Assigned to GOV                                                                                                        AS PASSED BY THE SENATE

ARIZONA STATE SENATE

Forty-seventh Legislature, Second Regular Session

AMENDED

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 $1,200 or assessments that are delinquent for one year.

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. Prohibits foreclosure by an HOA until an owner has been delinquent in the payment of monies secured by a lien, excluding reasonable collection fees, reasonable attorney fees and charges for late payment of those assessments, for a period of one year or in the amount of $1,200 or more, whichever occurs first.

2. Makes technical changes.

3. Becomes effective on the general effective date.

Amendments Adopted by Committee

· Reduces the foreclosure threshold to delinquent assessment of $1,200 or assessments that are delinquent for one year.

Amendments Adopted by Committee of the Whole

· Makes clarifying changes.

Senate Action

GOV               1/26/06     DPA     7-0-0

3^rd Read           2/9/06                    27-1-2

Prepared by Senate Research

February 10, 2006

NS/ac