2024 Legislative Updates: Proposed Arizona Bills And Amendments

With Arizona's 2024 Legislative session in full swing, we review twenty-four bills that include proposed amendments or additions to Arizona's Planned Communities Statutes and Condominium Act. At Carpenter, Hazlewood, Delgado & Bolen, we strive to provide the community association industry the most recent updates to the Arizona Legislative session and the bills that may affect community association operations.

Please note that the bills listed are proposals only. Proposed bills are not yet changes to the law, and are subject to change as the Legislative session progresses. They do not change either the Planned Community Statutes or Condominium Act unless otherwise indicated in the below summaries. We will notify you of any bills that are enacted into law and provide information on how such newly enacted bills may affect community association operations.

The following is an overview of each bill, links to each bill, and the status of each bill. Bills listed apply to both condominiums and planned communities (unless otherwise noted).

PROPOSED AZ BILLS AND AMENDMENTS

ACC Registration Requirement

• HB2541 – A proposal to amend A.R.S. § 10-130, § 33-1258, and § 33-1805 to require a community association to file with the Arizona Corporation Commission (ACC), and for the ACC to make accessible, all governing documents of a community association that is located in a county with a population of more than 800,000, and to keep such governing documents updated.
• • Last Status 1/22/2024 House Second Read

Amending CC&Rs to Remove Historical Race Based Restrictions

• HB2531 – A proposal to add a new Article 7 relating to real property conveyances and deeds to A.R.S. Title 33, Chapter 4. This new article will make it easier to remove unlawful or unenforceable restrictions from recorded documents (e.g., restrictions based on race and other protected classes), and includes a process for community associations to do this.
• • Last Status 2/5/2024 House Second Read

Assessments

20% Cap

• HB2083 – A proposal to amend A.R.S. § 33-1242 to cap annual assessment increases at 20% greater than the prior years assessment unless the members approve a greater increase. A proposal to amend A.R.S. § 33-1803 to adjust the language that currently caps assessment increases for planned communities at 20% greater than the prior years assessment, to allow for greater increases if provided for in the community documents, and only permit greater increases if approved by 67% of the members who are voting on such greater increase at a meeting called for such purpose.
• • Last Status 1/9/2024 House Second Read

Budget Ratification/Special Assessments in Planned Communities Count towards the 20% Cap

• HB2126 – A proposal to amend A.R.S. § 33-1202, § 33-1215, § 33-1243, and § 33-1245 to require member ratification of the community associations annual budget and to require the approval of at least a majority of the members for any special assessment or financing of more than one year in duration. This bill also proposes to amend A.R.S. § 33-1803 to clarify that an annual assessment increase and a mid-year assessment increase may not be greater than 20% of the prior years assessment unless the members approve a greater increase, and to require the approval of at least a majority of the members for any special assessment or financing of more than one year in duration.
• • Last Status 1/16/2024 House Second Read

Assessment Lien Foreclosure/Collection Related Attorneys Fees

• HB2663 A proposal to amend A.R.S. § 33-1256 and § 33-1807 to remove attorneys fees incurred in connection with collecting unpaid assessments from the statutory assessment lien, unless the attorneys fees are awarded by a court; to only allow for foreclosure of an assessment lien if the owner remains delinquent in paying common expense assessments for the threshold amount ($1,200) and the board has exhausted all reasonable efforts to communicate, negotiate, and collect through all other reasonably available methods of collection prior to filing a foreclosure action; to give courts broader discretion in awarding attorneys fees and costs in foreclosure actions; and to provide that an assessment lien is extinguished if a community association or its agents/attorneys fail to correct any error in the application of payments within 10 days after notice of same.
• • Last Status 2/14/2024 Hearing: House Regulatory Affairs

Construction Defects

• SB1641 A proposal to amend A.R.S. § 12-552 and § 33-1242 to reduce the statute of repose for construction defect actions from eight to four years with an additional two year extension if the defect is discovered in the fourth year and to require the board of directors of condominium associations to obtain the approval of two-thirds of the unit owners before filing, defending, or intervening in any construction defect action.
• • Last Status 2/7/2024 Senate Second Read

Flags/Flagpoles

Two Flagpoles

• SB1016 A proposal to amend A.R.S. § 33-1801 to allow community associations to limit the number of flagpoles on a members lot to two.
• • Last Status 2/22/2024 Senate Consent COW

Appeal to Heaven Flag

• SB1022 A proposal to amend A.R.S. § 33-1261 and § 33-1808 to require community associations to allow An Appeal to Heaven Flag.
• • Last Status 1/24/2024 Hearing: Senate Government

Meetings

Agendas/Appeal Hearings/Minutes/Recall of Directors

• HB2270 A proposal to amend A.R.S. § 33-1243, § 33-1248, § 33-1804, and § 33-1813 to clarify that a director cannot be subjected to a recall vote more than once a term; require any rulemaking, enforcement, design control, or financial advisory committee meetings to be open to members; make other open meeting requirements (recording, right to speak, etc.) applicable to these committee meetings; require matters concerning member violations, fines, and delinquencies to be discussed in open session unless the member requests an appeal to be heard in executive session (consideration of personal health or financial hardships impacting a members ability to pay or comply may still be heard in executive session); include bid proposals and negotiations with financial institutions or other entities related to acquisition of property to matters that may be discussed in executive session; provide an automatic reduction in quorum and reconvened meetings for purposes of the annual membership meeting; require the posting of the draft agenda for open board or committee meetings at least 48 hours in advance of the meeting; require the posting of draft meeting minutes within 10 business days after a meeting; apply open meeting requirements to any quorum of the board that communicates in the official capacity of the board of directors (i.e., email); require declarant controlled community associations to provide advance notice of board meetings, provide agendas, and otherwise comply with other board meeting requirements; and provide that any action in violation of the statutes policy statement on open meetings is null and void.
• • Last Status 1/23/2024 House Second Read

Ballots/Notice/Proxies

• SB1294 A proposal to amend A.R.S. § 33-1250 and § 33-1812 to expressly prohibit proxy voting in any form; allow ballots to be returned by mail, fax or email; allow use of an online voting system; limit ineligibility to vote to only those members who are delinquent in the payment of assessments only; require secret ballots for any vote to recall directors from the board; include the number and term of each board position to be filled, along with the names of all eligible candidates, to be listed on ballots for director elections; permit associations to establish eligibility criteria to be a candidate for the board; require ballots to indicate the value of each members vote if weighted; require ballots to include information on how they may be returned in order to be counted; require a separate voter identification document to accompany each ballot; expressly permit use of a written consent process or a secret written ballot without a meeting; and allow members to challenge actions within one year.
• • Last Status 1/31/2024 Senate Second Read

Ballots/Nominations from the Floor/Quorum

• HB2084 A proposal to amend A.R.S. § 33-1248 and § 33-1804 to allow community associations to provide notice of membership meetings to the members in person, by mail, or by email, to prohibit cumulative voting for directors, to prohibit director nominations from the floor of the annual membership meeting, to require the names of all eligible candidates nominated for the board to be included on the ballot, and to establish a quorum of 1/10 of the members for any membership meeting at which the election of directors occurs. This bill also proposes to amend A.R.S. § 33-1250 and § 33-1812 to expressly allow for voting by a written ballot process, to adjust the requirements for ballots, to also authorize a written consent process, and to establish a quorum of 1/10 of the members for the annual membership meeting.
• • Last Status 1/31/2024 Hearing: House Regulatory Affairs

Membership Meeting Agendas

• HB2662 A proposal to amend A.R.S. § 33-1248 and § 33-1804 to require the secretary of every community association to provide an agenda for any membership meeting in advance of such membership meeting by hand delivery, mail, website posting, email, other electronic means, or posting at a community center or other similar location.
• • Last Status 2/26/2024 Senate Second Read

Records

• HB2085 A proposal to amend A.R.S. § 33-1258 and § 33-1805 to establish specific requirements for a members request for records and to define what constitutes a community associations records.
• • Last Status 1/9/2024 House Second Read

Resale Disclosure Fee Exempted Transactions

• HB2119 A proposal to amend A.R.S. § 33-442 to prohibit charging resale disclosure fees for transactions between certain related parties for nominal or no consideration, e.g., spouses, parent-child, affiliated entities.
• • Last Status 2/22/2024 House Third Read

Tax Lien Redemption

• HB2098 A proposal to amend various statutes relating to property tax to increases the tax lien redemption period from 3 to 5 years; to provide that foreclosure of redemption rights cannot occur sooner than five years after a tax lien sale and not later than ten years after the sale; to prohibit the foreclosure of redemption rights unless the amount required to redeem exceeds the lesser of 5% of the fair market value (according to county assessors valuation) or $50,000.
• • Last Status 2/22/2024 House COW

Condominiums Only

Interior Modifications

• HB2141 A proposal to amend A.R.S. § 33-1221 limit a condominium associations right to prohibit interior modifications, even if they may disturb adjacent unit occupants so long as the unit owner installs reasonably necessary improved materials, accessories or other adjustments that minimize the potential disturbance.
• • Last Status 2/20/2024 Senate Second Read
  • Next Hearing 2/28/2024 Senate Government

Condominium Organization

• SB1293 A proposal to amend A.R.S. § 33-1241 to provide that a condominium association must be organized no later than the date the first unit in the condominium is initially conveyed.
• • Last Status 1/31/2024 Senate Second Read
• SB1718 A proposal to amend A.R.S. § 33-1241 to provide that a condominium association must be organized no later than the date the first unit in the condominium is initially conveyed. This is identical to SB1293.
• • Last Status 2/7/2024 Senate Second Read

Termination

• HB2861 A proposal to amend A.R.S. § 33-1228 and 1260 and to add A.R.S. § 33- 1262 to increase the amount allocated to owner-occupied units for relocation expenses in the event a condominium is terminated; to require compensation to owner-occupied units for their closing costs incurred in relation to a sale necessitated by termination; to provide that fair market value for units is determined by an independent appraisal, which must take into consideration the value of the common elements; to require, as part of the resale disclosure requirements, inclusion of a statement notifying the purchaser that the condominium may be terminated under the laws of the State of Arizona by vote of 80% or more of the unit owners and that the condominium is governed by recorded CC&Rs; and to require boards of directors to provide an annual notice to all unit owners stating that under the laws of the State of Arizona, the condominium may be terminated by vote of 80% or more of the unit owners, along with a statement that provides the total number of units in the condominium, the number of units owned by each unit owner, and the name of each unit owner.
• • Last Status 2/20/2024 House Caucus

Planned Communities Only

Powers of the Association

• HB2575 A proposal to add A.R.S. § 33-1820, Powers of the association, to expressly authorize certain power/authority, all subject to the provisions of the declaration.
• • Last Status 2/21/2024 House COW
• SB1610 A proposal to add A.R.S. § 33-1820, Powers of the association, to expressly authorize certain power/authority, all subject to the provisions of the declaration. This is identical to HB2575.
• • Last Status 2/5/2024 Introduced

Elimination of all Authority over Public Roadways

• HB2470 A proposal to amend A.R.S. § 33-1818 to eliminate all community association regulation of roadways for which the ownership has been dedicated to or is otherwise held by a governmental entity. The voting process to allow community associations to retain control and enforce rules/restrictions contained in the associations governing documents that govern public roadways and that was passed into law last year would be eliminated.
• • Last Status 2/6/2024 House Caucus

Termination of Declarant Control

• HB2698 A proposal to add A.R.S. § 33-1820 to provide that any declaration that provides for a period of declarant control must also provide for the termination of the declarant control, which must be no later than the day on which the second to last lot in the planned community is conveyed to a buyer.
• • Last Status 2/26/2024 House Third Read

Termination for Failing to Meet Annual Quorum

• SB1297 A proposal to add A.R.S. § 33-1820 to provide that the CC&Rs and other governing documents of a planned community shall be dissolved if a planned community fails to meet minimum quorum requirements for an annual membership meeting for three consecutive years.
• • Last Status 1/31/2024 Senate Second Read

UPCOMING HEARINGS

If you are interested in being a part of the legislative process, all legislative hearings are open to the public. The following is a list of upcoming hearings on the various bills:

• HB2141 Senate Government on 2/28 at 9am

Notes: SB refers to Senate Bill, and HB refers to House Bill. These represent the legislative chamber in which the bills were first introduced.

• Statutes that begin with 33-12__ are a part of Arizonas Condominium Act.
• Statutes that begin with 33-18__ are a part of Arizonas Planned Communities Statutes.
• Statutes that begin with 10-____ are a part of Arizonas Corporations Act.

Originally published February 26, 2024

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.