ARIZONA HOUSE OF REPRESENTATIVES

HB 2609: homeowners' associations; assessments; foreclosures
PRIME SPONSOR: Representative Mosley, LD 5 BILL STATUS: Local & International Affairs

Abstract

Relating to HOA foreclosure on a property for unpaid assessments.

Provisions

1. Requires any HOA lien against a unit for overdue assessments to be first enforced by a civil action for the amount owed. (Sec. 1, 2)

2. Permits an HOA to foreclose on a property for overdue assessments by filing a judicial foreclosure action after failure to recover the full amount following any civil action. (Sec. 1, 2)

3. Removes the ability of the HOA to enforce charges for late payment of assessments, reasonable collection fees, reasonable attorney fees and costs incurred regarding the assessments as a part of a foreclosable action. (Sec. 1, 2)

4. Removes the ability of an HOA to include interest on certain assessments in a civil suit against a unit owner for unpaid assessments. (Sec. 1, 2)

5. Requires all payments received on a member's account to be applied to the interest on any assessments immediately following payment of the unpaid assessments themselves. (Sec. 1, 2)

o Currently, payments must be applied to unpaid assessments, charges for late payment, collection fees, attorney fees and costs incurred with respect to those assessments, unpaid fees, charges and monetary penalties or interest, in that order (A.R.S. §§ 33-1256 & 33-1807).

6. Requires an HOA to furnish the amount of any unpaid lien for a debt other than any assessment to a lienholder, escrow agent, unit owner or designee of the unit owner.  (Sec 1, 2)

o Currently, the association must furnish the amount of any unpaid assessments(A.R.S. §§ 33-1256 & 33-1807).

7. Prohibits an association or any agent of the association from refusing any partial payment from the unit owner for liens or unpaid charges. (Sec. 1, 2)

8. Removes the ability of the HOA to include attorney fees in an assessment. (Sec. 1, 2)

9. Prohibits an HOA from designating or otherwise converting owed monies into attorney fees and costs into assessments against the property, regardless of how they are denominated. (Sec. 1, 2)

10. Makes technical and conforming changes. (Sec. 1, 2)

Current Law

An HOA has a lien on a unit for any levied assessment as soon as the assessment becomes due.  A unit in an HOA for which the association has a lien for assessments, late payments, collection fees or attorney fees may be foreclosed in the same manner as a mortgage on real estate.  The foreclosure may only commence if the owner has been delinquent on the payment for a period of one year or in an amount of $1,200 or more. 

An HOA has a lien for fees, charges, late charges, monetary penalties and interest after the entry of a judgement in a civil suit for these amounts and the judgement if recorded in the office of the county recorder.  The lien for these amounts cannot be foreclosed and is considered effective only on conveyance of any interest in the real property. 

The HOA is required to furnish a statement to the lienholder, escrow agent, unit owner or designee setting forth the amount of unpaid assessments against the unit (A.R.S. §§ 33-1256 & 33-1807). 

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Fifty-third Legislature                  HB 2609

Second Regular Session                               Version 1: Local & International Affairs

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