Bulletin: AZ2016001

Dear Associates:

The Arizona Legislature adjourned its 2016 regular session sine die in the early hours of May 7, 2016, after 117 days in session. This year, the Legislature introduced 1,247 bills, sent 388 bills to the Governor's desk, 374 were signed into law, and 14 were vetoed. 

The following is a summary of legislation, as provided by the LTAA that was passed during the 2016 legislative session.  

BILLS THAT PASSED 

Bills listed below will become effective on August 6, 2016, unless otherwise noted. 

HB 2555 (judgment liens; recorded info statement) [Chapter 202] stipulates that a certified copy of a judgment requiring the payment of money and a separate information statement must be recorded with the county recorder in order for the judgment to become a lien on the real property of the judgment debtor. Amends sections 33-961, 33-964 and 33-967, Arizona Revised Statutes.

HB 2002 (insurance premium tax reduction) [Chapter 358] annually reduces the premium tax rate for insurance other than fire, disability, and health care service insurance by .05%, beginning from the 2015 rate of 2% down to 1.70% in calendar year 2021 and beyond. Previously, the rate was annually reduced from the 2015 rate of 2% to specified lower rates in calendar years 2016 through 2025 and to 1.70% in calendar year 2026 and beyond. Amends section 20-224, Arizona Revised Statutes. This section does not apply to title insurance, and such insurers shall be taxed as provided in section 20-1566, Arizona Revised Statutes.

HB 2076 (annexation; single property owner; exception) [Chapter 93] modifies the requirements for which a territory is considered contiguous. For the purposes of municipal annexation, a territory is considered contiguous if the territory adjoins the exterior boundary of the annexing municipality for at least 300 feet, if all of the real property in the territory is owned by one person, and the municipality and the property owner agree to the annexation. Amends section 9-471, Arizona Revised Statutes.

HB 2106 (homeowners' associations; enforcement grace period) [Chapter 230]modifies the response period for a notice of violation from a homeowners’ association (“HOA”). The bill stipulates that a condominium unit owner or planned community member has 21 calendar days to provide the HOA with a written response to a notice of violation, rather than 10 business days. Amends sections 33-1242 and 33-1803, Arizona Revised Statutes.

HB 2125 (district boundary modifications; parcel lines) [Chapter 179] allows special taxing district boundary lines to be adjusted if the current lines split a parcel. Sponsored by Republican Rep. TJ Shope, the bill allows a property owner whose parcel is split by a district boundary line to request the county assessor, in writing, to modify the district boundary so that the entire parcel is contained within the district that governs the majority of the area of the parcel. The legislation also authorizes a county assessor to initiate the consolidation of a parcel found to be split into two districts and exempts various specified districts. HB 2125 received strong support from the Maricopa County Assessor’s Office, the County Supervisors Association of Arizona, and the Arizona Association of Counties; there was no opposition. It passed by unanimous vote in both chambers and was signed into law by Gov. Ducey on May 11, 2016. Amends section 48-272, Arizona Revised Statutes.

HB 2172 (planned communities; architectural designs; approval) [Chapter 83]stipulates that the approval of a construction project’s architectural designs, plans and amendments may not be “unreasonably withheld” by the planned communities’ design review committee, architectural committee or a committee that performs a similar function. Amends section 33-1817, Arizona Revised Statutes.

HB 2342 (insurance; licensed entities) [Chapter 101] makes various changes relating to the regulation of insurance licensees. The bill requires an insurance producer to inform the director of the Arizona Department of Insurance of any change in the licensee’s e-mail address within 30 days. The legislation also prohibits an authorized insurer from issuing a policy unless the policy declaration page or endorsement identifies the name of the producer licensed for that line of authority in this state, and removes statutory references to the countersignature requirement (this does not apply to reinsurance or life, disability or title insurance). Amends sections 20-229, 20-286 and 20-1693, Arizona Revised Statutes. Repeals section 20-2405, Arizona Revised Statutes.

HB 2382 (property; declaration amendment; procedure) [Chapter 254] creates a process for amending a community declaration. The bill stipulates that except during the period of declarant control, or if during the period of declarant control, with the written consent of the declarant in each instance, the declaration may be amended by a homeowner's association or a property owner by an affirmative vote or written consent of the number of eligible voters as prescribed in the declaration. An amendment to a declaration may apply to fewer than all of the lots or less than all of the property that is bound by the declaration, and the amendment is deemed to conform to the general design and plan of the community if specified conditions are met. An amendment to the declaration is effective immediately on recordation of the instrument in the county in which the property is located and does not apply to a condominium or a timeshare plan or association. Amends sections 33-440 and 33-1817, Arizona Revised Statutes.

HB 2447 (business entities; database; posting; requirements) [Chapter 322] requires the Arizona Corporation Commission (“ACC”) to establish and maintain an online database for the filing of certain business documents within 60 days after approval, beginning January 1, 2017. The bill limits the database to the inclusion of documents filed for an entity with a known place of business located in a county with a population of greater than 800,000 persons (Maricopa and Pima Counties), and stipulates that the ACC must post the database on its website to allow the public to search for business information, including an entity’s name, approval date and county of known place of business. This was an extremely controversial bill and its passage was a significant defeat for the newspapers, as it eliminates the long-standing requirement for new businesses in Maricopa and Pima Counties to purchase advertisements in newspapers to publish their articles of incorporation. Instead, the ACC will publish formation documents through a new online database, once it is created. Amends sections 10-130, 10-203, 10-1006, 10-1007, 10-1008, 10-1105, 10-1403, 10-1503, 10-1520, 10-2077, 10-2143, 10-3203, 10-11006, 10-11007, 10-11008, 10-11105, 10-11403, 10-11503, 10-11520, 29-633, 29-635 and 29-754, Arizona Revised Statutes.

SB 1413 (fiduciary access to digital assets.) [Chapter 165] adds a new chapter to Title 14 (Trusts and Estates) and adopts the Revised Uniform Fiduciary Access to Digital Assets Act (“Act”) as developed by the National Conference of Commissioners on Uniform State Laws, which governs the disclosure of certain types of digital assets. The Act extends the traditional power of a fiduciary to manage tangible property to include management of a person’s digital assets by establishing a procedure for disclosing digital assets and for disclosing content of electronic communications and other digital assets of a deceased user or a principal. It also establishes requirements for disclosure of digital assets held in trust both when the trustee is the original user and when the trustee is not the original user. As defined, “user” means “a person that has an account with a custodian.” A “custodian,” as defined, is “a person that carries, maintains, processes, receives or stores a digital asset of a user.” Under the Act, the legal duties imposed on a fiduciary charged with managing tangible property apply to the management of digital assets, however, a custodian and its officers, employees and agents are immune from liability for an act or omission done in good faith in compliance with this legislation. Amends Title 14, Arizona Revised Statutes, by adding Chapter 13.

SB 1432 (conservation easements; tax classification; registry) [Chapter 168] effective on January 1, 2017, establishes a separate classification for and requires county assessors to establish a digital registry of properties burdened by a conservation easement.  The bill establishes an assessment ratio of 15% and requires all county assessors to review and revise the information in the registry to verify that the properties should remain as class 2 (C)—a subclass of class 2 property for property tax purposes, which consists of real property, and improvements to real property, that is burdened by a conservation easement that has been created and is currently in effect under state law. Amends section 42-12002, Arizona Revised Statutes; amends Title 42, Chapter 12, Article 2, Arizona Revised Statutes, by adding section 42-12058; amends section 42-15002, Arizona Revised Statutes. 

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