2010 LEGISLATIVE UPDATE ARIZONA COMMUNITY ASSOCIATION LAW

Introduction

The 2010 legislative session concluded with three changes to the Arizona statutes directly governing community associations. House Bill 2768 (HB2768) and House Bill 2345 (HB2345) were passed and signed into law. HB2768 addresses transfer fee at sale provisions authorized by the Declaration. HB 2345 addresses “For Sale” and “For Rent” signs. The legislature also passed and expanded the Arizona Fair Housing Act in SB 1232 (SB1232). Laws passed this year are effective July 29, 2010.

The information contained in this legislative update is for informational purposes only and is not specific legal advice or a substitute for specific legal counsel. Readers should not act upon this information without seeking professional counsel specific to their concerns or issues.

HB2768 – TRANSFER FEES

This new law affects both planned communities and condominiums. This law prohibits transfer fees on sale paid to the Declarant, Developer, or third person when such fee does not benefit the Association or its property.

The Association may continue to collect reasonable transfer fees—particularly Working Capital and Reserve Contribution Fees—upon property transfers when such fees are authorized by the Declaration. This law firm is of the opinion that the legislation does not affect transfer fees paid to the Association as those transactions are currently handled in the industry. The legislation also does not affect disclosure fees required by A.R.S. § 33-1260 for condominiums or A.R.S. § 33-1806 for planned communities.

The bill, however, is vague and ambiguous. We are aware that one other law firm thinks the bill might apply to HOA transfer fees. If the Board is worried, the Board might consider passing a resolution earmarking any such fee directly to “Recreational Activities” in the Association such as swimming pools, parks, walkways, or other areas used by the Members for recreation. There is a specific safe harbor in the bill for transfer fees used for recreational purposes.

HB2345 – FOR SALE, FOR LEASE, OPEN HOUSE SIGNS

House Bill 2345 amends Arizona Revised Statute §33-1261 of the Condominium Act and Arizona Revised Statute §33-1808 of the Planned Community Act. This new law is a clarification and expansion of the existing law concerning for sale signs. Under existing law, an Association could not prohibit industry standard For Sale signs on the Member’s property of “industry standard” size. The new simply law expands the existing law to include industry standard “For Lease” and “For Rent”* signs placed by the Owner or the Owner’s agent.** The new law prohibits Associations from regulating the color and design of the signs.

The law also provides that “Open House” signs are allowed on the Member’s property. Furthermore the Association must allow an Open House between 8:00 am and 6:00 pm.

The law clarifies that the Association may prohibit Open House, For Sale, For Lease, or For Rent signs on the Common Areas or Common Elements of the Association.

SB1232 – EXPANDED ARIZONA FAIR HOUSING LAW

Senate Bill 1232 expanded and clarified provisions of the Arizona Fair Housing Act found in A.R.S. § 41-1491 et seq. The Act requires Associations to approve certain “reasonable accommodations” to qualified individuals so that they may reside in the Association. SB1232 expanded the definition of disability to not only to conform with that of the Americas with Disabilities Act of 1990—which was the existing law in Arizona—but also conforms Arizona law with the Americans with Disabilities Act Amendments Act of 2008.

Associations must treat all such Fair Housing claims with the upmost seriousness. The problem for the Association is that alleged violations of the Act are investigated and prosecuted by the Arizona Attorney General’s Office, while the Association must pay its attorneys to defend the Association. The result is often a very hollow victory for the Association even in cases where the Association’s offered reasonable accommodations are ultimately held valid.

A disability is: (1) a mental or physical impairment which substantially limits one or more major life activities, (2) a record of having such an impairment, and (3) being regarded as having such an impairment. The new law requires a court to construe a disability in favor of claimant to the maximum extent. Some commonly recognized disabilities are diseases and conditions such as orthopedic, visual, speech and hearing impediments, cerebral palsy, autism, epilepsy, muscular dystrophy, multiple sclerosis, cancer, heart disease, diabetes, HIV, mental retardation, emotional and psychological illness, drug addiction (other than use of illegal drugs) and alcoholism (recover phase). This list is not exclusive.

* “For Rent” signs are not specifically stated in the statute but the intent of the statute is clearly to allow such signs.

** Associations that do not allow Members to Rent or Lease their property may prohibit such signs.

Comments

[Debbie White]

HB2768 – TRANSFER FEES
Hi, thanks for the info! Five to six houses sold in our community last year and we never got transfer fees. The management co. set the fees and keep the fees. Our cc&r state that the broad set the fees.
How can it be right for the companies to keep all of the transfer fees? Thanks Debbie