Arizona 2025 Regular Session

Arizona House Bill HB2280 Compare Versions

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11 REFERENCE TITLE: homeowners' associations; assessments; liens; payments State of Arizona House of Representatives Fifty-seventh Legislature First Regular Session 2025 HB 2280 Introduced by Representative Blackman AN ACT amending sections 33-1202, 33-1256, 33-1802 and 33-1807, Arizona Revised Statutes; relating to condominiums and planned communities. (TEXT OF BILL BEGINS ON NEXT PAGE)
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99 REFERENCE TITLE: homeowners' associations; assessments; liens; payments
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6868 amending sections 33-1202, 33-1256, 33-1802 and 33-1807, Arizona Revised Statutes; relating to condominiums and planned communities.
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7878 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 a unit pursuant to the declaration or this chapter. 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. 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. (c) Subdivide units, convert units into common elements or convert common elements into units. (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. "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. "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. "Rules" means the provisions, if any, adopted pursuant to the declaration or bylaws governing maintenance and use of the units and common elements. 23. "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. (c) Maintain sales offices, management offices, signs advertising the condominium, and models. (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. "Unit" means a portion of the condominium designated for separate ownership or occupancy. 25. "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. "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 33-1256, Arizona Revised Statutes, is amended to read: START_STATUTE33-1256. Common expense liens; priority; mechanics' and materialmen's liens; notice; applicability A. The association has a common expense lien on a unit for any assessment levied against that unit from the time the assessment becomes due. The association's common expense lien may be foreclosed in the same manner as a mortgage on real estate but may be foreclosed only if the unit owner has been and remains delinquent in the payment of assessments, for a period of one year or in the amount of $1,200 or more, whichever occurs first, as determined on the date the action is filed. The association board of directors shall exercise reasonable efforts to communicate with the unit owner and offer a reasonable payment plan before filing a foreclosure action. If an assessment is payable in installments, the full amount of the assessment is a common expense lien from the time the first installment of the assessment becomes due. B. Notwithstanding any provision in the condominium documents, unit owner expenses are not enforceable as common expense liens under this section. The association has a judgment lien for unit owner expenses after the entry of a judgment in a civil suit for those unit owner expenses from a court of competent jurisdiction and the recording of that judgment in the office of the county recorder as otherwise provided by law. The association's judgment lien for unit owner expenses may not be foreclosed and is effective only on conveyance of any interest in the real property. C. A common expense lien under this section is prior to all other liens, interests and encumbrances on a unit except: 1. Liens and encumbrances recorded before the recordation of the declaration. 2. A recorded first mortgage on the unit, a seller's interest in a first contract for sale pursuant to chapter 6, article 3 of this title on the unit recorded before the common expense lien arising pursuant to subsection A of this section or a recorded first deed of trust on the unit. 3. Liens for real estate taxes and other governmental assessments or charges against the unit. D. Subsection C of this section does not affect the priority of mechanics' or materialmen's liens. The common expense lien under this section is not subject to chapter 8 of this title. E. Unless the declaration otherwise provides, if two or more associations have common expense liens created at any time on the same real estate, those common expense liens have equal priority. F. Recording the declaration constitutes record notice and perfection of the common expense lien. Further recordation of any claim of common expense lien under this section is not required. G. A common expense lien is extinguished unless proceedings to enforce the common expense lien are instituted within six years after the full amount of the assessments becomes due. H. This section does not prohibit: 1. Actions to recover sums for which subsection A or B of this section creates a lien. 2. An association from taking a deed in lieu of foreclosure. I. A judgment or decree in any action brought under this section may include costs and reasonable attorney fees for the prevailing party. J. The association on written request shall furnish to a lienholder, escrow agent, unit owner or person designated by a unit owner a statement setting forth the amount of any unpaid liens prescribed by subsection A or B of this section against the unit. The statement shall be furnished within ten days after receipt of the request. The statement is binding on the association if the statement is requested by an escrow agency that is licensed pursuant to title 6, chapter 7. Failure to provide the statement to the escrow agent within the time provided for in this subsection extinguishes any lien for any unpaid assessment then due. K. Notwithstanding any provision in the condominium documents or in any contract between the association and a management company or any other agent of the association, including any agreement or contract with any attorney, unless the unit owner directs otherwise in an instrument signed by the unit owner, all payments received on a unit owner's account shall be applied first to any unpaid assessments, due but not delinquent assessments, unpaid charges for late payment of those assessments if authorized in the declaration, unpaid reasonable collection fees and costs incurred or applied by the association and unpaid attorney fees and costs incurred with respect to those assessments if awarded by a court, in that order, with any remaining amounts applied next to other unpaid fees, charges and monetary penalties or interest and late charges on any of those amounts. L. For a delinquent account for unpaid common expense liens, the association shall provide the following written notice to the unit owner at the unit owner's address as provided to the association at least thirty days before authorizing an attorney, or a collection agency that is not acting as the association's managing agent, to begin collection activity on behalf of the association: Your account is delinquent. If you do not bring your account current or make arrangements that are approved by the association to bring your account current within thirty days after the date of this notice, your account will be turned over for further collection proceedings. Such collection proceedings could include bringing a foreclosure action against your property. The notice shall be in boldfaced bold-faced type or all capital letters and shall include the contact information for the person that the unit owner may contact to discuss payment. The notice shall be sent by certified mail, return receipt requested, and may be included within other correspondence sent to the unit owner regarding the unit owner's delinquent account. M. Except for condominiums that have fewer than fifty units and that do not contract with a third party to perform management services on behalf of the association, the association shall provide a statement of account in lieu of a periodic payment book to the unit owner with the same frequency that assessments are provided for in the declaration. The statement of account shall include the current account balance due and the immediately preceding ledger history. If the association offers the statement of account by electronic means, a unit owner may opt to receive the statement electronically. The association may stop providing any further statements of account to a unit owner if collection activity begins by an attorney, or a collection agency that is not acting as the association's managing agent, regarding that unit owner's unpaid account. After collection activity begins, a unit owner may request statements of account by written request to the attorney or collection agency. Any request by a unit owner for a statement of account after collection activity begins by an attorney or a collection agency that is not acting as the association's managing agent must be fulfilled by the attorney or the collection agency responsible for the collection. The statement of account provided by the attorney or collection agency responsible for the collection shall include all amounts claimed to be owing to resolve the delinquency through the date set forth in the statement, including attorney fees and costs, regardless of whether such amounts have been reduced to judgment. N. An agent for the association may collect on behalf of the association directly from a unit owner the assessments and other amounts owed by cash or check, by mailed or hand-delivered bank drafts, checks, cashier's checks or money orders, by credit, charge or debit card or by other electronic means. For any form of payment other than for cash or for mailed or hand-delivered bank drafts, checks, cashier's checks or money orders, the agent may charge a convenience fee to the unit owner that is approximately the amount charged to the agent by a third-party service provider. The association may not transfer ownership or control of debt for common expense liens or unit owner expenses. O. This section does not apply to timeshare plans or associations that are subject to chapter 20 of this title. END_STATUTE Sec. 3. 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. "Assessment" means the share of monies that is required for the payment of common expenses and that the association assesses against a property pursuant to the declaration or this chapter. 1. 2. "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. 3. "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. 3. 4. "Community documents" means the declaration, bylaws, articles of incorporation, if any, and rules, if any. 4. 5. "Declaration" means any instruments, however denominated, that establish a planned community and any amendment to those instruments. 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. 4. Section 33-1807, Arizona Revised Statutes, is amended to read: START_STATUTE33-1807. Common expense liens; priority; mechanics' and materialmen's liens; notice A. The association has a common expense lien on a property for any assessment levied against that property from the time the assessment becomes due. The association's common expense lien may be foreclosed in the same manner as a mortgage on real estate but may be foreclosed only if the owner has been and remains delinquent in the payment of assessments, for a period of one year or in the amount of $1,200 or more, whichever occurs first, as determined on the date the action is filed. The association board of directors shall exercise reasonable efforts to communicate with the member and offer a reasonable payment plan before filing a foreclosure action. If an assessment is payable in installments, the full amount of the assessment is a common expense lien from the time the first installment of the assessment becomes due. B. Notwithstanding any provision in the community documents, member expenses are not enforceable as common expense liens under this subsection section. The association has a judgment lien for member expenses after the entry of a judgment in a civil suit for those member expenses from a court of competent jurisdiction and the recording of that judgment in the office of the county recorder as otherwise provided by law. The association's judgment lien for member expenses may not be foreclosed and is effective only on conveyance of any interest in the real property. C. A common expense lien under this section is prior to all other liens, interests and encumbrances on a property except: 1. Liens and encumbrances recorded before the recordation of the declaration. 2. A recorded first mortgage on the property, a seller's interest in a first contract for sale pursuant to chapter 6, article 3 of this title on the property recorded before the common EXPENSE lien arising pursuant to subsection A of this section or a recorded first deed of trust on the property. 3. Liens for real estate taxes and other governmental assessments or charges against the property. D. Subsection C of this section does not affect the priority of mechanics' or materialmen's liens. The common expense lien under this section is not subject to chapter 8 of this title. E. Unless the declaration otherwise provides, if two or more associations have common expense liens created at any time on the same real estate those common expense liens have equal priority. F. Recording the declaration constitutes record notice and perfection of the common expense lien. Further recordation of any claim of common expense lien under this section is not required. G. A common expense lien is extinguished unless proceedings to enforce the common expense lien are instituted within six years after the full amount of the assessment becomes due. H. This section does not prohibit: 1. Actions to recover amounts for which subsection A or B of this section creates a lien. 2. An association from taking a deed in lieu of foreclosure. I. A judgment or decree in any action brought under this section may include costs and reasonable attorney fees for the prevailing party. J. On written request, the association shall furnish to a lienholder, escrow agent, member or person designated by a member a statement setting forth the amount of any unpaid liens prescribed by subsection A or B of this section against the property. The association shall furnish the statement within ten days after receipt of the request. The statement is binding on the association if the statement is requested by an escrow agency that is licensed pursuant to title 6, chapter 7. Failure to provide the statement to the escrow agent within the time provided for in this subsection extinguishes any lien for any unpaid assessment then due. K. Notwithstanding any provision in the community documents or in any contract between the association and a management company or any other agent of the association, including any agreement or contract with any attorney, unless the member directs otherwise in an INSTRUMENT signed by the member, all payments received on a member's account shall be applied first to any unpaid assessments, due but not delinquent assessments, unpaid charges for late payment of those assessments if authorized in the declaration, unpaid reasonable collection fees and costs incurred or applied by the association, and unpaid attorney fees and costs incurred with respect to those assessments if awarded by a court, in that order, with any remaining amounts applied next to other unpaid fees, charges and monetary penalties or interest and late charges on any of those amounts. L. For a delinquent account for unpaid common expense liens, the association shall provide the following written notice to the member at the member's address as provided to the association at least thirty days before authorizing an attorney, or a collection agency that is not acting as the association's managing agent, to begin collection activity on behalf of the association: Your account is delinquent. If you do not bring your account current or make arrangements that are approved by the association to bring your account current within thirty days after the date of this notice, your account will be turned over for further collection proceedings. Such collection proceedings could include bringing a foreclosure action against your property. The notice shall be in boldfaced bold-faced type or all capital letters and shall include the contact information for the person that the member may contact to discuss payment. The notice shall be sent by certified mail, return receipt requested, and may be included within other correspondence sent to the member regarding the member's delinquent account. M. Except for planned communities that have fewer than fifty lots and that do not contract with a third party to perform management services on behalf of the association, the association shall provide a statement of account in lieu of a periodic payment book to the member with the same frequency that assessments are provided for in the declaration. The statement of account shall include the current account balance due and the immediately preceding ledger history. If the association offers the statement of account by electronic means, a member may opt to receive the statement electronically. The association may stop providing any further statements of account to a member if collection activity begins by an attorney, or a collection agency that is not acting as the association's managing agent, regarding that member's unpaid account. After collection activity begins, a member may request statements of account by written request to the attorney or collection agency. Any request by a member for a statement of account after collection activity begins by an attorney or a collection agency that is not acting as the association's managing agent must be fulfilled by the attorney or the collection agency responsible for the collection. The statement of account provided by the attorney or collection agency responsible for the collection shall include all amounts claimed to be owing to resolve the delinquency through the date set forth in the statement, including attorney fees and costs, regardless of whether such amounts have been reduced to judgment. N. An agent for the association may collect on behalf of the association directly from a member the assessments and other amounts owed by cash or check, by mailed or hand-delivered bank drafts, checks, cashier's checks or money orders, by credit, charge or debit card or by other electronic means. For any form of payment other than for cash or for mailed or hand-delivered bank drafts, checks, cashier's checks or money orders, the agent may charge a convenience fee to the member that is approximately the amount charged to the agent by a third-party service provider. The association may not transfer ownership or control of debt for common expense liens or member expenses. END_STATUTE
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8080 Be it enacted by the Legislature of the State of Arizona:
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8282 Section 1. Section 33-1202, Arizona Revised Statutes, is amended to read:
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8484 START_STATUTE33-1202. Definitions
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8686 In the condominium documents, unless specifically provided otherwise or the context otherwise requires, and in this chapter:
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8888 1. "Affiliate of a declarant" means any person who controls, is controlled by or is under common control with a declarant.
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9090 2. "Allocated interests" means the undivided interests in the common elements, the common expense liability and votes in the association allocated to each unit.
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9292 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.
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9494 4. "Assessment" means the share of monies that is required for the payment of common expenses and that the association assesses periodically against each a unit pursuant to the declaration or this chapter.
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9696 5. "Association" or "unit owners' association" means the unit owners' association organized under section 33-1241.
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9898 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.
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100100 7. "Bylaws" means the bylaws required by section 33-1246.
101101
102102 8. "Common elements" means all portions of a condominium other than the units.
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104104 9. "Common expense liability" means the liability for common expenses allocated to each unit pursuant to section 33-1217.
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106106 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.
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108108 11. "Common expenses" means expenditures made by or financial liabilities of the association, together with any allocations to reserves.
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110110 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.
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112112 13. "Condominium documents" means the declaration, bylaws, articles of incorporation, if any, and rules, if any.
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114114 14. "Declarant" means any person or group of persons who reserves, is granted or succeeds to any special declarant right.
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116116 15. "Declaration" means any instruments, however denominated, that create a condominium and any amendments to those instruments.
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118118 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:
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120120 (a) Add real estate to a condominium.
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122122 (b) Create easements, units, common elements or limited common elements within a condominium.
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124124 (c) Subdivide units, convert units into common elements or convert common elements into units.
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126126 (d) Withdraw real estate from a condominium.
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128128 (e) Make the condominium part of a larger condominium or planned community.
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130130 (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.
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132132 (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.
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134134 17. "Identifying number" means a symbol or address that identifies one unit in a condominium.
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136136 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.
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138138 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.
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140140 20. "Person" means:
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142142 (a) A natural person, corporation, business trust, estate, trust, partnership, association, joint venture, government, governmental subdivision or agency, or other legal or commercial entity.
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144144 (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.
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146146 21. "Real estate":
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148148 (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.
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150150 (b) Includes parcels with or without upper or lower boundaries and spaces that may be filled with air or water.
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152152 22. "Rules" means the provisions, if any, adopted pursuant to the declaration or bylaws governing maintenance and use of the units and common elements.
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154154 23. "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:
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156156 (a) Construct improvements provided for in the declaration.
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158158 (b) Exercise any development right.
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160160 (c) Maintain sales offices, management offices, signs advertising the condominium, and models.
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162162 (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.
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164164 (e) Appoint or remove any officer of the association or any board member during any period of declarant control.
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166166 24. "Unit" means a portion of the condominium designated for separate ownership or occupancy.
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168168 25. "Unit owner" means:
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170170 (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.
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172172 (b) In the case of a contract for conveyance, as defined in section 33-741, of real property, the purchaser of the unit.
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174174 26. "Unit owner expenses":
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176176 (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.
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178178 (b) Does not include any amount that is included in a common expense lien. END_STATUTE
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180180 Sec. 2. Section 33-1256, Arizona Revised Statutes, is amended to read:
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182182 START_STATUTE33-1256. Common expense liens; priority; mechanics' and materialmen's liens; notice; applicability
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184184 A. The association has a common expense lien on a unit for any assessment levied against that unit from the time the assessment becomes due. The association's common expense lien may be foreclosed in the same manner as a mortgage on real estate but may be foreclosed only if the unit owner has been and remains delinquent in the payment of assessments, for a period of one year or in the amount of $1,200 or more, whichever occurs first, as determined on the date the action is filed. The association board of directors shall exercise reasonable efforts to communicate with the unit owner and offer a reasonable payment plan before filing a foreclosure action. If an assessment is payable in installments, the full amount of the assessment is a common expense lien from the time the first installment of the assessment becomes due.
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186186 B. Notwithstanding any provision in the condominium documents, unit owner expenses are not enforceable as common expense liens under this section. The association has a judgment lien for unit owner expenses after the entry of a judgment in a civil suit for those unit owner expenses from a court of competent jurisdiction and the recording of that judgment in the office of the county recorder as otherwise provided by law. The association's judgment lien for unit owner expenses may not be foreclosed and is effective only on conveyance of any interest in the real property.
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188188 C. A common expense lien under this section is prior to all other liens, interests and encumbrances on a unit except:
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190190 1. Liens and encumbrances recorded before the recordation of the declaration.
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192192 2. A recorded first mortgage on the unit, a seller's interest in a first contract for sale pursuant to chapter 6, article 3 of this title on the unit recorded before the common expense lien arising pursuant to subsection A of this section or a recorded first deed of trust on the unit.
193193
194194 3. Liens for real estate taxes and other governmental assessments or charges against the unit.
195195
196196 D. Subsection C of this section does not affect the priority of mechanics' or materialmen's liens. The common expense lien under this section is not subject to chapter 8 of this title.
197197
198198 E. Unless the declaration otherwise provides, if two or more associations have common expense liens created at any time on the same real estate, those common expense liens have equal priority.
199199
200200 F. Recording the declaration constitutes record notice and perfection of the common expense lien. Further recordation of any claim of common expense lien under this section is not required.
201201
202202 G. A common expense lien is extinguished unless proceedings to enforce the common expense lien are instituted within six years after the full amount of the assessments becomes due.
203203
204204 H. This section does not prohibit:
205205
206206 1. Actions to recover sums for which subsection A or B of this section creates a lien.
207207
208208 2. An association from taking a deed in lieu of foreclosure.
209209
210210 I. A judgment or decree in any action brought under this section may include costs and reasonable attorney fees for the prevailing party.
211211
212212 J. The association on written request shall furnish to a lienholder, escrow agent, unit owner or person designated by a unit owner a statement setting forth the amount of any unpaid liens prescribed by subsection A or B of this section against the unit. The statement shall be furnished within ten days after receipt of the request. The statement is binding on the association if the statement is requested by an escrow agency that is licensed pursuant to title 6, chapter 7. Failure to provide the statement to the escrow agent within the time provided for in this subsection extinguishes any lien for any unpaid assessment then due.
213213
214214 K. Notwithstanding any provision in the condominium documents or in any contract between the association and a management company or any other agent of the association, including any agreement or contract with any attorney, unless the unit owner directs otherwise in an instrument signed by the unit owner, all payments received on a unit owner's account shall be applied first to any unpaid assessments, due but not delinquent assessments, unpaid charges for late payment of those assessments if authorized in the declaration, unpaid reasonable collection fees and costs incurred or applied by the association and unpaid attorney fees and costs incurred with respect to those assessments if awarded by a court, in that order, with any remaining amounts applied next to other unpaid fees, charges and monetary penalties or interest and late charges on any of those amounts.
215215
216216 L. For a delinquent account for unpaid common expense liens, the association shall provide the following written notice to the unit owner at the unit owner's address as provided to the association at least thirty days before authorizing an attorney, or a collection agency that is not acting as the association's managing agent, to begin collection activity on behalf of the association:
217217
218218 Your account is delinquent. If you do not bring your account current or make arrangements that are approved by the association to bring your account current within thirty days after the date of this notice, your account will be turned over for further collection proceedings. Such collection proceedings could include bringing a foreclosure action against your property.
219219
220220 The notice shall be in boldfaced bold-faced type or all capital letters and shall include the contact information for the person that the unit owner may contact to discuss payment. The notice shall be sent by certified mail, return receipt requested, and may be included within other correspondence sent to the unit owner regarding the unit owner's delinquent account.
221221
222222 M. Except for condominiums that have fewer than fifty units and that do not contract with a third party to perform management services on behalf of the association, the association shall provide a statement of account in lieu of a periodic payment book to the unit owner with the same frequency that assessments are provided for in the declaration. The statement of account shall include the current account balance due and the immediately preceding ledger history. If the association offers the statement of account by electronic means, a unit owner may opt to receive the statement electronically. The association may stop providing any further statements of account to a unit owner if collection activity begins by an attorney, or a collection agency that is not acting as the association's managing agent, regarding that unit owner's unpaid account. After collection activity begins, a unit owner may request statements of account by written request to the attorney or collection agency. Any request by a unit owner for a statement of account after collection activity begins by an attorney or a collection agency that is not acting as the association's managing agent must be fulfilled by the attorney or the collection agency responsible for the collection. The statement of account provided by the attorney or collection agency responsible for the collection shall include all amounts claimed to be owing to resolve the delinquency through the date set forth in the statement, including attorney fees and costs, regardless of whether such amounts have been reduced to judgment.
223223
224224 N. An agent for the association may collect on behalf of the association directly from a unit owner the assessments and other amounts owed by cash or check, by mailed or hand-delivered bank drafts, checks, cashier's checks or money orders, by credit, charge or debit card or by other electronic means. For any form of payment other than for cash or for mailed or hand-delivered bank drafts, checks, cashier's checks or money orders, the agent may charge a convenience fee to the unit owner that is approximately the amount charged to the agent by a third-party service provider. The association may not transfer ownership or control of debt for common expense liens or unit owner expenses.
225225
226226 O. This section does not apply to timeshare plans or associations that are subject to chapter 20 of this title. END_STATUTE
227227
228228 Sec. 3. Section 33-1802, Arizona Revised Statutes, is amended to read:
229229
230230 START_STATUTE33-1802. Definitions
231231
232232 In this chapter and in the community documents, unless the context otherwise requires:
233233
234234 1. "Assessment" means the share of monies that is required for the payment of common expenses and that the association assesses against a property pursuant to the declaration or this chapter.
235235
236236 1. 2. "Association":
237237
238238 (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.
239239
240240 (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.
241241
242242 2. 3. "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.
243243
244244 3. 4. "Community documents" means the declaration, bylaws, articles of incorporation, if any, and rules, if any.
245245
246246 4. 5. "Declaration" means any instruments, however denominated, that establish a planned community and any amendment to those instruments.
247247
248248 5. 6. "Member expenses":
249249
250250 (a) Means fees, charges, late charges and monetary penalties or interest.
251251
252252 (b) Does not include any amount that is included in a common expense lien.
253253
254254 6. 7. "Planned community":
255255
256256 (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.
257257
258258 (b) Does not include any of the following:
259259
260260 (i) A timeshare plan or a timeshare association that is governed by chapter 20 of this title.
261261
262262 (ii) A condominium that is governed by chapter 9 of this title.
263263
264264 (iii) A real estate development that is not managed or maintained by an association. END_STATUTE
265265
266266 Sec. 4. Section 33-1807, Arizona Revised Statutes, is amended to read:
267267
268268 START_STATUTE33-1807. Common expense liens; priority; mechanics' and materialmen's liens; notice
269269
270270 A. The association has a common expense lien on a property for any assessment levied against that property from the time the assessment becomes due. The association's common expense lien may be foreclosed in the same manner as a mortgage on real estate but may be foreclosed only if the owner has been and remains delinquent in the payment of assessments, for a period of one year or in the amount of $1,200 or more, whichever occurs first, as determined on the date the action is filed. The association board of directors shall exercise reasonable efforts to communicate with the member and offer a reasonable payment plan before filing a foreclosure action. If an assessment is payable in installments, the full amount of the assessment is a common expense lien from the time the first installment of the assessment becomes due.
271271
272272 B. Notwithstanding any provision in the community documents, member expenses are not enforceable as common expense liens under this subsection section. The association has a judgment lien for member expenses after the entry of a judgment in a civil suit for those member expenses from a court of competent jurisdiction and the recording of that judgment in the office of the county recorder as otherwise provided by law. The association's judgment lien for member expenses may not be foreclosed and is effective only on conveyance of any interest in the real property.
273273
274274 C. A common expense lien under this section is prior to all other liens, interests and encumbrances on a property except:
275275
276276 1. Liens and encumbrances recorded before the recordation of the declaration.
277277
278278 2. A recorded first mortgage on the property, a seller's interest in a first contract for sale pursuant to chapter 6, article 3 of this title on the property recorded before the common EXPENSE lien arising pursuant to subsection A of this section or a recorded first deed of trust on the property.
279279
280280 3. Liens for real estate taxes and other governmental assessments or charges against the property.
281281
282282 D. Subsection C of this section does not affect the priority of mechanics' or materialmen's liens. The common expense lien under this section is not subject to chapter 8 of this title.
283283
284284 E. Unless the declaration otherwise provides, if two or more associations have common expense liens created at any time on the same real estate those common expense liens have equal priority.
285285
286286 F. Recording the declaration constitutes record notice and perfection of the common expense lien. Further recordation of any claim of common expense lien under this section is not required.
287287
288288 G. A common expense lien is extinguished unless proceedings to enforce the common expense lien are instituted within six years after the full amount of the assessment becomes due.
289289
290290 H. This section does not prohibit:
291291
292292 1. Actions to recover amounts for which subsection A or B of this section creates a lien.
293293
294294 2. An association from taking a deed in lieu of foreclosure.
295295
296296 I. A judgment or decree in any action brought under this section may include costs and reasonable attorney fees for the prevailing party.
297297
298298 J. On written request, the association shall furnish to a lienholder, escrow agent, member or person designated by a member a statement setting forth the amount of any unpaid liens prescribed by subsection A or B of this section against the property. The association shall furnish the statement within ten days after receipt of the request. The statement is binding on the association if the statement is requested by an escrow agency that is licensed pursuant to title 6, chapter 7. Failure to provide the statement to the escrow agent within the time provided for in this subsection extinguishes any lien for any unpaid assessment then due.
299299
300300 K. Notwithstanding any provision in the community documents or in any contract between the association and a management company or any other agent of the association, including any agreement or contract with any attorney, unless the member directs otherwise in an INSTRUMENT signed by the member, all payments received on a member's account shall be applied first to any unpaid assessments, due but not delinquent assessments, unpaid charges for late payment of those assessments if authorized in the declaration, unpaid reasonable collection fees and costs incurred or applied by the association, and unpaid attorney fees and costs incurred with respect to those assessments if awarded by a court, in that order, with any remaining amounts applied next to other unpaid fees, charges and monetary penalties or interest and late charges on any of those amounts.
301301
302302 L. For a delinquent account for unpaid common expense liens, the association shall provide the following written notice to the member at the member's address as provided to the association at least thirty days before authorizing an attorney, or a collection agency that is not acting as the association's managing agent, to begin collection activity on behalf of the association:
303303
304304 Your account is delinquent. If you do not bring your account current or make arrangements that are approved by the association to bring your account current within thirty days after the date of this notice, your account will be turned over for further collection proceedings. Such collection proceedings could include bringing a foreclosure action against your property.
305305
306306 The notice shall be in boldfaced bold-faced type or all capital letters and shall include the contact information for the person that the member may contact to discuss payment. The notice shall be sent by certified mail, return receipt requested, and may be included within other correspondence sent to the member regarding the member's delinquent account.
307307
308308 M. Except for planned communities that have fewer than fifty lots and that do not contract with a third party to perform management services on behalf of the association, the association shall provide a statement of account in lieu of a periodic payment book to the member with the same frequency that assessments are provided for in the declaration. The statement of account shall include the current account balance due and the immediately preceding ledger history. If the association offers the statement of account by electronic means, a member may opt to receive the statement electronically. The association may stop providing any further statements of account to a member if collection activity begins by an attorney, or a collection agency that is not acting as the association's managing agent, regarding that member's unpaid account. After collection activity begins, a member may request statements of account by written request to the attorney or collection agency. Any request by a member for a statement of account after collection activity begins by an attorney or a collection agency that is not acting as the association's managing agent must be fulfilled by the attorney or the collection agency responsible for the collection. The statement of account provided by the attorney or collection agency responsible for the collection shall include all amounts claimed to be owing to resolve the delinquency through the date set forth in the statement, including attorney fees and costs, regardless of whether such amounts have been reduced to judgment.
309309
310310 N. An agent for the association may collect on behalf of the association directly from a member the assessments and other amounts owed by cash or check, by mailed or hand-delivered bank drafts, checks, cashier's checks or money orders, by credit, charge or debit card or by other electronic means. For any form of payment other than for cash or for mailed or hand-delivered bank drafts, checks, cashier's checks or money orders, the agent may charge a convenience fee to the member that is approximately the amount charged to the agent by a third-party service provider. The association may not transfer ownership or control of debt for common expense liens or member expenses. END_STATUTE