IMPLEMENTATION MANUAL ARIZONA COMMUNITY ASSOCIATION LEGISLATIVE CHANGES

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1 IMPLEMENTATION MANUAL ARIZONA COMMUNITY ASSOCIATION LEGISLATIVE CHANGES 333 N. Wilmot Rd., Suite 180 Tucson, AZ t / f E. Southern Ave., Suite 400 Tempe, AZ t / f Plaza West Dr. Prescott, AZ t / f Scott B. Carpenter, Esq. scott@carpenterhazlewood.com May 22,

2 TABLE OF CONTENTS I. Introduction... 3 II. Judgment Renewal... 3 III. Condominium Termination... 3 IV. Landlord Obligation Regarding Tenant s Personal Property... 4 V. County Recorder Fees... 4 VI. Sober Living Houses... 4 VII. Turtle Rock III... 5 VIII. Bocchino Case... 9 EXHIBITS Bills HB2240, Judgment Renewal... Exhibit A, Pages 1 through 5 HB2262, Condominium Termination.. Exhibit A, Pages 6 through 9 SB1376, Landlord Obligation Regarding Tenant s Personal Property... Exhibit A, Pages 10 through 16 SB1043, County Recorder Fees.. Exhibit A, Pages 17 through 22 SB1465, Sober Living Homes.. Exhibit A, Pages 23 through 33 Turtle Rock III v. Lynne A. Fisher... Exhibit A, Pages 34 through 41 Patricia Bocchino v. Fountain Shadows Homeowners Association.... Exhibit A, Pages 42 through 48 PAGE 2 OF , CARPENTER, HAZLEWOOD, DELGADO & BOLEN LLP

3 I. INTRODUCTION The passage of the bills attached at Exhibit A comprise the Arizona Legislature s activity regulating community associations for The bill detailed and explained in this Manual will become effective on August 3, This Implementation Manual is intended to provide an operational guide to the day-to-day changes community associations will need to make to comply with the new laws. II. JUDGMENT RENEWAL HB2240 is attached at Exhibit A, Pages 1 through 5. HB2240 makes changes to how civil judgments are renewed if the judgment has not been paid or discharged in bankruptcy. Current law requires the judgment holder (the one who holds a civil judgment against someone or an entity) to file an affidavit every five years renewing the judgment for another five years. With HB2240, civil judgments are enforceable for 10 years before the renewal requirement and the affidavit to renew the judgment makes it enforceable or collectible for another 10 years. III. CONDOMINIUM TERMINATION HB2262 is attached at Exhibit A, Pages 6 through 9. HB2262 makes three changes to the process of terminating a condominium. First, current law requires that the compensable respective interests of unit owners are the fair market values of their units, limited common elements and common element interests immediately before the termination. With HB2262, the compensable interest includes an additional five percent of that total amount for relocation costs for owner-occupied units. Second, the unit owners now have 60 days to disapprove the appraisal instead of 30 days currently. Third, any unit owner has the right to obtain a second independent appraisal (at the unit owner s expense). If the second appraisal amount is different from the association s appraisal by five percent or less, the higher appraisal is the final appraisal. If the second appraisal is more than five percent higher than the association s appraisal, the unit owner must submit to an arbitration, at the PAGE 3 OF , CARPENTER, HAZLEWOOD, DELGADO & BOLEN LLP

4 association s expense, and the arbitrator s award is the final sale amount plus the additional five percent for relocation costs of owner-occupied units. IV. LANDLORD OBLIGATION REGARDING TENANT S PERSONAL PROPERTY SB1376 is attached at Exhibit A, Pages 10 through 16. SB1376 makes changes to how a landlord must treat a tenant s personal property. This can occur in a community association when the association forecloses its assessment lien and evicts the owners or other occupants of a unit after taking ownership and possession of the unit or home. After taking possession, the landlord must inventory the tenant s personal property and inform the tenant of the location and cost of storage of the personal property. The landlord can dispose of perishable or contaminated items. Animals can be immediately released to a shelter but the landlord must keep a record of where the animal(s) are taken. The landlord also has the option to provide reasonable care for the animals if not immediately removed. The personal property must be held for 14 days instead of the current 10 day requirement. After this time period, and if the tenant has made no reasonable effort to recover the items, the landlord can donate the items to a qualifying charitable organization. Any tax benefit from the donation, however, belongs to the tenant. If the tenant tenders payment for removal costs and storage, the landlord must return the items to the tenant. V. COUNTY RECORDER FEES SB1043 is attached at Exhibit A, Pages 17 through 22. SB1043 makes changes to how much a county recorder can charge to record a document in the land records. Currently, county recorders are allowed to charge five dollars for the first page and one dollar for each subsequent page with a maximum charge of $250. SB1043 changes the fee to a flat $30 per document, regardless of length of the document. A short note of lien, for example, that is one page today costs five dollars. After August 3, 2018, the cost will be $30. VI. SOBER LIVING HOUSES PAGE 4 OF , CARPENTER, HAZLEWOOD, DELGADO & BOLEN LLP

5 SB1465 is attached at Exhibit A, Pages 23 through 33. SB1465 makes changes to Arizona s regulation of sober living houses. SB1465 defines a sober living home as: Any premises, place or building that provides alcohol free or drug free housing and that (1) promotes independent living and life skills development, (2) may provide activities that are directed primarily toward recovery from substance use disorders, (3) provides a supervised setting to a group of unrelated individuals who are recovering from substance disorders, and (4) does not provide any medical or clinical services or mediation administration on-site, except for verification of abstinence. SB1465 prohibits cities and counties from disclosing the address of sober living homes except to local law enforcement and emergency personnel. VII. TURTLE ROCK III On October 26, 2017, Division One of Arizona s Court of Appeals decided Turtle Rock III Homeowners Association v. Lynne Fisher, attached at Exhibit A, Pages 34 through 41. On May 8, 2018, the Arizona Supreme Court accepted an appeal of the decision. For now, the attached case may be cited as precedent in similar cases. The Turtle Rock decision is the law in Arizona as of October 26, This law firm did not represent Turtle Rock in the dispute with the Defendant in the case, Ms. Fisher. Additionally, the Turtle Rock case was decided by Arizona s Division One Court of Appeals. It can be cited as persuasive authority in cases in Arizona s Division Two, but trial court judges and the Court of Appeals sitting in Division Two are not technically bound by the decision. Division Two s jurisdiction is limited to Cochise, Gila, Graham, Greenlee, Pima, Pinal, and Santa Cruz counties. It would be a mistake, however, for community associations in those counties to believe that they can ignore the Turtle Rock decision or that trial courts in those counties will be easily persuaded to render a decision contradicting it. The Turtle Rock case establishes the following principles going forward regarding monetary penalties (we also call them fines ) in a planned community. These principles probably apply to condominiums, but since Turtle Rock is a planned community, it is not crystal clear. We believe it PAGE 5 OF , CARPENTER, HAZLEWOOD, DELGADO & BOLEN LLP

6 would be inappropriate for a condominium anywhere in Arizona to believe that the Turtle Rock case does not apply to condominiums. 1. Monetary fines must be reasonable Ad hoc fines are per se (always) unreasonable. 3. Even where a community association has the authority to levy fines, it must promulgate the schedule of fines prior to imposing the fines, and the failure to prove promulgation will be fatal. Given these rules, all community associations in Arizona should, at a minimum, immediately (1) decline to impose an ad hoc fine, (2) adopt a schedule of fines prior to imposing fines, and (3) promulgate it to the owners before imposing the fine. What is an ad hoc fine? The word ad hoc means for this. When used as an adjective, it means concerned or dealing with a specific subject, purpose or end. The idea in the Turtle Rock case is that a fine that is imposed or created just for this violation will never be reasonable. There are two basic types of fine schedules: Type 1 Type 2 First Violation of the Declaration, Bylaws, and Rules of the Association: Warning Second Violation: $25 Fine Third Violation: $50 Fine Fourth Violation: $100 Fine Trash Cans at Curb: First Violation, Warning. Second Violation, $50 Fine Boat Storage on Driveway: $100 Fine Weeds in Front Yard: First Violation, 1 A.R.S. Section (B) states in part: After notice and an opportunity to be heard, the board of directors may impose reasonable monetary penalties on members for violations of the declaration, bylaws and rules of the association. Notice pursuant to this subsection shall include information pertaining to the manner in which the penalty shall be enforced. PAGE 6 OF , CARPENTER, HAZLEWOOD, DELGADO & BOLEN LLP

7 Warning, Second Violation, $100 Fine Because Turtle Rock had no fine schedule, the Turtle Rock decision does not provide clarity regarding which type of fine schedule is required. Because the Court did not differentiate between Type 1 or Type 2 (or a hybrid that includes both Type 1 or Type 2) when stating that a fine schedule is mandatory, there is no way to know which type is required. Generally, we believe that judges are more likely to consider a fine schedule adequate after the Turtle Rock decision if it provides as much detail as possible regarding fines for violations. Our view is, The more detail the better. To promulgate simply means to send it out to the owners. Given that Turtle Rock requires that the Association prove that the fine schedule was promulgated, community associations need to ask themselves, When did we send out the fine schedule? Or, put another way, Who is going to testify under oath as to when the fine schedule was promulgated? If no one can recall or if there are no records of when it occurred, a promulgation event should occur as soon as possible after each community association has made a decision about the adequacy of its existing fine schedule and whether or not it needs to be changed or amended in light of Turtle Rock. The Turtle Rock case also contains a statement that we believe is dicta 2 that has created the most consternation about what the case means. The final paragraph of the decision contains the following: Therefore, although the HOA had the authority under state statutes and the CC&Rs to promulgate a fine schedule for monetary penalties, there is no competent evidence in the record before us that it did so. Without competent evidence of a fee schedule timely promulgated demonstrating the fine amounts and the appropriateness of such amounts, monetary penalties are per se unreasonable. Even if a fee schedule existed, the HOA had the burden to prove its damages. 2 Obiter dictum is a judicial comment made during the course of delivering a judicial opinion, but one that is unnecessary to the decision in the case and therefore not precedential although it may be considered persuasive. Black's Law Dictionary (2d Pocket Ed.2001). PAGE 7 OF , CARPENTER, HAZLEWOOD, DELGADO & BOLEN LLP

8 This statement about proving damages is obiter dictum. It is a hypothetical statement by the Court because Turtle Rock did not have a fine schedule and that was fatal to their claim for fines. In that sense, the requirement to prove its damages is persuasive at best and not precedential (binding on trial courts and future appellate courts). If a future trial court or appeals court disagrees with our view that the statement about damages is dicta, we will argue that proving damages is as simple as putting on evidence of the fines imposed as reflected on a ledger pursuant to an adopted and promulgated fine schedule. The other alternative is that a court will require that the fine amounts bear a direct relationship to the damage suffered by the community association due to the violation. For example, if a motorist is negligently struck by another motorist, the damages suffered by the innocent drive include the cost to repair the vehicle and the medical costs of treatment due to the injuries suffered. Damages, in that context, refers to the extent of monetary harm suffered by the innocent driver. In the community association context, there is no monetary harm suffered by the community association when an owner has weeds in his or her front yard. If that type of damage is what is referred to in the case and if courts impose that standard going forward, it is hard to imagine any fine that will be collectible. Given all of these issues and because of Turtle Rock community associations should: 1. Impose no ad hoc fines. 2. Adopt a fine schedule (or amend an existing fine schedule). 3. Promulgate the new fine schedule (or promulgate an existing fine schedule again if the last time it was promulgated cannot be recalled or proven). 4. Consider seeking injunctive relief for violations where the fine amount is inadequate to encourage compliance or is simply ineffective. Finally, it is likely that debt collectors working on assessment collections for community associations will have varying degrees of reluctance to pursue fines. 15 United States Code 1692f, part of the federal Fair Debt Collections Practices Act ( FDCPA ), states in part as follows: PAGE 8 OF , CARPENTER, HAZLEWOOD, DELGADO & BOLEN LLP

9 A debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section: (1) The collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law. Each debt collector or law firm will have their own tolerance for the risk associated with filing a lawsuit to collect unpaid fines. The risk to debt collectors under the FDCPA is real. Each debt collector will have a different expectation or threshold for when pursuing a fine involves financial risk to the debt collector for attempting to collect a debt that may not be permitted by law. VIII. BOCCHINO CASE On April 3, 2018, Division One of Arizona s Court of Appeals decided Bocchino v. Fountain Shadows Homeowners Association, attached at Exhibit A, Pages 42 through 48. This case is not being reviewed by the Arizona Supreme Court. In its opinion, the Court held that attorneys fees incurred in a non-assessment collection matter seeking an injunction against harassment could not be collected at the real estate closing when the owner sold her unit because the association did not ask for the attorneys fees to be awarded in the injunction against harassment lawsuit. Factually, Fountain Shadows sought and obtained an injunction against harassment against Ms. Bocchino. Fountain Shadows did not ask the judge to award the attorneys fees incurred in obtaining the injunction at the time. The Association did, however, place the amount of attorneys fees incurred obtaining the injunction on Ms. Bocchino s account. Months later, when Ms. Bocchino went to sell her home, Fountain Shadows told the title company the outstanding balance on her account, including the attorneys fees amount, and it was paid through the closing process. Ms. Bocchino then sued Fountain Shadows to be paid back the amount of attorneys fees that was paid. PAGE 9 OF , CARPENTER, HAZLEWOOD, DELGADO & BOLEN LLP

10 The opinion makes two points. First, that the injunction against harassment statute is the exclusive legal authority authorizing attorneys fees when seeking an injunction against harassment and, that since the Association did not ask for the attorneys fees in that case, that the fees were not recoverable (regardless of what the CC&Rs said). Second, and more generally, the Court stated, Requiring the tribunal that resolves the litigation to evaluate attorney fee claims as generally required by our statutes and rules constitutes sound policy. Courts play a significant role in assessing and awarding attorney fees incurred in judicial proceedings. The Bocchino case does NOT address attorneys fees and collection costs that are included in the assessment lien pursuant to A.R.S (planned communities) and A.R.S (condominiums). Those statutes state in part as follows: The association has a lien on a unit for any assessment levied against that unit from the time the assessment becomes due. The association's lien for assessments, for charges for late payment of those assessments, for reasonable collection fees and for reasonable attorney fees and costs incurred with respect to those assessments may be foreclosed in the same manner as a mortgage on real estate. Since the Association has a lien for reasonable collection fees and for reasonable attorney fees and costs incurred with respect to those assessments, we believe that it remains appropriate for a planned community or condominium to track collection-related attorneys fees on the owner s ledger. Since there is no similar statute including enforcement legal fees in the Association s lien, enforcement-related fees and costs should probably not go on the owner s ledger, until and unless a court awards them (or of course the owner agrees to the charges). Going forward, there are three scenarios with different approaches after Bocchino: 1. Attorneys fees in an injunction against harassment matter MUST be requested of the judge in the injunction against harassment matter. Enforcement-related attorneys fees related to a past, closed matter, that have not been awarded by a court PAGE 10 OF , CARPENTER, HAZLEWOOD, DELGADO & BOLEN LLP

11 OR agreed to by the owner, should not be placed on the ledger and should not be requested at a real estate closing. 2. Attorneys fees in an enforcement matter, although not addressed by the Bocchino case, should be scrutinized carefully. The lawyer representing the Association incurring the fees should be asked his or her opinion about whether placing those amounts on the owner s ledger (and asking for those fees in a real estate closing) is appropriate. 3. Attorneys fees and collection costs in assessment collection matters where the reasonable attorneys fees and collection costs are included in the statutory lien are likely still appropriately placed on an owner s ledger (and requested in a real estate closing even before a judge orders the owner to pay the Association s attorneys fees). But, like in enforcement matters, the lawyer representing the Association incurring the fees should be asked his or her opinion about whether placing those amounts on an owner s ledger (and asking for those fees in a real estate closing) remains appropriate. PAGE 11 OF , CARPENTER, HAZLEWOOD, DELGADO & BOLEN LLP

12 House Engrossed State of Arizona House of Representatives Fifty-third Legislature Second Regular Session 2018 CHAPTER 36 HOUSE BILL 2240 AN ACT AMENDING SECTIONS , , , AND , ARIZONA REVISED STATUTES; RELATING TO JUDGMENTS. (TEXT OF BILL BEGINS ON NEXT PAGE) - i - Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 1 of 48

13 H.B Be it enacted by the Legislature of the State of Arizona: Section 1. Section , Arizona Revised Statutes, is amended to read: Issuance of writ of execution; limitation; renewal; death of judgment debtor; exemptions A. The party in whose favor a judgment is given, at any time within five TEN years after entry of the judgment and within five TEN years after any renewal of the judgment either by affidavit or by an action brought on it, may have a writ of execution or other process issued for its enforcement. B. An execution or other process shall not be issued on a judgment after the expiration of five TEN years from the date of its entry unless the judgment is renewed by affidavit or process pursuant to section or an action is brought on it within five TEN years from the date of the entry of the judgment or of its renewal. C. The court shall not issue a writ of execution after the death of the judgment debtor unless it is for the recovery of real or personal property or enforcement of a lien. D. This section does not apply to: 1. Criminal restitution orders entered pursuant to section Written judgments and orders for child support and spousal maintenance and to associated costs and attorney fees. 3. Judgments for supervision fees or expenses associated with the care of a juvenile pursuant to section or and to associated costs and attorney fees. 4. Civil judgments obtained by this state. Sec. 2. Section , Arizona Revised Statutes, is amended to read: Renewal by action A judgment may be renewed by action thereon at any time within five TEN years after the date of the judgment. Sec. 3. Section , Arizona Revised Statutes, is amended to read: Renewal by affidavit A. A judgment for the payment of money that has been entered and docketed in the civil docket or civil order book of the United States district court or superior court, whether originally rendered by it or entered upon ON a transcript of judgment from another court, or recorded with the county recorder, may be renewed by filing an affidavit for renewal with the clerk of the proper court. B. The judgment creditor or his THE JUDGMENT CREDITOR'S personal representative or assignee may within ninety days preceding the expiration of five TEN years from the date of entry of such judgment, make and file an affidavit, known as a renewal affidavit, entitled as in the action setting forth: Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 2 of 48

14 H.B The names of the parties, the name of the court in which docketed, if recorded the name of the county in which recorded, the date and amount of the judgment, if recorded, the number and page of the book in which recorded by the county recorder, the name of the owner of the judgment, and his source and succession of title, if not the judgment creditor. 2. That no execution is anywhere outstanding and unreturned upon ON the judgment, or if any execution is outstanding, that fact shall be stated. 3. The date and amount of all payments upon ON the judgment and that all payments have been duly credited upon ON the judgment. 4. That there are no set-offs SETOFFS or counterclaims in favor of the judgment debtor, and if a counterclaim or set-off SETOFF does exist in favor of the judgment debtor, the amount thereof, if certain, or, if the counterclaim or set-off SETOFF is unsettled or undetermined, a statement that when it is settled or determined by action or otherwise, it may be allowed as a payment or credit upon ON the judgment. 5. The exact amount due upon ON the judgment after allowing all set-offs SETOFFS and counterclaims known to affiant, and other facts or circumstances necessary to a complete disclosure as to the exact condition of the judgment. C. If the judgment was docketed by the clerk of the court upon ON a certified copy from any other court and subsequently an abstract recorded with the county recorder, the affidavit, in addition to the foregoing, shall set forth a statement of each county in which such transcript has been docketed and abstract recorded. The affidavit shall be verified positively by the person making it, and not upon ON information and belief. D. The filing of the affidavit in the office of the clerk of the court where the judgment is entered and docketed shall renew and revive the judgment to the extent of the balance shown due in the affidavit. E. Additional and successive renewal affidavits as provided for in subsection B OF THIS SECTION may be made and filed within ninety days of expiration of five TEN years from the date of the filing of a prior renewal affidavit. F. Recorded judgments that have been timely renewed by a renewal affidavit and successive affidavits, even if such successive affidavits were not authorized by prior law, may be renewed as provided in this section if the prior renewal affidavits were filed within ninety days from the expiration of each successive five TEN year period. Sec. 4. Section , Arizona Revised Statutes, is amended to read: Docketing and recording affidavit of renewal; effect A. The clerk shall docket the affidavit of renewal in the proper docket and shall enter in the proper docket forthwith, after the statement Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 3 of 48

15 H.B of the original judgment, the date and fact of the renewal, and the amount for which the judgment is renewed. B. The entry and docketing of the affidavit by the clerk shall renew the judgment for a period of five TEN years from the time of docketing. C. No lien on or against the real property of the judgment debtor shall be continued by an affidavit of renewal until a copy of the affidavit, certified by the clerk of the court, is recorded in the office of the county recorder. D. From and after recordation of the copy of the affidavit of renewal, certified by the clerk of the court, the judgment shall be a lien to the extent of the balance shown in the affidavit of renewal against all real property of the judgment debtor, except such as is exempt from execution, including interest in the homestead, for a period of five TEN years from the date of docketing the affidavit of renewal with the clerk. E. A copy of the renewal affidavit and of the docket entries thereon, certified by the clerk of the court wherein they are filed, may be docketed in any other county of the state in which a transcript of the original judgment was filed, and a copy of the renewal affidavit may be recorded with the county recorder of any county wherein the original judgment has been previously filed or docketed or wherein the judgment creditor desires the judgment to become a lien on real property of the judgment debtor. Sec. 5. Section , Arizona Revised Statutes, is amended to read: Lien of judgment; duration; exemption of homestead; acknowledgment of satisfaction by judgment creditor A. Except as provided in sections and , from and after the time of recording as provided in section , a judgment shall become a lien for a period of five TEN years from the date it is given, on all real property of the judgment debtor except real property exempt from execution, including homestead property, in the county in which the judgment is recorded, whether the property is then owned by the judgment debtor or is later acquired. A civil judgment lien obtained by this state and a judgment lien for support, as defined in section , remain in effect until satisfied or lifted. B. Except as provided in section , a recorded judgment shall not become a lien on any homestead property. Any person entitled to a homestead on real property as provided by law holds the homestead property free and clear of the judgment lien. C. A judgment of the justice court, municipal court, superior court or United States court that has become a lien under this article, immediately on the payment or satisfaction of the judgment, shall be discharged of record by the judgment creditor or the judgment creditor's attorney by recording a satisfaction of judgment with the county recorder Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 4 of 48

16 H.B of the county in which the judgment is recorded. The judgment creditor or the judgment creditor s attorney shall enter a notation of satisfaction on the docket of the clerk of the superior court of each county in which the judgment has been entered or docketed, and in a like manner enter a notation of satisfaction on the docket of the clerk of the United States district court. D. In a title IV-D case, if the title IV-D agency or its agent is listed as the holder of the lien and the judgment has been satisfied but the obligee is unwilling to sign the release of the lien or, after reasonable efforts, cannot be located to sign the release of the lien, the title IV-D agency or its agent may sign the satisfaction of judgment and release of lien without the signature of the obligee. The title IV-D agency or its agent shall send a copy by first class mail to the last known address of the obligee. APPROVED BY THE GOVERNOR MARCH 20, FILED IN THE OFFICE OF THE SECRETARY OF STATE MARCH 20, Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 5 of 48

17 Senate Engrossed House Bill State of Arizona House of Representatives Fifty-third Legislature Second Regular Session 2018 CHAPTER 235 HOUSE BILL 2262 AN ACT AMENDING SECTION , ARIZONA REVISED STATUTES; RELATING TO CONDOMINIUMS. (TEXT OF BILL BEGINS ON NEXT PAGE) - i - Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 6 of 48

18 H.B Be it enacted by the Legislature of the State of Arizona: Section 1. Section , Arizona Revised Statutes, is amended to read: Termination of condominium A. Except in the case of a taking of all the units by eminent domain, a condominium may be terminated only by agreement of unit owners of units to which at least eighty per cent PERCENT of the votes in the association are allocated, or any larger percentage the declaration specifies. The declaration may specify a smaller percentage only if all of the units in the condominium are restricted exclusively to nonresidential uses. B. An agreement to terminate shall be evidenced by the execution or ratifications of a termination agreement, in the same manner as a deed, by the requisite number of unit owners. The termination agreement shall specify a date after which the agreement will be void unless it is recorded before that date. A termination agreement and all ratifications of a termination agreement shall be recorded in each county in which a portion of the condominium is situated and is effective only on recordation. C. A termination agreement may provide that all the common elements and units of the condominium shall be sold following termination. If, pursuant to the agreement, any real estate in the condominium is to be sold following termination, the termination agreement shall set forth the minimum terms of the sale. D. The association, on behalf of the unit owners, may contract for the sale of real estate in the condominium, but the contract is not binding on the unit owners until approved pursuant to subsections A and B OF THIS SECTION. If any real estate in the condominium is to be sold following termination, title to that real estate on termination vests in the association as trustee for the holders of all interest in the units. Thereafter, the association has all powers necessary and appropriate to effect the sale. Until the sale has been concluded and the proceeds of the sale distributed, the association continues in existence with all powers it had before termination. Proceeds of the sale shall be distributed to unit owners and lienholders as their interests may appear, in proportion to the respective interests of unit owners as provided in subsection G OF THIS SECTION. Unless otherwise specified in the termination agreement, as long as the association holds title to the real estate, each unit owner and his THE UNIT OWNER'S successors in interest have an exclusive right to occupancy of the portion of the real estate that formerly constituted his THE UNIT OWNER'S unit. During the period of that occupancy, each unit owner and his THE successors in interest remain liable for all assessments and other obligations imposed on unit owners by this chapter or the declaration Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 7 of 48

19 H.B E. If the real estate constituting the condominium is not to be sold following termination, title to all the real estate in the condominium vests in the unit owners on termination as tenants in common in proportion to their respective interests as provided in subsection G OF THIS SECTION, and liens on the units shift accordingly. While the tenancy in common exists, each unit owner and his THE UNIT OWNER'S successors in interest have an exclusive right to occupancy of the portion of the real estate that formerly constituted his THE UNIT OWNER'S unit. F. Following termination of the condominium, the proceeds of any sale of real estate, together with the assets of the association, are held by the association as trustee for unit owners and holders of liens on the units as their interests may appear. Following termination, creditors of the association holding liens on the units which THAT were recorded before termination may enforce those liens in the same manner as any lienholder. G. The respective interests of unit owners referred to in subsections D, E and F OF THIS SECTION are as follows: 1. Except as provided in paragraph 2 OF THIS SUBSECTION, the respective interests of unit owners are the fair market values of their units, limited common elements and common element interests immediately before the termination as determined by AND AN ADDITIONAL FIVE PERCENT OF THAT TOTAL AMOUNT FOR RELOCATION COSTS FOR OWNER-OCCUPIED UNITS. An independent appraiser selected by the association SHALL DETERMINE THE TOTAL FAIR MARKET VALUES. The determination of the independent appraiser shall be distributed to the unit owners and becomes final unless disapproved within thirty SIXTY days after distribution by TO THE unit owners of units to which fifty per cent of the votes in the association are allocated OWNER. ANY UNIT OWNER MAY OBTAIN A SECOND INDEPENDENT APPRAISAL AT THE UNIT OWNER'S EXPENSE AND, IF THE UNIT OWNER'S INDEPENDENT APPRAISAL AMOUNT DIFFERS FROM THE ASSOCIATION'S INDEPENDENT APPRAISAL AMOUNT BY FIVE PERCENT OR LESS, THE HIGHER APPRAISAL IS FINAL. IF THE TOTAL AMOUNT OF COMPENSATION OWED AS DETERMINED BY THE SECOND APPRAISER IS MORE THAN FIVE PERCENT HIGHER THAN THE AMOUNT DETERMINED BY THE ASSOCIATION'S APPRAISER, THE UNIT OWNER SHALL SUBMIT TO ARBITRATION AT THE ASSOCIATION'S EXPENSE AND THE ARBITRATION AMOUNT IS THE FINAL SALE AMOUNT. AN ADDITIONAL FIVE PERCENT OF THE FINAL SALE AMOUNT SHALL BE ADDED FOR RELOCATION COSTS FOR OWNER-OCCUPIED UNITS. The proportion of any unit owner's interest to that of all unit owners is determined by dividing the fair market value of that unit owner's unit and common element interest by the total fair market values of all the units and common elements. 2. If any unit or any limited common element is destroyed to the extent that an appraisal of the fair market value of the unit or element before destruction cannot be made, the interests of all unit owners are their respective common element interests immediately before the termination Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 8 of 48

20 H.B H. Except as provided in subsection I OF THIS SECTION, foreclosure or enforcement of a lien or encumbrance against the entire condominium does not of itself terminate the condominium, and foreclosure or enforcement of a lien or encumbrance against a portion of the condominium does not withdraw that portion from the condominium. Foreclosure or enforcement of a lien or encumbrance against withdrawable real estate does not of itself withdraw that real estate from the condominium, but the person taking title may require from the association, on request, an amendment excluding the real estate from the condominium. I. If a lien or encumbrance against a portion of the real estate comprising the condominium has priority over the declaration, and the lien or encumbrance has not been partially released, the parties foreclosing the lien or encumbrance may, on foreclosure, MAY record an instrument excluding the real estate subject to that lien or encumbrance from the condominium. J. The provisions of subsections C, through I D, E, F, H AND I OF THIS SECTION do not apply if the original declaration, an amendment to the original declaration recorded before the conveyance of any unit to an owner other than the declarant or an agreement by all of the unit owners contain CONTAINS provisions inconsistent with such THESE subsections. K. BEGINNING ON THE EFFECTIVE DATE OF THIS AMENDMENT TO THIS SECTION, ANY PROVISIONS IN THE DECLARATION THAT CONFLICT WITH SUBSECTION G, PARAGRAPH 1 OF THIS SECTION ARE VOID AS A MATTER OF PUBLIC POLICY. Sec. 2. Applicability This act applies to all condominiums created in this state without regard to when the condominium was created. APPROVED BY THE GOVERNOR APRIL 17, FILED IN THE OFFICE OF THE SECRETARY OF STATE APRIL 17, Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 9 of 48

21 Senate Engrossed State of Arizona Senate Fifty-third Legislature Second Regular Session 2018 CHAPTER 127 SENATE BILL 1376 AN ACT AMENDING SECTIONS AND , ARIZONA REVISED STATUTES; RELATING TO THE ARIZONA RESIDENTIAL LANDLORD AND TENANT ACT. (TEXT OF BILL BEGINS ON NEXT PAGE) - i - Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 10 of 48

22 S.B Be it enacted by the Legislature of the State of Arizona: Section 1. Section , Arizona Revised Statutes, is amended to read: Noncompliance with rental agreement by tenant; failure to pay rent; utility discontinuation; liability for guests; definition A. Except as provided in this chapter, if there is a material noncompliance by the tenant with the rental agreement, including material falsification of the information provided on the rental application, the landlord may deliver a written notice to the tenant specifying the acts and omissions constituting the breach and that the rental agreement will terminate upon ON a date not less than ten days after receipt of the notice if the breach is not remedied in ten days. For the purposes of this section, material falsification shall include INCLUDES the following untrue or misleading information about the: 1. Number of occupants in the dwelling unit, pets, income of THE prospective tenant, social security number and current employment listed on the application or lease agreement. 2. Tenant's criminal records, prior eviction record and current criminal activity. Material falsification of information in this paragraph is not curable under this section. If there is a noncompliance by the tenant with section materially affecting health and safety, the landlord may deliver a written notice to the tenant specifying the acts and omissions constituting the breach and that the rental agreement will terminate upon ON a date not less than five days after receipt of the notice if the breach is not remedied in five days. However, if the breach is remediable by repair or the payment of damages or otherwise, and the tenant adequately remedies the breach before the date specified in the notice, the rental agreement will not terminate. If there is an additional act of these types of noncompliance of the same or a similar nature during the term of the lease after the previous remedy of noncompliance, the landlord may institute a special detainer action pursuant to section ten days after delivery of a written notice advising the tenant that a second noncompliance of the same or a similar nature has occurred. If there is a breach that is both material and irreparable and that occurs on the premises, including but not limited to WHICH MAY INCLUDE an illegal discharge of a weapon, homicide as defined PRESCRIBED in sections , through , AND , prostitution as defined in section , criminal street gang activity as prescribed in section , activity as prohibited in section , the unlawful manufacturing, selling, transferring, possessing, using or storing of a controlled substance as defined in section , threatening or intimidating as prohibited in section , assault as prohibited in section , acts that have been found to constitute a nuisance pursuant to section or a breach of the lease agreement Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 11 of 48

23 S.B that otherwise jeopardizes the health, safety and welfare of the landlord, the landlord's agent or another tenant or involving imminent or actual serious property damage, the landlord may deliver a written notice for immediate termination of the rental agreement and shall proceed under section THE FOREGOING LIST OF ACTIONS WHICH MAY CONSTITUTE A MATERIAL AND IRREPARABLE BREACH OF A TENANT'S LEASE IS NOT EXHAUSTIVE. B. A tenant may not withhold rent for any reason not authorized by this chapter. If rent is unpaid when due and the tenant fails to pay rent within five days after written notice by the landlord of nonpayment and the landlord's intention to terminate the rental agreement if the rent is not paid within that period of time, the landlord may terminate the rental agreement by filing a special detainer action pursuant to section Before the filing of a special detainer action the rental agreement shall be reinstated if the tenant tenders all past due and unpaid periodic rent and a reasonable late fee set forth in a written rental agreement. After a special detainer action is filed the rental agreement is reinstated only if the tenant pays all past due rent, reasonable late fees set forth in a written rental agreement, attorney fees and court costs. After a judgment has been entered in a special detainer action in favor of the landlord, any reinstatement of the rental agreement is solely in the discretion of the landlord. C. The landlord may recover all reasonable damages, resulting from noncompliance by the tenant with the rental agreement or section or occupancy of the dwelling unit, court costs, reasonable attorney fees and all quantifiable damage caused by the tenant to the premises. D. The landlord may discontinue utility services provided by the landlord on the day following the day that a writ of restitution or execution is executed pursuant to section Disconnections shall be performed only by a person authorized by the utility whose service is being discontinued. Nothing in This section shall DOES NOT supersede standard tariff and operational procedures that apply to any public service corporation, municipal corporation or special districts providing utility services in this state. E. The landlord shall hold the tenant's personal property for a period of twenty-one days beginning on the first day after a writ of restitution or writ of execution is executed as prescribed in section The landlord shall use reasonable care in moving and holding the tenant's property and may store the tenant's property in an unoccupied dwelling unit owned by the landlord, the unoccupied dwelling unit formerly occupied by the tenant or off the premises if an unoccupied dwelling unit is not available. If the tenant's former dwelling unit is used to store the property, the landlord may change the locks on that unit at the landlord's discretion. The landlord shall prepare an inventory and promptly notify the tenant of the location and cost of storage of the personal property by sending a notice by certified mail, return receipt Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 12 of 48

24 S.B requested, addressed to the tenant's last known address and to any of the tenant's alternative addresses known to the landlord. To reclaim the personal property, the tenant shall pay the landlord only for the cost of removal and storage for the time the property is held by the landlord. Within five days after a written offer by the tenant to pay these charges the landlord must surrender possession of the personal property in the landlord's possession to the tenant upon the tenant's tender of payment. If the landlord fails to surrender possession of the personal property to the tenant, the tenant may recover the possessions or an amount equal to the damages determined by the court if the landlord has destroyed or disposed of the possessions before the twenty-one days specified in this section or after the tenant's offer to pay. The tenant shall pay all removal and storage costs accrued through the fifth day after the tenant's offer to pay is received by the landlord or the date of delivery or surrender of the property, whichever is sooner. Payment by the tenant relieves the landlord of any further responsibility for the tenant's possessions. F. A tenant does not have any right of access to that property until all payments specified in subsection E of this section have been made in full, except that the tenant may obtain clothing and the tools, apparatus and books of a trade or profession and identification or financial documents including all those related to the tenant's immigration status, employment status, public assistance or medical care. If the landlord holds the property for the twenty-one day period and the tenant does not make a reasonable effort to recover it, the landlord, upon the expiration of twenty-one days as provided in this subsection, may administer the personal property as provided in section , subsection E. The landlord shall hold personal property after a writ of restitution or writ of execution is executed for not more than twenty-one days after such an execution. Nothing in this subsection shall preclude the landlord and tenant from making an agreement providing that the landlord will hold the personal property for a period longer than twenty-one days. E. ON THE DAY FOLLOWING THE DAY THAT A WRIT OF RESTITUTION OR EXECUTION IS EXECUTED PURSUANT TO SECTION , THE LANDLORD SHALL COMPLY WITH SECTION , SUBSECTIONS D, E, F, G, H AND I REGARDING THE TENANT'S PERSONAL PROPERTY. G. F. For the purposes of this chapter, the tenant shall be held responsible for the actions of the tenant's guests that violate the lease agreement or rules or regulations of the landlord if the tenant could reasonably be expected to be aware that such actions might occur and did not attempt to prevent those actions to the best of the tenant's ability. H. G. For THE purposes of this section, "days" means calendar days Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 13 of 48

25 S.B Sec. 2. Section , Arizona Revised Statutes, is amended to read: Abandonment; notice; remedies; personal property; definition A. If a dwelling unit is abandoned after the time prescribed in subsection H J of this section, the landlord shall send the tenant a notice of abandonment by certified mail, return receipt requested, addressed to the tenant's last known address and to any of the tenant's alternate addresses known to the landlord. The landlord shall also post a notice of abandonment on the door to the dwelling unit or any other conspicuous place on the property for five days. B. Five days after THE notice of abandonment has been both posted and mailed, the landlord may retake the dwelling unit and rerent the dwelling unit at a fair rental value if no personal property remains in the dwelling unit. After the landlord retakes the dwelling unit, money held by the landlord as a security deposit is forfeited and shall be applied to the payment of any accrued rent and other reasonable costs incurred by the landlord by reason of the tenant's abandonment. C. If the tenant abandons the dwelling unit, the landlord shall make reasonable efforts to rent it THE DWELLING UNIT at a fair rental. If the landlord rents the dwelling unit for a term beginning prior to BEFORE the expiration of the rental agreement, it THE RENTAL AGREEMENT is deemed to be terminated as of the date the new tenancy begins. If the landlord fails to use reasonable efforts to rent the dwelling unit at a fair rental or if the landlord accepts the abandonment as a surrender, the rental agreement is deemed to be terminated by the landlord as of the date the landlord has notice of the abandonment. If the tenancy is from month to month or week to week, the term of the rental agreement for this purpose shall be deemed to be a month or a week, as the case may be. D. AFTER THE LANDLORD RETAKES POSSESSION OF THE DWELLING UNIT, AND IF THE TENANT'S PERSONAL PROPERTY REMAINS IN THE DWELLING UNIT, THE LANDLORD SHALL PREPARE AN INVENTORY AND NOTIFY THE TENANT OF THE LOCATION AND COST OF STORAGE OF THE PERSONAL PROPERTY IN THE SAME MANNER PRESCRIBED IN SUBSECTION A OF THIS SECTION. D. E. After the landlord has retaken RETAKES possession of the dwelling unit, the landlord may store the tenant's personal possessions in the unoccupied dwelling unit that was abandoned by the tenant, in any other available unit or any storage space owned by the landlord or off the premises if a dwelling unit or storage space is not available. The landlord shall notify the tenant of the location of the personal property in the same manner prescribed in subsection A of this section. THE LANDLORD IS NOT REQUIRED TO STORE THE TENANT'S PERISHABLE ITEMS, PLANTS AND ANIMALS ON BEHALF OF THE TENANT. THE LANDLORD MAY REMOVE OR DISPOSE OF, AS APPROPRIATE, THE PERISHABLE ITEMS, INCLUDING PLANTS. AT THE LANDLORD'S DISCRETION, THE LANDLORD MAY REMOVE AND DISPOSE OF ANY PERSONAL Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 14 of 48

26 S.B PROPERTY IN THE DWELLING UNIT THAT IS CONTAMINATED OR MAY BE CONSIDERED A BIOHAZARD OR POSES A HEALTH AND SAFETY RISK. AT THE LANDLORD'S DISCRETION, THE TENANT'S ABANDONED ANIMALS MAY BE IMMEDIATELY REMOVED AND RELEASED TO A SHELTER OR BOARDING FACILITY. THE LANDLORD SHALL KEEP A RECORD OF THE NAME AND LOCATION OF THE SHELTER OR BOARDING FACILITY TO WHICH THE ANIMAL WAS RELEASED. IF THE LANDLORD DOES NOT IMMEDIATELY REMOVE AND RELEASE THE ABANDONED ANIMALS TO A SHELTER OR BOARDING FACILITY, THE LANDLORD SHALL PROVIDE REASONABLE CARE FOR THE ABANDONED ANIMALS FOR THE PERIOD PRESCRIBED BY SUBSECTION F OF THIS SECTION. IF THE LANDLORD IS UNABLE OR UNWILLING TO PROVIDE REASONABLE CARE TO THE ABANDONED ANIMALS, THE LANDLORD SHALL NOTIFY THE COUNTY ENFORCEMENT AGENT AS DEFINED IN SECTION OR AN ANIMAL CONTROL OFFICER AS PRESCRIBED IN SECTION OF THE PRESENCE OF THE TENANT'S ABANDONED ANIMALS ON THE PROPERTY TO BE SEIZED PURSUANT TO SECTION THE LANDLORD IS NOT LIABLE FOR ANY ACTIONS TAKEN IN GOOD FAITH RELATED TO THE REMOVAL, RELEASE, SEIZURE OR CARE OF THE ABANDONED ANIMALS PURSUANT TO THIS SECTION. E. F. The landlord shall hold the tenant's personal property for a period of ten FOURTEEN CALENDAR days after the landlord's declaration of abandonment LANDLORD RETAKES POSSESSION OF THE DWELLING UNIT. The landlord shall use reasonable care in MOVING AND holding the tenant's personal property. If the landlord holds the property for this period and the tenant makes no reasonable effort to recover it, the landlord may DONATE THE PERSONAL PROPERTY TO A QUALIFYING CHARITABLE ORGANIZATION AS DEFINED IN SECTION OR OTHERWISE RECOGNIZED CHARITY OR sell the property., IF THE LANDLORDS SELLS THE PROPERTY, THE LANDLORD SHALL retain the proceeds and apply them toward the tenant's outstanding rent or other costs which THAT are covered in the lease agreement or otherwise provided for in title 33, chapter 10 THIS CHAPTER or title 12, chapter 8 and THAT have been incurred by the landlord, due to the tenant's abandonment. Any AND excess proceeds shall be mailed to the tenant at the tenant's last known address. A tenant does not have any right of access to that property until the actual removal and storage costs have been paid in full, except that the tenant may obtain clothing and the tools, apparatus and books of a trade or profession and any identification or financial documents, including all those related to the tenant's immigration status, employment status, public assistance or medical care. If provided by a written rental agreement, The landlord may destroy or otherwise dispose of some or all of the property if the landlord reasonably determines that the value of the property is so low that the cost of moving, storage and conducting a public sale exceeds the amount that would be realized from the sale. ANY TAX BENEFIT ASSOCIATED WITH THE DONATION OF THE PERSONAL PROPERTY BELONGS TO THE TENANT. A LANDLORD THAT COMPLIES WITH THIS SECTION IS NOT LIABLE FOR ANY LOSS TO THE TENANT OR ANY Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 15 of 48

27 S.B THIRD PARTY THAT RESULTS FROM MOVING, STORING OR DONATING ANY PERSONAL PROPERTY LEFT IN THE DWELLING UNIT. F. G. For a period of twelve months after the sale, the landlord shall: 1. Keep adequate records of the outstanding and unpaid rent and the sale of the tenant's personal property. 2. Hold FOR THE BENEFIT OF THE TENANT any excess proceeds which THAT have been returned as undeliverable for the benefit of the tenant. G. H. If the tenant notifies the landlord in writing on or before the date the landlord sells or otherwise disposes of the personal property that the tenant intends to remove the personal property from the dwelling unit or the place of safekeeping, the tenant has five days to reclaim the personal property. To reclaim the personal property the tenant must only pay the landlord for the cost of COSTS ASSOCIATED WITH removal and storage for the period the tenant's personal property remained in the landlord's safekeeping WAS STORED. EXCEPT AS PROVIDED IN SUBSECTIONS E OR I OF THIS SECTION FOR PERSONAL PROPERTY EXEMPT FROM STORAGE REQUIREMENTS, WITHIN FIVE DAYS AFTER A WRITTEN OFFER BY THE TENANT TO PAY THE APPLICABLE STORAGE OR REMOVAL COSTS THE LANDLORD MUST SURRENDER POSSESSION OF THE PERSONAL PROPERTY IN THE LANDLORD'S POSSESSION TO THE TENANT UPON THE TENANT'S TENDER OF PAYMENT. IF THE LANDLORD FAILS TO SURRENDER POSSESSION OF THE PERSONAL PROPERTY TO THE TENANT, THE TENANT MAY RECOVER THE POSSESSIONS OR AN AMOUNT EQUAL TO THE DAMAGES DETERMINED BY THE COURT IF THE LANDLORD HAS DESTROYED OR DISPOSED OF THE POSSESSIONS BEFORE THE FOURTEEN DAYS SPECIFIED IN THIS SECTION OR AFTER THE TENANT'S OFFER TO PAY. I. NOTWITHSTANDING SUBSECTIONS D, E, F AND G OF THIS SECTION, IF THE TENANT RETURNS TO THE LANDLORD THE KEYS TO THE DWELLING UNIT AND THERE IS PERSONAL PROPERTY REMAINING IN THE DWELLING UNIT, THE LANDLORD MAY IMMEDIATELY REMOVE AND DISPOSE OF THE PERSONAL PROPERTY WITHOUT LIABILITY TO THE TENANT OR A THIRD PARTY UNLESS THE LANDLORD AND TENANT HAVE AGREED IN WRITING TO SOME OTHER TREATMENT OF THE PROPERTY. H. J. In FOR THE PURPOSES OF this section "abandonment" means either the absence of the tenant from the dwelling unit, without notice to the landlord for at least seven days, if rent for the dwelling unit is outstanding and unpaid for ten days and there is no reasonable evidence other than the presence of the tenant's personal property that the tenant is occupying the residence or the absence of the tenant for at least five days, if the rent for the dwelling unit is outstanding and unpaid for five days and none of the tenant's personal property is in the dwelling unit. APPROVED BY THE GOVERNOR APRIL 3, FILED IN THE OFFICE OF THE SECRETARY OF STATE APRIL 3, Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 16 of 48

28 House Engrossed Senate Bill State of Arizona Senate Fifty-third Legislature Second Regular Session 2018 CHAPTER 143 SENATE BILL 1043 AN ACT AMENDING SECTIONS , , AND , ARIZONA REVISED STATUTES; RELATING TO COUNTY RECORDERS. (TEXT OF BILL BEGINS ON NEXT PAGE) - i - Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 17 of 48

29 S.B Be it enacted by the Legislature of the State of Arizona: Section 1. Section , Arizona Revised Statutes, is amended to read: Fees; exemption A. The county recorder shall receive the following fees: 1. For recording papers required or authorized by law to be recorded, if the fee is not otherwise specified in this section, five THIRTY dollars for the first five pages plus one dollar for each additional page. In no case shall the charge for additional pages exceed two hundred fifty dollars PER INSTRUMENT. 2. For recording papers to which the United States, this state or a political subdivision thereof OF THIS STATE, including cities, towns and irrigation, drainage and electrical districts, is a party, when recorded at the request of the United States, this state or the political subdivision, three FIFTEEN dollars for the first five pages, plus fifty cents for each additional page, such fee to apply only if the fee is to be paid from public monies. Those fees due the county recorder from the state for recording papers may be paid on a monthly basis PER INSTRUMENT. 3. For preparing and certifying copies of a record in the recorder's office, one dollar for each page or partial page. In addition for attaching the recorder's certificate and seal, three dollars. 4. For issuing a certificate pursuant to section , ten dollars for each name, plus one dollar for each financing statement or statement of assignment reported therein. 5. Fifteen dollars for each deed that transfers, conveys or affects an interest in real property. 6. Twenty-five dollars for each deed of trust or mortgage. 7. Ten dollars for each release of a deed of trust or mortgage. B. A person recording a deed of trust or mortgage for residential property constructed for at least one family but not more than four families shall include "residential 1-4" in the caption heading on the first page of each document. Failure to comply with this subsection does not affect the validity of the document or the validity of the recording of the document. C. B. The fees provided in subsection A, paragraphs 5, 6 and 7 1 AND 2 of this section include the amount charged pursuant to subsection G of this section and section D. The standard fee shall be charged for the first indexing category indicated by the caption of any instrument. Three dollars shall be charged for each additional indexing category on the same instrument. E. The standard fee shall be charged for the first assignment, partial assignment, release, partial release or other modification of any instrument. Three dollars shall be charged for each additional transaction on the same instrument. F. C. Notwithstanding subsection A, paragraph 3 of this section, the recorder shall prepare and furnish copies and certifications at Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 18 of 48

30 S.B one-half of the established fee when requested by any state agency for official purposes. G. One dollar shall be charged for each instrument if the recorder is required to deliver the instruments by mail. The fee collected pursuant to this subsection shall be deposited into the county general fund. H. D. The county recorder shall not receive a fee for performing the duties prescribed by this section for an office, agency or department of the county where the document is to be recorded. This exemption shall apply only when such THE fees would otherwise be paid from public monies. Sec. 2. Section , Arizona Revised Statutes, is amended to read: Document storage and retrieval conversion and maintenance fund; purpose A. A THE document storage and retrieval conversion and maintenance fund is established in each county consisting of monies received pursuant to subsection C OF THIS SECTION. B. The board of supervisors shall administer the fund and, in cooperation with the county recorder, expend monies in the fund in order to defray the cost of converting the county recorder's document storage and retrieval system to micrographics or computer automation. Monies in the fund may only be used for purchasing hardware and software, training employees to operate the system, maintaining the system, purchasing equipment maintenance agreements and updating the system hardware or software for the county recorder's office. Monies in the fund shall not be expended for expenses other than for the support of the county recorder's automation system. If the expenditures are determined by the auditor general to be improper and inconsistent with this section, the county general fund shall reimburse the document storage and retrieval conversion and maintenance fund for all improper and inconsistent expenditures. C. In addition to any other fee charged pursuant to this article, the board of supervisors may assess a special recording surcharge of not to exceed four dollars for each instrument, paper or notice filed with the county recorder. All monies received pursuant to this subsection shall be transmitted to the county treasurer and placed in the document storage and retrieval conversion and maintenance fund. D. THE SPECIAL RECORDING SURCHARGE PRESCRIBED IN SUBSECTION C OF THIS SECTION IS INCLUDED IN THE AMOUNT CHARGED PURSUANT TO SECTION , SUBSECTION A. D. E. The county recorder shall annually submit to the board of supervisors the amount of projected revenues to be raised for the document storage and retrieval conversion and maintenance fund pursuant to this section. If projected revenues of the fund are deemed insufficient to pay for conversion costs, fund monies may accumulate until sufficient monies are available in the fund Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 19 of 48

31 S.B Sec. 3. Section , Arizona Revised Statutes, is amended to read: Real estate transfer fee; collection; disposition of proceeds A. Before recording a deed or contract relating to the sale or transfer of real property, the county recorder shall collect a fee of two dollars for the deed or contract, in addition to the fee collected pursuant to section B. THE FEE PRESCRIBED IN SUBSECTION A OF THIS SECTION IS INCLUDED IN THE AMOUNT CHARGED PURSUANT TO SECTION , SUBSECTION A. B. C. The county shall retain all monies collected pursuant to this section in the same manner as monies collected under section Sec. 4. Section , Arizona Revised Statutes, is amended to read: Affidavit of annual work; affidavit of claim maintenance fee payment; fees A. Before December 31 of any year in which the performance of annual labor or making improvements or the payment of claim maintenance fees on a mining claim is required, the person on whose behalf the work or improvement or payment was made, or the person's representative, knowing the facts, may make and record in the office of the county recorder of the county in which the claim is located an affidavit of annual work or an affidavit of claim maintenance fee payment. B. The affidavit of annual work must state in substance the following: State of Arizona, county of ss:, being duly sworn, deposes and says that: I am a citizen of the United States and at least eighteen years of age. I reside at, in county, Arizona. I am personally acquainted with the mining claim known as mining claim, situated in mining district, county, Arizona, the location notice of which is recorded in the office of the county recorder of that county at [county recorder information]. Between the day of,, and the day of,, at least dollars worth of work and improvements were done and performed on the claim, not including the location work of the claim. Such work and improvements were made by and at the expense of, owners of the claim, for the purpose of complying with the laws of the United States pertaining to assessment or annual work, and (here name the miners Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 20 of 48

32 S.B or persons who worked on the claim) were the persons who are employed by the owner and who labored on the claim, doing the work and improvements as follows: (Here describe the work done and add signature and verification.) C. The affidavit of claim maintenance fee payment must state in substance the following: State of Arizona, county of ss:, being duly sworn, deposes and says that: I am a citizen of the United States and at least eighteen years of age. I reside at, in county, Arizona. I am personally acquainted with the mining claim known as mining claim, situated in mining district, county, Arizona, the location notice of which is recorded in the office of the county recorder of that county at [county recorder information]. A claim maintenance fee of dollars was paid by or at the expense of, owners of the claim, instead of recording an affidavit of annual work for the purpose of complying with the laws of the United States and holding the claim. (Here add signature and verification.) D. The affidavit of annual work or the affidavit of claim maintenance fee payment when recorded shall be prima facie evidence of the performance of the labor or improvements or of claim maintenance fee payment. Any affidavit shall include, if known to the locator, the identification of the section, township and range in which the notice of location of the claim is posted. E. When annual work or improvements or claim maintenance fee payment is done on one or more of a contiguous group of claims for the benefit of all, or wholly or partly outside of a contiguous group of claims for the benefit of all, all claims may be included in a single affidavit. F. In addition to the fees required under section for recording of documents, the county recorder, before recording the affidavit of annual work or the affidavit of claim maintenance fee payment, shall collect from the person recording the affidavit a fee in the sum of five dollars For each separate affidavit of annual work or affidavit of claim maintenance fee payment recorded,. the county recorder, by the tenth day of each month, shall forward to the state treasurer for deposit in the state general fund eighty per cent of the monies FOUR DOLLARS OF EACH TOTAL FEE collected pursuant to this subsection SECTION during the previous month. Sec. 5. Effective date This act is effective from and after June 30, Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 21 of 48

33 S.B APPROVED BY THE GOVERNOR APRIL 5, FILED IN THE OFFICE OF THE SECRETARY OF STATE APRIL 5, Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 22 of 48

34 Senate Engrossed State of Arizona Senate Fifty-third Legislature Second Regular Session 2018 CHAPTER 194 SENATE BILL 1465 AN ACT AMENDING SECTION , ARIZONA REVISED STATUTES; AMENDING SECTION , ARIZONA REVISED STATUTES, AS AMENDED BY LAWS 2018, FIRST SPECIAL SESSION, CHAPTER 1, SECTION 1; AMENDING SECTION , ARIZONA REVISED STATUTES; AMENDING SECTION , ARIZONA REVISED STATUTES, AS AMENDED BY LAWS 2018, FIRST SPECIAL SESSION, CHAPTER 1, SECTION 3; AMENDING TITLE 36, CHAPTER 18, ARIZONA REVISED STATUTES, BY ADDING ARTICLE 4; RELATING TO SOBER LIVING HOMES. (TEXT OF BILL BEGINS ON NEXT PAGE) - i - Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 23 of 48

35 S.B Be it enacted by the Legislature of the State of Arizona: Section 1. Section , Arizona Revised Statutes, is amended to read: Limits on regulation of vacation rentals and short-term rentals; state preemption; definitions A. A city or town may not prohibit vacation rentals or short-term rentals. B. A city or town may not restrict the use of or regulate vacation rentals or short-term rentals based on their classification, use or occupancy. A city or town may regulate vacation rentals or short-term rentals for the following purposes: 1. Protection of the public's health and safety, including rules and regulations related to fire and building codes, health and sanitation, transportation or traffic control, solid or hazardous waste and pollution control, and designation of an emergency point of contact, if the city or town demonstrates that the rule or regulation is for the primary purpose of protecting the public's health and safety. 2. Adopting and enforcing residential use and zoning ordinances, including ordinances related to noise, protection of welfare, property maintenance and other nuisance issues, if the ordinance is applied in the same manner as other property classified under sections and Limiting or prohibiting the use of a vacation rental or short-term rental for the purposes of housing sex offenders, operating or maintaining a structured sober living home, selling illegal drugs, liquor control or pornography, obscenity, nude or topless dancing and other adult-oriented businesses. C. This section does not exempt an owner of a residential rental property, as defined in section , from maintaining with the assessor of the county in which the property is located information required under title 33, chapter 17, article 1. D. For the purposes of this section: 1. "Transient" has the same meaning prescribed in section "Vacation rental" or "short-term rental" means any individually or collectively owned single-family or one-to-four-family house or dwelling unit or any unit or group of units in a condominium, cooperative or timeshare, that is also a transient public lodging establishment or owner-occupied residential home offered for transient use if the accommodations are not classified for property taxation under section Vacation rental and short-term rental do not include a unit that is used for any nonresidential use, including retail, restaurant, banquet space, event center or another similar use Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 24 of 48

36 S.B Sec. 2. Section , Arizona Revised Statutes, as amended by Laws 2018, first special session, chapter 1, section 1, is amended to read: Sober living homes; standards; definitions A. A city or town may adopt by ordinance standards for structured sober living homes that comply with state and federal fair housing laws and the Americans with disabilities act. If adopted, the standards for structured sober living homes may include: 1. A written notification from all structured sober living homes that includes: (a) The name, TELEPHONE NUMBER and address of the structured sober living home. A CITY OR TOWN MAY NOT DISCLOSE THE ADDRESS OF A SOBER LIVING HOME EXCEPT TO LOCAL LAW ENFORCEMENT AND EMERGENCY PERSONNEL. A SOBER LIVING HOME'S ADDRESS IS NOT A PUBLIC RECORD AND IS NOT SUBJECT TO TITLE 39, CHAPTER 1, ARTICLE 2. (b) The following information regarding the property: (i) The property owner's name, address and contact telephone number. (ii) If the property is leased, a copy of the lease that states that the property will be used as a structured sober living home. 2. Supervision requirements in the structured sober living home for the residents during all hours of operation. 3. The establishment and maintenance of an operation plan that facilitates the rehabilitative process, including discharge planning, and that addresses the maintenance of the property and noise abatement consistent with local ordinances. B. A city or town that adopts standards for structured sober living homes pursuant to subsection A of this section: 1. Shall require structured sober living homes to develop policies and procedures to allow individuals on medication-assisted treatment to continue to receive this treatment while living in the structured sober living home. 2. May exclude from regulation any structured sober living home that is subject to adequate oversight by another governmental entity or contractor. C. For the purposes of this section: 1. "Medication-assisted treatment" has the same meaning prescribed in section "Structured Sober living home" : (a) means any premises, place or building that provides alcohol-free or drug-free housing, AND THAT: (a) Promotes independent living and life skill development. and provides structured (b) MAY PROVIDE activities that are directed primarily toward recovery from substance use disorders. in Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 25 of 48

37 S.B (c) PROVIDES a supervised setting to a group of unrelated individuals who are recovering from drug or alcohol addiction and who are receiving outpatient behavioral health services for substance abuse or addiction treatment while living in the home SUBSTANCE USE DISORDERS. (b) Does not include a private residence in which a related family member is required to receive outpatient behavioral health services for substance abuse or addiction treatment as a condition of continuing to reside in the family dwelling. (d) DOES NOT PROVIDE ANY MEDICAL OR CLINICAL SERVICES OR MEDICATION ADMINISTRATION ON-SITE, EXCEPT FOR VERIFICATION OF ABSTINENCE. Sec. 3. Section , Arizona Revised Statutes, is amended to read: Limits on regulation of vacation rentals and short-term rentals; state preemption; definitions A. A county may not prohibit vacation rentals or short-term rentals. B. A county may not restrict the use of or regulate vacation rentals or short-term rentals based on their classification, use or occupancy. A county may regulate vacation rentals or short-term rentals for the following purposes: 1. Protection of the public's health and safety, including rules and regulations related to fire and building codes, health and sanitation, transportation or traffic control, solid or hazardous waste and pollution control, and designation of an emergency point of contact, if the county demonstrates that the rule or regulation is for the primary purpose of protecting the public's health and safety. 2. Adopting and enforcing residential use and zoning ordinances, including ordinances related to noise, protection of welfare, property maintenance and other nuisance issues, if the ordinance is applied in the same manner as other property classified under sections and Limiting or prohibiting the use of a vacation rental or short-term rental for the purposes of housing sex offenders, operating or maintaining a structured sober living home, selling illegal drugs, liquor control or pornography, obscenity, nude or topless dancing and other adult-oriented businesses. C. This section does not exempt an owner of a residential rental property, as defined in section , from maintaining with the assessor of the county in which the property is located information required under title 33, chapter 17, article 1. D. For the purposes of this section: 1. "Transient" has the same meaning prescribed in section "Vacation rental" or "short-term rental" means any individually or collectively owned single-family or one-to-four-family house or Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 26 of 48

38 S.B dwelling unit or any unit or group of units in a condominium, cooperative or timeshare, that is also a transient public lodging establishment or owner-occupied residential home offered for transient use if the accommodations are not classified for property taxation under section Vacation rental and short-term rental do not include a unit that is used for any nonresidential use, including retail, restaurant, banquet space, event center or another similar use. Sec. 4. Section , Arizona Revised Statutes, as amended by Laws 2018, first special session, chapter 1, section 3, is amended to read: Sober living homes; standards; definitions A. A county may adopt by ordinance standards for structured sober living homes that comply with state and federal fair housing laws and the Americans with disabilities act. If adopted, the standards for structured sober living homes may include: 1. A written notification from all structured sober living homes that includes: (a) The name, TELEPHONE NUMBER and address of the structured sober living home. A COUNTY MAY NOT DISCLOSE THE ADDRESS OF A SOBER LIVING HOME EXCEPT TO LOCAL LAW ENFORCEMENT AND EMERGENCY PERSONNEL. A SOBER LIVING HOME'S ADDRESS IS NOT A PUBLIC RECORD AND IS NOT SUBJECT TO TITLE 39, CHAPTER 1, ARTICLE 2. (b) The following information regarding the property: (i) The property owner's name, address and contact telephone number. (ii) If the property is leased, a copy of the lease that states that the property will be used as a structured sober living home. 2. Supervision requirements in the structured sober living home for the residents during all hours of operation. 3. The establishment and maintenance of an operation plan that facilitates the rehabilitative process, including discharge planning, and that addresses the maintenance of the property and noise abatement consistent with local ordinances. B. A county that adopts standards for structured sober living homes pursuant to subsection A of this section: 1. Shall require structured sober living homes to develop policies and procedures to allow individuals on medication-assisted treatment to continue to receive this treatment while living in the structured sober living home. 2. May exclude from regulation any structured sober living home that is subject to adequate oversight by another governmental entity or contractor Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 27 of 48

39 S.B C. For the purposes of this section: 1. "Medication-assisted treatment" has the same meaning prescribed in section "Structured Sober living home" : (a) means any premises, place or building that provides alcohol-free or drug-free housing, AND THAT: (a) Promotes independent living and life skill development. and provides structured (b) MAY PROVIDE activities that are directed primarily toward recovery from substance use disorders. in (c) PROVIDES a supervised setting to a group of unrelated individuals who are recovering from drug or alcohol addiction and who are receiving outpatient behavioral health services for substance abuse or addiction treatment while living in the home SUBSTANCE USE DISORDERS. (b) Does not include a private residence in which a related family member is required to receive outpatient behavioral health services for substance abuse or addiction treatment as a condition of continuing to reside in the family dwelling. (d) DOES NOT PROVIDE ANY MEDICAL OR CLINICAL SERVICES OR MEDICATION ADMINISTRATION ON-SITE, EXCEPT FOR VERIFICATION OF ABSTINENCE. Sec. 5. Title 36, chapter 18, Arizona Revised Statutes, is amended by adding article 4, to read: ARTICLE 4. SOBER LIVING HOMES Definitions IN THIS ARTICLE, UNLESS THE CONTEXT OTHERWISE REQUIRES: 1. "CERTIFYING ORGANIZATION" MEANS AN ORGANIZATION THAT CERTIFIES HOMES AS SOBER LIVING HOMES AND IS AFFILIATED WITH A NATIONAL ORGANIZATION RECOGNIZED BY THE DEPARTMENT WHOSE PRIMARY FUNCTION IS TO IMPROVE ACCESS TO AND THE QUALITY OF SOBER LIVING RESIDENCES THROUGH STANDARDS, EDUCATION, RESEARCH AND ADVOCACY. 2. "MEDICATION-ASSISTED TREATMENT" MEANS THE USE OF PHARMACOLOGICAL MEDICATIONS THAT ARE APPROVED BY THE UNITED STATES FOOD AND DRUG ADMINISTRATION, IN COMBINATION WITH COUNSELING AND BEHAVIORAL THERAPIES, TO PROVIDE A WHOLE PATIENT APPROACH TO THE TREATMENT OF SUBSTANCE USE DISORDERS. 3. "SOBER LIVING HOME" MEANS ANY PREMISES, PLACE OR BUILDING THAT PROVIDES ALCOHOL-FREE OR DRUG-FREE HOUSING AND THAT: (a) PROMOTES INDEPENDENT LIVING AND LIFE SKILLS DEVELOPMENT. (b) MAY PROVIDE ACTIVITIES THAT ARE DIRECTED PRIMARILY TOWARD RECOVERY FROM SUBSTANCE USE DISORDERS. (c) PROVIDES A SUPERVISED SETTING TO A GROUP OF UNRELATED INDIVIDUALS WHO ARE RECOVERING FROM SUBSTANCE USE DISORDERS. (d) DOES NOT PROVIDE ANY MEDICAL OR CLINICAL SERVICES OR MEDICATION ADMINISTRATION ON-SITE, EXCEPT FOR VERIFICATION OF ABSTINENCE Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 28 of 48

40 S.B Licensure; standards; civil penalties; inspections; use of title A. THE DIRECTOR SHALL ADOPT RULES TO ESTABLISH MINIMUM STANDARDS AND REQUIREMENTS FOR THE LICENSURE OF SOBER LIVING HOMES IN THIS STATE NECESSARY TO ENSURE THE PUBLIC HEALTH, SAFETY AND WELFARE. THE DIRECTOR MAY USE THE CURRENT STANDARDS ADOPTED BY ANY RECOGNIZED NATIONAL ORGANIZATION APPROVED BY THE DEPARTMENT AS GUIDELINES IN PRESCRIBING THE MINIMUM STANDARDS AND REQUIREMENTS UNDER THIS SUBSECTION. THE STANDARDS SHALL INCLUDE: 1. A REQUIREMENT THAT EACH SOBER LIVING HOME TO DEVELOP POLICIES AND PROCEDURES TO ALLOW INDIVIDUALS WHO ARE ON MEDICATION-ASSISTED TREATMENT TO CONTINUE TO RECEIVE THIS TREATMENT WHILE LIVING IN THE SOBER LIVING HOME. 2. CONSISTENT AND FAIR PRACTICES FOR DRUG AND ALCOHOL TESTING, INCLUDING FREQUENCY, THAT PROMOTE THE RESIDENTS' RECOVERY. 3. POLICIES AND PROCEDURES FOR THE RESIDENCE TO MAINTAIN AN ENVIRONMENT THAT PROMOTES THE SAFETY OF THE SURROUNDING NEIGHBORHOOD AND THE COMMUNITY AT LARGE. 4. POLICIES AND PROCEDURES FOR DISCHARGE PLANNING OF PERSONS LIVING IN THE RESIDENCE THAT DO NOT NEGATIVELY IMPACT THE SURROUNDING COMMUNITY. 5. A GOOD NEIGHBOR POLICY TO ADDRESS NEIGHBORHOOD CONCERNS AND COMPLAINTS. 6. A REQUIREMENT THAT THE OPERATOR OF EACH SOBER LIVING HOME HAVE AVAILABLE FOR EMERGENCY PERSONNEL AN UP-TO-DATE LIST OF CURRENT MEDICATIONS AND MEDICAL CONDITIONS OF EACH PERSON LIVING IN THE HOME. 7. A POLICY THAT ENSURES RESIDENTS ARE INFORMED OF ALL SOBER LIVING HOME RULES, RESIDENCY REQUIREMENTS AND RESIDENT AGREEMENTS. 8. POLICIES AND PROCEDURES FOR THE MANAGEMENT OF ALL MONIES RECEIVED AND SPENT BY THE SOBER LIVING HOME IN ACCORDANCE WITH STANDARD ACCOUNTING PRACTICES, INCLUDING MONIES RECEIVED FROM RESIDENTS OF THE SOBER LIVING HOME. 9. A REQUIREMENT THAT EACH SOBER LIVING HOME POST A STATEMENT OF RESIDENT RIGHTS THAT INCLUDES THE RIGHT TO FILE A COMPLAINT ABOUT THE RESIDENCE OR PROVIDER AND INFORMATION ABOUT HOW TO FILE A COMPLAINT. 10. POLICIES THAT PROMOTE RECOVERY BY REQUIRING RESIDENTS TO PARTICIPATE IN TREATMENT, SELF-HELP GROUPS OR OTHER RECOVERY SUPPORTS. 11. POLICIES REQUIRING ABSTINENCE FROM ALCOHOL AND ILLICIT DRUGS. 12. PROCEDURES REGARDING THE APPROPRIATE USE AND SECURITY OF MEDICATION BY A RESIDENT. 13. POLICIES REGARDING THE MAINTENANCE OF SOBER LIVING HOMES, INCLUDING THE INSTALLATION OF FUNCTIONING SMOKE DETECTORS, CARBON MONOXIDE DETECTORS AND FIRE EXTINGUISHERS AND COMPLIANCE WITH LOCAL FIRE CODES APPLICABLE TO COMPARABLE DWELLINGS OCCUPIED BY SINGLE FAMILIES. 14. POLICIES AND PROCEDURES THAT PROHIBIT A SOBER LIVING HOME OWNER, EMPLOYEE OR ADMINISTRATOR FROM REQUIRING A RESIDENT TO SIGN ANY Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 29 of 48

41 S.B DOCUMENT FOR THE PURPOSE OF RELINQUISHING THE RESIDENT'S PUBLIC ASSISTANCE BENEFITS, INCLUDING MEDICAL ASSISTANCE BENEFITS, CASH ASSISTANCE AND SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM BENEFITS. 15. POLICIES AND PROCEDURES FOR MANAGING COMPLAINTS ABOUT SOBER LIVING HOMES. 16. REQUIREMENTS FOR THE NOTIFICATION OF A FAMILY MEMBER OR OTHER EMERGENCY CONTACT DESIGNATED BY A RESIDENT UNDER CERTAIN CIRCUMSTANCES, INCLUDING DEATH DUE TO AN OVERDOSE. B. THE LICENSURE OF A SOBER LIVING HOME UNDER THIS ARTICLE IS FOR ONE YEAR. A PERSON OPERATING A SOBER LIVING HOME IN THIS STATE THAT HAS FAILED TO ATTAIN OR MAINTAIN LICENSURE OF THE SOBER LIVING HOME SHALL PAY A CIVIL PENALTY OF UP TO ONE THOUSAND DOLLARS FOR EACH VIOLATION. C. TO RECEIVE AND MAINTAIN LICENSURE, A SOBER LIVING HOME MUST COMPLY WITH ALL FEDERAL, STATE AND LOCAL LAWS, INCLUDING THE AMERICANS WITH DISABILITIES ACT OF D. A TREATMENT FACILITY THAT IS LICENSED BY THE DEPARTMENT FOR THE TREATMENT OF SUBSTANCE USE DISORDERS AND THAT HAS ONE OR MORE SOBER LIVING HOMES ON THE SAME CAMPUS AS THE FACILITY'S PROGRAM SHALL OBTAIN LICENSURE FOR EACH SOBER LIVING HOME PURSUANT TO THIS ARTICLE. E. ONCE THE DIRECTOR ADOPTS THE MINIMUM STANDARDS AS REQUIRED IN SUBSECTION A OF THIS SECTION, A PERSON MAY NOT ESTABLISH, CONDUCT OR MAINTAIN IN THIS STATE A SOBER LIVING HOME UNLESS THAT PERSON HOLDS A CURRENT AND VALID LICENSE ISSUED BY THE DEPARTMENT OR IS CERTIFIED AS PRESCRIBED IN SECTION THE LICENSE IS VALID ONLY FOR THE ESTABLISHMENT, OPERATION AND MAINTENANCE OF THE SOBER LIVING HOME. THE LICENSEE MAY NOT: 1. IMPLY BY ADVERTISING, DIRECTORY LISTING OR OTHERWISE THAT THE LICENSEE IS AUTHORIZED TO PERFORM SERVICES MORE SPECIALIZED OR OF A HIGHER DEGREE OF CARE THAN IS AUTHORIZED BY THIS ARTICLE AND THE UNDERLYING RULES FOR SOBER LIVING HOMES. 2. TRANSFER OR ASSIGN THE LICENSE. A LICENSE IS VALID ONLY FOR THE PREMISES OCCUPIED BY THE SOBER LIVING HOME AT THE TIME OF ITS ISSUANCE Fees; licensure; inspections; complaints; investigation; civil penalty; sanctions A. THE DEPARTMENT SHALL ESTABLISH FEES FOR INITIAL LICENSURE AND LICENSE RENEWAL AND A FEE FOR THE LATE PAYMENT OF LICENSING FEES THAT INCLUDES A GRACE PERIOD. THE DEPARTMENT SHALL DEPOSIT, PURSUANT TO SECTIONS AND , NINETY PERCENT OF THE FEES COLLECTED PURSUANT TO THIS SECTION IN THE HEALTH SERVICES LICENSING FUND ESTABLISHED BY SECTION AND TEN PERCENT OF THE FEES COLLECTED PURSUANT TO THIS SECTION IN THE STATE GENERAL FUND. B. ON A DETERMINATION BY THE DIRECTOR THAT THERE IS REASONABLE CAUSE TO BELIEVE A SOBER LIVING HOME IS NOT ADHERING TO THE LICENSING REQUIREMENTS OF THIS ARTICLE, THE DIRECTOR AND ANY DULY DESIGNATED EMPLOYEE OR AGENT OF THE DIRECTOR MAY ENTER ON AND INTO THE PREMISES OF Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 30 of 48

42 S.B ANY SOBER LIVING HOME THAT IS LICENSED OR REQUIRED TO BE LICENSED PURSUANT TO THIS ARTICLE AT ANY REASONABLE TIME FOR THE PURPOSE OF DETERMINING THE STATE OF COMPLIANCE WITH THIS ARTICLE, THE RULES ADOPTED PURSUANT TO THIS ARTICLE AND LOCAL FIRE ORDINANCES OR RULES. ANY APPLICATION FOR LICENSURE UNDER THIS ARTICLE CONSTITUTES PERMISSION FOR AND COMPLETE ACQUIESCENCE IN ANY ENTRY OR INSPECTION OF THE PREMISES DURING THE PENDENCY OF THE APPLICATION AND, IF LICENSED, DURING THE TERM OF THE LICENSE. IF AN INSPECTION REVEALS THAT THE SOBER LIVING HOME IS NOT ADHERING TO THE LICENSING REQUIREMENTS ESTABLISHED PURSUANT TO THIS ARTICLE, THE DIRECTOR MAY TAKE ACTION AUTHORIZED BY THIS ARTICLE. ANY SOBER LIVING HOME WHOSE LICENSE HAS BEEN SUSPENDED OR REVOKED IN ACCORDANCE WITH THIS ARTICLE IS SUBJECT TO INSPECTION ON APPLICATION FOR RELICENSURE OR REINSTATEMENT OF LICENSE. C. THE DIRECTOR MAY IMPOSE A CIVIL PENALTY ON A PERSON THAT VIOLATES THIS ARTICLE OR THE RULES ADOPTED PURSUANT TO THIS ARTICLE IN AN AMOUNT OF NOT MORE THAN FIVE HUNDRED DOLLARS FOR EACH VIOLATION. EACH DAY THAT A VIOLATION OCCURS CONSTITUTES A SEPARATE VIOLATION. THE DIRECTOR MAY ISSUE A NOTICE THAT INCLUDES THE PROPOSED AMOUNT OF THE CIVIL PENALTY ASSESSMENT. IF A PERSON REQUESTS A HEARING TO APPEAL AN ASSESSMENT, THE DIRECTOR MAY NOT TAKE FURTHER ACTION TO ENFORCE AND COLLECT THE ASSESSMENT UNTIL THE HEARING PROCESS IS COMPLETE. THE DIRECTOR SHALL IMPOSE A CIVIL PENALTY ONLY FOR THOSE DAYS FOR WHICH THE VIOLATION HAS BEEN DOCUMENTED BY THE DEPARTMENT. D. THE DEPARTMENT MAY IMPOSE SANCTIONS AND COMMENCE DISCIPLINARY ACTIONS AGAINST A LICENSED SOBER LIVING HOME, INCLUDING REVOKING THE LICENSE. A LICENSE MAY NOT BE SUSPENDED OR REVOKED UNDER THIS ARTICLE WITHOUT AFFORDING THE LICENSEE NOTICE AND AN OPPORTUNITY FOR A HEARING AS PROVIDED IN TITLE 41, CHAPTER 6, ARTICLE 10. E. THE DEPARTMENT MAY CONTRACT WITH A THIRD PARTY TO ASSIST THE DEPARTMENT WITH LICENSURE AND INSPECTIONS Certified sober living homes A. NOTWITHSTANDING ANY OTHER PROVISION OF THIS ARTICLE, A SOBER LIVING HOME IN THIS STATE THAT IS CERTIFIED BY A CERTIFYING ORGANIZATION MAY OPERATE IN THIS STATE AND RECEIVE REFERRALS PURSUANT TO SECTION A SOBER LIVING HOME CERTIFICATION IS IN LIEU OF LICENSURE UNTIL THE SOBER LIVING HOME IS LICENSED. A CERTIFIED SOBER LIVING HOME SHALL APPLY TO THE DEPARTMENT FOR LICENSURE WITHIN NINETY DAYS AFTER THE DEPARTMENT'S INITIAL LICENSURE RULES ARE FINAL. THE DEPARTMENT SHALL NOTIFY THE CERTIFYING ORGANIZATION WHEN THE DEPARTMENT'S INITIAL LICENSURE RULES ARE FINAL. B. IN LIEU OF AN INITIAL ON-SITE LICENSURE SURVEY AND ANY ANNUAL ON-SITE SURVEY, THE DEPARTMENT SHALL ISSUE A LICENSE TO A SOBER LIVING HOME THAT SUBMITS AN APPLICATION PRESCRIBED BY THE DEPARTMENT AND THAT MEETS THE FOLLOWING REQUIREMENTS: Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 31 of 48

43 S.B IS CURRENTLY CERTIFIED AS A SOBER LIVING HOME BY A CERTIFYING ORGANIZATION. 2. MEETS ALL DEPARTMENT LICENSURE REQUIREMENTS State contracts; referrals BEGINNING JANUARY 1, 2019: 1. A STATE AGENCY OR A STATE-CONTRACTED VENDOR THAT DIRECTS SUBSTANCE ABUSE TREATMENT SHALL REFER A PERSON ONLY TO A CERTIFIED OR LICENSED SOBER LIVING HOME. 2. ONLY A CERTIFIED OR LICENSED SOBER LIVING HOME MAY BE ELIGIBLE FOR FEDERAL OR STATE FUNDING TO DELIVER SOBER LIVING HOME SERVICES IN THIS STATE. 3. PERSONS WHOSE SUBSTANCE ABUSE TREATMENT IS FUNDED WITH FEDERAL OR STATE MONIES MAY BE REFERRED ONLY TO A CERTIFIED OR LICENSED SOBER LIVING HOME. 4. A STATE OR COUNTY COURT SHALL GIVE FIRST CONSIDERATION TO A CERTIFIED OR LICENSED SOBER LIVING HOME WHEN MAKING RESIDENTIAL RECOMMENDATIONS FOR INDIVIDUALS UNDER ITS SUPERVISION. 5. A HEALTH CARE INSTITUTION THAT PROVIDES SUBSTANCE ABUSE TREATMENT AND THAT IS LICENSED BY THE DEPARTMENT SHALL REFER A PATIENT OR CLIENT ONLY TO A CERTIFIED OR LICENSED SOBER LIVING HOME. 6. A BEHAVIORAL HEALTH PROVIDER WHO IS LICENSED PURSUANT TO TITLE 32, CHAPTER 33 SHALL REFER A PATIENT OR CLIENT ONLY TO A CERTIFIED OR LICENSED SOBER LIVING HOME Posting; confidential information THE DEPARTMENT SHALL POST ON ITS PUBLIC WEBSITE THE NAME AND TELEPHONE NUMBER OF EACH CERTIFIED AND LICENSED SOBER LIVING HOME AND SHALL UPDATE THE LIST QUARTERLY. THE DEPARTMENT MAY NOT DISCLOSE THE ADDRESS OF A CERTIFIED OR LICENSED SOBER LIVING HOME EXCEPT TO A LOCAL JURISDICTION FOR ZONING PURPOSES, LOCAL LAW ENFORCEMENT AND EMERGENCY PERSONNEL. A SOBER LIVING HOME'S ADDRESS IS NOT A PUBLIC RECORD AND IS NOT SUBJECT TO TITLE 39, CHAPTER 1, ARTICLE Department; annual report A. BEGINNING JANUARY 2, 2020 AND EACH JANUARY 2 THEREAFTER, THE DEPARTMENT SHALL SUBMIT TO THE SENATE HEALTH AND HUMAN SERVICES COMMITTEE AND THE HOUSE OF REPRESENTATIVES HEALTH COMMITTEE, OR THEIR SUCCESSOR COMMITTEES, A REPORT ON LICENSED SOBER LIVING HOMES IN THIS STATE THAT INCLUDES: 1. THE NUMBER OF LICENSED SOBER LIVING HOMES IN EACH CITY, TOWN AND COUNTY. 2. THE NUMBER OF SOBER LIVING HOMES THAT ARE LICENSED EACH YEAR. 3. THE NUMBER OF COMPLAINTS AGAINST LICENSED SOBER LIVING HOMES THAT THE DEPARTMENT INVESTIGATES ANNUALLY. 4. THE NUMBER OF ENFORCEMENT ACTIONS THE DEPARTMENT TAKES AGAINST LICENSED SOBER LIVING HOMES ANNUALLY Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 32 of 48

44 S.B B. THE DEPARTMENT SHALL PROVIDE A COPY OF THE REPORT SUBMITTED PURSUANT TO SUBSECTION A OF THIS SECTION TO THE SECRETARY OF STATE. Sec. 6. Department of health services; rulemaking; exemption For the purposes of title 36, chapter 18, article 4, Arizona Revised Statutes, as added by this act, the department of health services is exempt from the rulemaking requirements of title 41, chapter 6, Arizona Revised Statutes, for two years after the effective date of this act. Sec. 7. Conditional repeal; notice A. Sections and , Arizona Revised Statutes, as amended by this act, are repealed ninety days after the date that the director of the department of health services finalizes rules relating to the licensure of sober living homes pursuant to title 36, chapter 18, article 4, Arizona Revised Statutes, as added by this act. B. The director of the department of health services shall notify in writing the director of the Arizona legislative council and each city, town and county in this state of the date the rules are finalized. APPROVED BY THE GOVERNOR APRIL 11, FILED IN THE OFFICE OF THE SECRETARY OF STATE APRIL 11, Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 33 of 48

45 IN THE ARIZONA COURT OF APPEALS DIVISION ONE TURTLE ROCK III HOMEOWNERS ASSOCIATION, Plaintiff/Appellee, v. LYNNE A. FISHER, Defendant/Appellant. No. 1 CA-CV FILED Appeal from the Superior Court in Maricopa County No. CV The Honorable David M. Talamante, Judge AFFIRMED IN PART; REVERSED IN PART COUNSEL The Law Offices of J. Roger Wood, PLLC, Tempe By James Roger Wood, Erin S. Iungerich Counsel for Defendant/Appellant Goodman Law Group, LLP, Mesa By Clint G. Goodman, Ashely N. Moscarello, Maura A. Abernathy Counsel for Plaintiff/Appellee OPINION Judge Jon W. Thompson delivered the Opinion of the Court, in which Presiding Judge Kent E. Cattani and Judge Paul J. McMurdie joined. T H O M P S O N, Judge: Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 34 of 48

46 1 This matter involves a dispute between the Turtle Rock III Homeowners Association (HOA) and homeowner Lynne A. Fisher (Fisher). Fisher appeals from an injunction requiring her to clean up or repair certain parts of her property and from a judgment in favor of the HOA for penalties in the amount of $3850. The injunction is affirmed. The award of monetary penalties and attorneys fees against Fisher below is reversed. FACTUAL AND PROCEDURAL HISTORY 2 Fisher s home is in a planned community with recorded deed restrictions (CC&Rs). The CC&Rs require owners to maintain their property in a clean and attractive condition. The CC&Rs provide that the failure to maintain the property in a manner satisfactory to the HOA Board will result in a notice specifying the nature of the violation and, in the event the violation is not cured within thirty days, the HOA has the right to fine the owner. The HOA sent Fisher many such notices and statements of fines being levied beginning in January In November 2015, the HOA filed a complaint in superior court asserting breach of the CC&Rs and requesting an injunction after Fisher failed to keep up maintenance on her property. The HOA asserted that Fisher was using the home as a storage facility and she had allowed parts of the exterior to become broken, missing, or dilapidated. The HOA further asserted that Fisher had excessive items within the home that can be viewed from neighboring property and/or constitute a health and safety hazard to the rest of the members in the community. It asserted that Fisher was accumulating fines at a rate of $25 per day. 4 An evidentiary hearing was scheduled to address both the monetary penalties and the ongoing maintenance violations. The HOA submitted a pretrial statement; Fisher did not. HOA officers attended the hearing with counsel; Fisher s counsel attended the hearing, but Fisher did not. The HOA presented one witness and five exhibits, including photographs of the property, a voluminous number of letters to Fisher from the HOA, a ledger of the accrued fines, and the HOA CC&Rs. The HOA did not provide the fine schedule. Fisher s counsel waived any presentation of testimony and did not introduce any evidence. 5 The trial court entered an order that stated there was no objection by Fisher to the HOA s requested exterior maintenance repairs or to the requested interior changes namely, moving any interior items that prevent the blinds from closing properly and replacing the dilapidated blinds. On the issue of the monetary penalties, the court addressed Fisher s Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 35 of 48

47 counsel s apparent objection that there was no written fine schedule in evidence and that the HOA had deviated from the CC&Rs requirement that a homeowner have thirty days notice to cure any defect before the assessment of any fines. The court s order concluded the HOA had complied with the thirty day notice requirement and that the HOA s witness had presented sufficient testimony as to the fine assessment. 6 The trial court issued a judgment in favor of the HOA. It ordered all the requested maintenance, $10, in attorneys fees, $3850 in penalties, and $474 in costs against Fisher. The order was signed and was issued pursuant to Arizona Rule of Civil Procedure 54(c). Fisher timely appealed. DISCUSSION 7 On appeal, Fisher raises two issues: (1) whether the trial court erred in issuing an injunction requiring her to make changes to the interior of her property, and (2) whether the award of penalties against Fisher ignored the express language of the CC&Rs and Arizona law, and violated her due process rights. 8 The grant or denial of injunctive relief rests within the sound discretion of the trial court. Fin. Assocs., Inc. v. Hub Props., Inc., 143 Ariz. 543, 545, 694 P.2d 831, 833 (App. 1984). The interpretation of deed restrictions is a question of law, which we resolve de novo. Arizona Biltmore Estates Ass n v. Tezak, 177 Ariz. 447, 448, 868 P.2d 1030, 1031 (1993) (upholding HOA s restrictions). 9 Fisher s argument about having to remedy the interior of her house is made for the first time on appeal. She filed no pretrial statement making this argument. She did not testify or present evidence at trial. And, below, the trial court noted she offered no objection as to the enumerated maintenance items, which specifically included the interior although limited to items that interfered with the operation of blinds that can be seen from the exterior. [A]rguments raised for the first time on appeal are untimely and deemed waived. Odom v. Farmers Ins. Co. of Ariz., 216 Ariz. 530, 535, 18, 169 P.3d 120, 125 (App. 2007). Further, because the hearing transcript is missing, we must presume the missing transcript would have supported the trial court's ruling. See Myrick v. Maloney, 235 Ariz. 491, 495, 11, 333 P.3d 818, 822 (App. 2014). The trial court s injunction is affirmed as to the interior of Fisher s house. 10 Fisher next argues that the $3850 in penalties for maintenance violations were imposed without a contractual or legal basis, and before she Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 36 of 48

48 had proper notice and an opportunity to be heard. 1 She maintains that because there was no written schedule enumerating penalties in evidence, such charges were unreasonable and inconsistent with Arizona Revised Statutes (A.R.S.) (B) (2014) 2 which requires monetary penalties to be reasonable. 3 To this end she cites Villas at Hidden Lakes Condos Assoc. v. Geupel Constr. Co., 174 Ariz. 72, 81, 847 P.2d 117, 126 (App. 1992) (finding it unreasonable for a HOA to impose late fees pursuant to a retroactively adopted fee schedule). Fisher further asserts that under the CC&Rs she 1 We reject the HOA s contention that because Fisher failed to appear at trial, all of her issues on appeal are waived. The case cited for this proposition, Bloch v. Bentfield, 1 Ariz. App. 412, 418, 403 P.2d 559, 565 (1965), is inapposite. Bloch was a matter where a party was representing himself and failed to appear for trial. In the instant matter, Fisher s counsel appeared and presented argument on the issue of penalties. 2 Some of Fisher s citations regarding penalties are to A.R.S (A) (relating to assessments), rather than to A.R.S (B), which relates to penalties. 3 Section (B) provides: After notice and an opportunity to be heard, the board of directors may impose reasonable monetary penalties on members for violations of the declaration, bylaws and rules of the association. Notwithstanding any provision in the community documents, the board of directors shall not impose a charge for a late payment of a penalty that exceeds the greater of fifteen dollars or ten percent of the amount of the unpaid penalty. A payment is deemed late if it is unpaid fifteen or more days after its due date, unless the declaration, bylaws or rules of the association provide for a longer period. Any monies paid by a member for an unpaid penalty shall be applied first to the principal amount unpaid and then to the interest accrued. Notice pursuant to this subsection shall include information pertaining to the manner in which the penalty shall be enforced. (Emphasis added.) Under A.R.S (C) Fisher could have challenged any alleged violation within ten business days of such notice by certified mail, but she did not do so. Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 37 of 48

49 should have been entitled to a full thirty day opportunity to cure or object before any penalty was assessed, and because she was not given such an opportunity, the penalties were all invalid. 4 She further argues that a daily or weekly fine is akin to a punitive damage award and, to this end, cites Kalenka v. Taylor, 896 P.2d 222 (Alaska 1995) (addressing breach of contract construction penalties). 11 In response, the HOA asserts the penalties were reasonable and supported by the HOA s witness s uncontroverted testimony at trial. The HOA submitted a ledger detailing the charges. On appeal, the HOA did not respond to Fisher s citation to Villas for the proposition that there must be evidence in the record of a promulgated fee schedule for fines to be reasonable. 12 As to the thirty day argument, the HOA further insists Fisher had abundant notice and opportunity to be heard and failed to avail herself of those opportunities both before the HOA and before the trial court. In fact, Fisher received in the range of ninety separate notices between January 2014 and the time of trial notifying her that she was incurring escalating monetary penalties for her failure to cure those same few property violations. While the HOA admits the $25 fines were initially applied before the expiration of thirty days, it argues that fact does not invalidate any subsequent fines for the same violation--especially in light of the court awarding only the penalties that accrued after September 16, 2015, which was the date the HOA s lawyer finally wrote to Fisher We view the evidence presented to the trial court in the light most favorable to upholding decision to award the HOA $3850 in penalties. See Bell Kilbourn v. Bell Kilbourn, 216 Ariz. 521, 522, n.1, 169 P.3d 111, 112, n.1 (App. 2007). The trial court enjoys broad discretion in its evaluation of 4 Specifically, Fisher asserts The Association s habit was to send a second notice to Ms. Fisher prior to the expiration of the required 30 day notice. Then, at the time of the second notice (day 20 of the 30 day notice period), the fine would be imposed and added to her account ledger. In other words, the notices gave her ten days to cure or additional action would be taken under the Enforcement Policy. It also gave her ten days to request a hearing. Fisher argues This consistent habit and practice did not comply with the law and the documents and should work to invalidate any and all such penalties. 5 The trial court, sua sponte, reduced the penalties from the requested $9, to $3850. Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 38 of 48

50 evidence. Conant v. Whitney, 190 Ariz. 290, 292, 947 P.2d 864, 866 (App. 1997). However, we review issues of law de novo. See Keenen v. Biles, 199 Ariz. 266, 267, 4, 17 P.3d 111, 112 (App. 2001). 14 Monetary fines must be reasonable. See A.R.S (B). Ad hoc fines are per se unreasonable. Villas, 174 Ariz. at 81, 847 P.2d at 126. Villas is dispositive on this issue. Under Villas, even where the HOA has the authority to levy fines, it must promulgate the schedule of fines prior to imposing the fines, and the failure to prove promulgation is fatal. Id. 15 As Fisher noted below, no fee schedule was introduced into evidence or presented to the trial court. There is a bare assertion in the HOA s briefs that it provided Fisher a copy of the fine policy after the hearing, however no evidence in the record corroborates this claim. The trial court did not make a finding that a promulgated fee schedule existed and we do not find the trial court s reference to Ms. Curtiss testimony sufficient to establish that fact. Based on the way the trial court phrased its order, stating the Court finds Ms. Curtiss testimony sufficient under the circumstances to support as a matter of evidence the fine assessment of $25 per day, the witness could have been testifying to HOA policy or facts related to the violations Next, the HOA argues that Fisher never provided evidence controverting that the fine schedule authorized reasonable monetary penalties. Fisher was not required to present evidence controverting the existence of the fee schedule. To bring an action for the breach of the contract, the plaintiff has the burden of proving the elements of the claim. Clark v. Compania Ganadera de Cananea, S.A., 95 Ariz. 90, 94, 387 P.2d 235, 238 (1963). And, where a litigant seeks to prove the terms of a writing, the original document itself must be produced unless shown to be unavailable due to no fault of the litigant seeking to prove such terms. Higgins v. Arizona Sav. and Loan Ass'n, 90 Ariz. 55, 68, 365 P.2d 476, 486 (1961); see also Ariz. R. Evid ( An original writing, recording, or photograph is required in order to prove its content unless these rules or an applicable statute provides otherwise. ). 6 Fisher asserted in her opposition to monetary penalties that No evidence of the reasonable nature of the fines was presented at trial and when asked, the Association s witness (board member) could not produce or recall that the Association s documents provided for such daily fines. Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 39 of 48

51 When the contents of a writing are at issue, oral testimony as to the terms of the writing is subject to a greater risk of error than oral testimony as to events or other situations. The human memory is not often capable of reciting the precise terms of a writing, and when the terms are in dispute only the writing itself, or a true copy, provides reliable evidence. To summarize then, we observe that the importance of the precise terms of writings in the world of legal relations, the fallibility of the human memory as reliable evidence of the terms, and the hazards of inaccurate or incomplete duplication are the concerns addressed by the best evidence rule. Seiler v. Lucasfilm, Ltd., 808 F.2d 1316, 1319 (9th Cir. 1986) (citing 5 Louisell & Mueller, Federal Evidence, 550 at 283; McCormick on Evidence (3d ed. 1984) 231 at 704; Cleary & Strong, The Best Evidence Rule: An Evaluation in Context, 51 Iowa L.Rev. 825, 828 (1966)). 17 There is also no support in the record for a determination that a fine of $25 per day, for any violation, is reasonable. A stipulated damages provision made in advance of a breach is a penalty, and is generally unenforceable. Larson Hegstrom & Assocs., Inc. v. Jeffries, 145 Ariz. 329, 333, 701 P.2d 587, 591 (App. 1985). And, that the trial court attempted to remedy the HOA s overreach by slashing the assessed fines by 58% cannot establish the reasonableness of HOA s fine scheme. Rather, the exact opposite is true. 18 Therefore, although the HOA had the authority under state statutes and the CC&Rs to promulgate a fine schedule for monetary penalties, there is no competent evidence in the record before us that it did so. Without competent evidence of a fee schedule timely promulgated demonstrating the fine amounts and the appropriateness of such amounts, monetary penalties are per se unreasonable. Even if a fee schedule existed, the HOA had the burden to prove its damages. Given our resolution of this matter, we need not address Fisher s due process claim related to the required thirty day notice of a penalty. The trial court s award of monetary penalties is reversed and the attorneys fees award below is reversed. ATTORNEYS FEES 19 Both parties request attorneys fees on appeal. The HOA cites both the CC&Rs and A.R.S (2016) as the basis for its fees. We grant neither party their fees as neither party was wholly successful. Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 40 of 48

52 CONCLUSION 20 For the above stated reasons, the trial court s injunction is affirmed and the judgment for monetary penalties in the amount of $3850 is reversed. Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 41 of 48

53 IN THE ARIZONA COURT OF APPEALS DIVISION ONE PATRICIA BOCCHINO, Plaintiff/Appellee, v. FOUNTAIN SHADOWS HOMEOWNERS ASSOCIATION, Defendant/Appellant. No. 1 CA-CV FILED Appeal from the Superior Court in Maricopa County No. CV The Honorable Douglas Gerlach, Judge AFFIRMED COUNSEL Dessaules Law Group, Phoenix By Jonathan A. Dessaules, Ashley C. Hill Counsel for Plaintiff/Appellee Carpenter, Hazlewood, Delgado & Bolen, PLC, Phoenix By Chad P. Miesen, Charlene Cruz Counsel for Defendant/Appellant Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 42 of 48

54 OPINION Judge John C. Gemmill 1 delivered the opinion of the Court, in which Presiding Judge Michael J. Brown and Judge Maria Elena Cruz joined. G E M M I L L, Judge: 1 Fountain Shadows Homeowners Association (the Association ) appeals from summary judgment in favor of Patricia Bocchino. We affirm the judgment requiring the Association to repay an amount of attorney fees to Bocchino. The Association was not entitled to unilaterally assess against her the attorney fees it incurred in obtaining from justice court an injunction against her, when the Association did not seek an award of attorney fees from the court and no fees were awarded by the court. FACTS AND PROCEDURAL HISTORY 2 Bocchino previously owned a home located within the community known as Fountain Shadows. All property owners within Fountain Shadows are members of the Fountain Shadows Homeowners Association and are subject to a Declaration of Covenants, Conditions, and Restrictions (the Declaration ). A short time after purchasing the property, Bocchino allegedly began harassing certain members of the Association board and disrupting Association meetings. Her actions prompted the Association to video record its meetings and hire an off-duty police officer to keep the peace at the meetings. 3 On December 10, 2014, tensions boiled over at an Association meeting. According to witnesses at the meeting and responding police officers, Bocchino demanded copies of certain paperwork after the meeting and refused to leave after being asked several times. According to Bocchino, after the off-duty officer present for the meeting twisted Bocchino s arm, she called police to have that individual prosecuted for assault. The responding officer viewed the video of the meeting and 1 The Honorable John C. Gemmill, retired Judge of the Arizona Court of Appeals, Division One, has been authorized to sit in this matter pursuant to Article VI, Section 3 of the Arizona Constitution. Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 43 of 48

55 confirmed that after two people asked her to leave, the off-duty officer walked her out in an escort hold. After several minutes of arguing with officers on scene, Bocchino finally left. 4 The Association and several of its leaders sought from the Manistee Justice Court an injunction against workplace harassment by Bocchino, citing Arizona Revised Statutes ( A.R.S. ) section After an ex parte hearing without notice to Bocchino, the justice court granted the injunction. Bocchino did not thereafter contest the injunction. The Association did not ask the justice court to grant attorney fees when it sought the injunction, and the court did not award any fees. Instead, the Association assessed directly against Bocchino in her Association account the attorney fees it incurred ($3,887.28) to obtain the injunction. To do so, the Association relied primarily on the following provisions in the Declaration: Article XIII, Section 10. No noxious or offensive activity shall be carried on upon any Lot or any part of the Properties, nor shall anything be done thereupon which may be, or may become, an annoyance or nuisance to the neighborhood, or which shall in any way interfere with the quiet enjoyment of each of the Owners of his respective Townhouse, or which shall in any way increase the rate of insurance. Article XVII, Section I. Attorneys Fees. In the event the Association employs an attorney or attorneys to enforce the collection of any amounts due pursuant to this Declaration or in connection with any lien provided for herein, or the foreclosure thereof, or to enforce compliance with or specific performance of the terms and conditions of this Declaration, the Owner... against whom the action is brought shall pay all attorneys fees... thereby incurred by the Association in the event the Association prevails in any such action. 5 In making the assessment, the Association reasoned that Bocchino s conduct violated Article XIII, Section 10 of the Declaration; the Association took legal action to enforce the Declaration; the Association incurred attorney fees, costs and expenses in doing so; Article XVII, Section I of the Declaration provides that the Association is entitled to recover all attorney fees, costs and expenses incurred in such an action if it prevails; and the Association prevailed by obtaining the relief it sought the issuance of the injunction. Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 44 of 48

56 6 Bocchino sold her Fountain Shadows home in September Five days prior to closing, the Association notified the title company of the balance remaining on Bocchino s account, including the attorney fees. The title company withheld that balance from Bocchino s sale proceeds and remitted it to the Association. 7 Bocchino then filed a complaint in superior court alleging, inter alia, breach of contract and breach of the covenant of good faith and fair dealing. After the Association answered, Bocchino moved for summary judgment. The Association responded to Bocchino s motion with a cross-motion for summary judgment. After briefing and argument, the superior court ruled Bocchino was entitled to damages of $3,887.28, the amount of the fees the Association assessed against her. The court considered the issue of the Association s entitlement to attorney fees as turning on whether the injunction was enforceable, and the court concluded that the injunction was unconstitutionally vague and overbroad. The court also ruled that the Association could not have been the prevailing party in an uncontested injunction against workplace harassment when Bocchino was not given notice and did not participate. 8 The Association timely appeals. We have jurisdiction pursuant to A.R.S and DISCUSSION 9 We review the grant of summary judgment de novo and view the evidence in the light most favorable to [the Association], the party against whom summary judgment was entered. Espinoza v. Schulenburg, 212 Ariz. 215, 216, 6 (2006). We will affirm a summary judgment ruling if it is correct for any reason. Hawkins v. State, 183 Ariz. 100, 103 (App. 1995). 10 As noted, the superior court found the injunction was unenforceable as a matter of law because, as written, it was unconstitutionally vague and overbroad. We decline to reach this constitutional issue, however, because we can resolve this appeal on nonconstitutional grounds. See Fragoso v. Fell, 210 Ariz. 427, 430, 6 (App. 2005) ( Courts should decide cases on nonconstitutional grounds if possible, avoiding resolution of constitutional issues, when other principles of law are controlling and the case can be decided without ruling on the constitutional questions. ) (citation omitted). 11 Although conceding it did not seek attorney fees from the justice court that issued the injunction, the Association argues it was not required to do so because the Declaration authorized the unilateral Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 45 of 48

57 imposition of the fees it incurred in seeking the injunction. Bocchino argues the statute allowing an injunction against workplace harassment, A.R.S , provided the exclusive basis for the Association to request and receive its fees, and because the Association did not comply with the statute s requirements, it is barred from recovering an award of fees. 12 We conclude the superior court s judgment should be affirmed for two primary reasons. 13 First, A.R.S governs injunctions against workplace harassment, and the Association relied on the statute when seeking its injunction in justice court. Subsection (O) provides that [o]n notice to the affected party and after a hearing, the court may enter an order that requires any party to pay the costs of the action, including reasonable attorney fees. (Emphasis added.) Therefore, we conclude the Association waived its claim for attorney fees incurred in this judicial proceeding by not requesting an award of fees from the justice court that issued the injunction. 2 This conclusion is also consistent with other Arizona rules and statutes. See Ariz. R. Prot. Order Proc. 2(C)(1) (2015) ( After a hearing with notice to the affected party, a judicial officer may order any party to pay the costs of the action, including reasonable attorneys fees.... ) (emphasis added); Ariz. R. Civ. P. 54(g)(1) (2015) ( A claim for attorneys fees shall be made in the pleadings. ); Ariz. R. Just. Ct. P. 139(e) ( If a party has made a claim for attorneys fees in a pleading, the party may request that attorneys fees be included in the amount of the judgment. ); A.R.S (A) ( In any contested action arising out of a contract... the court may award the successful party reasonable attorney fees. ) (emphasis added). 14 Second, the Declaration does not expressly provide that the Association may assess, directly against a homeowner, attorney fees 2 We also note that a default judgment cannot exceed the relief requested in the complaint served upon the defaulting defendant. See Ariz. R. Civ. P. 54(d) (2015) ( A judgment by default shall not be different in kind from or exceed in amount that prayed for in the demand for judgment. ); Kline v. Kline, 221 Ariz. 564, 571, 27 (App. 2009) (Rule 54(d) serves the goals of due process by preventing a plaintiff from securing a result in a default proceeding without giving the defendant notice of the risk he faces. ). Similarly, the Association did not provide Bocchino notice in the injunction proceeding that it was seeking attorney fees, which would have allowed Bocchino to choose whether to contest the validity of the injunction, any award of fees, or both. Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 46 of 48

58 incurred in a judicial proceeding that have not been awarded by a qualified tribunal. 15 The Association further contends that because the fee provision in the Declaration allows the Association to recover all the fees incurred, no judicial approval of fees is necessary. Section (O) and sound policy dictate otherwise. Even a contractual entitlement to all attorney fees incurred can be overcome by an evidentiary showing that the fees were clearly excessive. See McDowell Mountain Ranch Cmty. Ass n, Inc. v. Simons, 216 Ariz. 266, , 20 (App. 2007). Moreover, the Association has cited no authority for the proposition that it was permissible to simply charge Bocchino s Association account for attorney fees it incurred without first receiving an award from the court. Requiring the tribunal that resolves the litigation to evaluate attorney fee claims as generally required by our statutes and rules constitutes sound policy. Courts play a significant role in assessing and awarding attorney fees incurred in judicial proceedings. 3 3 The parties competing contentions in this case underscore the value of judicial oversight. Bocchino argues that the Association charged her for attorney fees it incurred after the injunction was issued. And in its ruling, the superior court observed that the record failed to show why it was reasonable at all to retain attorneys given the nature of the conduct alleged. Whether the fees the Association incurred were prima facie reasonable (or clearly excessive) was a question for the court that issued the injunction. Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 47 of 48

59 CONCLUSION 16 On this record, we conclude the Association improperly assessed attorney fees against Bocchino that had not been awarded by the justice court. We therefore affirm the judgment of the superior court The Association has requested its attorney fees and costs on appeal. Because it has not prevailed, we deny its request. Bocchino has also requested her fees and costs pursuant to A.R.S In the exercise of our discretion, we decline to award Bocchino her attorney fees on appeal. She may, however, recover her taxable costs upon compliance with Arizona Rule of Civil Appellate Procedure We need not address the Association s argument that the issuance of the injunction was conclusive proof that Bocchino violated the Declaration. We note, however, that the Declaration was not attached to the petition and the justice court made no findings regarding Bocchino s conduct vis-à-vis the Declaration. Also, we need not address whether the Association prevailed in obtaining, ex parte, the injunction. Carpenter, Hazlewood, Delgado & Bolen, LLP Exhibit A, Page 48 of 48