SB1440 - 572R

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

Section 1. Section 33-1242, Arizona Revised Statutes, is amended to read:

START_STATUTE33-1242. Powers of unit owners' association; notice to unit owner of violation

A. Subject to the provisions of the declaration, the association may:

1. Adopt and amend bylaws and rules.

2. Adopt and amend budgets for revenues, expenditures and reserves and collect assessments for common expenses from unit owners.

3. Hire and discharge managing agents and other employees, agents and independent contractors.

4. Institute, defend or intervene in litigation or administrative proceedings in its own name on behalf of itself or two or more unit owners on matters affecting the condominium.

5. Make contracts and incur liabilities.

6. Regulate the use, maintenance, repair, replacement and modification of common elements.

7. Cause additional improvements to be made as a part of the common elements.

8. Acquire, hold, encumber and convey in its own name any right, title or interest to real or personal property, except that common elements may be conveyed or subjected to a security interest only pursuant to section 33-1252.

9. Grant easements, leases, licenses and concessions through or over the common elements.

10. Impose and receive any payments, fees or charges for the use, rental or operation of the common elements other than limited common elements described in section 33-1212, paragraphs 2 and 4 and for services provided to unit owners.

11. Impose charges for late payment of assessments after the association has provided notice that the assessment is overdue or provided notice that the assessment is considered overdue after a certain date and, after notice and an opportunity to be heard, impose reasonable monetary penalties on unit owners for violations of the declaration, bylaws and rules of the association.

12. Impose reasonable charges for the preparation and recordation of amendments to the declaration or statements of unpaid assessments.

13. Provide for the indemnification of its officers and executive board of directors and maintain directors' and officers' liability insurance.

14. Assign its right to future income, including the right to receive common expense assessments, but only to the extent the declaration expressly provides.

15. Be a member of a master association or other entity owning, maintaining or governing in any respect any portion of the common elements or other property benefitting or related to the condominium or the unit owners in any respect.

16. Exercise any other powers conferred by the declaration or bylaws.

17. Exercise all other powers that may be exercised in this state by legal entities of the same type as the association.

18. Exercise any other powers necessary and proper for the governance and operation of the association.

B. A unit owner who receives a written notice that the condition of the property owned by the unit owner is in violation of a requirement of the condominium documents without regard to whether a monetary penalty is imposed by the notice may provide the association with a written response by sending the response by certified mail either take the actions necessary to comply with the condominium documents, eliminate any identified imminent personal safety threat or request to appeal the notice of violation within twenty-one ten calendar days after the date of receiving the notice. If the notice of violation was sent by the united states postal service, the notice of violation is considered received two calendar days after the notice of violation is postmarked. On expiration of the opportunity to appeal, if the notice of violation imposed penalties and was not cured or appealed, the association may take the authorized action necessary to enforce the condominium documents until cured. The response request to appeal the alleged violation shall be sent to the address, email address or online portal or by any other available means identified in the notice of violation. The unit owner may request that the hearing be held in either an open or closed session of the board of directors pursuant to section 33-1248.

C. If the alleged violation is appealed, the association shall:

1. Schedule a hearing before the board of directors.

2. at least forty-eight hours before the hearing, Provide directly to the unit owner by email, text or other documented means notice of the location, date and time of the hearing.

3. Provide the unit owner or the unit owner's designated representative with a reasonable allotment of time necessary to present the appeal.

D. The board of directors may apply discretion in its enforcement power but shall treat all unit owners fairly, reasonably and consistently in the enforcement actions. If the unit owner or the unit owner's designated representative fails to appear at the scheduled hearing, the opportunity to be heard is satisfied and the association may act to enforce the action until the violation is cured. If a violation appeal is rejected by the board of directors, the association may act to enforce the action until the violation is cured.

C. E. Within ten business days after receipt of the certified mail containing the response from the unit owner, the association shall respond to the unit owner with a written explanation regarding the notice that shall provide at least the following information unless previously provided in The notice of violation shall identify the following information:

1. The provision of the condominium documents that has allegedly been violated.

2. The date of the violation or the date the violation was observed.

3. The first and last name of the person or persons who observed the violation.

3. The actions necessary to correct the alleged violation, the provisions of the published enforcement policy and the monetary penalty schedule that may be applied.

4. The process the unit owner must follow to contest appeal the notice pursuant to subsections b and C of this section, including the hearing options.

D. Unless the information required in subsection C, paragraph 4 of this section is provided in the notice of violation, the association shall not proceed with any action to enforce the condominium documents, including the collection of attorney fees, before or during the time prescribed by subsection C of this section regarding the exchange of information between the association and the unit owner and shall give the unit owner written notice of the unit owner's option to petition for an administrative hearing on the matter in the state real estate department pursuant to section 32-2199.01. At any time before or after completion of the exchange of information pursuant to this section, the unit owner may petition for a hearing pursuant to section 32-2199.01 if the dispute is within the jurisdiction of the state real estate department as prescribed in section 32-2199.01.

F. After notice and an opportunity to be heard pursuant to this section, the board of directors may impose reasonable monetary or other penalties based on the published enforcement policy and schedule of monetary penalties commensurate with the significance of the violation until the violation is cured. Notwithstanding any provision of the condominium documents to the contrary, the association or the association's agent may not impose a charge or monetary or other penalty that does any of the following:

1. Restricts the right to vote, sign a petition or run for office other than for failure to pay common expense assessments.

2. based on any unrelated violation, restricts access to the community security gate, residential buildings, parking structures, utilities or other vital services.

3. except for imminent personal safety issues, repeats the monetary penalty more frequently than every fifteen days or escalates the penalty more frequently than every two months for the unit owner failing to cure the violation.

4. Applies interest to any unpaid monetary penalty that compounds at an annual rate greater than twenty percent.

5. except for costs of billing statements, applies any collection costs on monetary penalties other than as authorized under section 33-1256.

6. Applies a fee to the unit owner for the execution of the due process of this section, including any notice of violation.

G. The association's failure to comply with this section invalidates and makes unenforceable any penalty that is imposed on a unit owner for a violation of a requirement in the condominium documents.

H. The association shall provide notice in the published enforcement policy that the unit owner has the right to file a petition with the state real estate department for an administrative hearing pursuant to section 32-2199.01 on any alleged violation of this section, this chapter or the condominium documents.END_STATUTE

Sec. 2. Section 33-1803, Arizona Revised Statutes, is amended to read:

START_STATUTE33-1803. Assessment limitation; penalties; notice to member of violation

A. Unless limitations in the community documents would result in a lower limit for the assessment, the association shall not impose a regular assessment that is more than twenty percent greater than the immediately preceding fiscal year's assessment without the approval of the majority of the members of the association. Unless reserved to the members of the association, the board of directors may impose reasonable charges for the late payment of assessments. A payment by a member is deemed late if it is unpaid fifteen or more days after its due date, unless the community documents provide for a longer period. Charges for the late payment of assessments are limited to the greater of fifteen dollars $15 or ten percent of the amount of the unpaid assessment and may be imposed only after the association has provided notice that the assessment is overdue or provided notice that the assessment is considered overdue after a certain date. Any monies paid by the member for an unpaid assessment shall be applied first to the principal amount unpaid and then to the interest accrued pursuant to section 33-1807.

B. After notice and an opportunity to be heard pursuant to this section, the board of directors may impose reasonable monetary penalties on members for violations of the declaration, bylaws and rules of the association or other penalties based on the published enforcement policy and schedule of monetary penalties commensurate with the significance of the violation until the violation is cured. Notwithstanding any provision in the community documents, the board of directors or the board's agent shall not impose a charge for a late payment of a penalty that exceeds the greater of fifteen dollars or ten percent of the amount of the unpaid penalty. A payment is deemed late if it is unpaid fifteen or more days after its due date, unless the declaration, bylaws or rules of the association provide for a longer period. Any monies paid by a member for an unpaid penalty shall be applied first to the principal amount unpaid and then to the interest accrued. Notice pursuant to this subsection shall include information pertaining to the manner in which the penalty shall be enforced. or monetary or other penalty that does any of the following:

1. restricts the right to vote, sign a petition or run for office other than for failure to pay common expense assessments.

2. based on any unrelated violation, restricts access to the community security gate, utilities or other vital services.

4. applies interest to any monetary penalty that compounds at an annual rate greater than twenty percent.

5. except for costs of billing statements, applies any collection costs on monetary penalties other than as authorized under section 33-1807.

6. Applies a fee to the member for the execution of due process pursuant to this section, including any notice of violation.

C. A member who receives a written notice that the condition of the property owned by the member is in violation of the community documents without regard to whether a monetary penalty is imposed by the notice may provide the association with a written response by sending the response by certified mail either take the actions necessary to comply with the community documents, eliminate any identified imminent personal safety threat or request to appeal the notice of violation within twenty-one ten calendar days after the date of receiving the notice. If the notice of violation was sent by the United States postal service, the notice of violation is deemed received two calendar days after the notice of violation was postmarked. The response request appeal the alleged violation shall be sent to the address, email address or online portal or by any other available means identified in the notice of violation.

D. If the alleged violation is appealed, the association shall:

1. Schedule a hearing before the board of directors.

2. at least forty-eight hours before the hearing, Provide directly to the member by email, text or other documented means notice of the location, date and time of the hearing.

3. Provide the member or the member's designated representative with a reasonable allotment of time necessary to present the appeal.

E. The board of directors may apply discretion in its enforcement power but shall treat all members fairly, reasonably and consistently in the enforcement actions. If the member or the member's designated representative fails to appear at the scheduled hearing, the opportunity to be heard is satisfied and the association may act to enforce the action until the violation is cured. If a violation appeal is rejected by the board of directors, the association may act to enforce the action until the violation is cured.

D. F. Within ten business days after receipt of the certified mail containing the response from the member, the association shall respond to the member with a written explanation regarding the notice that shall provide at least the following information unless previously provided in the notice of violation:

1. The provision of the community documents that has allegedly been violated.

2. The date of the violation or the date the violation was observed.

3. The first and last name of the person or persons who observed the violation.

3. THe actions necessary to correct the alleged violation, the provisions of the published enforcement policy and the penalty schedule that may be applied.

4. The process the member must follow to contest appeal the notice described in subsections C and D of this section, including hearing options.

E. Unless the information required in subsection D, paragraph 4 of this section is provided in the notice of violation, the association shall not proceed with any action to enforce the community documents, including the collection of attorney fees, before or during the time prescribed by subsection D of this section regarding the exchange of information between the association and the member and shall give the member written notice of the member's option to petition for an administrative hearing on the matter in the state real estate department pursuant to section 32-2199.01. At any time before or after completion of the exchange of information pursuant to this section, the member may petition for a hearing pursuant to section 32-2199.01 if the dispute is within the jurisdiction of the state real estate department as prescribed in section 32-2199.01.

G. The association's failure to comply with this section invalidates and makes unenforceable any penalty that is imposed on a member for a VIOLATION of community documents.

H. The association shall provide notice in the published enforcement policy that the member has the right to file a petition with the state real estate department for an administrative hearing pursuant to section 32-2199.01 on any alleged violation of this section, this chapter or the community documents. END_STATUTE