Bill Text: AZ HB2599 | 2025 | Fifty-seventh Legislature 1st Regular | Introduced
Bill Title: Condominiums; construction defects; actions
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced) 2025-01-28 - House read second time [HB2599 Detail]
Download: Arizona-2025-HB2599-Introduced.html
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REFERENCE TITLE: condominiums; construction defects; actions |
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State of Arizona House of Representatives Fifty-seventh Legislature First Regular Session 2025
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HB 2599 |
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Introduced by Representative Blackman
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AN ACT
amending section 12-552, Arizona Revised Statutes; amending title 33, chapter 9, article 3, Arizona Revised Statutes, by adding section 33-1242.01; relating to condominium property.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 12-552, Arizona Revised Statutes, is amended to read:
12-552. Actions involving development of real property design, engineering and construction of improvements
A. Notwithstanding any other statute, an action or arbitration based in contract may not be instituted or maintained against a person who develops or develops and sells real property, or performs or furnishes the design, specifications, surveying, planning, supervision, testing, construction or observation of construction of an improvement to real property more than eight four years after substantial completion of the improvement to real property.
B. Notwithstanding any other statute, a municipality or a county may not institute or maintain an action or arbitration against a person who develops or develops and sells real property or performs or furnishes the design, specifications, surveying, planning, supervision, testing, construction or observation of construction of an improvement to real property that is dedicated to the municipality or county more than eight four years after the improvement to real property has been accepted by the municipality or county for ownership, operation and maintenance if the action or arbitration is based on either:
1. A municipal or county code, ordinance or other legal requirement.
2. A permit that is required as a condition of development.
C. The limitations of subsection B of this section do not apply to an action or arbitration that is based on a claim of a wilful, reckless or concealed violation of a municipal or county requirement.
D. Subsection B of this section does not limit any immunity or defense that is available to a municipality or county pursuant to chapter 7, article 2 of this title.
E. Notwithstanding subsection A or B of this section, in the case of injury to real property or an improvement to real property, if the injury occurred during the eighth fourth year after the substantial completion or, in the case of a latent defect, was not discovered until the eighth fourth year after substantial completion, an action to recover damages for injury to the real property may be brought within one year two years after the date on which the injury to real property or an improvement to real property occurred or a latent defect was discovered, but an action may not be brought more than nine six years after the substantial completion of the improvement.
F. The limitations in subsections A, B and E of this section include any action based on implied warranty arising out of the contract or the construction, including implied warranties of habitability, fitness or workmanship.
G. This section does not apply to actions for personal injury or death or shorten the period of warranty provided in an express written warranty.
H. For the purposes of subsections A, E and F of this section, an improvement to real property is considered substantially complete when any of the following first occurs:
1. It is first used by the owner or occupant of the improvement.
2. It is first available for use after having been completed according to the contract or agreement covering the improvement, including agreed changes to the contract or agreement.
3. Final inspection, if required, by the governmental body that issued the building permit for the improvement.
I. In this section an action based in contract is an action based on a written real estate contract, sales agreement, construction agreement, conveyance or written agreement for construction or for the services set forth in subsection A of this section. This section does not extend the period prescribed by the laws of this state for bringing any action. If a shorter period of limitation is prescribed for a specific action, the shorter period governs.
J. With respect to an improvement to real property that was substantially complete on or before September 15, 1989, the eight and nine-year periods established in subsections A and E of this section shall begin to run on September 15, 1989. Notwithstanding the provisions of subsection H of this section and section 12-505, subsection A, this subsection applies to claims that accrued before May 14, 1992.
Sec. 2. Title 33, chapter 9, article 3, Arizona Revised Statutes, is amended by adding section 33-1242.01, to read:
33-1242.01. Association's construction defect claims; inspection; meeting; vote
A. In a civil action brought pursuant to section 12-552, the board of directors shall first obtain the approval by a vote of at least two-thirds of the unit owners voting on the matter before the board of directors may institute, defend or intervene in litigation or administrative proceedings. The board of directors may initiate the action only if authorized by a vote of the unit owners pursuant to this section.
B. Before holding a meeting of the unit owners to vote on the matter pursuant to this section, the association shall obtain an inspection from a professional engineer who is registered pursuant to title 32, chapter 1 that:
1. Identifies the specific units or common elements that are subject to the alleged construction defect.
2. Describes the physical condition of the units or common elements that are subject to the claim.
3. Describes any modifications, maintenance or repairs to the units that were performed by the unit owners or the association.
C. The association shall provide written notice of the inspection prescribed by subsection B of this section to the condominium developer not later than five business days before the date of the inspection. The notice of inspection shall include all of the following:
1. The name and company of the REGISTERED professional engineer who is conducting the inspection.
2. The specific units or common elements to be inspected.
3. The date and time the inspection will occur.
D. The condominium developer or the developer's designee may attend the inspection.
E. Before a vote of the unit owners pursuant to this section, the association shall deliver by certified mail written notice of the anticipated commencement of a construction defect action to the following:
1. Each unit owner.
2. The developer of the condominium.
3. Each construction professional against whom a construction defect action is proposed.
F. The notice to unit owners pursuant to subsection E of this section must call for a meeting of the unit owners to be held not less than fifteen days and not more than thirty days after the mailing date of the notice. The notice must contain:
1. A description of the nature of the construction defect action, a description of the alleged defect or defects, the relief sought and a good faith estimate of the benefits and risks involved.
2. A copy of the inspection report prepared by the registered professional engineer who conducted the inspection pursuant to subsection B of this section.
3. A disclosure that the construction defect claim may result in increased costs to the association in maintenance or repair or cause an increase in assessments or special assessments to cover the cost of repairs.
4. A disclosure that until the alleged defects are repaired, a unit owner who is selling a unit may be required to disclose known defects to buyers.
5. The fee arrangement agreed to by the board of directors and the attorneys representing the association, including the percentage of the recovery from the defendant that the attorneys may receive.
6. A disclosure that if the association does not prevail on its claim, the association may be responsible for paying attorney fees.
7. A disclaimer that there is no guarantee that the association will recover the monies to repair the defects and that if the defects are not repaired the association may increase assessments.
G. At least five business days before mailing the notice to unit owners, the association shall notify the condominium developer and each construction professional against whom a construction defect action is proposed by certified mail, at the last known address, of the date, time and location of the meeting to consider the construction defect action pursuant to this section.
H. The meeting to consider instituting, defending or intervening in litigation pursuant to section 12-552 and in compliance with this section shall include a presentation by the association or its attorneys of the alleged construction defects. The CONDOMINIUM developer and the construction professionals against whom the construction defect is alleged have the right to offer to remedy to any defect alleged as prescribed in section 12-1363.
I. Pursuant to section 33-1250, the conclusion of the meeting constitutes the beginning of the voting period on the question, during which time the association shall accept votes for and against proceeding with the construction defect action. The voting period shall end not later than forty-five days after the meeting or when the association determines the construction defect action is either approved or disapproved.
J. A unit owner's vote may not be submitted more than once and may be obtained in any written format prescribed by section 33-1250 that CONFIRMS the unit owner's vote to approve or reject the proposed construction defect action. The association shall maintain a record of all votes until the conclusion of the construction defect action, including any appeals.
K. For the purposes of this section, the right to cure for condominium developers and construction professionals as prescribed in section 12-1363 shall commence after the association votes in favor of the construction defect action.
L. This section does not apply to a publicly owned building.
M. This section applies in addition to any applicable provisions of title 12, chapter 8, article 14 and chapter 18 of this title,
Sec. 3. Applicability
Section 12-552, Arizona Revised Statutes, as amended by this act, applies to any claim filed after the effective date of this act.
