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ARIZONA STATE SENATE
Fifty-Seventh Legislature, Second Regular Session
homeowners' associations; foreclosure process
Purpose
Modifies condominium unit owner association (COA) and planned community association (HOA) requirements for common expenses and records of accounts for each unit or property owner. Increases the amount over which a unit owner in a COA must be delinquent to $10,000 and the period of delinquency to 18 months for a COA to foreclose a common expense lien.
Background
A COA or HOA applies a common expense lien to a property for any assessment levied against that property from the time the assessment becomes due. A COA's or HOA's common expense lien may be foreclosed in the same manner as a mortgage on real estate if the owner has been and remains delinquent in the payment of assessments in the amounts prescribed by statute. Laws 2025, Chapter 71 increased the amount over which an owner in an HOA must be delinquent to $10,000 and the period of delinquency to 18 months, whichever occurs first, for an HOA to foreclose on a common expense lien. A COA may foreclose a common expense lien if the unit owner has been and remains delinquent in the payment of assessments, for a period of one year or in the amount of $1,200 or more, whichever occurs first, as determined on the date the action is filed.
A COA board and an HOA board must exercise reasonable efforts to communicate with the unit owner or member, provide outlined written notice to the member at least 30 days before authorizing collection and offer a reasonable payment plan before filing a foreclosure action. For a delinquent account for unpaid common expense liens, the COA or HOA must provide a written notice to the unit owner or member at the individual's address as provided to the association. Common expense lien means the lien for assessments, authorized charges for late payment of assessments, reasonable collection fees and costs incurred or applied by a COA or HOA and reasonable attorney fees and costs that are incurred with respect to the COA or HOA, if the attorney fees and costs are awarded by a court.
Except for a COA or HOA with less than 50 units or lots that does not
contract with a third party to perform management services, a COA or HOA must provide
a statement of account in lieu of a periodic payment book to the unit owner or member
with the same frequency that assessments are provided for in the declaration. The
statement of the account must include the current account balance due and the
immediately preceding ledger history. The COA or HOA may
stop providing any further statements of account to a unit owner or member if
collection activity begins by an attorney, or a collection agency that is not
acting as the COA's or HOA's managing agent, regarding that unit owner or
members' unpaid account (A.R.S. §§ 33-1202;
33-1256;
33-1802;
and 33-1807).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
Foreclosure
1. Increases, from $1,200 or more to $10,000 or more, the amount over which a unit owner in a COA must be delinquent for a COA to foreclose a common expense lien.
2. Increases, from one year to 18 months, the period of delinquency for a payment of an assessment or a portion of an assessment for which a unit owner must be delinquent for a COA to foreclose a common expense lien.
3. Specifies that for any COA or HOA special assessment with an initial value of $10,000 or more, only the 18 month delinquency threshold applies.
4. Requires a COA or HOA, for a delinquent account for unpaid common expense liens, to deliver a written notice to the member's address of record rather than providing the written notice to the address as provided to the COA or HOA.
5. Removes the ability of a COA or HOA to include the written notice for a delinquent account for an unpaid common expense lien within other correspondence sent to the member regarding the member's delinquent account.
6. Stipulates that if a COA or HOA does not comply with the outlined notice requirements, then all subsequent collection costs incurred by the COA or HOA are uncollectable against the member.
Record of Accounts
7. Removes the exclusion of a COA or HOA with less than 50 units or lots that does not contract to perform management services from the requirement to maintain a statement of accounts.
8. Requires a COA or HOA to maintain a true and accurate record of accounts for each unit or property in the COA or HOA that distinguishes between charges that are included in the common expense lien and other charges.
9. Specifies, with respect to the accounts, that the COA or HOA:
a) may use any process or tool deemed appropriate for the billing of money owed on the accounts, including the use of period payment books;
b) must provide secure online viewing access to the individual account or, on request, an electronic copy of the statement of the account for the current fiscal year, without charge; and
c) or its agents, must make good faith efforts to evaluate and resolve any charges on the account that are contested by the unit owner or member, including a request for review and correction by the board, if necessary.
10. Deems that any charge assessed in violation of the declaration or statutory requirements on the common expense lien or member charges or unit owner charges is invalid and unenforceable.
11. Allows any contested charge from the statement of account challenged in a court of competent jurisdiction in any action by the COA or HOA to enforce or apply the common expense lien or judgment lien.
12. Stipulates that, if the court finds the charge to be invalid, then the charge and any subsequent related collection cost or fees that are included in the common expense lien or judgment lien based on that charge must be extinguished and excluded from the common expense lien or judgment lien by order of the court.
Miscellaneous
13. Replaces unit owner expenses with unit owner charges for a COA, and member expenses with member charges for an HOA.
14. Removes late charges from the definition of unit owner charges and member charges.
15. Redefines assessment to mean the association's charges that are applied to a unit owner or member to fund the actual or anticipated common expenses based on each unit owner or members' common expense liability.
16. Defines common expenses as expenditures made by or financial liabilities of the COA or HOA for the maintenance, operation, use, upgrade, replacement or acquisition of the common property or elements, utilities or other services required by the declaration and the COA or HOAs' reasonable administrative and operational expenses as authorized in the declaration.
17. Adds, to the definition of a common expense lien, the interest on assessments.
18. Defines, for an HOA:
a) allocated interests as the common expense liability and voting rights that are allocated to each member of the HOA; and
b) common expense liability as the share or assignment of common expenses that are allocated to each member by the HOA declaration.
19. Makes technical and conforming changes.
20. Becomes effective on the general effective date.
Prepared by Senate Research
February 16, 2026
AN/KP/ci