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ARIZONA STATE SENATE
Fifty-Seventh Legislature, First Regular Session
condominiums; commercial structures; residential structures
Purpose
Requires a condominium that includes commercial structures that are separate from the residential structures to assess common expenses that exclusively benefit the residential or commercial structures against the respective units.
Background
A condominium refers to a real estate development in which certain portions are designated for separate ownership (units) and the remainder is designated for common ownership by the unit owners. A condominium may consist of residential structures, commercial structures or both, which is commonly referred to as mixed-use. In a condominium, each unit owner has an undivided percentage interest in the common elements, which are defined as all portions of a condominium other than the units which may include the land, exterior walls, walkway areas and recreational areas. The condominium unit owners' association (COA) is responsible for maintenance, repair and replacement of the common elements, which are typically paid for by common expenses. Statute outlines requirements for the assessment of common expenses in cases where the entire condominium does not benefit. Any common expense associated with the maintenance, repair or replacement of a limited common element be equally assessed against the units to which the common element is assigned. If all of the units of a condominium will not benefit from a common expense or portion of a common expense, then the common expense must be assessed exclusively against the units that will be benefitted. A COA may assess a common expense that is caused by the misconduct of any unit owner exclusively against that unit (A.R.S. Title 33, Ch. 9).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Requires, for a condominium that includes one or more commercial structures that are separate from the residential structures, any common expense or portion of a common expense that:
a) exclusively benefits the residential structures to be assessed exclusively against the units in the residential structure, whether assessed in a general or special assessment or otherwise;
b) exclusively benefits the commercial structures to be assessed exclusively against the units in the commercial structure, whether assessed in a general or special assessment or otherwise; and
c) benefits both the residential and commercial structures to be assessed in proportion to the category of the structures benefitted, whether assessed in a general or special assessment or otherwise.
2. Requires, for a common expense or a portion of a common expense that benefits both the commercial and residential structures, the proportional share of the common expenses that benefit the commercial structures to thereafter be assessed against the units on a pro rata basis, and the proportional share of the common expenses that benefit the residential structures to thereafter be assessed against the units in the residential structures on a pro rata basis.
3. Defines common expenses as expenditures made by or financial liabilities of the COA, together with any allocations to reserves.
4. Defines commercial structure as a structure in which a majority of the units are designated for commercial or work purposes and is separate from a residential structure if no residential units are located on top of or below the commercial structure.
5. Defines residential structure as a structure in which a majority of the units are designated for residential purposes.
6. Applies the outlined requirements relating to the allocation of condominium expenses to any condominium that exists beginning on the general effective date.
7. Makes technical and conforming changes.
8. Becomes effective on the general effective date.
House Action
COM 2/4/25 DPA 10-0-0-0
3rd Read 2/25/25 60-0-0
Prepared by Senate Research
March 10, 2025
AN/slp