ARIZONA HOUSE OF REPRESENTATIVES

Fifty-sixth Legislature

Second Regular Session

 

HB 2663: homeowners' associations; assessment liens

Sponsor: Representative Carter, LD 15

Committee on Regulatory Affairs

Overview

Modifies the lien statutes for condominiums and planned community associations (Association).

History

An association is defined as a nonprofit organization qualified under federal code or a nonprofit mandatory membership organization created pursuant to applicable laws, covenants or declarations and is composed of the owners of condominiums, cooperatives, homes or manufactured homes or other interest in real property (A.R.S. § 33-442).

An Association has a lien on a unit or property for any assessment that is levied against the unit or property from the time the assessment becomes due.  The Association’s lien for assessments, for charges for late payment of the 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 only if the owner has been delinquent in the payment of monies secured by the lien, excluding reasonable collection and attorney fees for a period of one year or in the amount of $1,200 or more, whichever is first (A.R.S. §§ 33-1256, 33-1807). Common expenses refer to the expenditures made by or financial liabilities of the Association, together with any allocations to reserves (A.R.S. 33-1202).

Provisions

1.   Specifies that an Association has a lien on a unit or property for any common expense assessment. (Sec. 1, 2)

2.   Stipulates that any common expense assessment may include:

a)   reasonable charges or interest for late payment if authorized in the declaration;

b)   reasonable collection costs or fees incurred or applied by the Association; and

c) reasonable attorney fees and costs incurred only as awarded by the court in an action. (Sec. 1, 2)

3.   Declares that the full amount of the assessment is a lien from the time the first installment becomes due if a common expense assessment is payable in installments. (Sec. 1, 2)

4.   Prescribes that the common expense assessment lien is not subject to the homestead exemption prescribed by statute. (Sec. 1, 2)

5.   Specifies that a common expense assessment may be foreclosed only if:

a)   the owner has been and remains delinquent in payment of the common expense assessments for a period of one year; and

b)   the Association board of directors has exercised all reasonable efforts to communicate with the owner, negotiate reasonable payment plans and collect the debt through remedies available under statute before filing a foreclosure action. (Sec. 1, 2)

6.   States that a judgment or decree in any action brought under this section may include costs and reasonable attorney fees for the prevailing party only as ordered by the court. (Sec. 1, 2)

7.   Changes, from 10 days to 10 calendar days, for the Association to furnish the statement of any unpaid assessment liens to a lienholder, escrow agent, unit owner or other person designated by the unit owner. (Sec. 1, 2)

8.   Asserts that, unless the unit owner directs otherwise, all payments received on a unit owner's account must be applied first to the following:

a)   unpaid delinquent common expense assessments;

b)   unpaid current but nondelinquent common expense assessments;

c) unpaid charges or interest for late payment of those assessments;

d)   unpaid reasonable collection costs or fees; and

e)   unpaid court-ordered attorney fees and costs incurred for those assessments. (Sec. 1, 2)

9.   Stipulates that failure of the Association or its authorized agents, including any attorney for the Association or its authorized agent, to correct any error in the application of payments from the unit owner within 10 calendar days after receiving the notice of error extinguishes any common expense lien assessment then due. (Sec. 1, 2)

10.  ☐ Prop 105 (45 votes) ☐ Prop 108 (40 votes) ☐ Emergency (40 votes) ☐ Fiscal NoteMakes technical and conforming changes. (Sec. 1, 2)

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14.                    HB 2663

15.  Initials IG Page 0 Regulatory Affairs

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