Assigned to FICO FOR COMMITTEE
ARIZONA STATE SENATE
Fifty-Sixth Legislature, Second Regular Session
FACT SHEET FOR H.B. 2648
motor vehicle manufacturers; TPT; exemption
(NOW: condominiums; planned communities; lien; assessment)
Purpose
Bifurcates association liens into common expense liens and liens for member expenses.
Specifies that a member expense lien may not be foreclosed and is effective only on conveyance
of any interest in the real property. Requires the association board of directors to exercise all
reasonable efforts to communicate with the unit owner, negotiate reasonable payment plans or
apply any relevant and applicable collections remedies before filing a foreclosure action.
Background
A condominium association and a planned community association have a lien on a unit for
any assessment levied against that unit from the time the assessment becomes due. An association's
lien may be foreclosed in the same manner as a mortgage but may be foreclosed only if the owner
has been delinquent in the payment of monies secured by the lien, excluding reasonable collection
fees, reasonable attorney fees and costs incurred with respect to those assessments, for a period of
one year or in the amount of $1,200 or more, whichever occurs first. Proceedings to enforce an
association's lien must begin within six years after the full amount of the assessment becomes due
(A.R.S. § 33-1256).
A condominium association and a planned community association may: 1) impose and
receive any payments, fees or charges for the use, rental or operation of the common elements and
for services provided to unit owners; 2) impose charges for late payment of assessments after the
association has provided notice that the assessment is overdue or 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; and 3) impose
reasonable charges for the preparation and recordation of amendments to the declaration or
statements of unpaid assessments (A.R.S. § 33-1242).
There is no anticipated fiscal impact to the state General Fund associated with this
legislation.
Provisions
1. Requires an association board of directors to exercise all reasonable efforts to communicate
with the unit owner, negotiate reasonable payment plans or apply any relevant and applicable
collection remedies before filing a foreclosure action.
2. Defines member expenses as fees, charges, late charges and monetary penalties or interest
imposed by an HOA, excluding any amount of a common expense lien. FACT SHEET
H.B. 2648
Page 2
3. Specifies that an association has a lien for member expenses after the entry of a judgment in a
civil suit for the expenses.
4. Specifies that a lien for member expenses may not be foreclosed and is effective only on
conveyance of any interest in the real property.
5. Defines common expense lien as 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.
6. Clarifies that a common expense lien may be foreclosed only if the owner has been delinquent
in the payment of any assessments secured by the common expense lien.
7. Defines assessment as the share of monies required for the payment of common expenses and
that the association assesses periodically against each unit.
8. Specifies that a common expense lien is extinguished unless proceedings to enforce the lien
are instituted within six years after the assessments become due.
9. Prohibits an association from transferring ownership or control of debt for common expense
liens or member expenses.
10. Allows, rather than requires, a judgment or decree in a foreclosure action to include costs and
reasonable attorney fees for the prevailing party.
11. Exempts only a common expense lien from the statutory requirements of the homestead
exemption.
12. Specifies that a failure to provide an escrow agent with a statement that sets forth the amount
of any unpaid common expense liens or member expenses extinguishes any common expense
lien then due.
13. Adds, to the items required to be paid by any payment received on a unit owner's account, due
but not delinquent assessments and costs incurred or applied by the association.
14. Makes technical and conforming changes.
15. Becomes effective on the general effective date.
House Action
WM 2/8/24 W/D
COM 2/13/24 DPA/SE 9-0-1-0
3
rd
Read 2/26/24 56-0-3-0-1
Prepared by Senate Research
March 7, 2024
MG/cs