SB1222 - 502R

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

Section 1. Section 33-1242, Arizona Revised Statutes, is amended to read:

START_STATUTE33-1242. Powers of unit owners' association; notice to unit owner of violation; ombudsman

A. Subject to the provisions of the declaration, the association may:

1. Adopt and amend bylaws and rules.

2. Adopt and amend budgets for revenues, expenditures and reserves and collect assessments for common expenses from unit owners.

3. Hire and discharge managing agents and other employees, agents and independent contractors.

4. Institute, defend or intervene in litigation or administrative proceedings in its own name on behalf of itself or two or more unit owners on matters affecting the condominium.

5. Make contracts and incur liabilities.

6. Regulate the use, maintenance, repair, replacement and modification of common elements.

7. Cause additional improvements to be made as a part of the common elements.

8. Acquire, hold, encumber and convey in its own name any right, title or interest to real or personal property, except that common elements may be conveyed or subjected to a security interest only pursuant to section 33‑1252.

9. Grant easements, leases, licenses and concessions through or over the common elements.

10. Impose and receive any payments, fees or charges for the use, rental or operation of the common elements other than limited common elements described in section 33‑1212, paragraphs 2 and 4 and for services provided to unit owners.

11. Impose charges for late payment of assessments and, after notice and an opportunity to be heard, impose reasonable monetary penalties upon unit owners for violations of the declaration, bylaws and rules of the association.

12. Impose reasonable charges for the preparation and recordation of amendments to the declaration or statements of unpaid assessments.

13. Provide for the indemnification of its officers and executive board of directors and maintain directors' and officers' liability insurance.

14. Assign its right to future income, including the right to receive common expense assessments, but only to the extent the declaration expressly provides.

15. Be a member of a master association or other entity owning, maintaining or governing in any respect any portion of the common elements or other property benefitting or related to the condominium or the unit owners in any respect.

16. Exercise any other powers conferred by the declaration or bylaws.

17. Exercise all other powers that may be exercised in this state by legal entities of the same type as the association.

18. Exercise any other powers necessary and proper for the governance and operation of the association.

B. A unit owner who receives a written notice that the condition of the property owned by the unit owner is in violation of a requirement of the condominium documents without regard to whether a monetary penalty is imposed by the notice may provide the association with a written response by sending the response by certified mail within ten business days after the date of the notice. The response shall be sent to the address contained in the notice or in the recorded notice prescribed by section 33-1256, subsection J.

C. Within ten business days after receipt of the certified mail containing the response from the unit owner, the association shall respond to the unit owner with a written explanation regarding the notice that shall provide at least the following information unless previously provided in the notice of violation:

1. The provision of the condominium documents that has allegedly been violated.

2. The date of the violation or the date the violation was observed.

3. The first and last name of the person or persons who observed the violation.

4. The process the unit owner must follow to contest the notice.

D. Unless the information required in subsection C, paragraph 4 of this section is provided in the notice of violation, the association shall not proceed with any action to enforce the condominium documents, including the collection of attorney fees, before or during the time prescribed by subsection C of this section regarding the exchange of information between the association and the unit owner. At any time before or after completion of the exchange of information pursuant to this section, the unit owner may petition for a hearing pursuant to section 41-2198.01 if the dispute is within the jurisdiction of the department of fire, building and life safety as prescribed in section 41-2198.01, subsection B.

E. Notwithstanding any provision in the condominium documents, the association shall have an ombudsman with the powers and duties prescribed in this section and who shall be elected in the same manner and at the same time as other members of the board of directors. The ombudsman shall have the same access to meetings, deliberations, administrative support and information that the voting members of the board of directors have, but the ombudsman is not a member of the board of directors and has no authority to manage or direct the affairs of the association and shall have only the authority prescribed in this section. The ombudsman shall:

1. Serve as an impartial decision maker in resolving disputes between the board of directors and one or more unit owners of the condominium. Any dispute that would require action of the board shall be referred by the board to the ombudsman for resolution.

2. Have authority to resolve any dispute referred by the board, after mediation, arbitration or hearing conducted by the ombudsman. The ombudsman may request the participation of relevant parties in the dispute and order any appropriate relief, including issuing an order for the payment of monies or to compel or cease action by any party to the dispute. Decisions of the ombudsman are final within the condominium and are not appealable to the board of directors, but the dispute may be tried as a civil action in a court of competent jurisdiction and heard as a trial de novo.

3. Issue a determination of any dispute within fifteen days after completion of any hearings or other meetings on the dispute. During the course of the dispute, The ombudsman shall not meet with any of the parties to the dispute other than in the course of dispute resolution.

4. Be elected to a two-year term, and shall serve no more than two consecutive two-year terms.

5. Be a unit owner of the condominium who resides in the condominium and who has not served on the board of directors for at least two years before taking office. A unit owner is not eligible to serve as the OMBUDSMAN if an immediate family member is also serving as a member of the board of directors of the association. Service as ombudsman is unpaid to the same extent as other members of the board of directors, but the association shall provide appropriate administrative, clerical or other support as provided to the members of the board of directors.

6. be subject to recall by a petition signed by twenty per cent of the unit owners of the association, and if recalled by a sufficient number of petitioners, shall be subject to a vote of the unit owners at which any other unit owner may run in opposition.

7. On election, be provided by the board of directors with appropriate training in NEGOTIATION, ARBITRATION, mediation or other dispute resolution techniques at no cost to the ombudsman.END_STATUTE

Sec. 2. Section 33-1803, Arizona Revised Statutes, is amended to read:

START_STATUTE33-1803. Assessment limit; penalties; notice to member of violation; ombudsman

A. Unless limitations in the community documents would result in a lower limit for the assessment, the association shall not impose a regular assessment that is more than twenty per cent greater than the immediately preceding fiscal year's assessment without the approval of the majority of the members of the association. Unless reserved to the members of the association, the board of directors may impose reasonable charges for the late payment of assessments. A payment by a member is deemed late if it is unpaid fifteen or more days after its due date, unless the community documents provide for a longer period. Charges for the late payment of assessments are limited to the greater of fifteen dollars or ten per cent of the amount of the unpaid assessment. Any monies paid by the member for an unpaid assessment shall be applied first to the principal amount unpaid and then to the interest accrued.

B. After notice and an opportunity to be heard, the board of directors may impose reasonable monetary penalties on members for violations of the declaration, bylaws and rules of the association. Notwithstanding any provision in the community documents, the board of directors shall not impose a charge for a late payment of a penalty that exceeds the greater of fifteen dollars or ten per cent of the amount of the unpaid penalty. A payment is deemed late if it is unpaid fifteen or more days after its due date, unless the declaration, bylaws or rules of the association provide for a longer period. Any monies paid by a member for an unpaid penalty shall be applied first to the principal amount unpaid and then to the interest accrued. Notice pursuant to this subsection shall include information pertaining to the manner in which the penalty shall be enforced.

C. A member who receives a written notice that the condition of the property owned by the member is in violation of the community documents without regard to whether a monetary penalty is imposed by the notice may provide the association with a written response by sending the response by certified mail within ten business days after the date of the notice. The response shall be sent to the address contained in the notice or in the recorded notice prescribed by section 33-1807, subsection J.

D. Within ten business days after receipt of the certified mail containing the response from the member, the association shall respond to the member with a written explanation regarding the notice that shall provide at least the following information unless previously provided in the notice of violation:

1. The provision of the community documents that has allegedly been violated.

2. The date of the violation or the date the violation was observed.

3. The first and last name of the person or persons who observed the violation.

4. The process the member must follow to contest the notice.

E. Unless the information required in subsection D, paragraph 4 of this section is provided in the notice of violation, the association shall not proceed with any action to enforce the community documents, including the collection of attorney fees, before or during the time prescribed by subsection D of this section regarding the exchange of information between the association and the member. At any time before or after completion of the exchange of information pursuant to this section, the member may petition for a hearing pursuant to section 41-2198.01 if the dispute is within the jurisdiction of the department of fire, building and life safety as prescribed in section 41-2198.01, subsection B.

F. Notwithstanding any provision in the community documents, the association shall have an ombudsman with the powers and duties prescribed in this section and who shall be elected in the same manner and at the same time as other members of the board of directors. The ombudsman shall have the same access to meetings, deliberations, administrative support and information that the voting members of the board of directors have, but the ombudsman is not a member of the board of directors and has no authority to manage or direct the affairs of the association and shall have only the authority prescribed in this section. The ombudsman shall:

1. Serve as an impartial DECISION MAKER in resolving disputes between the board of directors and one or more members of the planned community. Any dispute that would require action of the board shall be referred by the board to the OMBUDSMAN for resolution.

2. Have authority to resolve any dispute referred by the board, after mediation, arbitration or hearing conducted by the ombudsman. The ombudsman may request the participation of relevant parties in the dispute and order any appropriate relief, including issuing an order for the payment of monies or to compel or cease action by any party to the dispute. Decisions of the ombudsman are final within the planned community and are not appealable to the board of directors, but the dispute may be tried as a civil action in a court of competent jurisdiction and heard as a trial de novo.

4. Be elected to a two-year term, and shall serve no more than two consecutive two-year terms.

5. Be a member of the planned community who resides in the planned community and who has not served on the board of directors for at least two years before taking office. A member is not eligible to serve as the ombudsman if an immediate family member is also serving as a member of the board of directors of the association. Service as ombudsman is unpaid to the same extent as other members of the board of directors, but the association shall provide appropriate administrative, clerical or other support as provided to the members of the board of directors.

6. Be subject to recall by a petition signed by twenty per cent of the members of the association, and if recalled by a sufficient number of petitioners, shall be subject to a vote of the membership at which any other member may run in opposition.

7. On election, be provided by the board of directors with appropriate training in negotiation, arbitration, mediation or other dispute resolution techniques at no cost to the ombudsman.END_STATUTE

Sec. 3. Applicability; special election

For any condominium or planned community in which the regularly scheduled election for board of directors occurs in 2012 before October 2012, the condominium or planned community shall hold a special election within sixty days after the effective date of this act to elect an ombudsman.