuned for legislative developments over the next 6 months! BILL # SUMMARY STATUS SB1070 TECHNICAL CORRECTION; CHANGE OF VENUE This bill is a technical correction for changing venue in the Superior Court of any County 1/17/2019 TECHNICAL CORRECTION; PROCESS SERVICE SB1229 This bill is a technical correction for duty to show process 1/30/2019 ANTIDISCRIMINATION; EMPLOYMENT; HOUSING; PUBLIC ACCOMMODATIONS SB1249 SB1309 SB1389 This bill expands the discrimination protections to include sexual orientation and gender identity. RENEWAL OF JUDGMENTS; APPLICABILITY This bill specifies that a judgment may be renewed except for a judgment entered on or before August 2, 2013 that was not renewed on or before August 2, 2018 EMPLOYMENT; HOUSING; PUBLIC ACCOMMODATIONS; ANTIDISCRIMINATION This bill expands the discrimination protections to include sexual orientation, gender identity and veteran status. CONDOMINIUMS, HOMEOWNERS' ASSOCIATIONS; DECLARATION AMENDMENTS Signed by Governor 3/22/2019 Copyright 2019 by 3001 East Camelback Road, Suite 130 Phoenix, Arizona written acknowledgement is given to

2 Apr. 1, PENDING BILLS SUMMARY Page 2 SB Proposed amendments to ARS for Condominiums: If a proposed amendment to the Declaration would apply to fewer than all of the Units or less than all of the property that is bound by the Declaration, then the amendment would need both of the following: o The approval of at least 67% of the votes in the Declaration or the number of unit owners or eligible voters specified in the Declaration, whichever is greater, and; o The approval of all of the Unit owners of Units to which the amendment applies. If an amendment is going to change the basis for allocating voting rights or assessments among unit owners, the amendment will need unanimous consent. If an amendment is going to change or restrict the uses or occupancy of or the behaviors in any unit, the amendment will need unanimous consent. An action to challenge the validity of an amendment to the Declaration may not be brought more than 4 years after the amendment is recorded, unless the amendment involves the creation or collection of a debt pursuant to ARS Any amendment proposed after the effective date of this change, must include an update or a revision to the Declaration to make it consistent with this chapter. 2. Proposed amendments to ARS for Planned Communities: An amendment to the Declaration will need the affirmative vote of at least 67% of the owners or eligible voters of any higher percentage that is specified in the Declaration. In the absence of unanimous consent of the community members, an amendment may not do any of the following: o Create or increase special declarant rights. o Change the basis for allocating voting right or assessment among community members. o Prohibit or restrict the uses or occupancy of or behaviors in any property. An action to challenge the validity of an amendment to the Declaration may not be brought more than 4 years after the amendment is recorded, unless the amendment involves the creation or collection of a debt pursuant to ARS Any amendment proposed after the effective date of this change, must include an update or a revision to the Declaration to make it consistent with this chapter. 2/06/2019 Copyright 2019 by 3001 East Camelback Road, Suite 130 Phoenix, Arizona written acknowledgement is given to

3 Apr. 1, PENDING BILLS SUMMARY Page 3 SB1531 HOAS; ASSESSMENTS; COSTS This bill increases the time to enforce a lien from three to six years. For a delinquent account for unpaid assessments or charges related to unpaid assessments, the Association shall provide the following written notice to the unit owner at the owner s address as provided to the Association at least thirty days before authorizing person to begin a collection action on behalf of the Association: Your account is delinquent. If you do not bring your account current or make arrangements that are approved by the association to 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. The notice shall be in boldfaced type or all capital letters and shall include the contact information for the person that the unit owner may contact to discuss payment. The notice shall be sent by certified mail, return receipt requested, and may be included within other correspondence sent to the unit owner regarding the unit owner's delinquent account. Except for a Planned Community or Condominium that has less than fifty lots and does not contract with a third party for management services on behalf of the Association, the Association shall provide a statement of account in lieu of a periodic payment book to the member with the same frequency that assessments are provided for in the declaration. The statement of account shall include the current balance due and immediately preceding ledger history. The Association may stop providing any further statements to a member if a civil action is filed regarding that member s unpaid account. After a civil action is filed, a unit owner may request statements of account by written request to the association. The association may include the following disclaimer on the requested Statement of account: This statement may not be relied on for accuracy as to the actual amount that may be owed. Please refer to the collection agency. An agent for the Association may collect on behalf of the Association directly from a member the assessments and other amounts owed by cash or check, or credit, charge or debit card or by other electronic means. The agent may charge a convenience fee to the member that is approximately the amount charged to the agent by a third-party service provider. This bill also removed most all of ARS , including the Board s right to impose reasonable monetary penalties for violations of the governing documents and the notice of violation process for the Association and members. See the Floor Amendment for more details WATER CONSERVATION; LANDSCAPING; RENT; NOTICE House Second Read 3/14/2019 Copyright 2019 by 3001 East Camelback Road, Suite 130 Phoenix, Arizona written acknowledgement is given to

4 Apr. 1, PENDING BILLS SUMMARY Page 4 SB1544 HB2138 This bill would prevent a Planned Community or Condominium from prohibiting a water saving device or water conservation practice. A Planned Community may adopt reasonable rules regarding the placement of a water saving device or use of a water conservation practice. A Planned Community shall provide written notice to the member of any rules adopted regarding this topic. HOMEOWNERS' ASSOCIATIONS; EVAPORATIVE COOLERS This bill adds evaporative coolers that are designed as a residential cooler as a device that cannot be prohibited by an association. 2/07/2019 1/29/2019 HB2151 HB2169 Applies to Planned Communities. SATISFACTION OF JUDGMENT; JUSTICE COURTS This bill states that a Satisfaction of Judgment shall be filed within forty (40) days of the judgment being satisfied. If the Satisfaction is not filed in that time period the opposing party may file a motion to compel a Satisfaction of Judgment. If the motion is granted the Judgment is deemed satisfied. If the judgment is in small claims this will have to be transferred to Justice Court to file the Motion to Compel. A Judge may compel the moving party to post a bond with the court in the amount of the judgment. INCARCERATION; PROHIBITED; FAILURE TO PAY This bill would prohibit the Court from ordering a Defendant to be incarcerated solely on the basis of non-payment. Minority Caucus Read 3/19/2019 WRIT OF GARNISHMENT; CERTIFIED MAIL HB2230 This bill would allow garnishments to be served by certified mail with return receipts. Signed by Governor 3/22/2019 CIVIL LIABILITY; GUN-FREE ZONES HB2257 HB2374 This bill would hold anyone who establishes a gun free zone liable for damages by a person harmed by criminal conduct if a reasonable person would believe that a firearm could have helped the person defend against the criminal conduct. PLANNED COMMUNITIES; APPLICABILITY; RECREATIONAL CENTER This bill expands the definition section so that association does not include an organization that is created or incorporated for the sole purpose of supporting recreational activities in a real estate development. This would only apply to Associations incorporated or organized after Read 3/4/2019 HB2546 HB2585 Applies to Planned Communities. ANTIDISCRIMINATION; EMPLOYMENT; HOUSING; PUBLIC ACCOMMODATIONS This bill expands the discrimination protections to include sexual orientation and gender identity. CONDOMINIUMS, PLANNED COMMUNITIES; WRITE-IN CANDIDATES This bill states that the Board shall provide for and accept write in candidates for election for any position on the Board other than a director appointed by the declarant. 2/11/2019 MOBILE FOOD VENDORS; MUNICIPALITIES Copyright 2019 by 3001 East Camelback Road, Suite 130 Phoenix, Arizona written acknowledgement is given to

5 Apr. 1, PENDING BILLS SUMMARY Page 5 HB2636 HB2637 HB2639 HB2672 This bill would allow a mobile food vendor to operate on private property in a residential area if the mobile food vendor obtains a separate written agreement with the property owner. CONDOMINIUM, HOMEOWNERS' ASSOCIATIONS; LIEN PRIORITY This bill removes the first mortgage from the list of liens that have priority in a foreclosure. TIMESHARES; DISCLOSURES This bill has many proposed changes and therefore if it is of interest, please check out the following link to see all of the proposed changes pdf A purchaser of a timeshare may rescind the purchase agreement without cause in a written notice by midnight of the tenth day after the day the purchaser executed the purchase agreement. This extends it from seven to ten days. Before entering into an agreement or contract for the sale of a timeshare interest, the seller must provide the purchaser a separate document that discloses a number of things, including: the duration of the timeshare, if there is no set duration it must state that the agreement may extend through the course of the purchasers lifetime; A good faith estimate of the total potential financial obligation during the first year of ownership, including all potential assessments. If the amount of the assessments is unknown it must disclose that the purchaser will be required to pay assessments in addition to the disclosed purchase payment and that the amount of those assessment is unknown; it should include a statement of the assessments levied for the previous three years if available and a good faith estimate based on the highest assessment listed during those three years; and a statement that there is no limit on the assessments that the purchaser may be charged in the first year of ownership and; a list of all fees including estimated taxes, utility fees, special assessments and regular assessments shall also be included. The purchaser must sign the separate disclosure and verify that the purchaser has read and understand the separate disclosure. Both the seller and the purchaser shall have a copy of the separate disclosure. VACATION RENTALS; SHORT-TERM RENTALS; REGULATION This bill expands on the reasons a city or town may regulate short term rentals. It adds a requirement for the owner of a short term rental property to provide the city or town with contact information for the owner or owner s designee who is responsible for responding to complaints in a timely manner before offering to rent the property. It also states that a short term rental may not be used for nonresidential uses including for special events or for a retail, restaurant, banquet space, even center or other similar use. CONDOMINIUMS; TERMINATIONS; APPRAISALS Read 3/5/2019 2/13/2019 Read 3/13/2019 Read 3/13/2019 Copyright 2019 by 3001 East Camelback Road, Suite 130 Phoenix, Arizona written acknowledgement is given to

6 Apr. 1, PENDING BILLS SUMMARY Page 6 HB2687 This bill applies to the termination of a condominium pursuant to At least thirty days before recording a termination agreement, the board of directors of the association shall convene a regular or special meeting of the board of directors at which a person or entity that purports to have the agreement of at least eighty percent of the votes in the association, or any larger percentage if required, shall produce and make available to the unit owners copies of a signed notarized statement that the owner of a unit has executed a termination agreement. The person or entity shall produce copies of a statement for each unit owner who has agreed to the termination, or may produce the signed termination agreement that includes a sufficient number of unit owners. Any meeting called pursuant to this subsection shall be noticed as otherwise provided by law, except that the board may not take action by written consent or any other method that does not provide for an actual meeting that is open to all the unit owners. Any termination agreement that is recorded without full compliance with this subsection is invalid. Senate Majority Caucus 3/26/2019 In order to determine total fair market values, the bill also allows a unit owner to obtain a second independent appraisal at the unit owner's expense and, if the unit owner's independent appraisal amount differs from the association's independent appraisal amount by five percent or less, the higher appraisal is final. If the total amount of compensation owed as determined by the second appraiser is more than five percent higher than the amount determined by the association's appraiser, the unit owner shall submit to arbitration by an arbitrator affiliated with a national arbitration association and under the rules of that association 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. An additional five percent of the final sale amount shall be added for relocation costs. Applies to Condominiums Copyright 2019 by 3001 East Camelback Road, Suite 130 Phoenix, Arizona written acknowledgement is given to