SB1531 - 541R

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

Section 1. Section 33-1256, Arizona Revised Statutes, is amended to read:

START_STATUTE33-1256. Lien for assessments; priority; mechanics' and materialmen's liens; payment plan; applicability

A. The association has a lien on a unit for any assessment levied against that unit from the time the assessment becomes due. The association's lien for assessments, for charges for late payment of those assessments, for reasonable collection fees and for reasonable attorney fees and costs incurred with respect to those assessments may be foreclosed in the same manner as a mortgage on real estate but may be foreclosed only if the owner has been delinquent in the payment of monies secured by the lien, excluding reasonable collection fees, reasonable attorney fees and charges for late payment of and costs incurred with respect to those assessments, for a period of one year or in the amount of one thousand two hundred dollars $1,200 or more, whichever occurs first. Fees, charges, late charges, monetary penalties and interest charged pursuant to section 33‑1242, subsection A, paragraphs 10, 11 and 12, other than charges for late payment of assessments, are not enforceable as assessments under this section. If an assessment is payable in installments, the full amount of the assessment is a lien from the time the first installment of the assessment becomes due. The association has a lien for fees, charges, late charges, other than charges for late payment of assessments, monetary penalties or interest charged pursuant to section 33‑1242, subsection A, paragraphs 10, 11 and 12 after the entry of a judgment in a civil suit for those fees, charges, late charges, monetary penalties or interest from a court of competent jurisdiction and the recording of that judgment in the office of the county recorder as otherwise provided by law. The association's lien for monies other than for assessments, for charges for late payment of those assessments, for reasonable collection fees and for reasonable attorney fees and costs incurred with respect to those assessments may not be foreclosed and is effective only on conveyance of any interest in the real property.

B. A lien for assessments, for charges for late payment of those assessments, for reasonable collection fees and for reasonable attorney fees and costs incurred with respect to those assessments under this section is prior to all other liens, interests and encumbrances on a unit except:

1. Liens and encumbrances recorded before the recordation of the declaration.

2. A recorded first mortgage on the unit, a seller's interest in a first contract for sale pursuant to chapter 6, article 3 of this title on the unit recorded prior to the lien arising pursuant to subsection A of this section or a recorded first deed of trust on the unit.

3. Liens for real estate taxes and other governmental assessments or charges against the unit.

C. Subsection B of this section does not affect the priority of mechanics' or materialmen's liens or the priority of liens for other assessments made by the association. The lien under this section is not subject to chapter 8 of this title.

D. Unless the declaration otherwise provides, if two or more associations have liens for assessments created at any time on the same real estate, those liens have equal priority.

E. Recording of the declaration constitutes record notice and perfection of the lien for assessments, for charges for late payment of those assessments, for reasonable collection fees and for reasonable attorney fees and costs incurred with respect to those assessments. Further recordation of any claim of lien for assessments under this section is not required.

F. A lien for unpaid assessments is extinguished unless proceedings to enforce the lien are instituted within three years after the full amount of the assessments becomes due.

G. This section does not prohibit:

1. Actions to recover sums for which subsection A of this section creates a lien. or does not prohibit

2. An association from taking a deed in lieu of foreclosure.

H. A judgment or decree in any action brought under this section shall include costs and reasonable attorney fees for the prevailing party.

I. The association on written request shall furnish to a lienholder, escrow agent, unit owner or person designated by a unit owner a statement setting forth the amount of unpaid assessments against the unit. The statement shall be furnished within ten days after receipt of the request and the statement is binding on the association, the board of directors and every unit owner if the statement is requested by an escrow agency that is licensed pursuant to title 6, chapter 7. Failure to provide the statement to the escrow agent within the time provided for in this subsection shall extinguish any lien for any unpaid assessment then due.

J. Notwithstanding any provision in the condominium documents or in any contract between the association and a management company, unless the member unit owner directs otherwise, all payments received on a member's unit owner's account shall be applied first to any unpaid assessments, for unpaid charges for late payment of those assessments, for reasonable collection fees and for unpaid attorney fees and costs incurred with respect to those assessments, in that order, with any remaining amounts applied next to other unpaid fees, charges and monetary penalties or interest and late charges on any of those amounts amounts in the order the debt was accrued if those charges, costs, fees or other amounts are specifically authorized in the declaration to be charged to the unit owner. Any charges, costs, fees or other amounts that are not specifically authorized in the declaration to be charged to the unit owner are void.

K. NOTWITHSTANDING any provision in the condominium documents or any other law, before a JUDGMENT of FORECLOSURE may be issued for any amount claimed to be owed to the association, the attorney for any FORECLOSING party in the FORECLOSURE action shall provide the unit owner a written payment plan that CONTAINS specific terms and amounts as follows:

1. Except as prescribed in paragraph 2 of this subsection, the total amount of the payment plan may not include interest, late FEES, costs, attorney fees or any additional amounts that exceed the amount unpaid at the time the FORECLOSURE action is filed, and the unit owner is not liable for any subsequent charges for interest, late fees, COSTS, ATTORNEY fees or any other amounts, without regard to the designation or description of those amounts.

2. The paymENT plan may include a reasonable payment plan ESTABLISHMENT fee and a reasonable satisfaction of judgment fee.

3. tHE PAYMENT PLAN SHALL PROVIDE FOR EQUAL MONTHLY INSTALLMENTS OVER NOt MORE THAN THREE YEARS AND ON COMPLETION OF THE PLAN SHALL RESULT IN A COMPLETE DISCHARGE OF ALL AMOUNTS OWED.

4. tHE PLAN SHALL REQUIRE A unit owner WHO CONTINUES TO OCCUPY THE property TO REMAIN CURRENT ON ALL REGULAR and special ASSESSMENTS THAT BECOME DUE while the plan is in EFFECT.

5. tHE PLAn shall REQUIRE THE unit owner TO STIPULATE TO A JUDGMENT OR OTHER AGREEMENT OR WAIVER THAT PROVIDES FOR THE FORECLOSURE ACTION TO PROCEED IF THE unit owner DOES NOT comply with the payment plan.

6. tHE ATTORNEY FOR THE FORECLOSING PARTY SHALL GIVE WRITTEN NOTICE OF THE PROPOSED PAYMENT PlAN TO THE unit owner AND SHALL allow THE unit owner THIRTY DAYS TO EXECUTE THE PAYMENT PLAN AFTER RECEIVING NOTICE OF THE PLAN.

L. For any debt owed by a unit owner that arises out of an OBLIGATION to pay assessments or other amounts to the association and that consists of only attorney fees owed to a third party, The third party shall provide the unit owner with a payment plan that PROVIDEs FOR payment of the attorney fees in EQUAL MONTHLY INSTALLMENTS OVER NOt MORE THAN THREE YEARS, that ON COMPLETION OF THE PLAN RESULTs IN A COMPLETE DISCHARGE OF ALL AMOUNTS OWED and that includes only a reasonable payment plan ESTABLISHMENT fee and a reasonable satisfaction of judgement fee.

M. The association shall provide a monthly statement of account to all unit owners if assessments accrue monthly, a quarterly statement if assessments accrue quarterly or a semiannual statement if assessments accrue yearly. The unit owner may be charged for the cost of the statement.

N. Unless the association agrees otherwise in writing, a MANAGING agent for the association may collect directly from a unit owner the assessments and other amounts owed by cash, check, credit or DEBIT card or other ELECTRONIC means and may charge a convenience fee to the unit owner.

K. O. This section does not apply to timeshare plans or associations that are subject to chapter 20 of this title. END_STATUTE

Sec. 2. Section 33-1807, Arizona Revised Statutes, is amended to read:

START_STATUTE33-1807. Lien for assessments; priority; mechanics' and materialmen's liens; payment plan

A. The association has a lien on a unit for any assessment levied against that unit from the time the assessment becomes due. The association's lien for assessments, for charges for late payment of those assessments, for reasonable collection fees and for reasonable attorney fees and costs incurred with respect to those assessments may be foreclosed in the same manner as a mortgage on real estate but may be foreclosed only if the owner has been delinquent in the payment of monies secured by the lien, excluding reasonable collection fees, reasonable attorney fees and charges for late payment of and costs incurred with respect to those assessments, for a period of one year or in the amount of one thousand two hundred dollars $1,200 or more, whichever occurs first. Fees, charges, late charges, monetary penalties and interest charged pursuant to section 33‑1803, other than charges for late payment of assessments are not enforceable as assessments under this section. If an assessment is payable in installments, the full amount of the assessment is a lien from the time the first installment of the assessment becomes due. The association has a lien for fees, charges, late charges, other than charges for late payment of assessments, monetary penalties or interest charged pursuant to section 33‑1803 after the entry of a judgment in a civil suit for those fees, charges, late charges, monetary penalties or interest from a court of competent jurisdiction and the recording of that judgment in the office of the county recorder as otherwise provided by law. The association's lien for monies other than for assessments, for charges for late payment of those assessments, for reasonable collection fees and for reasonable attorney fees and costs incurred with respect to those assessments may not be foreclosed and is effective only on conveyance of any interest in the real property.

1. Liens and encumbrances recorded before the recordation of the declaration.

3. Liens for real estate taxes and other governmental assessments or charges against the unit.

D. Unless the declaration otherwise provides, if two or more associations have liens for assessments created at any time on the same real estate those liens have equal priority.

E. Recording of the declaration constitutes record notice and perfection of the lien for assessments, for charges for late payment of assessments, for reasonable collection fees and for reasonable attorney fees and costs incurred with respect to those assessments. Further recordation of any claim of lien for assessments under this section is not required.

F. A lien for an unpaid assessment is extinguished unless proceedings to enforce the lien are instituted within three years after the full amount of the assessment becomes due.

G. This section does not prohibit:

1. Actions to recover amounts for which subsection A of this section creates a lien.

2. An association from taking a deed in lieu of foreclosure.

H. A judgment or decree in any action brought under this section shall include costs and reasonable attorney fees for the prevailing party.

I. On written request, the association shall furnish to a lienholder, escrow agent, unit owner or person designated by a unit owner a statement setting forth the amount of any unpaid assessment against the unit. The association shall furnish the statement within ten days after receipt of the request, and the statement is binding on the association, the board of directors and every unit owner if the statement is requested by an escrow agency that is licensed pursuant to title 6, chapter 7. Failure to provide the statement to the escrow agent within the time provided for in this subsection shall extinguish any lien for any unpaid assessment then due.

J. Notwithstanding any provision in the community documents or in any contract between the association and a management company, unless the member directs otherwise, all payments received on a member's account shall be applied first to any unpaid assessments, for unpaid charges for late payment of those assessments, for reasonable collection fees and for unpaid attorney fees and costs incurred with respect to those assessments, in that order, with any remaining amounts applied next to other unpaid fees, charges and monetary penalties or interest and late charges on any of those amounts unpaid amounts in the order the debt was accrued if those charges, costs, fees or other amounts are specifically authorized in the declaration to be charged to the member. Any charges, costs, fees or other amounts that are not specifically authorized in the declaration to be charged to the member are void.

K. NOTWITHSTANDING any provision in the COmmunity documents or any other law, before a JUDGMENT of FORECLOSURE may be issued for any amount claimed to be owed to the association, the attorney for any FORECLOSING party in the FORECLOSURE action shall provide the member a written payment plan that CONTAINS specific terms and amounts as follows:

1. Except as prescribed in paragraph 2 of this subsection, the total amount of the payment plan may not include interest, late FEES, costs, attorney fees or any additional amounts that exceed the amount unpaid at the time the FORECLOSURE action is filed, and the member is not liable for any subsequent charges for interest, late fees, COSTS, ATTORNEY fees or any other amounts, without regard to the designation or description of those amounts.

2. The paymENT plan may include a reasonable payment plan ESTABLISHMENT fee and a reasonable satisfaction of judgment fee.

3. tHE PAYMENT PLAN SHALL PROVIDE FOR EQUAL MONTHLY INSTALLMENTS OVER NOt MORE THAN THREE YEARS AND ON COMPLETION OF THE PLAN SHALL RESULT IN A COMPLETE DISCHARGE OF ALL AMOUNTS OWED.

4. tHE PLAN SHALL REQUIRE A member WHO CONTINUES TO OCCUPY THE property TO REMAIN CURRENT ON ALL REGULAR and special ASSESSMENTS THAT BECOME DUE while the plan is in EFFECT.

5. tHE PLAn shall REQUIRE THE member TO STIPULATE TO A JUDGMENT OR OTHER AGREEMENT OR WAIVER THAT PROVIDES FOR THE FORECLOSURE ACTION TO PROCEED IF THE member DOES NOT comply with the payment plan.

6. tHE ATTORNEY FOR THE FORECLOSING PARTY SHALL GIVE WRITTEN NOTICE OF THE PROPOSED PAYMENT PlAN TO THE MEMBER AND SHALL allow THE member THIRTY DAYS TO EXECUTE THE PAYMENT PLAN AFTER RECEIVING NOTICE OF THE PLAN.

L. For any debt owed by a member that arises out of an OBLIGATION to pay assessments or other amounts to the association and that consists of only attorney fees owed to a third party, The third party shall provide the member with a payment plan that PROVIDEs FOR payment of the attorney fees in EQUAL MONTHLY INSTALLMENTS OVER NOt MORE THAN THREE YEARS, that ON COMPLETION OF THE PLAN RESULTs IN A COMPLETE DISCHARGE OF ALL AMOUNTS OWED and that includes only a reasonable payment plan ESTABLISHMENT fee and a reasonable satisfaction of judgement fee.

M. The association shall provide a monthly statement of account to all members if assessments accrue monthly, a quarterly statement if assessments accrue quarterly or a semiannual statement if assessments accrue yearly. The member may be charged for the cost of the statement.

N. Unless the association agrees otherwise in writing, a MANAGING agent for the association may collect directly from a member the assessments and other amounts owed by cash, check, credit or DEBIT card or other ELECTRONIC means and may charge a convenience fee to the member. END_STATUTE