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2014LEGISLATIVEUPDATE
WILLBECOMEEFFECTIVEONJuly 24,2014
SENATEBILL1482: An Omnibus Billthatchangesseveralprovisions of thePlannedCommunity Act,theCondominium Act,and severalother statutesthataffectcommunityassociations.Weare addressingthemin order of importance toour existingclients:
VotingbyEmailand FacsimileDelivery
1.SB1482amendssection33-1250of theCondominium Actand section33-1812of the
PlannedCommunityAct.SB1482provides thatin addition toproviding forvotinginperson and byabsenteeballot, theassociationmayprovide for votingbysomeother form of delivery,includingtheuseof electronicmail and facsimiledelivery.
2.Votescastbyabsenteeballotor other formof delivery,includingtheuseof electronicmail and facsimiledelivery,are valid for thepurpose of establishinga quorum.
PB&J: Associationsmustcontinuetoprovide for votingin person and byabsenteeballot.The above provisions allow thatan associationmay also provide for votingbyother forms of delivery, includingtheuseof electronicmail and facsimiledelivery.WeadvisethattheAssociationrequire Ownerstofillouta form similar totheattachedspecificallyauthorizing useof a particular email addressbytheAssociationfor contactswiththeowner.Weadvisethatifan associationallowsfor votingbyemail,theassociationrequiretheentireballotbescannedand emailedtoproperly authenticatetheballot and for ease of disclosure in the event a Member asks to see the ballots. Also, ttisnot inconceivablethata person couldlog onto, or hackinto,thevoter’s computerand votebyemail.Voting by email may be cumbersome and not practical for large associations. It does however open the door to voting on a website. There are vendors who will set up a site with adequate measures to ensure authenticity and reliability of the votes.
RentalProperty
1.SB1482addssection33-1260.01totheCondominium Actand section33-1806.01tothe PlannedCommunityAct.SB1482placesseveralnewrestrictionson community associations.
2.A property owner mayusehis or her property asa rental property unlessprohibited bythe Declaration.Theproperty owner shallusethepropertyin accordancewiththeDeclaration’s rental timeperiod restrictions.
PB&J: Ifan association’sDeclarationdoesnot prohibit rentals,and theassociationwishestodo so,theassociationmustamendtheDeclaration.Theassociationmaynot prohibit rentalsvia resolutionor rule.
3.A property ownermaydesignate,in writing,a third party toactasthepropertyowner’s agentwithrespecttoall associationmattersrelatingtotherental property. The designated agent may not vote at elections or serve on the Board. On delivery of the written designation, the association is authorized, but not obligated, to conduct association business with the designated agent. Any notice given to the designated agent constitutes notice to the property owner.
PB&J: Iftheproperty owner designatesan agentin writing,theassociationmay conduct associationbusinesswiththedesignatedagent.Associationsare not obligatedtodo so,and may continuetodealdirectlywiththepropertyowner.
4.Associationsare prohibited from requiring aproperty owner or designatedagenttodisclose any information regarding a tenantother than:
A. Thename and contactinformation for any adultsoccupyingtheproperty;
B. Thetimeperiod of thelease,includingthebeginning and endingdatesof thetenancy; C. A descriptionand thelicenseplatenumbersof thetenants’vehicles;and
D. Iftheplanned communityisan agerestrictedcommunity,a governmentissued identificationthatbears a photograph and thatconfirms thatthetenantmeetsthe community’sagerestrictionsor requirements.
5.SB1482provides thatanassociationisprohibited from doing anyof thefollowing:
A. Requiringa copyof thetenant’srental application, creditreport, leaseagreement,rental contract,or other personal information;
(i) Theassociationmayacquirea creditreport on a person in an attempttocollecta debt.
B. Requiringthetenanttosigna waiveror other documentlimitingthetenant’sdueprocess rightsasa condition of thetenant’soccupancyof theproperty;
C. Prohibiting or otherwiserestrictingthepropertyowner from servingon theBoard of
Directorsbasedon thepropertyowner not beingan occupantof theproperty;
D. Imposing a fineof more than fifteendollars ($15.00)for incompleteor lateinformation requestedpursuanttoSection4above.
6.An associationmaynot chargemore than twenty-fivedollars ($25.00)asan administrative
feefor eachnewtenancy,butnot for therenewalofan existinglease.Theadministrativefee shall bepaid withinfifteendaysof thepostmarkedrequest.
7.Exceptfor theadministrativefee,and fees related to the use of recreational facilities, theassociationmaynot assess,levy,or chargea feeor fine,or otherwiseimposea requirementon a rental property any differentlythan on an owner-occupiedproperty.
8.Any attemptbyan associationtochargea fee,penalty,assessmentor chargeother than the twenty-fivedollar ($25.00)administrativefeeorthefifteendollar ($15.00)finevoidstheadministrativefeeand voidstherequirementtoprovide information pursuanttoSection4 above.
9. SB 1482 does not prohibit an Owner from using a Crime Free Addendum as part of a lease. The new legislation directs Owners to abate criminal activity on the property.
10. The Association may lawfully enforce a provision in its governing documents that restricts the residency of persons who are classified as class two or three sex offenders.
PB&J: SB 1482 restricts the information that an association may require an Owner to provide about his or her tenants. SB 1482 does not put any limitations on information that an association may require from the tenants themselves. So, if an association asks for additional information from a tenant, such as number of pets, there is an argument that the request will not violate the new statute.
To assistour clientsin complyingwiththesenewrestrictions,wehaveattacheda Tenant Information Form and RentalRulesthatconform tothenewlegislation.Thenewrestrictionswill makeitdifficultfor associationstoparticipatein localcrimefreeprograms. Thenewlegislation makesclearthatan associationmaynotrequiretheOwner toprovidea criminal background check. Associationsthatwishtoprohibit certaincriminals from rentingmustperform thechecks themselves. Associations may restrict the residency of class two or three sex offenders, but only if the community documents contain that restriction.
OfficeofAdministrativeHearings
1.SB1482amendstheadministrativehearing proceduresprovided for byA.R.S.§41.2198.01 concerningviolations of theassociation’sgoverningdocumentsor violations of thestatutes thatgovern condominiums or planned communities.
2.Ifa petitionisdismissedattherequestofa petitionerbeforea hearing isscheduled,the filingfeeshall berefundedtothepetitioner.Ifa petitionisdismissedbystipulationof the partiesbeforea hearing isscheduled,thefilingfeeshall berefundedtothepetitioner.
PB&J: Thefilingfeefor theadministrativehearing processishigh, and under currentlaw, nonrefundable. A petitionermaybemore willingtowork withan associationtoresolvethedispute iftheyare aware thatthefilingfeewillberefundedupon voluntarydismissalof thepetition.
Political Signsin Condominiums
1.SB1482amendssection33-1261of theCondominiumAct.Theseprovisions do not applyto planned communities.
2.A condominiumassociationshall not prohibit theindoor or outdoor displayof politicalsigns on a Unit Owner’s property, including any Limited Common Elements that touch the Unit, other than the roof, but including doors, walls, and patios.
3.A condominiumassociationmaycontinuetoprohibitthedisplayof politicalsignsearlier than seventy-one(71)daysbeforean electionandlaterthan three(3)daysafteran election.
4.A condominiumassociationmayregulatethesizeand number of politicalsigns.However,the associationmaynot beanymore restrictivethan anyapplicable city,town,or countyordinance that regulatesthesizeand number of politicalsignson residentialproperty. Ifthereisno such ordinance, theassociationshall not limitthenumber and sizeof politicalsigns,exceptthat thetotal aggregatedimensionsshall not exceednine squarefeet.
5.A politicalsignisdefinedas“a signthatattemptstoinfluencetheoutcomeof an election,including supporting or opposing therecallof a publicofficeror supporting or opposing thecirculationof a petitionfor a ballot measure,question,or proposition or therecallof a publicofficer.”
PB&J: Pleaseobservethata condominium association’sregulationsmaynot beany more restrictivethanany applicable local ordinance. Ifthereisno applicable localordinance, the condominium associationmay not regulatethenumber and sizeof politicalsigns.
Small Claims Actions;ManagementServices
1. SB1482amendsA.R.S.§22-512relatingtosmallclaimsactions.Thechangeswillapply to plannedcommunitiesandcondominiums thathavecontractedthemanagementservicesof any lawfullyformed entity.
2.SB1482allowstheemployeesof theassociationand theemployeesof themanagement company toacton behalfof theassociationby:
A. Recordinga Noticeof Lienor Noticeof Claim of Lienof theassociationagainstanOwner’s
property if:
i.Theindividualisspecificallyauthorized in writingbytheassociationtorecordliens on
behalf of theassociationand isa certifieddocumentpreparer;
ii. Theassociationistheoriginal party tothelienand thelienright isnot theresultof an assignmentof rights;and
iii. Thelienright existsbyoperation of lawpursuanttoA.R.S.§33-1256or A.R.S.§33-1807and
isnot theresultof obtaining a finaljudgmentin an actiontowhichthe associationisa party.
B. Appearing on behalf of theassociationin a small claimsactionif:
i.Theindividualisspecificallyauthorized in writingtoappear on behalf of the association; and
ii. Theassociationisan original party tothesmall claimsaction.
PB&J: Employeesof an associationoremployeesofa managementcompanymaylawfullyrecord a
Noticeof Claim of Lienin a collectionactionand maylawfullyappear in small claimscourtactionson behalfof theassociation.
Requirementof a Planned CommunityProhibited
1. SB1482enactsA.R.S.§9-461.14and A.R.S.§11-810relatingtomunicipalitiesand counties.SB1482prohibits any municipalityor countyfrom requiring a developertoestablisha planned community.Developerscannot bepenalized becausea newdevelopmentdoesnot constituteorincludea planned community.
2. A municipalityor a countymayrequirea developertoestablisha planned communityto
maintain private,common, or communityowned improvementsthatare approved and installedaspart of theplat or developmentplan. Themunicipalityor countyshall not requirethatan associationbeformed or operatedfor any other purpose.
3. A developerisnot prohibited from establishinga planned communitypursuanttoand under theauthorityof thePlannedCommunityAct.Developersand associationsare not prohibited from requestingand enteringinto maintenanceagreementswithmunicipalitiesor counties.
PB&J: Theseprovisions demonstratetheLegislature’shostilitytoward plannedcommunities, ArchitecturalControl Committees,and userestrictions.Despitethenewlegislation,developerswill continuetocreateplanned communitiesthatincludeuserestrictionsand ArchitecturalControl Committees.Webelievethatqualitydevelopersprefer tobuild thesetypesofplanned communities and willcontinuetodo so.Ifa communityappears shabby becausethereisno architecturalcontrol or any userestrictions,thedeveloperwillhavea hard timegettingtop dollar for itsproduct. The legislation is frankly rather silly.
Nuisance Abatement
1.SB1482 amends A.R.S. § 12-991 to provide that if a planned community or a condominium association is affected by a nuisance, the association has standing to bring an action in superior court against the owner, the owner’s managing agent, or any other party responsible for the property to abate and prevent the nuisance.
2. A.R.S. § 12-991(A) defines a nuisance as, “residential property that is regularly used in the commission of a crime is a nuisance, and the criminal activity causing the nuisance shall be enjoined, abated, and prevented.”
PB&J: If a resident is engaging in criminal activity, an association may now bring an action against the owner of the property to require the owner to abate the criminal activity. This section provides associations with an additional option when dealing with high crime rates and problem tenants.
HOUSEBILL2477:Amends section 33-1807 of the Planned Community Act and section 33-1260 of the Condominium Act.
1.A.R.S. §33-1807 and A.R.S. §33-1260 provide that associations must provide certain mandatory disclosures upon resale. Associations may charge certain fees for this disclosure. HB 2477 provides that certain transactions are exempt from these mandatory resale disclosures, including:
A.A sale in which a public report is issued for subdivided lands pursuant to A.R.S. §32-2183, and a sale in which a public report is issued for a timeshare pursuant to A.R.S. §32-2197.02; and
B. When the transfer of title has only nominal actual consideration for the transfer
of residential property between:
i. Husband and wife, or ancestor of the husband and wife; and
ii. Parent and child, including natural adopted children and their descendants; and
iii. Grandparent and grandchild; and
iv. Natural or adopted siblings.
C. When the transfer of title is for no consideration or nominal consideration:
i. By a subsidiary to its parent or from a parent to a subsidiary; and
ii. Among commonly controlled entities; and
iii. From a member to its limited liability company or from a limited liability company to a member; and
iv. From a partner to its partnership, or a partnership to its partner; and
vi. From a joint venturer to its joint venture, or a joint venture to its joint venturer; and
vii. From a trust beneficiary to its trustee, or a trustee to its trust beneficiary; and
viii. From any of the above to a single purpose entity in order to obtain financing.
D. On recordation of the deed, and at no additional charge, the new Owner shall
provide the association with the changes in ownership, including the Member’s name, billing address, and phone number. Failure to provide the information shall not prevent the member from qualifying for the exemption.
PB&J: New Owners will be required to notify the association of the change in ownership, which will help to eliminate confusion when family members or other entitiesuse quit-claim deeds to transfer property among themselves. The Association will no longer be permitted to charge the disclosure fees in any of the above scenarios.
HOUSEBILL2141:Amends A.R.S. §42-13404 relating to the taxation of Common Areas within planned communities. HB 2141 applies to planned communities only.
1.HB 2141 adds a new section to this statute that provides that a County Assessor must automatically consolidate common area parcels within the same taxing district for tax purposes.
2. If, after further review by the County Assessor, the parcel does not meet the definition of a Common Area, the County Assessor may revoke the valuation, and value the parcel according to standard appraisal techniques. If revoked, the association retains the right to request the common area valuation.
PB&J: Planned communities are no longer required to apply to the County Assessor for Common Area parcel consolidation. Planned communities may still request consolidation.
SENATEBILL1184:Amends section 33-1802 of the Planned Community Act. SB 1184 does not apply to condominiums.
1.SB 1184 amends the definition of a planned community to, “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 owners of separately owned lots, parcels or units are mandatory members and are required to pay assessments to the association for these purposes. .
PB&J: SB 1184 expands the definition of a ‘planned community’ to include property owners’ associations that do not own any common areas but maintain the roadways within the community pursuant to an easement or a covenant. These types of associations will now be subject to all of the provisions contained in the Planned Community Act.
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BROWN | OLCOTT “PBJ”
KNOWING AND INTELLIGENT WAIVER
______(insert name) resides at ______(insert address) within the______Homeowners Association (“Association”). The Association’s Bylaws require the Association to send me notice of the annual meetings by United States mail. I would prefer to receive the notices via email. I hereby knowingly and intelligently waive my right to receive notice of the annual meeting by United States mail.
______
SignatureDate
______
Email address
TheBoardofDirectorssetshigh standardsforthecommunity’s appearance in*Association(“Association”).The goalsforthe appearanceofthepropertiesare well-maintainedhomesandcommon areas and to implement regulations to secure a crime free neighborhood for families and their guests. Residents in the Association takepridein theircommunity.Customarily,investment propertiesarelessattendedtothanowneroccupiedhomes.Tenants do not always share the community’s high standards created to improveandprotectlongtermproperty values.Inaneffort to maintain thesestandards,theBoardofDirectorshas implementedthefollowing rulesforrentalunits.Ownersandtheirtenantsshallcomply withthe Association’srulesandotherCommunity Documents.TheAssociation shallimposemonetary penaltiesassessedagainsttheOwner’sunitfor violationsoftheCommunityDocuments.CompliancewiththeseRental RulesandCommunityDocumentsisavitalpartoftheAssociation’s successasacrimefreeneighborhood.EachOwner who rentsaunit withintheAssociationmustcomplywiththeRentalRulesandassistin ourgoalforacrimefreeneighborhood.TheAssociation seeks everyone’scooperationinmakingthecommunity adesirableplaceto live.
RENTALRULES
1.Allleasesshallbeforaperiodof notlessthan .
2.InnoeventmaylessthantheentireUnit/Lot berented.
3.Withinfifteen(15)daysofsigningthelease,renewal,orrevision,the Owner shall complete and return the attached Tenant Information Form,whichincludesthefollowinginformation:
a.Thenames ofthetenants;
b.Contactinformationforalladult occupants;
c.The timeperiodof theleaseincludingthebeginningorendingdates ofthetenancy;
d.Adescriptionofthetenants’ vehicles;
e.Thelicenseplatenumbers ofthetenants’vehicles;and
f.*AGERESTRICTEDCOMMUNITIESONLY*Governmentissued identification thatbearsaphotograph and confirmsthatthe tenants meetthecommunity’sagerestriction.
4. If theOwnerdoesnotprovidetheinformationinSection3abovewithin fifteen (15)daysofsigning the lease,the Owner shall be fined $15.00 afternoticeandopportunityforahearing.
5.Foreachnewtenancy,the Ownerwillbecharged anadministrativefee of$25.00. TheOwnershallnotbechargedanadministrativefeefor therenewalofanexistinglease.
6.Withinfifteen(15)days ofsigning thelease,theOwnershallcertifythat theOwnerhasfurnishedthetenantwithcopiesofthe Community Documents;thatthetenanthasagreedtobeboundby theCommunity Documents;andthattheOwneracceptsresponsibility forthetenants’ violationsoftheCommunity Documents.TheCommunity Documents consist oftheCCRs,theBylaws,andRulesandRegulations.
TenantInformationForm
______Association
Member(Landlord)Name: Unit#:
MemberMailingAddress:
NameofDesignatedAgent(ifapplicable):
AddressofDesignatedAgent:
TelephoneNumberofDesignatedAgent:
LengthofLease: BeginningDate: EndDate:
TenantNames:
Tenant’sTelephoneNumber:
VehicleNo.1: License#: Make: Color:
VehicleNo.2: License#: Make: Color:
DateofPaymentofAdministrativeFee:
I(we), ______, atUnit/LotNo. havereceived,readandagreetoabidebytheCCRs,By-Laws andRules andRegulationsof*Association(andasalteredoramended)knowingthatiftheyarenotadheredto,I willultimatelybefinedforviolations.
SignatureofTenantDate
SignatureofTenantDate
SignatureofTenantDate
SignatureofTenantDate
SignatureofMemberorDesignatedAgentDate
Pleasereturnthiscompleted,signedanddatedformtoususingtheenclosedself-addressedstampedenvelope.