An Explanation of House Bill 2119

House Bill 2119 is a proposed law that aims to amend Section 33-442 of the Arizona Revised Statutes. This section pertains to condominiums and planned communities.

The purpose of the bill is to prohibit certain fees that homeowner's associations (HOAs) may charge. The bill states that any provision in a declaration, covenant, or other document relating to real property in Arizona will not be enforceable if it tries to:

1. Bind future owners of the property.
2. Require the payment of a fee or charge to the HOA or a third party when transferring ownership of the property.

It is important to note that regularly scheduled fees or charges that are paid by the current owner regardless of whether or not the property is transferred are not considered payable on transfer.

The bill also clarifies that any provision attempting to impose a transfer fee is unenforceable, even if it is recorded, and does not create a lien right. This means that any lien purportedly arising from an unenforceable provision is invalid and unenforceable.

However, there are exceptions to this prohibition. The bill does not apply to certain types of fees or charges, including:

1. Fees or commissions paid to a licensed real estate broker for their services in facilitating the transfer of the property.
2. Fees or charges that must be paid to an association and are used exclusively for authorized purposes, provided that they pertain to the land and are not passed on to a third party or developer, unless authorized.
3. Rent, reimbursement, charges, or other amounts payable under a lease agreement.
4. Consideration paid to the holder of an option to purchase or the holder of a right of first refusal or first offer to purchase when waiving or releasing their rights upon transfer of the property.
5. Fees or charges related to the purchase or transfer of a club membership associated with the property.
6. Nonprofit fees or charges that support recreational activities within the association.
7. Fees, taxes, assessments, or charges imposed by a governmental authority.
8. Consideration paid by the transferee for the interest in real property being transferred, including any subsequent additional consideration based on appreciation, development, or sale of the property.

The bill also specifies that any transfer fee covenant or document executed after July 29, 2010, regardless of any provisions or liens, is not binding or enforceable. However, this does not imply that transfer fee covenants or documents executed before July 29, 2010, are automatically enforceable or valid.

Finally, the bill states that an association cannot charge fees authorized under certain circumstances for conveyances between parties as prescribed by other sections of the law.

For the purposes of this bill, "association" refers to a nonprofit organization qualified under the United States internal revenue code or a nonprofit mandatory membership organization composed of property owners.

"Transfer" in this context means the sale, gift, conveyance, assignment, inheritance, or any other transfer of an interest in real property located in Arizona.