HB2609 - 532R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 33-1256, Arizona Revised Statutes, is amended to read:

START_STATUTE33-1256. Lien for assessments; priority; mechanics' and materialmen's liens; applicability

A. The association has a lien on a unit for any regular or Special assessment levied against that unit from the time the assessment becomes due. The association's lien for assessments, for charges for late payment of those assessments, for reasonable collection fees and for reasonable attorney fees and costs incurred with respect to those assessments may shall be enforced first by a civil action for the amount owed, and on entry of judgement, by proper execution of a GARNISHMENT of monies or property as prescribed in title 12, chapter 9, article 4. On any failure to recover the full amount of the assessments owed by way of the execution of the writ of garnishment, the association may foreclosed foreclose on the property by filing a judicial FORECLOSURE action in the same manner as a mortgage on real estate as prescribed in chapter 6, article 2 of this title but the association may be foreclosed FORECLOSE only if the owner has been delinquent in the payment of monies secured by the lien, excluding reasonable collection fees, reasonable attorney fees and charges for late payment of and costs incurred with respect to those assessments, for a period of one year or in the amount of one thousand two hundred dollars or more, whichever occurs first. Fees, charges, late charges, monetary penalties and interest charged pursuant to section 33‑1242, subsection A, paragraphs 10, 11 and 12, other than charges for late payment of assessments, are not enforceable as assessments under this section. If an assessment is payable in installments, the full amount of the assessment is a lien from the time the first installment of the assessment becomes due.

B. The association has a lien for fees, charges, late charges, other than charges for late payment of assessments, or monetary penalties or interest charged pursuant to section 33‑1242, subsection A, paragraphs 10, 11 and 12 after the entry of a judgment in a civil suit for those fees, charges, late charges, or monetary penalties or interest 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 fees, charges, late charges or monetary penalties are not ENFORCEABLE as assessments as prescribed in subsection A of this section.

C. The association's lien for monies other than for assessments, for charges for late payment of those assessments, for reasonable collection fees and for reasonable attorney fees and costs incurred with respect to those assessments may not be foreclosed and is effective only on conveyance of any interest in the real property.

B. D. A lien for assessments, for charges for late payment of those assessments, for reasonable collection fees and for reasonable attorney fees and costs incurred with respect to those assessments 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 prior to the 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.

C. E. Subsection B D of this section does not affect the priority of mechanics' or materialmen's liens or the priority of liens for other assessments made by the association. The assessment lien under this section is not subject to chapter 8 of this title.

D. F. Unless the declaration otherwise provides, if two or more associations have liens for assessments created at any time on the same real estate, those liens have equal priority.

E. G. Recording of the declaration constitutes record notice and perfection of the lien for assessments, for charges for late payment of those assessments, for reasonable collection fees and for reasonable attorney fees and costs incurred with respect to those assessments. Further recordation of any claim of lien for assessments under this section is not required.

F. H. A lien for unpaid assessments is extinguished unless proceedings to enforce the lien are instituted within three years after the full amount of the assessments becomes due.

G. I. This section does not prohibit:

1. Actions to recover sums for which subsection A or B of this section creates a lien. or does not prohibit

2. An association from taking a deed in lieu of foreclosure.

H. J. A judgment or decree in any action brought under this section shall include costs and reasonable attorney fees for the prevailing party.

I. K. 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 unpaid assessments assessment lien and any unpaid lien for a DEBT other than an assessment against the unit. The statement shall be furnished within ten CALENDAR days after receipt of the request and the statement is binding on the association, the board of directors and every unit owner 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 shall extinguish any lien for any unpaid assessment monies then due.

J. L. Notwithstanding any provision in the condominium documents or in any contract between the association and a management company or other agent of the association, unless the member directs otherwise, all payments received on a member's account shall be applied first to any unpaid assessments, for to unpaid charges for late payment of or interest on those assessments, for to reasonable collection fees and for to unpaid attorney fees and costs incurred with respect to those assessments, 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. The association and any agent of the ASSOCIATION MAY not refuse any one or more partial payments from the unit OWNER for the liens or charges prescribed by subsection A or B of this section.

M. NOTWITHSTANDING any provision in the condominium documents, an ASSESSMENT does not include attorney fees and the ASSOCIATION may not designate or otherwise convert monies owed in attorney fees and costs into assessments against the property, regardless of how those attorney fees and costs are DEnominated.

K. N. 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_STATUTE33-1807. Lien for assessments; priority; mechanics' and materialmen's liens

A. The association has a lien on a unit property for any regular or special assessment levied against that unit property from the time the assessment becomes due. The association's lien for assessments, for charges for late payment of those assessments, for reasonable collection fees and for reasonable attorney fees and costs incurred with respect to those assessments may shall be enforced first by a civil action for the amount owed, and on entry of judgement, by proper EXECUTION of a garnishment of monies or PROPERTY as prescribed in title 12, chapter 9, article 4. On any failure to recover the full amount of assessments owed by way of the execution of the writ of garnishment, the ASSOCIATION may foreclosed FORECLOSE on the property by filing a judicial FORECLOSURE action in the same manner as a mortgage on real estate as prescribed in chapter 6, article 2 of this title but the association may be foreclosed FORECLOSE only if the owner has been delinquent in the payment of monies secured by the lien, excluding reasonable collection fees, reasonable attorney fees and charges for late payment of and costs incurred with respect to those assessments, for a period of one year or in the amount of one thousand two hundred dollars or more, whichever occurs first. Fees, charges, late charges, monetary penalties and interest charged pursuant to section 33‑1803, other than charges for late payment of assessments are not enforceable as assessments under this section. If an assessment is payable in installments, the full amount of the assessment is a lien from the time the first installment of the assessment becomes due.

B. The association has a lien for fees, charges, late charges, other than charges for late payment of assessments, or monetary penalties or interest charged pursuant to section 33‑1803 after the entry of a judgment in a civil suit for those fees, charges, late charges, or monetary penalties or interest 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 fees, charges, late charges or monetary penalties are not enforceable as assessments as PRESCRIBED in subsection A of this section.

c. The association's lien for monies other than for assessments, for charges for late payment of those assessments, for reasonable collection fees and for reasonable attorney fees and costs incurred with respect to those assessments may not be foreclosed and is effective only on conveyance of any interest in the real property.

1. Liens and encumbrances recorded before the recordation of the declaration.

2. A recorded first mortgage on the unit property, a seller's interest in a first contract for sale pursuant to chapter 6, article 3 of this title on the unit property recorded prior to the lien arising pursuant to subsection A of this section or a recorded first deed of trust on the unit property.

3. Liens for real estate taxes and other governmental assessments or charges against the unit property.

D. F. Unless the declaration otherwise provides, if two or more associations have liens for assessments created at any time on the same real estate those liens have equal priority.

E. G. Recording of the declaration constitutes record notice and perfection of the lien for assessments, for charges for late payment of assessments, for reasonable collection fees and for reasonable attorney fees and costs incurred with respect to those assessments. Further recordation of any claim of lien for assessments under this section is not required.

F. H. A lien for an unpaid assessment is extinguished unless proceedings to enforce the lien are instituted within three years after the full amount of the assessment becomes due.

G. I. 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.

H. J. A judgment or decree in any action brought under this section shall include costs and reasonable attorney fees for the prevailing party.

I. K. On written request, the association shall furnish to a lienholder, escrow agent, unit property owner or person designated by a unit property owner a statement setting forth the amount of any unpaid assessment lien and any unpaid lien for a debt other than an assessment against the unit PROPERTY. The association shall furnish the statement within ten calendar days after receipt of the request, and the statement is binding on the association, the board of directors and every unit property owner 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 shall extinguish any lien for any unpaid assessment monies then due.

J. L. Notwithstanding any provision in the community documents or in any contract between the association and a management company or other agent of the ASSOCIATION, unless the member directs otherwise, all payments received on a member's account shall be applied first to any unpaid assessments, for to unpaid charges for late payment of or INTEREST on those assessments, for to reasonable collection fees and for to reasonable unpaid attorney fees and costs incurred with respect to those assessments, 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. The association and any agent of the association may not refuse any one or more partial payments from the member for the liens or charges prescribed by SUBSECTION A or b of this section.

M. NOTWITHSTANDING any provision in the community documents, an ASSESSMENT does not include attorney fees and the ASSOCIATION may not designate or otherwise convert monies owed in attorney fees and costs into assessments against the property, regardless of how those attorney fees and costs are DEnominated. END_STATUTE