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ARIZONA STATE SENATE
Fifty-Seventh Legislature, Second Regular Session
HOAs; duties
Purpose
Determines that a condominium unit owners' association (COA) and a planned community association (HOA) have a duty to act reasonably in the exercise of discretionary powers.
Background
A COA is a real estate development in which certain portions are designated for separate ownership and the remainder is designated for common ownership by the unit owners. An HOA is a real estate development that includes property owned and operated by a nonprofit corporation or unincorporated association of owners that is created pursuant to a recorded declaration for managing, maintaining or improving the property. A COA's and HOA's power and authority is derived from a variety of legal documents, including the governing documents and federal and state statutes and regulations. The governing documents create the legal foundation and organizational framework of a COA and HOA. The governing documents consist of the declaration of covenants, conditions and restriction, (CC&Rs), the articles of incorporation, the bylaws, and the rules and regulations (A.R.S. §§ 33-1202; 33-1246; and 33-1802).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Determines that a COA and HOA have a duty to act reasonably in the exercise of discretionary powers.
2. Defines duty to act reasonably to include the duty to exercise discretionary powers neutrally, fairly, without favoritism and in a nonarbitrary fashion.
3. Becomes effective on the general effective date.
House Action
COM 2/17/26 DP 11-0-0-0
3rd Read 2/26/26 54-0-6
Prepared by Senate Research
March 22, 2026
AN/TR/ci