Assigned to FICO                                                                                                                    FOR COMMITTEE

 

 

 

 


ARIZONA STATE SENATE

Fifty-Sixth Legislature, Second Regular Session

 

FACT SHEET FOR H.B. 2698

 

planned communities; declarant control

(NOW: declarant control; planned communities)

Purpose

Prescribes requirements relating to the termination of declarant control of a homeowners' association (HOA).

Background

An association, also known as an HOA, is a common interest organization to which all the owners of lots in a planned community must belong. HOAs are organized and established to operate shared portions of the planned community. The community documents create the legal foundation and organizational framework of an HOA. The community documents are the declaration, bylaws, articles of incorporation, if any, and rules, if any. A declaration is any instrument, however denominated, that establishes a planned community and any amendment to those instruments. A planned community is a real estate development that: 1) includes real estate owned and operated by a nonprofit corporation or unincorporated association of owners; and 2) is created pursuant to a recorded declaration for the purpose of managing, maintaining or improving the property. In a planned community, the owners of separate lots, parcels or units are mandatory members of the association and are required to pay assessments (A.R.S. § 33-1802).

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

Provisions

1.   Requires each declaration that provides for a period of declarant control of an HOA to also provide a date of or method for calculating the date of the termination of declarant control.

2.   Stipulates that for every planned community, without regard to whether the community documents provide for the termination of declarant control, declarant control terminates no later than the date on which the second to last lot in the planned community is conveyed to a buyer.

3.   Requires, after termination of the period of declarant control and while the declarant owns one or more lots in the planned community, the HOA to:

a)   provide at least the same level maintenance of common areas that the declarant provided; and

b)   not impede the declarant's ability to develop, construct and sell its lots and not impede access to and use of common areas by the declarant in the same manner as other members.

4.   Becomes effective on the general effective date.

House Action

RA                  2/7/2024       DPA/SE       6-0-0-0

3rd Read          2/26/2024                          56-0-3-0-1

Prepared by Senate Research

March 7, 2024

JT/MA/cs