Arizona HOA Law Update 2017
During each legislative session, we closely follow bills pertinent to our industry, as they can have a direct impact on homeowners, associations and Board members. With the conclusion of the 53rd Arizona Legislative Session on May 10, 2017, there were only three bills successfully passed that are directly related to the community management industry.
With the passage of House Bill 2411 (HB2411), condominium and homeowners associations’ Boards are prohibited from requiring attendees to give any advanced notice of their intent to audiotape or videotape a meeting. As a best practice to avoid unnecessary exposure, it is recommended that any open Board meeting or membership meeting should now be conducted under the assumption that every word and action is being recorded at all times.
Before entering into any closed portion of a Board meeting, HB2411 modifies both A.R.S. § 33-1804 for planned communities and A.R.S. § 33-1248 for condominiums to require the Board to specifically identify, by reference to the closed meeting statute section number, the reason for the executive session. This notification must cite the section number(s) and be provided to the membership either in the meeting notice or verbally at an open meeting. The five sections warranting a closed/executive session include:
1. Legal advice from an attorney for the Board or the association.
2. Pending or contemplated litigation.
3. Personal, health or financial information about an individual member of the association, an individual employee of the association or an individual employee of a contractor for the association.
4. Matters relating to the job performance of, compensation of, health records of or specific complaints against an individual employee of the association or an individual employee of a contractor of the association who works under the direction of the association.
5. Discussion of a member’s appeal of any violation cited or penalty imposed by the association except on request of the affected member that the meeting be held in an open session.
HB2411 also specifies that emergency Board meetings may only be called to discuss business or take action that cannot be delayed for the 48 hours required for notice. Additionally, the Board may only act on emergency matters at any emergency meeting called.
Last year, there was a change to A.R.S. § 33-1812, planned communities, and A.R.S. § 33-1250, condominiums, which contained language that created confusion as to whether both the ballot and envelope must be signed in order for a vote to be counted. This session, the Legislature modified this provision with the following language in HB2411, clarifying that an owner need not sign both the ballot and the envelope in a non-secret ballot voting situation:
The completed ballot shall contain the name, the address and either the actual or electronic signature of the person voting, except that if the condominium/planned community documents permit secret ballots, only the envelope shall contain the name, the address and either the actual or electronic signature of the voter.
In addition, HB2411 enacted changes to A.R.S. § 33-440 (applicable to non-planned communities and non-condominiums) regarding “non-uniform” amendments to a “Declaration,” generally referred to as “CC&Rs.”
Senate Bill 1060 (SB1060) clarifies that the dispute resolution process that exists outside of the judicial branch is lodged in the Department of Real Estate (DRE), not the Department of Fire, Building, and Life Safety (DFBLS). This change was made last year but a clerical error left a reference to the DFBLS in both the planned community statutes and the condominium act.
Senate Bill 1175 (SB1175) explains that prohibition on certain types of transfer fees found in A.R.S. § 33-442 applies to 501(c)(3) and 501(c)(4) organizations as well as “nonprofit mandatory membership organizations that are created pursuant to a declaration, covenant or other applicable law and that are composed of the owners of homes, condominiums, cooperatives or manufactured homes or any other interest in real property.” It clarified that the $400 fee is to compensate the association for the costs incurred in the preparation and delivery of a statement or other documents furnished by the association for resale disclosure, lien estoppel and any other services related to the transfer or use of the property.
This year’s General Effective date for the new laws is August 9, 2017.