This bill addresses HOA board members' duties and director indemnification — the legal standards board members must meet and when the association covers their liability, which affects board accountability.
In short: Addresses HOA board members' duties and director indemnification.
Introduced — no action Mixed
SB1387 writes into statute the duties that condominium and planned community boards and directors owe to members, describing them as codifying existing case law rather than making substantive changes. It states directors must act in good faith, with prudent care, treat owners fairly, and act reasonably. It also grants indemnification and creates a legal presumption that directors met their duties.
For homeowners: Two halves. It codifies enforceable director duties — ordinary care, fair treatment of owners, a duty to act reasonably in rulemaking, enforcement and design control, and recorded conflict disclosures — which helps owners. But it also adds director indemnification and a presumption of compliance an owner can rebut only by clear and convincing evidence, which raises the bar to hold a bad director accountable. The two roughly offset, so Mixed.
What the bill actually does, point by point — from the Arizona Legislature’s official fact sheet.
- Requires the board to act with the care an ordinarily prudent person in a like position would exercise under similar circumstances.
- Requires the board to treat unit owners fairly and to ensure any agent acting on its behalf does the same.
- Requires the board to act reasonably in exercising discretionary powers, including rulemaking, enforcement, and design-control powers.
- Requires directors to act in good faith and within the authority of the chapter and the governing documents.
- Indemnifies the association, directors, and officers from liability for actions taken or failures to act, if duties were performed in compliance with the stated standards.
- Presumes a director acted in accordance with these duties, and requires a challenger to prove a breach by clear and convincing evidence.
- States the changes are intended as non-substantive and based on existing case law (Tierra Ranchos v. Kitchukov).
The A.R.S. sections this bill amends, adds, or repeals — taken from the bill text. Click one to read the current law.
Organizations and industry insiders who registered a position on this bill through the Legislature’s public Request to Speak system — simply where each stood: For, Against, or Neutral. Individual homeowners are not listed. Whether this bill helps or hurts homeowners is our own read, shown by its label above — a group’s position doesn’t set our call. Each row links to that entity’s report card and to the source at azleg.gov.