HB2397 - 572R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 33-1260, Arizona Revised Statutes, is amended to read:

START_STATUTE33-1260. Sale of units; information required; fees; civil penalty; applicability; definition

A. For condominiums with fewer than fifty units, a unit owner shall mail electronically transmit or deliver to a purchaser or a purchaser's authorized designated agent the information required by this subsection within ten days after receipt of a written notice of a pending sale of the unit, and acceptance of the purchaser's offer to purchase. For condominiums with fifty or more units, the association shall mail electronically transmit or deliver to a purchaser or a purchaser's authorized designated agent within ten days after receipt of a written notice of a pending sale that contains the name, email address and mailing address of the purchaser or the purchaser's designated agent all of the following in either paper or electronic format:

1. A copy of the current bylaws and the current rules of the association.

2. A copy of the current recorded declaration and final plat or an ELECTRONIC copy of the final plat, if available.

3. A copy of the board of directors-approved minutes of all open meetings of the board of directors for the previous three meetings.

3. 4. A dated statement containing:

(a) The telephone number and address of a principal contact for the association, which may be an association manager, an association management company, an officer of the association or any other person designated by the board of directors.

(b) The amount of and payment schedule for the annual common expense assessment for the unit and the remaining installments and payment schedules on any approved and assessed special assessment, if any.

(c) the amount and purpose of any special assessment approved by the board of directors but not yet assessed or any special assessment submitted by the board of directors for unit owner approval within the previous four months, if any.

(d) any known material deficiency or condition of the limited common elements associated with the unit or common elements known by the association for which the purchaser will be liable for the directly assessed repair costs within six months of the purchase, if any.

(e) the current amount of any unpaid common expense assessment, special assessment or other assessment, fee or charge currently due and payable from the selling unit owner. If the request is made by a lienholder, escrow agent, unit owner or person designated by a unit owner pursuant to section 33-1256, failure to provide the information pursuant to this subdivision within the time provided for in this subsection shall extinguish any lien for any unpaid assessment then due against that unit lien or judgment lien on the unit due to the association pursuant to section 33-1256 and any lis pendens recorded by the association against the unit.

(d) The total amount of money held by the association as reserves.

(e) If the statement is being furnished by the association, a statement as to whether the records of the association reflect any alterations or improvements to the unit that violate the declaration. The association is not obligated to provide information regarding alterations or improvements that occurred more than six years before the proposed sale. Nothing in this subdivision relieves the seller of a unit from the obligation to disclose alterations or improvements to the unit that violate the declaration, nor precludes the association from taking action against the purchaser of a unit for violations that are apparent at the time of purchase and that are not reflected in the association's records.

(f) If the statement is being furnished by the unit owner, a statement as to whether the unit owner has any knowledge of any alterations or improvements to the unit that violate the declaration.

(g) A statement of case names and case numbers for pending litigation with respect to the unit filed by the association against the unit owner or filed by the unit owner against the association. The unit owner or the association shall not be required to disclose information concerning the pending litigation that would violate any applicable rule of attorney-client privilege under Arizona law.

(h) A statement that provides "I hereby acknowledge that the declaration, bylaws and rules of the association constitute a contract between the association and me (the purchaser). By signing this statement, I acknowledge that I have read and understand the association's contract with me (the purchaser). I also understand that as a matter of Arizona law, if I fail to pay my association assessments, the association may foreclose on my property." The statement shall also include a signature line for the purchaser and shall be returned to the association within fourteen calendar days.

(f) the amount and purpose of any title transfer fee or other similar fee, however denominated, that is authorized in the declaration and ESTABLISHED by the ASSOCIATION PURSUANT to section 33-442.

(g) A copy of the association's most recent income and expenses financial statement for all operating and reserve accounts, as applicable.

(h) ANY OUTSTANDING AND UNRESOLVED VIOLATION OF THE ASSOCIATION'S CONDOMINIUM DOCUMENTS that was CITED AGAINST THE UNIT, IF ANY.

4. 5. A copy of the current operating budget of the association.

5. 6. A copy of the most recent annual financial audit, review or compilation report of the association prescribed by section 33-1243, subsection J. If the report is more than ten pages, the association may provide a summary of the report in lieu of the entire report.

6. 7. A copy of the most recent reserve study of the association, if any. If the report is more than ten pages, the association may provide a summary of the report in lieu of the entire report.

7. 8. A statement summarizing any pending lawsuits, except those relating to the collection of assessments owed by unit owners other than the selling unit owner, in which the association is a named party, including the amount of any money claimed.

9. A statement as to whether a portion of the unit is covered by insurance maintained by the association and a copy of all insurance certificates identifying the coverage limits and deductibles maintained by the association pursuant to section 33-1253.

10. A statement as to whether the condominium is under declarant control and the approximate percentage of units identified on the recorded plat that are currently owned by the declarant.

11. A statement identifying whether any corporation or limited liability company owns and leases thirty-five percent or more of the units.

12. a statement that, For any report provided in summary format pursuant to this subsection, the purchaser may request to view the entire report from the association directly, and the association shall provide access to that report within ten days after a written request.

13. A statement to be signed by the purchaser at the close of escrow that provides "I hereby acknowledge that with the purchase of this home or property, I will be contractually bound to the valid covenants, conditions and restrictions of the recorded declaration, and will be contractually bound to pay all common expense assessments applied to my home or property as authorized in the declaration and title 33, chapter 9 or 16, Arizona Revised Statutes, as applicable. If I fail to pay common expense assessments, I may be subject to collection activity by the association up to and including foreclosure action, without the equity protection of the homestead act pursuant to title 33, chapter 8, Arizona Revised Statutes."

14. If the unit is governed by multiple associations, a statement notifying the purchaser that the unit is subject to each association's resale disclosure fee authorized under subsection D of this section.

B. All INFORMATION that is provided under subsection A of this section shall be based on the good faith reliance on association records or information, without the need for INDEPENDENT investigation or validation.

B. c. A purchaser or seller who is damaged by the failure of the unit owner or the association knowingly or recklessly failing to disclose the information required by subsection A of this section or knowingly or recklessly providing materially false or misleading STATEMENTS in the DISCLOSURE may pursue all remedies at law or in equity against the unit owner or the association, whichever failed to comply with subsection A of this section, including the recovery of reasonable attorney fees as awarded by the court.

C. d. The association may charge the unit owner a fee of not more than an aggregate of four hundred dollars $400 to compensate the association for the costs incurred in the preparation and delivery of a statement report or other documents furnished by the association pursuant to this section for purposes of resale disclosure, lien estoppel and any other services related to the transfer or use of the property. In addition, the association may charge a rush fee of not more than one hundred dollars $100 if the rush services are required to be performed within seventy-two hours after the request for rush services. , and The unit owner may REQUEST the ASSOCIATION to update the report if thirty days or more have passed since the date of the original disclosure report. The association may charge a statement or other documents document update fee of not more than fifty dollars if thirty days or more have passed since the date of the original disclosure statement or the date the documents were delivered $50. The association shall make available to any interested party the amount of any fee established from time to time by the association. If the aggregate fee for purposes of resale disclosure, lien estoppel and any other services related to the transfer or use of a property is less than four hundred dollars on January 1, 2010, the fee may increase at a rate of not more than twenty percent per year based on the immediately preceding fiscal year's amount not to exceed the four hundred dollar aggregate fee. The association may charge the same fee without regard to whether the association is furnishing the statement or other documents in paper or electronic format.

D. e. The fees prescribed by this section shall be collected no not earlier than at the close of escrow and may only be charged once to a unit owner or purchaser for that transaction between the parties specified in the notice required pursuant to subsection A of this section. An association shall not charge or collect a fee relating to services for resale disclosure, lien estoppel and any other services related to the transfer or use of a property except as specifically authorized in this section. An association that charges or collects a fee in violation of this section is subject to a civil penalty of not more than one thousand two hundred dollars $1,200.

E. f. This section applies to a managing agent for an association that is acting on behalf of the association.

F. g. The following are exempt from this section:

1. A sale in which a public report is issued pursuant to section 32-2183 or 32-2197.02.

2. A sale pursuant to section 32-2181.02.

3. A conveyance by recorded deed that bears an exemption listed in section 11-1134, subsection B, paragraph 3 or 7. On recordation of the deed and for no additional charge, the unit owner purchaser shall provide the association with the changes in ownership, including the unit owner's name, billing address and phone number. Failure to provide the information shall not prevent the unit owner from qualifying for the exemption pursuant to this section.

G. h. This section does not apply to timeshare plans or associations that are subject to chapter 20 of this title.

H. i. For the purposes of this section, unless the context otherwise requires, "unit owner":

1. Means the seller of the condominium unit title. and excludes

2. does not include:

(a) Any real estate salesperson or real estate broker who is licensed under title 32, chapter 20 and who is acting as a salesperson or broker. ,

(b) Any escrow agent who is licensed under title 6, chapter 7 and who is acting as an escrow agent. and also excludes

(c) A trustee of a deed of trust who is selling the property in a trustee's sale pursuant to chapter 6.1 of this title. END_STATUTE

Sec. 2. Section 33-1806, Arizona Revised Statutes, is amended to read:

START_STATUTE33-1806. Sale of properties; information required; fees; civil penalty; definition

A. For planned communities with fewer than fifty units properties, a member shall mail electronically transmit or deliver to a purchaser or a purchaser's authorized designated agent the information required by this subsection within ten days after receipt of a written notice of a pending sale of the unit, and acceptance of the purchaser's offer to purchase. For planned communities with fifty or more units properties, the association shall mail electronically transmit or deliver to a purchaser or a purchaser's authorized designated agent within ten days after receipt of a written notice of a pending sale that contains the name, email address and mailing address of the purchaser or the purchaser's designated agent all of the following in either paper or electronic format:

1. A copy of the current bylaws and the current rules of the association.

2. A copy of the current declaration and final plat or an electronic copy of the final plat, if available.

3. A copy of the board-approved minutes of all open meetings of the board of directors for the previous three meetings.

3. 4. A dated statement containing:

(b) The amount of and payment schedule for the annual common regular assessment and the remaining installments and payment schedules on any approved and assessed special assessment, if any.

(c) the amount and purpose of any special assessment approved by the board of directors but not yet assessed or any special assessment submitted by the board for member approval within the previous four months, if any.

(d) the current amount of any unpaid common regular assessment, special assessment or other assessment, fee or charge currently due and payable from the selling member. If the request is made by a lienholder, escrow agent, member or person designated by a member pursuant to section 33-1807, failure to provide the information pursuant to this subdivision within the time provided for in this subsection shall extinguish any lien for any unpaid assessment then due against that property lien or judgment lien on the property due to the association pursuant to section 33-1807 and any lis pendens recorded by the association against the property.

(d) The total amount of money held by the association as reserves.

(f) If the statement is being furnished by the member, a statement as to whether the member has any knowledge of any alterations or improvements to the unit that violate the declaration.

(g) A statement of case names and case numbers for pending litigation with respect to the unit filed by the association against the member or filed by the member against the association. The member shall not be required to disclose information concerning such pending litigation that would violate any applicable rule of attorney-client privilege under Arizona law.

(e) the amount and purpose of any title transfer fee or other similar fee, however denominated, that is authorized in the declaration and ESTABLISHED by the ASSOCIATION PURSUANT to section 33-442.

(f) A copy of the association's most recent income and expenses financial statement for all operating and reserve accounts, as applicable.

(g) ANY OUTSTANDING AND UNRESOLVED VIOLATION OF THE ASSOCIATION'S COmmunity DOCUMENTS that was CITED AGAINST THE property, IF ANY.

4. 5. A copy of the current operating budget of the association.

5. 6. A copy of the most recent annual financial audit, review or compilation report of the association pursuant to section 33-1810. If the report is more than ten pages, the association may provide a summary of the report in lieu may be provided in place of the entire report.

6. 7. A copy of the most recent reserve study of the association, if any. If the report is more than ten pages, the association may provide a summary of the report in place of the entire report.

7. 8. A statement summarizing any pending lawsuits, except those relating to the collection of assessments owed by members other than the selling member, in which the association is a named party, including the amount of any money claimed.

9. A statement as to whether the planned community is under declarant control and the approximate percentage of lots identified on the recorded plat that are currently owned by the declarant.

10. a statement that, For any report provided in summary format pursuant to this subsection, the purchaser may request to view the entire report from the association directly, and the association shall provide access to that report within ten days after a written request.

11. A statement to be signed by the purchaser at the close of escrow that provides "I hereby acknowledge that with the purchase of this home or property, I will be contractually bound to the valid covenants, conditions and restrictions of the recorded declaration, and will be contractually bound to pay all common expense assessments applied to my home or property as authorized in the declaration and title 33, chapter 9 or 16, Arizona Revised Statutes, as applicable. If I fail to pay common expense assessments, I may be subject to collection activity by the association up to and including foreclosure action, without the equity protection of the homestead act pursuant to title 33, chapter 8, Arizona Revised Statutes."

12. If the property is governed by multiple associations, a statement notifying the purchaser that the property is subject to each association's resale disclosure fee authorized under subsection D of this section.

B. c. A purchaser or seller who is damaged by the failure of the member or the association knowingly or recklessly failing to disclose the information required by subsection A of this section or knowingly or recklessly providing materially false or misleading STATEMENTS in the DISCLOSURE may pursue all remedies at law or in equity against the member or the association, whichever failed to comply with subsection A of this section, including the recovery of reasonable attorney fees as awarded by the court.

C. d. The association may charge the member a fee of not more than an aggregate of four hundred dollars $400 to compensate the association for the costs incurred in the preparation and delivery of a statement report or other documents furnished by the association pursuant to this section for purposes of resale disclosure, lien estoppel and any other services related to the transfer or use of the property. In addition, the association may charge a rush fee of not more than one hundred dollars $100 if the rush services are required to be performed within seventy-two hours after the request for rush services. , and The member may REQUEST the ASSOCIATION to update the report if thirty days or more have passed since the date of the original disclosure report. The association may charge a statement or other documents document update fee of not more than fifty dollars if thirty days or more have passed since the date of the original disclosure statement or the date the documents were delivered $50. The association shall make available to any interested party the amount of any fee established from time to time by the association. If the aggregate fee for purposes of resale disclosure, lien estoppel and any other services related to the transfer or use of a property is less than four hundred dollars on January 1, 2010, the fee may increase at a rate of not more than twenty percent per year based on the immediately preceding fiscal year's amount not to exceed the four hundred dollar aggregate fee. The association may charge the same fee without regard to whether the association is furnishing the statement or other documents in paper or electronic format.

D. E. The fees prescribed by this section shall be collected no not earlier than at the close of escrow and may only be charged once to a member or purchaser for that transaction between the parties specified in the notice required pursuant to subsection A of this section. An association shall not charge or collect a fee relating to services for resale disclosure, lien estoppel and any other services related to the transfer or use of a property except as specifically authorized in this section. An association that charges or collects a fee in violation of this section is subject to a civil penalty of not more than one thousand two hundred dollars $1,200.

E. F. This section applies to a managing agent for an association that is acting on behalf of the association.

F. G. The following are exempt from this section:

1. A sale in which a public report is issued pursuant to section 32-2183 or 32-2197.02.

2. A sale pursuant to section 32-2181.02.

3. A conveyance by recorded deed that bears an exemption listed in section 11-1134, subsection B, paragraph 3 or 7. On recordation of the deed and for no additional charge, the member purchaser shall provide the association with the changes in ownership, including the member's name, billing address and phone number. Failure to provide the information shall not prevent the member from qualifying for the exemption pursuant to this section.

G. H. For the purposes of this section, unless the context otherwise requires, "member":

1. Means the seller of the unit property title. and excludes

2. does not include:

(a) Any real estate salesperson or real estate broker who is licensed under title 32, chapter 20 and who is acting as a salesperson or broker. ,

(b) Any escrow agent who is licensed under title 6, chapter 7 and who is acting as an escrow agent. and also excludes

(c) A trustee of a deed of trust who is selling the property in a trustee's sale pursuant to chapter 6.1 of this title.END_STATUTE