AZ HOA Law Update 2019

Arizona Legislative Update 2019

During the 135 days in session, lawmakers introduced 1,318 bills and 100 memorials and resolutions, of which 331 bills received final passage. The governor signed 320 bills into law and vetoed 11. The effective date for all non-emergency measures is August 27, 2019. The bills containing an emergency clause take effect immediately upon signature.

Each session, AAM tracks bills that may have a direct impact on homeowners associations and the community management industry. Of the priority bills we tracked this session, there were three bills that passed. Below is a recap of the HOA bills that were successfully passed through the legislature and were signed into law this session.

Priority Billed Passed by the Legislature and Signed by the Governor

S1531 (Chapter 200): HOAS; ASSESSMENTS; COSTS (Sen. D. Farnsworth R – Dist. 16) – SB 1531 implements various changes relating to condo associations and planned community associations (HOAs). A lien for unpaid HOA assessments is extinguished unless proceedings to enforce the lien are instituted within six years, increased from three years, after the full amount of the assessments becomes due. For a delinquent account for unpaid assessments or for charges related to unpaid assessments, the HOA is required to provide a specified written notice to the unit owner or member at least 30 days before authorizing an attorney or a collection agency that is not the HOA's managing agent to begin collection activity on behalf of the HOA. Beginning January 1, 2020, an HOA with more than 50 units or lots that contracts with a third party to perform management services is required to provide a statement of account in lieu of a periodic payment book to the unit owner or member with the same frequency that assessments are provided for in the declaration. Information that must be included in the statement is specified. An agent for an HOA is authorized to collect assessments on behalf of the HOA directly from a unit owner and to charge a convenience fee that is approximately the amount charged to the agent by a third-party service provider. AS SIGNED BY GOVERNOR.

H2672 (Chapter 240): VACATION RENTALS; SHORT-TERM RENTALS; REGULATION (Rep. Kavanagh R - Dist. 23) – HB 2672 offers the list of purposes for which counties and municipalities are permitted to regulate vacation rentals and short-term rentals is expanded to include requiring the owner to provide contact information for the owner or the owner's designee who is responsible for responding to complaints in a timely manner in person, over the phone or by email at any time of day before offering for rent or renting the vacation rental or short-term rental. Counties and municipalities are required to notify the Department of Revenue and the property owner of "verified violations" (defined) of the county's or municipality's applicable laws and regulations within 30 days after a verified violation. If the owner of a vacation rental or short-term rental has provided contact information to a county or municipality, and if the county or municipality issues a citation for a violation of applicable laws, regulations or ordinances or a state law that occurred on the owner's vacation rental or short-term rental property, the county or municipality is required to make a reasonable attempt to notify the owner or the owner's designee of the citation within seven business days after the citation is issued. Vacation rentals and short-term rentals are prohibited from being used for nonresidential uses, including for a special event that would otherwise require a permit or license or for a retail, restaurant, banquet space or other similar use. An online lodging operator is prohibited from offering for rent or renting a lodging accommodation without a current transaction privilege tax license. The online lodging operator is required to list the transaction privilege tax license number on each advertisement for each lodging accommodation the online lodging operator maintains, including online lodging marketplace postings. Establishes penalties for violations. If there is a legitimate business need relating to enforcing laws, regulations and ordinances, a county or municipal tax official is authorized to re-disclose transaction privilege tax information relating to a vacation rental or short-term rental property owner or online lodging operator from the new license report and license update report, subject to a list of specified requirements. AS SIGNED BY GOVERNOR. In his signing statement, the Governor stated his expectation that this bill will have no impact on most short-term rental homeowners and that he is open to corrective action if this law is applied too broadly.

H2687 (Chapter 233): CONDOMINIUMS; TERMINATIONS; APPRAISALS (Rep. Weninger R - Dist. 17) – HB 2687 modifies statutes relating to termination of condominium procedures. At least 30 days before recording a termination agreement, the board of directors of the condo association are required to convene a meeting at which a person to entity that purports to have the agreement of at least 80 percent of the votes in the association must produce and make available to the unit owners copies of a signed notarized statement that the owner or a unit has executed a termination agreement. The person or entity is required to produce copies of a statement for each unit owner who has agreed to the termination, or is permitted to produce the signed termination agreement that includes a sufficient number of unit owners. Any meeting called for this purpose is required to be noticed as otherwise provided by law, except that the board cannot take action by written consent or any other method that does not provide for an actual meeting that is open to all unit owners. Any termination agreement that is recorded without full compliance with statutory termination procedures is invalid. The respective interest of unit owners are modified to include their pro rata share of any monies in the association's reserve fund and the operating account. Also, as part of the arbitration process, the appraisers determining the fair market values of the condo units are required to fully disclose their appraisal methodologies and any other transaction occurring between the buyer and the sellers. Also makes changes identical to Laws 2018, Chapter 235 and repeals that legislation. AS SIGNED BY GOVERNOR.