In April 1999 the Arizona legislature passed House Bill 2668,
which required certain steps before construction defect lawsuits
can be filed. Chapter 17, as the bill is commonly referred to,
applies only to homeowners' association dwelling actions.
Chapter 17 Prelitigation Steps
The homeowners' association must comply with the following
steps before filing an action:
(1) The board of directors must fully disclose in writing
to all association members all material information relating
to the filing of the action. The material information shall
include:
(a) A statement describing how the action will be funded, and
(b) A statement describing all demands, notices, offers
to settle, or responses to offers to settle made by the
association or the seller.
(c) This material information must be distributed to
all members before meeting below occurs.
(2) The association must hold a meeting of its members and
board of directors, and adequate notice must be given of this
meeting.
The homeowners' association board of directors authorizes the
filing of the action.
(1) If notice to the members is given less than 60 days
before the statute of limitations expires, the statute of
limitations will be tolled for 60 days.
(2) The association may meet the remaining statutory
requirements within the 60-day tolling period.
The board of directors must disclose in writing to the members
a plan that describes how the proceeds of the action will be
allocated.
(1) The plan must be disclosed within 30 days after the
association receives the proceeds from the action.
(2) The plan is not binding on the homeowners'
association, but the board of directors must disclose any
material changes to the plan to the members within 30 days of
making the changes.
The homeowners' association must prepare and preserve all
records that show compliance with Chapter 17 for five years.
A director who acts in good faith pursuant to Chapter 17 is not
liable for any act or failure to act pursuant to Chapter 17.
(1) If an action is filed against a director for failing to
act pursuant to Chapter 17, the director is presumed to have
acted in good faith. The burden is on the party challenging
the director's conduct to establish by clear and convincing
evidence facts that rebut the good faith presumption.
For more legislation information, see the California Legislation Web Site at http://www.leginfo.ca.gov.
© Copyright 2008 The Miller Law Firm. All rights Reserved.
If you experience problems or have questions, contact us at Info@ConstructionDefects.com.
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