HB 2743

Overview

HB 2743 introduces new liabilities for condominium and planned community associations whose governing documents contain provisions prohibited by law. Specifically, if an association fails to amend or remove such unlawful provisions after receiving written notice from an owner, the association becomes liable for damages: $1,000 after the first notice and $2,500 for each subsequent notice, regardless of whether the notices come from the same or different individuals.

Key Changes

• Amending A.R.S. 33-1242 for condominium associations and A.R.S. 33-1803 for planned community associations to:
  • Subject an association to liability for provisions of the declaration, bylaws, or rules that are prohibited by law in the following instances:
    • $1,000 in damages if the association, after the first written notice from an owner that a provision is unlawful, fails to amend or remove the unlawful provision;
    • $2,500 in damages if the association, after the second and any additional written notices from an owner that a provision is unlawful, fails to amend or remove the unlawful provision;
  • Provide that an association’s liability is cumulative based on the number of written notices received from owners regardless of whether the notices are received from the same or different owners.
  • Provide recourse to owners against associations for the damages provided for in this bill in any court of competent jurisdiction.

Legislative Timeline

• January 22, 2026 – House Second Reading
• January 21, 2026 – Introduced; House First Reading; Assigned to Senate Government and Rules Committees

Impact

If enacted, this bill will increase the responsibility of boards of directors and managers to review and update association documents promptly, as repeated failures to act can result in accumulating financial penalties and potential court actions by owners. As a result, the bill heightens the need for proactive compliance and may deter the inclusion or maintenance of illegal provisions in governing documents. There is also the possibility of abuse arising from this bill and litigation over whether a particular provision is valid or invalid under the law. An owner may repeatedly send an association notice of provisions that are not invalid under the law, but that are simply disliked by the owner. This will lead to either the owner filing a lawsuit against the association to collect the owner’s alleged damages, or the association filing a lawsuit against the owner to stop the abuse.