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HB2614 - 572R - I Ver
REFERENCE TITLE:
homeowners' associations; assessments; liens; payments
State of Arizona
House of Representatives
Fifty-seventh Legislature
Second Regular Session
2026
HB 2614
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)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 33-1202, Arizona Revised
Statutes, is amended to read:
START_STATUTE
33-1202.
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
or 33-1255.
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_STATUTE
33-1256.
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_STATUTE
33-1802.
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
that are
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_STATUTE
33-1807.
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
any assessment or portion of the assessment
for a period of eighteen months or in the amount of $10,000
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 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 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