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ARIZONA HOUSE OF REPRESENTATIVESFifty-seventh Legislature First Regular Session |
House: GOV DPA 4-3-0-0 |
HB 2442: homeowners' associations; budget ratification; requirements
Sponsor: Representative Keshel, LD 17
House Engrossed
Overview
Establishes certain procedures and requirements for a condominium association or homeowners association relating to the approval of an annual operating budget and additional unanticipated expenses.
History
The board of directors of a condominium are required to provide a summary of an adopted budget to all unit owners within 30 days of adoption. Unless the board of directors is expressly authorized in the declaration to adopt and amend budgets from time to time, any budget amendment must be ratified by the unit owners. If seeking ratification, the board of directors must set a date for a meting of the unit owners to consider ratification no fewer than 14 or more than 30 days after mailing of a budget summary. Unless a majority of all unit owners reject a proposed budget, it will be ratified. Should a proposed budget be rejected, the periodic budget last ratified by unit owners will continue until unit owners ratify a subsequent budget proposal (A.R.S § 33-1243).
The board of directors of a Homeowners Association (HOA) must prepare an annual financial audit at the end of every fiscal year. All audit information must be made available to owners within 180 days of the end of the fiscal year. The HOA retains the right to increase dues up to a maximum of 20% per year and may raise the dues further should they obtain a majority vote from association members (A.R.S. §§ 33-1810, 33-1803).
Provisions
1. Specifies the board of directors of a condominium association or homeowners association has a duty to develop an annual operating budget for the fiscal year that is based on a reasonably prudent and good faith estimate of the common expenses necessary to satisfy their obligations to the unit owners or members. (Sec. 3, 6)
2. Requires a copy of a proposed budget to be made reasonably available for unit owner or member review at least 48 hours before the board meeting at which the approval of the budget will be considered. (Sec. 3, 6)
3. Allows an association to establish and fund reserve accounts to address anticipated long-term or major maintenance and upgrade of common elements, or for other purposes, provided that doing so is authorized in the declaration or community documents. (Sec. 3, 6)
4. Prohibits the board or its managing agent from spending or transferring any monies from the association's reserve accounts for any purpose that is not included in the declaration or community documents' authorized use of that account without prior authorization from the unit owners or members. (Sec. 3, 6)
5. Instructs the Board of Directors, prior to the implementation and assessment of an approved budget, to notice and call an informational special meeting to answer and address questions of unit owners or members. (Sec. 3, 6)
6. Outlines a procedure for circumstances involving unanticipated and unbudgeted operating expenses. (Sec. 3, 6)
7. Requires the unit owners or members to ratify, by a majority vote of all allocated votes in the association, or a larger percentage if required by the declaration or community documents, a special assessment or to secure financing for any reason, if approved by the board. (Sec. 3, 6)
8. Asserts that a board of director's failure to adhere to the provisions of this act involving budgets results in any action or assessment deemed invalid and unenforceable. (Sec. 3, 6)
9. Prohibits a homeowner's association from imposing a regular assessment that is more than 10% greater than the immediately preceding fiscal year's assessment without the prior approval of a majority of the members voting on that issue. (Sec. 6)
10. Modifies the definition of unit owner expenses and member expenses. (Sec. 1, 5)
11. Defines assessment, common expense liability and common expenses.
12. Makes technical and conforming changes.
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16. HB 2442
17. Initials JH Page 0 House Engrossed
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