SB1151 - 572R

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

Section 1. Section 33-1202, Arizona Revised Statutes, is amended to read:

START_STATUTE33-1202. Definitions

In the condominium documents, unless specifically provided otherwise or the context otherwise requires, and in this chapter:

1. "Affiliate of a declarant" means any person who controls, is controlled by or is under common control with a declarant.

2. "Allocated interests" means the undivided interests in the common elements, the common expense liability and votes in the association allocated to each unit.

3. "Articles of incorporation" means the instrument by which an incorporated association or unit owners' association is formed and organized under this state's corporate statutes.

4. "Assessment" means the share of monies that is required for the payment of common expenses and that the association assesses periodically against each unit.

5. "Association" or "unit owners' association" means the unit owners' association organized under section 33-1241.

6. "Board of directors" means the body, regardless of its name, designated in the declaration and given general management powers to act on behalf of the association.

7. "Bylaws" means the bylaws required by section 33-1246.

8. "Common elements" means all portions of a condominium other than the units.

9. "Common expense liability" means the liability for common expenses allocated to each unit pursuant to section 33-1217 or 33-1255.

10. "Common expense lien" means the lien for assessments, charges for late payment of assessments if authorized in the declaration, reasonable collection fees and costs incurred or applied by the association and reasonable attorney fees and costs that are incurred with respect to those assessments, if the attorney fees and costs are awarded by a court.

11. "Common expenses" means expenditures made by or financial liabilities of the association, together with any allocations to reserves.

12. "Condominium" means real estate, portions of which are designated for separate ownership and the remainder of which is designated for common ownership solely by the owners of the separate portions. Real estate is not a condominium unless the undivided interests in the common elements are vested in the unit owners.

13. "Condominium documents" means the declaration, bylaws, articles of incorporation, if any, and rules, if any.

14. "Declarant" means any person or group of persons who reserves, is granted or succeeds to any special declarant right.

15. "Declaration" means any instruments, however denominated, that create a condominium and any amendments to those instruments.

16. "Development rights" means any right or combination of rights reserved by or granted to a declarant in the declaration to do any of the following:

(a) Add real estate to a condominium.

(b) Create easements, units, common elements or limited common elements within a condominium.

(d) Withdraw real estate from a condominium.

(e) Make the condominium part of a larger condominium or planned community.

(f) Amend the declaration during any period of declarant control, pursuant to section 33-1243, subsection E, to comply with applicable law or to correct any error or inconsistency in the declaration, if the amendment does not adversely affect the rights of any unit owner.

(g) Amend the declaration during any period of declarant control, pursuant to section 33-1243, subsection E, to comply with the rules or guidelines, in effect from time to time, of any governmental or quasi-governmental entity or federal corporation guaranteeing or insuring mortgage loans or governing transactions involving mortgage instruments.

17. "Identifying number" means a symbol or address that identifies one unit in a condominium.

18. "Leasehold condominium" means a condominium in which all or a portion of the real estate is subject to a lease the expiration or termination of which will terminate the condominium or reduce its size.

19. "Limited common element" means a portion of the common elements specifically designated as a limited common element in the declaration and allocated by the declaration or by operation of section 33-1212, paragraph 2 or 4 for the exclusive use of one or more but fewer than all of the units.

20. "Meeting" means any gathering or interaction, in person or through technological means, of a quorum of the board of directors, a designated committee or the unit owners at which they propose, discuss, deliberate or take legal action on association business.

20. 21. "Person" means:

(a) A natural person, corporation, business trust, estate, trust, partnership, association, joint venture, government, governmental subdivision or agency, or other legal or commercial entity.

(b) In the case of a subdivision trust, as defined in section 6-801, the beneficiary of the trust who holds the right to subdivide, develop or sell the real estate rather than the trust or trustee.

21. 22. "Real estate":

(a) Means any legal, equitable, leasehold or other estate or interest in, over or under land, including structures, fixtures and other improvements and interests which by custom, usage or law pass with a conveyance of land though not described in the contract of sale or instrument of conveyance.

(b) Includes parcels with or without upper or lower boundaries and spaces that may be filled with air or water.

22. 23. "Rules" means the provisions, if any, adopted pursuant to the declaration or bylaws governing maintenance and use of the units and common elements.

23. 24. "Special declarant rights" means any right or combination of rights reserved by or granted to a declarant in the declaration to do any of the following:

(a) Construct improvements provided for in the declaration.

(b) Exercise any development right.

(d) Use easements through the common elements for the purpose of making improvements within the condominium or within real estate that may be added to the condominium.

(e) Appoint or remove any officer of the association or any board member during any period of declarant control.

24. 25. "Unit" means a portion of the condominium designated for separate ownership or occupancy.

25. 26. "Unit owner" means:

(a) A declarant or other person who owns a unit or, unless otherwise provided in the lease, a lessee of a unit in a leasehold condominium whose lease expires simultaneously with any lease the expiration or termination of which will remove the unit from the condominium but does not include a person having an interest in a unit solely as security for an obligation.

(b) In the case of a contract for conveyance, as defined in section 33-741, of real property, the purchaser of the unit.

26. 27. "Unit owner expenses":

(a) Means fees, charges, late charges and monetary penalties or interest that is imposed pursuant to section 33-1242, subsection A, paragraphs 10, 11 and 12.

(b) Does not include any amount that is included in a common expense lien.END_STATUTE

Sec. 2. Section 33-1243, Arizona Revised Statutes, is amended to read:

START_STATUTE33-1243. Board of directors and officers; conflict; powers; limitations; removal; annual audit; applicability

A. Except as provided in the declaration, the bylaws, subsection B of this section or other provisions of this chapter, the board of directors may act in all instances on behalf of the association.

B. The board of directors shall not act on behalf of the association to amend the declaration, terminate the condominium, elect members of the board of directors or determine the qualifications, powers and duties or terms of office of board of directors members. Except as provided in subsection H of this section, the board of directors may fill vacancies in its membership for the unexpired portion of any term.

C. If any contract, decision or other action for compensation taken by or on behalf of the board of directors would benefit any member of the board of directors or any person who is a parent, grandparent, spouse, child or sibling of a member of the board of directors or a parent or spouse of any of those persons, that member of the board of directors shall declare a conflict of interest for that issue. The member shall declare the conflict in an open meeting of the board of directors before the board of directors discusses or takes action on that issue and that member may then vote on that issue. Any contract entered into in violation of this subsection is void and unenforceable.

D. Except as provided in the declaration, within thirty days after adoption of any proposed budget for the condominium, the board of directors shall provide a summary of the budget to all the unit owners. Unless the board of directors is expressly authorized in the declaration to adopt and amend budgets from time to time, any budget or amendment shall be ratified by the unit owners in accordance with the procedures set forth in this subsection. If ratification is required, the board of directors shall set a date for a meeting of the unit owners to consider ratification of the budget not fewer than fourteen or more than thirty days after mailing of the summary. Unless at that meeting a majority of all the unit owners or any larger vote specified in the declaration rejects the budget, the budget is ratified, whether or not a quorum is present. If the proposed budget is rejected, the periodic budget last ratified by the unit owners shall be continued until such time as the unit owners ratify a subsequent budget proposed by the board of directors.

E. The declaration may provide for a period of declarant control of the association, during which period a declarant or persons designated by the declarant may appoint and remove the officers and members of the board of directors. Regardless of the period provided in the declaration, a period of declarant control terminates not later than the earlier of:

1. Ninety days after conveyance of seventy-five percent of the units that may be created to unit owners other than a declarant.

2. Four years after all declarants have ceased to offer units for sale in the ordinary course of business.

F. A declarant may voluntarily surrender the right to appoint and remove officers and members of the board of directors before termination of the period prescribed in subsection E of this section, but in that event the declarant may require, for the duration of the period of declarant control, that specified actions of the association or board of directors, as described in a recorded instrument executed by the declarant, be approved by the declarant before they become effective.

G. Not later than the termination of any period of declarant control the unit owners shall elect a board of directors of at least three members, at least a majority of whom must be unit owners. The board of directors shall elect the officers. The board of directors members and officers shall take office on election.

H. Notwithstanding any provision of the declaration or bylaws to the contrary, all of the following apply to a meeting at which a member of the board of directors, other than a member appointed by the declarant, is proposed to be removed from the board of directors:

1. The unit owners who are eligible to vote at the time of the meeting may remove any member of the board of directors, other than a member appointed by the declarant, by a majority vote of those voting on the matter at a meeting of the unit owners.

2. The meeting of the unit owners shall be called pursuant to this section and action may be taken only if a quorum is present.

3. The unit owners may remove any member of the board of directors with or without cause, other than a member appointed by the declarant.

4. For purposes of calling for removal of a member of the board of directors, other than a member appointed by the declarant, the following apply:

(a) In an association with one thousand or fewer members unit owners, on receipt of a petition that calls for removal of a member of the board of directors and that is signed by the number of persons who are eligible to vote in the association at the time the person signs the petition equal to at least twenty-five percent of the votes in the association or by the number of persons who are eligible to vote in the association at the time the person signs the petition equal to at least one hundred votes in the association, whichever is less, the board of directors shall call and provide written notice of a special meeting of the association as prescribed by section 33-1248, subsection B C.

(b) Notwithstanding section 33-1248, subsection B C, in an association with more than one thousand members unit OWNERS, on receipt of a petition that calls for removal of a member of the board of directors and that is signed by the number of persons who are eligible to vote in the association at the time the person signs the petition equal to at least ten percent of the votes in the association or by the number of persons who are eligible to vote in the association at the time the person signs the petition equal to at least one thousand votes in the association, whichever is less, the board of directors shall call and provide written notice of a special meeting of the association. The board of directors shall provide written notice of a special meeting as prescribed by section 33-1248, subsection B C.

(d) If all of the requirements of this subsection for calling a special meeting are met and the board of directors fails to call, notice and hold a special meeting within thirty days after receipt of the petition, the members of the board of directors are deemed removed from office effective at midnight of the thirty-first day.

(e) For purposes of a special meeting called pursuant to this subsection, a quorum is present if the number of owners who are eligible to vote in the association at the time the person attends the meeting equal to at least twenty percent of the votes of the association or the number of persons who are eligible to vote in the association at the time the person attends the meeting equal to at least one thousand votes, whichever is less, is present at the meeting in person or as otherwise allowed by law.

(f) (e) If a civil action is filed regarding the removal of a board of directors member, the prevailing party in the civil action shall be awarded its reasonable attorney fees and costs.

(g) (f) The board of directors shall retain all documents and other records relating to the proposed removal of the member of the board of directors and any election or other action taken for that director's replacement for at least one year after the date of the special meeting and shall allow members to inspect those documents and records pursuant to section 33-1258.

(h) (g) A petition that calls for the removal of the same member of the board of directors shall not be submitted subject to a recall vote more than once during each term of office for that member.

5. On removal of at least one but fewer than a majority of the members of the board of directors at a special meeting of the membership called pursuant to this subsection, the vacancies shall be filled as provided in the condominium documents for the remainder of the original terms.

6. On removal of a majority of the members of the board of directors at a special meeting of the membership called pursuant to this subsection, or if the condominium documents do not provide a method for filling board of directors vacancies, the association shall hold an election for the replacement of the removed directors for the remainder of the directors' original terms at a separate meeting of the members of the association that is held not later than thirty days after the meeting at which the members of the board of directors were removed.

7. A member of the board of directors who is removed pursuant to this subsection is not eligible to serve on the board of directors again until after the expiration of the removed board of directors member's term of office, unless the condominium documents specifically provide for a longer period of ineligibility.

I. For an association in which board of directors members are elected from separately designated voting districts, a member of the board of directors, other than a member appointed by the declarant, may be removed only by a vote of the members from that voting district, and only the members from that voting district are eligible to vote on the matter or be counted for purposes of determining a quorum.

J. Unless any provision in the condominium documents requires an annual audit by a certified public accountant, the board of directors shall provide for an annual financial audit, review or compilation of the association. The audit, review or compilation shall be completed no not later than one hundred eighty days after the end of the association's fiscal year and shall be made available on request to the unit owners within thirty days after its completion.

K. This section does not apply to timeshare plans or associations, or the period of declarant control under timeshare instruments, that are subject to chapter 20 of this title. END_STATUTE

Sec. 3. Section 33-1248, Arizona Revised Statutes, is amended to read:

START_STATUTE33-1248. Open meetings; exceptions; notice; agenda; policy statement

A. After the period of declarant control and notwithstanding any provision in title 10 or the declaration, bylaws or other condominium documents to the contrary, all meetings of the unit owners' association and the board of directors, and any regularly scheduled common element management or financial advisory committee meetings, however denominated, are open to all members unit owners of the association or any person designated by a member unit owner in writing as the member's unit owner's representative. and All members unit owners or designated representatives so desiring shall be allowed to attend and speak at an appropriate time during the deliberations and proceedings. The board of directors, committee or unit owners may place reasonable time restrictions on those persons speaking during the meeting but shall allow a member unit owner or a member's unit owner's designated representative to speak once after the board body has discussed a specific agenda item but before the board body takes formal action on that item in addition to any other opportunities to speak. The board body shall provide for a reasonable number of persons to speak on each side of an issue. The following apply to meetings of the board of directors, committee or unit owners:

1. Persons attending may audiotape or videotape record those portions of the meetings of the board of directors, DESIGNATED committees and meetings of the members unit owners that are open. The board of directors of the association shall not require advance notice of the audiotaping or videotaping recording and may adopt reasonable rules governing the audiotaping or videotaping recording of open portions of the meetings of the board and the membership, but such rules shall not preclude such audiotaping or videotaping recording by those attending, unless the board audiotapes or videotapes the meeting and makes the unedited audiotapes or videotapes available to members on request without restrictions on their use as evidence in any dispute resolution process. If a board records a meeting that is open to the members, the board shall keep a copy of the recording for at least six months and make the unedited recording available to any member on request in compliance with section 33-1258, subsection A.

2. The ASSOCIATION may ESTABLISH rules that prevent distributing any RECORDING of an association meeting to anyone who is not a resident or unit owner of the CONDOMINIUM, except for the use of those recordings as evidence in any DISPUTE RESOLUTION process.

3. Any recording made by the BOARD of DIRECTORS, a committee appointed by the board of directors or any agents of the board of directors or such committee is not a record of the association and is not subject to a records REQUEST pursuant to section 33-1258.

B. Any portion of a board of directors or committee meeting may be closed only if that portion of the meeting is limited to consideration without action of one or more of the following:

1. Legal advice from an attorney for the board or the association of directors or the committee. On final resolution of any matter for which the board received legal advice or that concerned pending or contemplated litigation, the board may disclose information about that matter in an open meeting except for matters that are required to remain confidential by the terms of a settlement agreement or judgment.

2. Pending or contemplated litigation.

3. Personal, health or financial information about an individual member of the association unit owner, an individual employee of the association or an individual employee of a contractor for the association, including the review of any records of the association directly related to the personal, health or financial information about an individual member of the association, an individual employee of the association or an individual employee of a contractor for the association or containing that information. CITED OR CONTEMPLATED citations for VIOLATIONS OF CONDOMINIUM DOCUMENTS, ALONG WITH ANY SUBSEQUENT FINE OR PENALTY IMPOSED BY THE ASSOCIATION, ARE Not PERSONAL or FINANCIAL INFORMATION prescribed by this paragraph.

4. Matters relating to the job performance of, compensation of, health records of or specific complaints against an individual employee of the association or an individual employee of a contractor of the association who works under the direction of the association.

5. On the specific REQUEST of the unit owner, discussion and DIRECT DISPOSITION of a unit owner's appeal of any violation cited or penalty imposed by the association except on request of the affected unit owner that the meeting be held in an open session with the unit owner present.

6. THE REVIEW, NEGOTIATION AND CONSIDERATION OF PROPRIETARY BID PROPOSALS FROM POTENTIAL CONTRACTORS OR FINANCING OPTIONS FROM ANY FINANCIAL INSTITUTION BEFORE AWARDING A CONTRACT FOR THE DESIRED GOODS OR SERVICES. Any fINAL CONTRACT SHALL BE APPROVED IN OPEN SESSION.

B. C. Notwithstanding any provision in the condominium documents, all meetings of the unit owners' association and the board of directors shall be held in this state. A formal meeting of the unit owners' association shall be held at least once each year to elect board of directors members to fill expired terms or newly created POSITIONS and to CONDUCT any other business of the association. Special meetings of the unit owners' association may be called by the president, by a majority of the board of directors or by unit owners having at least twenty-five percent, or any lower percentage specified in the bylaws, of the votes in the association. Not fewer than ten or more than fifty days in advance of any meeting of the unit owners, the secretary association shall cause written notice to be hand delivered or sent prepaid by United States mail to the mailing address of record of each unit or to any other mailing to be sent to an email address if authorized and designated in writing by the unit owner. The notice of any meeting of the unit owners shall state the date, time, method and place of the meeting. The notice of any annual, regular or special meeting of the unit owners shall also state the purpose for which the meeting is called, including the general nature of any proposed amendment to the declaration or bylaws, any changes in assessments that require approval of the unit owners and any proposal to remove a director or officer. The secretary ASSOCIATION shall also provide an agenda for any meeting of the unit owners' association by hand delivery, mail, website posting, email or other electronic means or posting at a community center or other similar location. The failure of any unit owner to receive actual notice of a meeting of the unit owners or the meeting agenda does not affect the validity of any action taken at that meeting. wITH RESPECT TO ANY ANNUAL OR SPECIAL MEETING OF THE association, THE FOLLOWING APPLY:

1. the unit owners of the association present or participating at the meeting shall control and conduct the annual or special meeting of the association. The board of directors shall facilitate the meeting and provide for minutes to be taken.

2. the quorum for any annual or special meeting of the association shall be determined pursuant to section 33-1249.

3. if any annual or special meeting of the association is called to elect board of directors members and the meeting fails to satisfy the required quorum, the association shall reconvene that meeting within fourteen days until a quorum is satisfied and the meeting and election are held.

4. All decisions REGARDING THE conduct of the meeting SHALL be made by unit owner motionS and decided by voice vote or show of hands by those unit owners present at the meeting.

5. All ballot actions at the meeting SHALL be conducted pursuant to section 33-1250. aLL Unit owners present shall be provided the opportunity to speak AS PRESCRIBED BY subsection a of this section BEFORE the vote.

6. If A meeting is being conducted BY remote meeting technology, the association shall identify any eligible unit owner present in the virtual meeting who has not submitted an absentee ballot and wishes to vote on the issues BEING CONSIDERED BY the unit ownerS and provide those unit owners the opportunity to vote in person by roll call, show of hands or any other APPROPRIATE means OF VOTING. fOR ANY BALLOT ACTION TAKEN AT THE VIRTUAL MEETING, The association shall create a true written record of the votes cast WITHOUT NAMES ATTACHED.

7. For the annual meeting of the association, the board of directors shall provide a report on the status of the association's finances, the budget for the upcoming fiscal year and the significant achievements and challenges Of the association from the last year. The board of directors shall then open the floor for any questions or concerns raised by the unit owners who are present.

8. For any special meeting of the association that is called by a petition signed by the required number of unit owners, the agenda for that meeting SHALL be as specified in the petition.

C. Before entering into any closed portion of a meeting of the board of directors, or on notice of a meeting under subsection D of this section that will be closed, the board shall identify the paragraph under subsection A of this section that authorizes the board to close the meeting.

D. Notwithstanding any provision in the declaration, bylaws or other condominium documents, for meetings of the board of directors OR DESIGNATED COMMITTEES that are held after the termination of declarant control of the association, notice to unit owners of OPEN meetings of the board of directors OR DESIGNATED COMMITTEE and meeting agendas shall be given at least forty-eight hours in advance of the meeting by newsletter, conspicuous posting or any other reasonable means as determined by the board of directors. An affidavit of notice by an officer of the association is prima facie evidence that notice was given as prescribed by this section. Notice to unit owners of meetings of the board of directors is not required if emergency circumstances require action by the board before notice can be given. Any notice of a board Of directors oR DESIGNATED COMMITTEE meeting shall state the date, time, method and place of the meeting. The failure of any unit owner to receive actual notice of a meeting of the board of directors OR DESIGNATED COMMITTEE or a meeting agenda does not affect the validity of any action taken at that meeting.

E. Notwithstanding any provision in the declaration, bylaws or other condominium documents, for OPEN meetings of the board of directors, DESIGNATED COMMITTEES OR UNIT OWNERS that are held after the termination of declarant control of the association, all of the following apply:

1. The agenda shall be available in advance for all unit owners attending.

2. An emergency meeting of the board of directors may be called to discuss business or take action that cannot be delayed for the forty-eight hours required for notice. At any emergency meeting called by the board of directors, the board of directors may act only on emergency matters. The minutes of the emergency meeting shall state the reason necessitating the emergency meeting. The minutes of the emergency meeting shall be read and approved at the next regularly scheduled meeting of the board of directors. eMERGENCY MEETINGS MAY BE CONDUCTED IN ANY FORMAT DEtermined BY THE BOARD OF DIRECTORS.

3. A quorum of the board of directors, A DESIGNATED COMMITTEE OR THE UNIT OWNERS may meet IN PERSON OR by means of a telephone conference VOICE, VIDEO OR REMOTE MEETING TECHNOLOGY OR ANY COMBINATION OF THESE, if a speakerphone SPEAKER is available in the ACTUAL OR VIRTUAL meeting room that allows board Of directors oR COMMITTEE members and unit owners to hear all parties who are speaking during the meeting. iF REMOTE MEETING TECHNOLOGY IS UsED, ALL OF THE FOLLOWING APPLY:

(a) the association shall provide to all unit owners the access link to the meeting in the meeting notice that is posted on a website or emailed to each unit owner or shall provide the link on request and shall allow any unit owner or a unit owner's designated representative the opportunity to speak at the meeting, as prescribed by subsection a of this section.

(b) The association shall allow individual unit owners to control the unit owner's microphone but may ask that all microphones be muted until the participant requests to speak. Participants may speak on an issue when recognized by the presiding officer.

(c) The meeting host shall enable the individual recording capability of the virtual meeting program for participants, if available.

4. Any motion brought forward for action related to any closed session matters authorized in subsection B of this section is not required to be identified on the published agenda and shall be made in a manner that does not disclose any privileged or confidential information. Any unit owners present shall be provided an opportunity to speak to the issue AS PRESCRIBED BY subsection a of this section.

4. 5. Any quorum of the board of directors that meets informally to discuss association business, including workshops, shall comply with the open meeting and notice provisions of this section without regard to whether the board of directors votes or takes any action on any matter at that informal meeting. This paragraph does not apply to any casual discussion of association issues in social or personal gatherings, training sessions, condominium walkdowns, informal meetings of unit owners acting simply as unit owners or communications to establish meeting agendas even if a quorum of the board of directors participates.

6. The minutes of any open or emergency meeting of the board of directors at a minimum shall represent a true and accurate record of all actions taken by the board of directors and the vote tally on those actions.

7. Draft minutes of any open or emergency meeting of the board of directors, a designated committee or the unit owners shall be either posted or made available to any unit owner on request within ten business days after the day of the meeting.

F. It is the policy of this state as reflected in this section that after the period of declarant control, all formal meetings of a condominium, whether meetings of the unit owners' association or meetings of the board of directors of the association or designated committees, be conducted openly and that notices and agendas be provided in advance for those meetings that contain the information that is reasonably necessary to inform the unit owners of the matters to be discussed or decided and to ensure that unit owners have the ability to speak after discussion of agenda items, but before a vote of the board of directors, the designated committee or members the unit owners is taken. Toward this end, any person or entity that is charged with the interpretation of these provisions, including members of the board of directors and any community manager, shall take into account this declaration of policy and shall construe any provision of this section in favor of open meetings. ANY ACTION TAKEN BY THE BOARD OF DIRECTORS IN VIOLATION OF THIS POLICY IS vOID AS A MATTER OF LAW.

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

Sec. 4. Section 33-1249, Arizona Revised Statutes, is amended to read:

START_STATUTE33-1249. Quorums; applicability

A. Unless the bylaws provide otherwise condominium documents SPECIFY a lower percentage, a quorum is present throughout any meeting of the association if persons entitled to cast at least twenty-five per cent percent of the votes in the association are present in person or by proxy as otherwise allowed by law at the beginning of the meeting.

B. Unless the bylaws specify a larger percentage, a quorum is deemed present throughout any meeting of the board of directors or a committee if persons entitled to cast at least fifty per cent percent of the votes on that board or committee are present in person, remotely or by written proxy held by another board or committee member who is present at the beginning of the meeting. A vacancy on the board of directors or a committee does not alter quorum requirements.

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

Sec. 5. Section 33-1802, Arizona Revised Statutes, is amended to read:

START_STATUTE33-1802. Definitions

In this chapter and in the community documents, unless the context otherwise requires:

1. "Association":

(a) Means a nonprofit corporation or unincorporated association of owners that is created pursuant to a declaration to own and operate portions of a planned community and that has the power under the declaration to assess association members to pay the costs and expenses incurred in the performance of the association's obligations under the declaration.

(b) Does not include a nonprofit corporation or unincorporated association of owners that is created or incorporated before January 1, 1974 and that does not have authority to enforce covenants, conditions or restrictions related to the use, occupancy or appearance of the separately owned lots, parcels or units in a real estate development, unless the nonprofit corporation or unincorporated association of owners elects to be subject to this chapter pursuant to section 33-1801, subsection D.

2. "Common expense lien" means the lien for assessments, charges for late payment of assessments if authorized in the declaration, reasonable collection fees and costs that are incurred or applied by the association and reasonable attorney fees and costs that are incurred with respect to those assessments, if the attorney fees and costs are awarded by a court.

3. "Community documents" means the declaration, bylaws, articles of incorporation, if any, and rules, if any.

4. "Declaration" means any instruments, however denominated, that establish a planned community and any amendment to those instruments.

5. "Meeting" means any gathering or interaction, in person or through technological means of a quorum of the board of directors, a designated committee or the association members at which they propose, discuss, deliberate or take legal action on association business.

5. 6. "Member expenses":

(a) Means fees, charges, late charges and monetary penalties or interest.

(b) Does not include any amount that is included in a common expense lien.

6. 7. "Planned community":

(a) Means a real estate development that includes real estate owned and operated by or real estate on which an easement to maintain roadways or a covenant to maintain roadways is held by a nonprofit corporation or unincorporated association of owners, that is created for the purpose of managing, maintaining or improving the property and in which the declaration expressly states both that the owners of separately owned lots, parcels or units are mandatory members and that the owners are required to pay assessments to the association for these purposes.

(b) Does not include any of the following:

(i) A timeshare plan or a timeshare association that is governed by chapter 20 of this title.

(ii) A condominium that is governed by chapter 9 of this title.

(iii) A real estate development that is not managed or maintained by an association. END_STATUTE

Sec. 6. Section 33-1804, Arizona Revised Statutes, is amended to read:

START_STATUTE33-1804. Open meetings; exceptions; notice; agenda; policy statement

A. AFter the period of declarant CONTROL and notwithstanding any provision in title 10 or the declaration, bylaws or other community documents to the contrary, all meetings of the members' association and the board of directors, and any regularly scheduled DESIGN CONTROL or financial advisory committee meetings, however denominated, are open to all members of the association or any person designated by a member in writing as the member's representative and all members or designated representatives so desiring shall be allowed to attend and speak at an appropriate time during the deliberations and proceedings. The board, a committee or the members' association may place reasonable time restrictions on those persons speaking during the meeting but shall allow a member or member's designated representative to speak once after the board, committee or members' association has discussed a specific agenda item but before the board, committee or members' association takes formal action on that item in addition to any other opportunities to speak. The board, committee or members' association shall provide for a reasonable number of persons to speak on each side of an issue. The following apply to meetings of the board, a committee or the members' association:

1. Persons attending may audiotape or videotape record those portions of the meetings of the board of directors, designated committees and meetings of the members that are open. The board of directors of the association shall not require advance notice of the audiotaping or videotaping recording and may adopt reasonable rules governing the audiotaping and videotaping recording of open portions of the meetings of the board and the membership, but such rules shall not preclude such audiotaping or videotaping RECORDING by those attending, unless the board audiotapes or videotapes the meeting and makes the unedited audiotapes or videotapes available to members on request without restrictions on their use as evidence in any dispute resolution process. If a board records a meeting that is open to the members, the board shall keep a copy of the recording for at least six months and make the unedited recording available to any member on request in compliance with section 33-1805, subsection A.

2. The ASSOCIATION may ESTABLISH rules that prevent distributing any RECORDING of an association meeting to anyone who is not a resident or member of the association, except for the use of those recordings as evidence in any DISPUTE RESOLUTION process.

3. Any recording made by the BOARD of DIRECTORS, a committee appointed by the board or any agents of the board or such committee is not a record of the association and is not subject to a records REQUEST pursuant to section 33-1805.

B. Any portion of a board or committee meeting may be closed only if that closed portion of the meeting is limited to consideration without action of one or more of the following:

1. Legal advice from an attorney for the board of directors or the association a committee. On final resolution of any matter for which the board received legal advice or that concerned pending or contemplated litigation, the board may disclose information about that matter in an open meeting except for matters that are required to remain confidential by the terms of a settlement agreement or judgment.

2. Pending or contemplated litigation.

3. Personal, health or financial information about an individual member of the association, an individual employee of the association or an individual employee of a contractor for the association, including the REVIEW of records of the association directly related to the personal, health or financial information about an individual member of the association, an individual employee of the association or an individual employee of a contractor for the association or containing that information. CITED OR CONTEMPLATED citations for VIOLATIONS OF the community DOCUMENTS, ALONG WITH ANY SUBSEQUENT FINE OR PENALTY IMPOSED BY THE ASSOCIATION, ARE Not PERSONAL or FINANCIAL INFORMATION prescribed by this paragraph.

5. On the specific request of the member, discussion of a member's appeal of any violation cited or penalty imposed by the association except on request of the affected member that the meeting be held in an open session with the member present.

B. C. Notwithstanding any provision in the community documents, all meetings of the members' association and the board shall be held in this state. A formal meeting of the members' association shall be held at least once each year to elect board members to fill expired terms or for newly created POSITIONS and to conduct any other business of the association. Special meetings of the members' association may be called by the president, by a majority of the board of directors or by members having at least twenty-five percent, or any lower percentage specified in the bylaws, of the votes in the association. Not fewer than ten or more than fifty days in advance of any meeting of the members the secretary association shall cause written notice to be hand delivered or sent prepaid by United States mail to the mailing address of record for each lot, parcel or unit owner member or to any other mailing to be sent to an email address if authorized and designated in writing by a member. The notice shall state the date, time, method and place of the meeting. A notice of any annual, regular or special meeting of the members shall also state the purpose for which the meeting is called, including the general nature of any proposed amendment to the declaration or bylaws, changes in assessments that require approval of the members and any proposal to remove a director or an officer. The secretary association shall also provide an agenda for any meeting of the members' association by hand delivery, mail, website posting, email or other electronic means or posting at a community center or other similar location. The failure of any member to receive actual notice of a meeting of the members or the meeting agenda does not affect the validity of any action taken at that meeting. wITH RESPECT TO ANY ANNUAL OR SPECIAL MEETING OF THE association, THE FOLLOWING APPLY:

1. the members of the association present or participating at the meeting shall control and conduct of the annual or special meeting of the members. The board of directors shall facilitate the meeting and provide for minutes to be taken.

2. the quorum for any annual or special meeting of the members shall be determined pursuant to section 33-1804.01.

3. if any annual or special meeting of the unit owners is called to elect board members and the meeting fails to satisfy the required quorum, the association shall reconvene that meeting within fourteen days until a quorum is satisfied and the meeting and election are held.

4. All decisions REGARDING THE conduct of the meeting SHALL be made by member motionS and decided by voice vote or show of hands by those members present at the meeting.

5. All ballot actions at the meeting SHALL be conducted pursuant to section 33-1812. aLL members present shall be provided the opportunity to speak AS PRESCRIBED BY subsection a of this section BEFORE the vote.

6. If A meeting is being conducted BY remote meeting technology, the association shall identify any member present in the virtual meeting who has not submitted an absentee ballot and wishes to vote on the issues BEING CONSIDERED BY the members and provide those members the opportunity to vote in person by roll call, show of hands or any other APPROPRIATE means OF VOTING. fOR ANY BALLOT ACTION TAKEN AT THE VIRTUAL MEETING, The association shall create a true written record of the votes cast WITHOUT NAMES ATTACHED.

7. For the annual meeting of the members, the association's board of directors shall provide a report on the status of the association's finances, the budget for the upcoming fiscal year and the significant achievements and challenges Of the association from the last year. The board shall then open the floor for any questions or concerns raised by the members who are present.

8. For any special meeting of the members that is called by a petition signed by the required number of members, the agenda for that meeting SHALL be as specified in the petition.

D. Notwithstanding any provision in the declaration, bylaws or other community documents, for meetings of the board of directors or designated committees that are held after the termination of declarant control of the association, notice to members of open meetings of the board of directors or a designated committee and meeting agendas shall be given at least forty-eight hours in advance of the meeting by newsletter, conspicuous posting or any other reasonable means as determined by the board of directors. An affidavit of notice by an officer of the corporation is prima facie evidence that notice was given as prescribed by this section. Notice to members of meetings of the board of directors is not required if emergency circumstances require action by the board before notice can be given. Any notice of a board meeting or designated committee shall state the date, time, method and place of the meeting. The failure of any member to receive actual notice of a meeting of the board of directors or a designated committee or a meeting agenda does not affect the validity of any action taken at that meeting.

E. Notwithstanding any provision in the declaration, bylaws or other community documents, for open meetings of the board of directors, designated committees or members that are held after the termination of declarant control of the association, all of the following apply:

1. The quorum for any board of directors' and designated committees' meetings shall be determined pursuant to section 33-1804.01.

1. 2. The agenda shall be available in advance for all members attending.

2. 3. An emergency meeting of the board of directors may be called to discuss business or take action that cannot be delayed for the forty-eight hours required for notice. At any emergency meeting called by the board of directors, the board of directors may act only on emergency matters. The minutes of the emergency meeting shall state the reason necessitating the emergency meeting. The minutes of the emergency meeting shall be read and approved at the next regularly scheduled meeting of the board of directors. Emergency meetings may be conducted in any format determined by the board of directors.

3. 4. A quorum of the board of directors, a designated committee or the members may meet by means of a telephone conference voice, video or remote MEETING TECHNOLOGY or an combination of these, if a speakerphone speaker is available in the actual or virtual meeting room that allows board or committee members and association members to hear all parties who are speaking during the meeting. iF REMOTE MEETING TECHNOLOGY IS UsED, ALL OF THE FOLLOWING APPLY:

(a) the association shall provide to all members owners the access link to the meeting in the meeting notice that is posted on a website or emailed to each member or shall provide the link on request and shall allow any member or a member's designated representative the opportunity to speak at the meeting, as prescribed by subsection a of this section.

(b) The association shall allow individual members to control the member's microphone but may ask that all microphones be muted until the participant requests to speak. Participants may speak on an issue when recognized by the presiding officer.

(c) The meeting host shall enable the individual recording capability of the virtual meeting program for participants, if available.

5. Any motion brought forward for action related to any closed session matters authorized in subsection B of this section is not required to be identified on the published agenda and shall be made in a manner that does not disclose any privileged or confidential information. Any members present shall be provided an opportunity to speak to the issue AS PRESCRIBED BY subsection a of this section.

4. 6. Any quorum of the board of directors that meets informally to discuss association business, including workshops, shall comply with the open meeting and notice provisions of this section without regard to whether the board votes or takes any action on any matter at that informal meeting. This paragraph does not apply to any casual discussion of association issues in social or personal gatherings, training sessions, community walkdowns, informal meetings of members acting simply as members or communications to establish meeting agendas even if a quorum of the board participates.

7. The minutes of any open or emergency meeting of the board of directors at a minimum shall represent a true and accurate record of all actions taken by the board of directors and the vote tally on those actions.

8. Draft minutes of any open or emergency meeting of the board of directors, a designated committee or the members shall be either posted or made available to any member on request within ten business days after the day of the meeting.

F. It is the policy of this state as reflected in this section that after the period of declarant control, all formal meetings of a planned community, whether meetings of the members' association or meetings of the board of directors of the association or designated committees, be conducted openly and that notices and agendas be provided in advance for those meetings that contain the information that is reasonably necessary to inform the members of the matters to be discussed or decided and to ensure that members have the ability to speak after discussion of agenda items, but before a vote of the board of directors, the designated committee or members is taken. Toward this end, any person or entity that is charged with the interpretation of these provisions, including members of the board of directors and any community manager, shall take into account this declaration of policy and shall construe any provision of this section in favor of open meetings. ANY ACTION TAKEN BY THE BOARD OF DIRECTORS IN VIOLATION OF THIS POLICY IS VOID AS A MATTER OF LAW. END_STATUTE

Sec. 7. Title 33, chapter 16, article 1, Arizona Revised Statutes, is amended by adding section 33-1804.01, to read:

START_STATUTE33-1804.01. Quorums; applicability

A. Unless the community documents SPECIFY a lower percentage, a quorum is present throughout any meeting of the association if persons entitled to cast at least twenty-five percent of the votes in the association are present in person or as otherwise allowed by law at the beginning of the meeting.

B. Unless the bylaws specify a larger percentage, a quorum is deemed present throughout any meeting of the board of directors or a committee if persons entitled to cast at least fifty percent of the votes on that board or committee are present in person, remotely or by written proxy held by another board or committee member who is present at the beginning of the meeting. A vacancy on the board of directors or a committee does not alter quorum requirements.END_STATUTE

Sec. 8. Section 33-1813, Arizona Revised Statutes, is amended to read:

START_STATUTE33-1813. Removal of board member; special meeting

A. Notwithstanding any provision of the declaration or bylaws to the contrary, all of the following apply to a meeting at which a member of the board of directors, other than a member appointed by the declarant, is proposed to be removed from the board of directors:

1. The members of the association who are eligible to vote at the time of the meeting may remove any member of the board of directors, other than a member appointed by the declarant, by a majority vote of those voting on the matter at a meeting of the members.

2. The meeting of the members shall be called pursuant to this section and action may be taken only if a quorum is present.

3. The members of the association may remove any member of the board of directors with or without cause, other than a member appointed by the declarant.

4. For purposes of calling for removal of a member of the board of directors, other than a member appointed by the declarant, the following apply:

(a) In an association with one thousand or fewer members, on receipt of a petition that calls for removal of a member of the board of directors and that is signed by the number of persons who are eligible to vote in the association at the time the person signs the petition equal to at least twenty-five percent of the votes in the association or by the number of persons who are eligible to vote in the association at the time the person signs the petition equal to at least one hundred votes in the association, whichever is less, the board shall call and provide written notice of a special meeting of the association as prescribed by section 33-1804, subsection B C.

(b) Notwithstanding section 33-1804, subsection B C, in an association with more than one thousand members, on receipt of a petition that calls for removal of a member of the board of directors and that is signed by the number of persons who are eligible to vote in the association at the time the person signs the petition equal to at least ten percent of the votes in the association or by the number of persons who are eligible to vote in the association at the time the person signs the petition equal to at least one thousand votes in the association, whichever is less, the board shall call and provide written notice of a special meeting of the association. The board shall provide written notice of a special meeting as prescribed by section 33-1804, subsection B C.

(f) (e) If a civil action is filed regarding the removal of a board member, the prevailing party in the civil action shall be awarded its reasonable attorney fees and costs.

(h) (g) A petition that calls for the removal of the same member of the board of directors shall not be submitted subject to a recall vote more than once during each term of office for that member.

5. On removal of at least one but fewer than a majority of the members of the board of directors at a special meeting of the membership called pursuant to this subsection, the vacancies shall be filled as provided in the community documents for the remainder of the original terms.

6. On removal of a majority of the members of the board of directors at a special meeting of the membership called pursuant to this subsection, or if the community documents do not provide a method for filling board vacancies, the association shall hold an election for the replacement of the removed directors for the remainder of the directors' original terms at a separate meeting of the members of the association that is held not later than thirty days after the meeting at which the members of the board of directors were removed.

7. A member of the board of directors who is removed pursuant to this subsection is not eligible to serve on the board of directors again until after the expiration of the removed board member's term of office, unless the community documents specifically provide for a longer period of ineligibility.

B. For an association in which board members are elected from separately designated voting districts, a member of the board of directors, other than a member appointed by the declarant, may be removed only by a vote of the members from that voting district, and only the members from that voting district are eligible to vote on the matter or be counted for purposes of determining a quorum. END_STATUTE