ARIZONA STATE SENATE
Forty-eighth Legislature, First Regular Session
FACT SHEET FOR H.B. 2593
homeowners’ associations; solar panels
Purpose
Prohibits a homeowners’ association (HOA) from restricting the installation or use of solar energy devices, but authorizes an HOA to adopt reasonable regulations on the placement of the solar energy devices.
Background
Governing documents create the legal foundation and organizational framework of an HOA. They consist of the declaration of covenants, conditions and restrictions (CC&Rs), the articles of incorporation, the bylaws, and the rules and regulations. The CC&Rs constitute the enabling document, which is recorded with the county recorder and empowers the HOA to control certain aspects of property use within the development, often including oversight and approval authority over the construction and alteration of homes. When a person buys a home in such a development, the person receives a copy of the CC&Rs and agrees to be bound by their terms. Thus, the CC&Rs form an enforceable contract between the HOA and the individual homeowner. The articles of incorporation are required of incorporated HOAs and establish the HOA as a legal entity. They constitute the corporate charter and are filed with the Arizona Corporation Commission.
Many aspects of HOAs are directly governed by Arizona statute, such as the Planned Communities statutes, the Arizona Condominium Act and the Nonprofit Corporations Act. The Planned Communities statutes took effect in 1994 and constitute the first regulations pertaining specifically to the formation and operation of master planned community HOAs. Currently, these statutes address assessment increases, penalties, open meetings, disclosure of association records, resale disclosure, penalty and assessment liens, foreclosures, flag and political sign display, vehicle parking and certain affairs of the boards of directors.
Currently, statute requires that the court award $5,000 and reasonable attorney fees and costs to any member of an association whose property was falsely filed in the office of the county recorder asserting a claim of interest in, or a lien or encumbrance against the real property.
Statute defines a solar energy device (A.R.S. § 44-1716) as a system or series of mechanisms designed primarily to provide heating, to provide cooling, to produce electrical power, to produce mechanical power, to provide solar daylighting or to provide any combination of the foregoing by means of collecting and transferring solar generated energy into such uses either by active or passive means. Such systems may also have the capability of storing such energy for future utilization. Passive systems shall clearly be designed as a solar energy device such as a trombe wall and not merely a part of a normal structure such as a window.
There is no anticipated fiscal impact to the state General Fund.
Provisions
1. Eliminates the exemption for a deed, contract, security agreement or other instrument affecting the transfer or sale of, or any interest in, real property that occurred before April 17, 1980.
2. Prohibits an HOA from restricting the installation or use of a solar energy device.
3. Allows an HOA to adopt reasonable rules regarding the placement of the solar energy device as long as those rules do not impair the functioning of the device, unreasonably restrict its use or adversely affect the cost or efficiency of the device.
4. Requires the court to award reasonable attorney fees and costs to any party who substantially prevails in an action against the board of directors of the HOA.
5. Become effective on the general effective date.
House Action
HSPR 2/15/07 DPA 9-0-0-1
3rd Read 3/19/07 52-6-2-0
Prepared by Senate Research
March 21, 2007
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