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REFERENCE TITLE: homeowners' associations; managers; duties; gratuities |
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State of Arizona Senate Fifty-third Legislature First Regular Session 2017
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SB 1401 |
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Introduced by Senators Farnsworth D: Bowie, Miranda, Otondo
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AN ACT
amending section 33‑1202, Arizona Revised Statutes; amending title 33, chapter 9, article 3, Arizona Revised Statutes, by adding sections 33‑1262 and 33‑1263; amending section 33‑1802, Arizona Revised Statutes; amending title 33, chapter 16, article 1, Arizona Revised Statutes, by adding sections 33‑1819 and 33‑1820; 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:
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. "Association" or "unit owners' association" means the unit owners' association organized under section 33‑1241.
5. "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.
6. "Bylaws" means the bylaws required by section 33‑1246.
7. "Common elements" means all portions of a condominium other than the units.
8. "Common expense liability" means the liability for common expenses allocated to each unit pursuant to section 33‑1217.
9. "Common expenses" means expenditures made by or financial liabilities of the association, together with any allocations to reserves.
10. "Community management services" means management services provided to an association to manage, maintain or improve the condominium and its common areas and elements, to enforce the condominium documents and to provide for the collection of assessments or payment of vendors and includes any or all of those services.
11. "Community manager" means a person or entity that provides community management services to an association.
10. 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.
11. 13. "Condominium documents" means the declaration, bylaws, articles of incorporation, if any, and rules, if any.
12. 14. "Declarant" means any person or group of persons who reserves, is granted or succeeds to any special declarant right.
13. 15. "Declaration" means any instruments, however denominated, that create a condominium and any amendments to those instruments.
14. 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.
15. 17. "Identifying number" means a symbol or address that identifies one unit in a condominium.
16. 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.
17. 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.
18. 20. "Person" means a natural person, corporation, business trust, estate, trust, partnership, association, joint venture, government, governmental subdivision or agency, or other legal or commercial entity. In the case of a subdivision trust, as defined in section 6‑801, person means the beneficiary of the trust who holds the right to subdivide, develop or sell the real estate rather than the trust or trustee.
19. 21. "Real estate" means any legal, equitable, leasehold or other estate or interest in, over or under land, including structures, fixtures and other improvements and interests which that by custom, usage or law pass with a conveyance of land though not described in the contract of sale or instrument of conveyance. Real estate includes parcels with or without upper or lower boundaries and spaces that may be filled with air or water.
20. 22. "Rules" means the provisions, if any, adopted pursuant to the declaration or bylaws governing maintenance and use of the units and common elements.
21. 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 which 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.
22. 24. "Unit" means a portion of the condominium designated for separate ownership or occupancy.
23. 25. "Unit owner" means 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. In the case of a contract for conveyance, as defined in section 33‑741, of real property, unit owner means the purchaser of the unit.
Sec. 2. Title 33, chapter 9, article 3, Arizona Revised Statutes, is amended by adding sections 33-1262 and 33-1263, to read:
33-1262. Association employees and contractors; compensation and gratuity; prohibition
The association's employees and independent contractors, including community managers, and any employee of any independent contractor may not solicit, receive or accept any undisclosed fee, compensation, commission or gratuity whether in cash or in kind from any third party that provides or solicits to provide goods or services to the association or the condominium.
33-1263. Community managers' duties; compliance; liability
A. A community manager shall:
1. be familiar with the condominium documents for the condominium and with the applicable law.
2. Act in good faith, with the appropriate authorization of the association and in compliance with the condominium documents and applicable law.
B. A community manager may not require the association to indemnify or otherwise defend the community manager from claims or complaints arising from the actions of the community manager with respect to that association and condominium. A community manager is responsible for the conduct of the community manager, including any negligence or other tortious conduct.
C. A community manager who violates this section is liable for damages in an action brought by a unit owner and may be subject to an order to comply with the condominium documents and applicable law. The court shall award reasonable attorney fees and costs to the prevailing party in an action pursuant to this section.
Sec. 3. Section 33-1802, Arizona Revised Statutes, is amended to read:
33-1802. Definitions
In this chapter and in the community documents, unless the context otherwise requires:
1. "Association" 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.
2. "Community documents" means the declaration, bylaws, articles of incorporation, if any, and rules, if any.
3. "Community management services" means management services provided to an association to manage, maintain or improve the planned community and its common areas, to enforce the community documents and to provide for the collection of assessments or payment of vendors and includes any or all of those services.
4. "Community manager" means a person or entity that provides community management services to an association.
3. 5. "Declaration" means any instruments, however denominated, that establish a planned community and any amendment to those instruments.
4. 6. "Planned community" 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 owners of separately owned lots, parcels or units are mandatory members and are required to pay assessments to the association for these purposes. Planned community does not include a timeshare plan or a timeshare association that is governed by chapter 20 of this title or a condominium that is governed by chapter 9 of this title.
Sec. 4. Title 33, chapter 16, article 1, Arizona Revised Statutes, is amended by adding sections 33-1819 and 33-1820, to read:
33-1819. Association employees and contractors; compensation and gratuity; prohibition
The association's employees and independent contractors, including community managers, and any employee of any independent contractor may not solicit, receive or accept any undisclosed fee, compensation, commission or gratuity whether in cash or in kind from any third party that provides or solicits to provide goods or services to the association or the planned community.
33-1820. Community managers' duties; compliance; liability
A. A community manager shall:
1. be familiar with the community documents for the planned community and with the applicable law.
2. Act in good faith, with the appropriate authorization of the association and in compliance with the community documents and applicable law.
B. A community manager may not require the association to indemnify or otherwise defend the community manager from claims or complaints arising from the actions of the community manager with respect to that association and planned community. A community manager is responsible for the conduct of the community manager, including any negligence or other tortious conduct.
C. A community manager who violates this section is liable for damages in an action brought by a member and may be subject to an order to comply with the community documents and applicable law. The court shall award reasonable attorney fees and costs to the prevailing party in an action pursuant to this section.