Bulletin: AZ2014001

Date:
July 24, 2014
To:
All Arizona Issuing Offices
RE:
LEGISLATIVE UPDATE - Arizona 2014 State Legislative Report

Dear Associates:

The Arizona Legislature adjourned its 2014 regular session sine die in the early hours of April 24, 2014. The 101-day session was the third-shortest session since 2000, and comes after last year's marathon 151-day session. This year, the Legislature introduced 1,205 bills, sent 303 bills to the Governor's desk, 278 were signed into law, and 25 were vetoed. Below is a summary of the budget and policy issues debated during this legislative session that have the greatest impact on the LTAA.

BILLS THAT PASSED

Bills listed below will become effective on July 24, 2014, unless otherwise noted.

HB 2018 (mortgages; trust deeds; deficiency actions) [Chapter 129] states that anti-deficiency protections do not apply for mortgages or deeds of trust originated after December 31, 2014, if any of the following apply: 1) the real property is owned by a person engaged in the business of constructing and selling dwellings that were acquired in the course of that business; 2) the real property contains a dwelling that was never “substantially completed”; or 3) the real property contains a dwelling that was never utilized as a dwelling. Amends ARS 33-729 and 33-814.

HB 2287 (county treasurer; lien; sale) [Chapter 205] authorizes a county sheriff to execute a bill of sale conveying the personal property to the highest bidder if no bid is made that is sufficient to pay the taxes at a tax lien sale. Also, the bill suspends the civil penalty for incorrectly classifying property as class 3 (residential – primary residence) when it should be classified as class 4 (residential – rental) if ownership changed between the time of the notice and the penalty. Amends ARS 40-407, 42-18201, 42-19113 and 42-12052 and repeals ARS 42-19114.

HB 2477 (hoas; transfer fees; exemption) [Chapter 94] prohibits condo or homeowner associations from charging a fee for the transfer of property if that property is exempt from filing an affidavit of value. The LTAA worked to amend this bill to ensure that title companies are not burdened with being the arbiter of who does/does not qualify for this exemption. Amends ARS 33-1260 and 33-1806.

HB 2560 (insurance; self-evaluation privilege) [Chapter 154] establishes an "insurance compliance self-evaluative audit document" and states that these documents are privileged information that is not discoverable or admissible as evidence in legal action in civil or administrative proceedings. A framework to qualify and administer this privilege is created. Adds Chapter 23 to ARS Title 20.

SB 1046 (financial transactions omnibus) [Chapter 103] makes numerous changes to statutes relating to financial transactions. The bill modifies various rules relating to collateral and filing of financing statements for secured transactions. It also adds a new article to the uniform commercial code regulating financing statements for secured transactions. This bill contains an emergency clause and became effective upon signature of the Governor, which was April 22, 2014. Amends and adds multiple sections to ARS.

SB 1047 (closing protection letters; escrow agents) [Chapter 216] requires a title insurer to issue a closing protection letter to any party of a title insurance policy that indemnifies the insured against a loss from specified actions of the issuing title insurance agent or settlement service provider. Title insurers are required to charge no more than $25 for the issuance of a closing protection letter. This bill was brought forth by First American and Fidelity but was not a bill pursued by the LTAA. Amends ARS 6-841.02.

SB 1089 (insurance holding companies; enterprise risk) [Chapter 104] makes numerous changes to laws regulating domestic insurance holding companies to conform with national accreditation requirements for insurance holding companies. Amends multiple sections of ARS Title 20.

SB 1184 (planned communities; definition; property easements) [Chapter 112] adds real estate on which an easement to maintain roadways or a covenant to maintain roadways is held by a nonprofit corporation or unincorporated association of owners to the definition of "planned community." Amends ARS 33-1802

SB 1215 (real estate, unsubdivied land) [Chapter 187] expands the definition of “unsubdivied lands” for the purposes of real estate regulations to include land that would otherwise constitute the sixth lot, parcel or fractional interest if the sale occurs ten years or more after the earliest sale of the previous five lots, parcels or fractional interests. This only applies if the property was originally contained within the same parcel that is more than 36 but less than 160 acres. Amends ARS 32-2101.

SB 1353 (restructuring; AZ entities) [Chapter 193] repeals statutes regulating mergers, conversions, share exchanges, transfer of domicile and consolidations for various types of corporations and partnerships and replaces these statutes with a newly established law regulating entity restructuring. Effective January 1, 2015. Amends multiple sections of ARS Title 10 and Title 29.

SB 1482 (hoas amendments; omnibus) [Chapter 83] repeals and reinstates various changes made by last year’s HOA omnibus that was declared unconstitutional under the “single subject” clause of the state constitution. Concerning topics of interest to the title industry, the bill allows management companies to lawfully record lien notices and appear in small claims court on behalf of a HOA. The bill allows a property or unit owner to designate a third party, such as a tenant, to act on their behalf with respect to all HOA matters and stipulates that any notice to the third party serves as notice to the property or unit owner. Finally, a HOA may charge a $25 administrative fee for each new tenant, and prohibits a HOA from charging a fee to the rental unit that would be different if charged to an owner-occupied property or unit. Amends and adds multiple sections to ARS.

If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.

For on-line viewing of this and other bulletins, please log onto www.vuwriter.com.

THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER  AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.

References

Bulletins Replaced:
None
Related Bulletins:
None
Underwriting Manual:
None
Exceptions Manual:
None
Forms:
None