Assigned to GOV &                                                                                                                   FOR COMMITTEE

 

 

 

 

ARIZONA STATE SENATE

Fifty-Third Legislature, Second Regular Session

 

FACT SHEET FOR S.B. 1495

 

condominiums; planned communities; meetings

 

Purpose

 

Outlines requirements for meetings within a unit owners' association (UOA) or homeowners' association (HOA).

 

Background

 

An HOA is a common interest organization to which all the owners of lots in a planned community must belong. Similarly, a UOA is a common interest organization to which all owners of a unit in a condominium must belong. The four defining characteristics of all HOAs and UOAs are: 1) all owners are automatically members;  2) governing documents create mutual obligations; 3) mandatory fees or assessments are generally levied against owners and used for the operation of the association; and 4) owners share a property interest in the community (A.R.S. §§ 33-1202 & 33-1802).

 

The period of declarant control terminates no later than the earlier of either 90 days after the conveyance of 75 percent of the units or four years after all declarants have ceased to offer units for sale in the ordinary course of business (A.R.S.§ 33-1243). A declarant is any person or group of persons designated by the declaration of a planned community with certain rights, including the right to construct improvements or exercise development rights (A.R.S. § 33-1202). 

 

For a UOA, the association's declaration may be amended by a vote of the unit owners to which at least 67 percent of the votes in the association are allocated, unless otherwise specified (A.R.S. § 33-1227).  A declaration may be amended by an HOA with an affirmative vote or written consent of the number of owners or eligible voters specified in the declaration (A.R.S. § 33-1817).

 

A member of the board of directors (Board) may be removed by members circulating a petition to gather a minimum number of signatures as outlined and calling a special meeting 30 days after the petition is received.   Currently, a quorum is established at the meeting when either the number of owners eligible to vote equals at least 20 percent of the votes of the association or the number of persons eligible to vote equals at least 1000 votes, whichever is less (A.R.S.  §§ 33-1243 & 33-1813). 

 

All meetings of the respective UOA or HOA and the Board must be held in the state at least once a year. Special meetings may be called by the president, by a majority of the board or by unit owners or members having at least 25 percent of the votes or any lower number specified in the bylaws (A.R.S. §§ 33-1248 & 33-1804).

 

Statute provides that an action by written consent allows members to approve any action, without a meeting of members, if the action is approved by members holding at least a majority of the voting power, unless otherwise specified. The action will be evidenced by one or more written consents describing the action taken, signed by those members representing at least the requisite among of the voting power and delivered to the corporation for inclusion in the minutes or filing with the corporate records (A.R.S. § 10-3704). 

 

There is no anticipated fiscal impact to the state General Fund associated with this legislation.

 

Provisions

 

Meetings

 

1.      Establishes at a minimum, an annual UOA or HOA meeting will include the following:

a) board member elections;

b) any other UOA or HOA business;

c) an opportunity for unit owners or members to address the Board under individual time limits as determined by the unit owners or members present at the meeting; and

d) a financial summary report of the UOA's or HOA's previous annual expenses and income, and a projection of the operating and capital expenses for the upcoming year.

 

2.      Modifies the minimum number of votes required to call a special UOA or HOA meeting by establishing the following thresholds:

a)      for an association with up to 1,000 unit owners or members, at least 25 percent of votes in the UOA or HOA; or

b)      for an association with more than 1,000 unit owners or members, 10 percent of votes in the UOA or HOA.

 

3.      Requires a Board meeting agenda, held after the termination of declarant control, to be given at least 48 hours in advance of the meeting and distributed as outlined.

 

4.      Adds that background or other information related to each agenda item must be available to all unit owners or members attending the Board meetings.

 

5.      Requires the Board, before a meeting is held, to provide:

a)      draft minutes from previous meetings; and

b)      financial reports upon request to any unit owner or member.

 

6.      Allows the UOA or HOA to make the outlined information available by posting it on the association's website at least 24 hours before the meeting is held.

 

7.      Adds that the number as prescribed in the condominium or community documents for a quorum of members is a quorum for the purposes of a special meeting called for removing a board member.

 

 

                                  Association Voting

 

8.      Allows unit owners or members to initiate or take action only at an annual, regular or special meeting of the association.

 

9.      Allows unit owners or members to use written consent for actions upon presentation of a petition and approval by a vote of unit owners or members at an annual, regular or special meeting.

 

10.  Allows a petition for written consent, which failed at the meeting, to be circulated for signature to the unit owners or members who did not appear and vote at the meeting along with draft minutes where the petition was considered that contain the arguments for and against the proposal.

 

11.  Allows the action by written consent to proceed pending sufficient approval from:

a)      the number of favorable votes cast in person at the meeting;

b)      the number of favorable votes cast by absentee ballot; and

c)      the number of petition signatures.

 

Amending a Declaration

 

12.  Prohibits a declaration, during the period of declarant control, from being amended to change the duration or conditions for declarant control, unless approved by an affirmative vote or written consent of at least 66 percent of the non-declarant owners, regardless of any existing provisions in community documents. 

 

Miscellaneous

 

13.  Stipulates a UOA or HOA in violation of outlined sections is liable for civil damages of $500 per violation.

 

14.  Defines a committee.

 

15.  Defines a meeting.

 

16.  Makes technical and conforming changes.

 

17.  Becomes effective on the general effective date.

 

Prepared by Senate Research

February 12, 2018

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