HB 4050

Overview

HB 4050 amends Arizona law to significantly increase the delinquency thresholds for foreclosure by condominium associations from 1 year/$1,200 to 18 months/$10,000, to match last year’s increase for planned community associations. The bill requires associations to clearly distinguish between common expense liens and other owner charges, with the latter only collectible through non-foreclosable judgment liens after a court judgment. Associations must follow enhanced notice and account statement procedures, including providing written notice before initiating collection and maintaining accessible, accurate records for each account. Good faith efforts to resolve contested charges are now mandated, and if improper charges are included in a lien, those portions are invalidated by court order. Collectively, these provisions impose additional processes and substantive limitations on association collection and foreclosure activities.

Note that HB 4050 is a duplicate of SB 1246.

Key Changes

• Amending A.R.S. 33-1202 to:
  • Revise the definition of “assessment” to “the association’s charges that are applied to each unit owner to fund the actual or anticipated common expenses based on each unit owner’s common expense liability;”
  • Include interest on assessments as part of the common expense lien;
  • Clarify that “common expenses” include expenditures made by or financial liabilities of the association “for the maintenance, operation, use, upgrade, replacement or acquisition of the common elements, utilities or other services required by the declaration and the association’s reasonable administrative and operational expenses as authorized in the declaration.”
• Amending A.R.S. 33-1256 and A.R.S. 33-1807 to:
  • For condominiums only, increase the delinquency thresholds for foreclosure from 1 year/$1,200 to 18 months/$10,000;
  • Specify that for special assessments with an initial value of $10,000 or more, that only the 18 month delinquency threshold applies for foreclosure;
  • Provide that associations that fail to comply with the final notice requirement of these sections will be unable to collect any subsequent collection costs from the delinquent owners;
  • Require associations to maintain true and accurate records of account for each owner and to distinguish between charges that are included in the common expense lien and other owner charges;
  • Establish the following with respect to owner accounts:
    • Associations may use any process or tool it deems appropriate for the billing of money owed on the owners’ accounts, including the use of periodic payment books;
    • Associations shall provide either secure online viewing access to individual owner accounts or, on request of an owner, an electronic copy of the statement of account for the current fiscal year, without charge;
    • Associations and their agents shall make good faith efforts to evaluate and resolve any charges on an owner’s account that the owner contests, including a request for review and correction by the board of directors, if necessary;
    • Charges assessed in violation of the declaration or Arizona law on either the common expense lien or the owner charges are invalid and unenforceable;
    • Contested charges may be challenged in court in any action brought by an association to enforce or apply the common expense lien or judgment lien; if a court finds the charge to be invalid, the charge and subsequent related collection costs or fees shall be extinguished and excluded.
• Amending A.R.S. 33-1802 to:
  • Add a definition for “allocated interests” to mean “the common expense liability and voting rights that are allocated to each member of the association;”
  • Add a definition for “assessment” to mean “the association’s charges that are applied to each member to fund the actual or anticipated common expenses based on each member’s common expense liability;”
  • Add a definition for “common expense liability” to mean “the share or assignment of common expenses that are allocated to each member by the declaration;”
  • Add a definition for “common expenses” to mean “expenditures made by or financial liabilities of the association for the maintenance, operation, use, upgrade, replacement or acquisition of the common elements, the maintenance of member property or utilities or other services required by the declaration and the association’s reasonable administrative and operational expenses as authorized in the declaration;”
  • Clarify that “member charges” are those charges that are imposed pursuant to the community documents.

Legislative Timeline

• February 11, 2026 – House Second Reading
• February 10, 2026 – Introduced, House First Reading; Assigned to House Government and Rules Committees

Impact

Overall, HB 4050 increases the administrative responsibilities of boards of directors and managers, emphasizing transparency, communication, and compliance with legal requirements. It also limits the ability to foreclose on properties and transfer debt, potentially impacting the financial operations of associations.