Assigned to COMPS                                                                                                                       FOR COMMITTEE

ARIZONA STATE SENATE

Fifty-Third Legislature, First Regular Session

FACT SHEET FOR S.B. 1175

real estate transfer fees; definition

Purpose

Allows, retroactive to July 28, 2010, a 501(c)3 or 501(c)4 nonprofit organization to qualify for exemptions from the prohibition on real estate transfer fees.

Background

Laws 2010, Chapter 40, § 1 specifies that a provision in a declaration, covenant or other document relating to real property is unenforceable against the real property or any subsequent owner, purchaser, lienholder or claimant on the property if the provision: a) binds successors in title to the specified real property; and b) obligates the transferee or transferor of all or part of the property to pay a fee or other charge to a declarant or third party on transfer of an interest in the property or in consideration for permitting such a transfer. The provision is enforceable whether or not recorded.

Pursuant to A.R.S. § 33-442, this prohibition on transfer fees does not apply to provisions requiring payment of a fee to an association if the fee being charged touches and concerns the land and no portion of the fee passes through to a third party, unless the third party is authorized in the document to manage real property within the association or was part of an approved development plan. The prohibition also does not apply to any fee payable to a nonprofit corporation for the sole purpose of supporting recreational activities within the association.

Association is defined as "a nonprofit mandatory membership organization that is created pursuant to a declaration, covenant or other applicable law and that is comprised of the owners of homes, condominiums, cooperatives or manufactured homes or any other interest in real property." S.B. 1175 retroactively amends this definition.

There is no anticipated fiscal impact to the state General Fund associated with this legislation.

Provisions

1. Adds, retroactive to July 28, 2010, a 501(c)3 or 501(c)4 nonprofit organization to the definition of association for exemptions from the prohibition on real estate transfer fees.

2. Contains legislative intent language.

3. Makes technical changes.

4. Becomes effective on the general effective date, with a retroactive provision as noted.

Prepared by Senate Research

January 26, 2017

GH/rr