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SB1246 - 572R - S Ver
Senate Engrossed
homeowners'
associations; foreclosure process
(now: HOAs; expense
liens; special assessment)
State of Arizona
Senate
Fifty-seventh Legislature
Second Regular Session
2026
SENATE BILL 1246
AN
ACT
amending sections 33-1256 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 33-1256, 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,
any assessment or
portion of the assessment
for a period of
one year
eighteen months
or in the amount of
$1,200
$10,000
or more, whichever occurs first, as determined on
the date the action is filed.
� For any special assessment with
an initial value of $10,000 or more, only the eighteen-month delinquency
threshold applies.
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, 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.
O.
The association may not
transfer ownership or control of debt for common expense liens or unit owner expenses.
O.
p.
This
section does not apply to timeshare plans or associations that are subject to
chapter 20 of this title.
END_STATUTE
Sec. 2. 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.
� For any special assessment with an
initial value of $10,000 or more, only the eighteen-month delinquency
threshold applies.
� 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, 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.
O.
The association may not
transfer ownership or control of debt for common expense liens or member expenses.
END_STATUTE