ARIZONA HOUSE OF REPRESENTATIVES

57th Legislature, 2nd Regular Session

Majority Research Staff

 

☐ Prop 105 (45 votes) ☐ Prop 108 (40 votes) ☐ Emergency (40 votes) ☐ Fiscal Note

HB 2397: homeowners' associations; property covenants; disclosures

Sponsor: Representative Biasiucci, LD 30

Committee on Commerce

Overview

Makes revision to Condominium and Planned Communities statutes relating to the sale of units or properties.

History

A condominium or planned community association (HOA) is formed and organized under governing documents which include a declaration, bylaws and articles of incorporation, if any. An HOA is responsible for managing, maintaining and improving community property. Members of the association elect a board of directors who are given general management powers to act on behalf of the association (Title 33, Chapters 9 & 16, A.R.S.).

Provisions

Private Covenants

1.   Includes a stipulation that the private covenant does not violate public policy for the covenant to the criteria in determining the validity and enforceability of a covenant. (Sec. 1)

2.   Provides characteristics of a covenant that constitute a violation of public policy. (Sec. 1)

3.   Allows any property owner that is subject to a private covenant to challenge the validity of any provision in that covenant in a court of competent jurisdiction. (Sec. 1)

4.   Defines pertinent terms. (Sec. 1)

Condominiums

5.   Restates, for condominiums with fewer than 50 units, that a unit owner must electronically transmit specified information to the purchaser within 10 calendar days after acceptance of the purchaser's offer to purchase. (Sec. 2)

6.   Allows the unit owner to request the association to provide the unit owner with the specified information on listing the unit for sale. (Sec. 2)

7.   Restates, for condominiums with 50 units or more, that the association must electronically transmit specified information to the purchaser within 10 calendar days after receipt of a written notice of a pending sale containing the name, email address and mailing address of the purchaser. (Sec. 2)

8.   Modifies the specified information contained in the dated statement that must be sent to the purchaser prior to sale. (Sec. 2)

9.   Outlines additional information that must be provided to the purchaser prior to sale, relating to declarant control, percentage of units owned by an owner and viewing a summarized report in its entirety. (Sec. 2)

10.  Adds that a purchaser may accept the reported information, propose a cure to address any concerns identified in the reported information or withdraw the offer without penalty or loss of earnest money. (Sec. 2)

11.  Requires the completed disclosure report be returned to the seller if a contract is canceled. (Sec. 2)

12.  Clarifies that a purchaser or seller may pursue all remedies at law against the unit owner for providing materially false or misleading statements in the disclosure report. (Sec. 2)

13.  Requires the association to provide to an escrow agent any requested information that is relevant to the close of the escrow at no cost. (Sec. 2)

14.  Allows the association to charge a nominal fee to the purchaser for compensation for updating the new owner information in the association records. (Sec. 2)

15.  Specifies any payment for fees associated with the disclosure report must be made directly and only to the association. (Sec. 2)

16.  Requires the declarant, for initial sales of a condominium unit from the declarant, to provide to any purchaser the prescribed documents relating to the disclosure report. (Sec. 2)

Planned Communities

17.  Declares any provision of a declaration that would impose mandatory assessments for membership in a private recreational club or for the maintenance or use of separate public or private property that is not owned by the association is invalid and unenforceable. (Sec. 4)

18.  Specifies any prescribed creates both an unreasonable restraint on alienation and on trade or competition and applies the following:

a.   the board of directors of any association that has a declaration that contains such a provision shall remove that provision by amendment to the declaration; and

b.   the association may not use common expense assessments for the maintenance, use or subsidy of third-party public or private property that is not directly owned by the association. (Sec. 4)

19.  Authorizes the association allow the use of resources or monies to effect the emergency repairs and bill the public or private entity that owns the separate property for the costs of the repairs if emergency measure are taken to maintain access to the association's property. (Sec 4)

20.  Allows the association to provide for voluntary assessments on individual property for the use of third-party property, recreational facilities or other facilities. (Sec. 4)

21.  Restates, for communities with fewer than 50 properties, that a member must electronically transmit specified information to the purchaser within 10 calendar days after acceptance of the purchaser's offer to purchase. (Sec. 5)

22.  Allows the member to request the association to provide the member with the specified information on listing the property for sale. (Sec. 5)

23.  Restates, for communities with 50 properties or more, that the association must electronically transmit specified information to the purchaser within 10 calendar days after receipt of a written notice of a pending sale containing the name, email address and mailing address of the purchaser. (Sec. 5)

24.  Modifies the specified information contained in the dated statement that must be sent to the purchaser prior to sale. (Sec. 5)

25.  Outlines additional information that must be provided to the purchaser prior to sale, relating to declarant control and viewing a summarized report in its entirety. (Sec. 5)

26.  Adds that a purchaser may accept the reported information, propose a cure to address any concerns identified in the reported information or withdraw the offer without penalty or loss of earnest money. (Sec. 5)

27.  Requires the completed disclosure report be returned to the seller if a contract is canceled. (Sec. 5)

28.  Clarifies that a purchaser or seller may pursue all remedies at law against the member for providing materially false or misleading statements in the disclosure report. (Sec. 5)

29.  Requires the association to provide to an escrow agent any requested information that is relevant to the close of the escrow at no cost. (Sec. 5)

30.  Allows the association to charge a nominal fee to the purchaser for compensation for updating the new owner information in the association records. (Sec. 5)

31.  Specifies any payment for fees associated with the disclosure report must be made directly and only to the association. (Sec. 5)

32.  Requires the declarant, for initial sales of a property from the declarant, to provide to any purchaser the prescribed documents relating to the disclosure report. (Sec. 5)

33.  Defines member and association. (Sec. 3,5)

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37.  Initials PB                       HB 2397

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