HB 2397

Overview

In its current amended form, HB 2397 amends the resale disclosure requirements applicable to condominiums and planned communities by expanding the information that must be provided to purchasers and modifying the timing and method of delivery. The bill authorizes electronic transmission of resale disclosures and changes the triggering event for disclosures to the acceptance of a purchaser’s offer. It significantly expands the list of documents and information that must be included in the resale disclosure package, including board meeting minutes, financial statements, declarant control information, and outstanding violation notices. The bill also modifies liability standards for disclosure errors by requiring knowing or reckless conduct and clarifies that associations may rely in good faith on their records when preparing disclosures. Additional changes clarify fee collection procedures and disclosure update rights.

Key Changes

Amending A.R.S. 33-1260 (Condominiums) and A.R.S. 33-1806 (Planned Communities)

• Delivery and Timing of Resale Disclosures
  • Resale disclosures must either be electronically transmitted or delivered to the purchaser within 10 days.
  • For associations with fewer than 50 units/properties: The seller must provide the resale disclosure to the purchaser within 10 days after acceptance of the purchaser’s offer to purchase.
  • For associations with 50 or more units/properties: The association must provide the resale disclosure within 10 days after receipt of written notice of a pending sale that includes:
    • Name of the purchaser or designated agent
    • Email address
    • Mailing address
• Expanded Required Contents of Resale Disclosure
  • The resale disclosure must include the following information and documents:
    • Governing documents
      • Current bylaws and rules
      • Current recorded declaration
      • Final plat (or electronic copy if available)
    • Minutes of the three most recent open board meetings
    • Assessment and financial information
      • Amount of the annual common expense assessment
      • Payment schedule and remaining installments of any approved special assessment
      • Any special assessment approved but not yet assessed or submitted to owners within the previous four months
      • The current amount of any lien or judgment lien held by the association and any lis pendens
    • Fees and financial disclosures
      • Amount and purpose of any title transfer fee
      • The association’s most recent income and expense financial statement
      • Current operating budget
      • Most recent audit, review, or compilation report
      • Most recent reserve study, if any
    • Condition and compliance disclosures
      • Any known material deficiency in limited common elements or common elements that may result in directly assessed repair costs within six months of purchase (condominiums)
      • Any outstanding and unresolved violation cited against the unit/property
    • A summary of pending lawsuits involving the association, excluding routine assessment collection actions.
    • Insurance disclosures (condominiums)
      • Whether any portion of the unit is covered by insurance maintained by the association
      • Insurance certificates identifying coverage limits and deductibles.
    • Declarant and ownership disclosures
      • Whether the association remains under declarant control
      • The approximate percentage of units/lots owned by the declarant
      • Whether any corporation or LLC owns and leases 35% or more of the units (condominiums)
    • If a report is provided in summary format, the purchaser may request to review the full report, which the association must provide within 10 days of written request.
    • A statement to be signed by the purchaser at closing acknowledging that:
      • The purchaser will be bound by the CC&Rs
      • Assessments are mandatory
      • Nonpayment may result in collection actions including foreclosure.
    • Disclosure if the property is governed by multiple associations and therefore may be subject to multiple resale disclosure fees.
• Good-Faith Reliance on Association Records – The bill clarifies that resale disclosures may be prepared based on good-faith reliance on association records without requiring independent investigation or verification.
• Liability Standard for Disclosure Violations – A purchaser or seller may pursue damages if a unit owner, member, or association:
  • Knowingly or recklessly fails to disclose required information; or
  • Knowingly or recklessly provides materially false or misleading information.
  • Remedies may include damages and reasonable attorney’s fees awarded by the court.
• Resale Disclosure Fees
  • Associations may charge:
    • Up to $400 total for preparation and delivery of disclosure documents.
    • A $100 rush fee if requested within 72 hours.
    • A $50 update fee if more than 30 days have passed since the original disclosure report.
  • A unit owner or member may request an updated disclosure report if the transaction is delayed.
  • Disclosure-related fees:
    • May be charged only once per transaction
    • May be collected no earlier than closing
    • May be charged to either the seller or purchaser
  • Associations charging unauthorized fees remain subject to a civil penalty of up to $1,200.
• Ownership Update Requirement – Following certain exempt property transfers the purchaser, rather than the seller, must provide updated ownership information to the association.

Legislative Timeline

• March 25, 2026 – On the agenda for the Senate Government Committee, 7:00 a.m.; passed out of committee as amended by the Hoffman amendment
• March 24, 2026 – Senator Hoffman posted an amendment to be considered in committee that would add ARS 33-1821 and ARS 33-1262 to require an association management representative to be on-site for certain time periods during any “capital or reserve account project”
• March 10, 2026 – Senate Second Reading
• March 9, 2026 – Senate First Reading; Assigned to the Senate Government and Rules Committees
• March 3, 2026 – Passed the House on a 52-3 vote
• March 3, 2026 – On the House COW Calendar, 1:15 p.m.; passed out of COW with floor amendment adopted; House Third Reading
• February 25, 2026 – On the House COW Calendar, 10:00 a.m.; retained on calendar (no action taken)
• February 23, 2026 – On the agenda for the House Rules Committee, 1:00 p.m.; passed out of committee; on the House Committee of the Whole (COW) Consent Calendar (objection filed)
• February 17, 2026 – On the agenda for the House Commerce Committee, 2:00 p.m.; unanimously passed out of committee as amended by the Weninger amendment
• February 13, 2026 – Rep. Weninger posted an amendment to be considered in committee that would significantly amend numerous provisions of the bill
• January 26, 2026 – House Second Reading
• January 22, 2026 – Introduced; House First Reading; Assigned to House Commerce and Rules Committees

Impact

As amended and passed by the House, HB 2397 expands the scope of resale disclosures required in condominium and planned community transactions by requiring associations to provide additional governance, financial, and compliance information to purchasers. Associations and management companies will need to assemble more records—such as board minutes, financial statements, and violation notices—when preparing resale disclosure packages. The bill also authorizes electronic delivery of disclosures and raises the liability standard for disclosure errors to knowing or reckless conduct. Overall, the bill increases transparency for purchasers while increasing the administrative burden on associations preparing resale disclosures.