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ARIZONA HOUSE OF REPRESENTATIVESFifty-seventh Legislature First Regular Session |
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HB 2599: condominiums; construction defects; actions
Sponsor: Representative Blackman, LD 7
Committee on Government
Overview
Modifies the statutes of limitation related to construction defects and establishes a process condominium unit owners' association must follow when taking legal actions related to construction defects.
History
A condominium unit owners' association is an organization comprised of all unit owners. The association's powers include the ability to create rules, manage common elements and litigate on behalf of itself or multiple unit owners (A.R.S. §§ 33-1241, 33-1242).
A construction defect is a material deficiency in the construction, manufacture, repair or alteration of a dwelling that results in a code violation, use of defective material or failure to adhere to generally accepted workmanship standards (A.R.S. § 12-1361).
Provisions
1. Reduces from eight years to four years the time an action or arbitration based in contract can occur for the substantial completion of real property. (Sec. 1)
2. Reduces from eight years to four years the time a municipality or county can take action or arbitrate against a person after an improvement to real property for the county or municipality has been accepted for ownership if the action or arbitration is based on municipal or county code, ordinance, other legal requirement, or a permit required as a condition of development. (Sec. 1)
3. Modifies the statute of limitations for construction defect claims when a defect is discovered in the fourth year after substantial completion of an improvement. (Sec. 1)
4. Requires the board of a condominium unit owners' association to obtain a vote of two-thirds approval from unit owners before the board can institute, defend or intervene in litigation or administrative proceedings relating to the development, design, engineering, construction or improvements of real property. (Sec. 2)
5. Requires before holding a vote, the board to obtain an inspection from a professional engineer to identify alleged construction defects, describe the physical conditions of the claims and describe any modifications, maintenance or repairs to the units that were performed by the unit owners of the association. (Sec. 2)
6. Requires the association to provide written notice of the inspection to the condominium developer no later than five days before the inspection. (Sec. 2)
7. Allows the condominium developer or their designee to attend the inspection. (Sec. 2)
8. Requires before the vote that the association delivers by certified mail written notices of anticipated commencement of a construction defect action to unit owners, the condominium developer and the construction professionals the action is against. (Sec. 2)
9. Requires the notice to the unit owners to call for a meeting held between 15 to 30 days after the mailing date of the notice. (Sec. 2)
10. Requires the notice to unit owners include:
a) A description of the construction defect action;
b) A description of alleged defects;
c) The relief sought and a good faith estimate of benefits and risks involved;
d) A copy of the inspection report by the professional engineer who conducted the inspection;
e) A disclosure that the construction defect claim may result in an increased cost to the association in maintenance, repair or an increase in assessments to cover the cost of repairs;
f) A disclosure that until the alleged defects are repaired a unit owner selling their unit may be required to disclose the defects;
g) The fee arrangement agreed to by the board of directors and the attorney representing the association;
h) A disclosure that if the association does not prevail on its claim, they may be responsible for paying the attorney's fee; and
i) A disclaimer that there is no guarantee that the association will recover the money to repair the defects and if they do not the association may increase assessments. (Sec. 2)
11. Requires the association to notify, five days beforehand, the condominium developer and construction professionals concerning the last known details about the association's meeting to consider possible legal actions. (Sec. 2)
12. Requires the association meeting considering litigation include a presentation by the association or its attorney about the construction defects. (Sec. 2)
13. Allows the condominium developer or construction professionals who are accused of the defect to offer remedy. (Sec. 2)
14. Requires the association's voting period begin at the conclusion of the meeting on whether to take action for construction defects. (Sec. 2)
15. Specifies the voting period can last no longer than 45 days or when the association determines if the action has been approved or disapproved. (Sec. 2)
16. Requires that a unit owner may only vote once, and their vote must be in a written format. (Sec. 2)
17. Requires the association maintain a record of all votes until the conclusion of the construction defect action, including any appeals. (Sec. 2)
18. Specifies the right to cure for condominium developers and construction professionals commences after the association votes in favor of the construction defect action. (Sec. 2)
19. States this section does not apply to publicly owned buildings. (Sec. 2)
20. Applies this section to any applicable provisions of law relating to purchaser dwelling actions and homeowner's association dwelling actions. (Sec. 2)
21. States the limitations on the time periods for filing an action established by this act only apply to claims filed after the effective date. (Sec. 3)
22. Makes a conforming change. (Sec. 1)
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26. HB 2599
27. Initials JH/MB Page 0 Government
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