Section 2: The reserve framework under Arizona law

2A. Title 33, Chapter 9 (Condominium Act) and reserves

Chapter 9 does not mandate a reserve study or a reserve-funding level. The Condominium Act gives the association the power to "adopt and amend budgets for revenues, expenditures and reserves" under A.R.S. § 33-1242, but that is an authorization, not a requirement — it sets no minimum funding level and no study cadence.⁵

The reserve obligation that does bind condominiums is disclosure at resale. Under A.R.S. § 33-1260, the association handles this for condominiums with fifty or more units, and the unit owner handles it for those with fewer than fifty; either way, within ten days of written notice of a pending sale, the seller must deliver a dated statement that includes the total amount the association holds as reserves, along with a copy of the most recent annual financial audit, review or compilation report and the most recent reserve study, if any.¹

A purchaser or seller harmed by a knowing or reckless failure to disclose can pursue every remedy at law or in equity, including reasonable attorney fees, and an association that charges unauthorized fees faces a civil penalty of up to $1,200.¹

On budgeting, A.R.S. § 33-1243 requires the board to give every unit owner a budget summary within thirty days of adoption and, unless the declaration lets the board adopt budgets directly, to submit the budget for member ratification; the same section requires an annual financial audit, review, or compilation within 180 days of the fiscal year's end.⁷ None of these provisions imposes a reserve-study or funding mandate, and because Chapter 9 is built on the 1980 Uniform Condominium Act, it does not carry the later UCIOA reserve provisions.³

2B. Title 33, Chapter 16 (Planned Communities Statute) and reserves

Chapter 16 also imposes no reserve-study requirement and no reserve-funding standard. Its reserve obligation is, once again, disclosure at resale. A.R.S. § 33-1806 parallels the condominium provision: for planned communities with fifty or more units the association delivers the statement, and for smaller communities the member does, within ten days of written notice of a pending sale. That dated statement includes the total amount the association holds as reserves, a copy of the most recent annual financial audit, review or compilation report, and the most recent reserve study, if any.²

The remedy and civil-penalty structure mirrors the condominium statute, right down to the attorney-fee provision and the $1,200 cap on unauthorized fees.² The differences between the two chapters are structural, not substantive, when it comes to reserves.

Chapter 16 has no budget-ratification provision to match § 33-1243(D); instead, A.R.S. § 33-1803 caps any increase in the regular assessment at twenty percent above the prior fiscal year unless a majority of members approve — a limit the Condominium Act does not contain.⁹ The annual audit, review, or compilation requirement sits separately at A.R.S. § 33-1810.⁸ The two statutes track each other on reserves, but each governs only its own chapter's communities, because a provision in one does not apply to the other.

2C. The declaration, corporate law, and fiduciary backstop

Because neither chapter sets a funding standard, the real obligation to fund reserves rests on two sources: the recorded declaration, which often requires the association to set aside reasonable reserves for replacement and contingencies, and the board's fiduciary duty.

Within each statutory framework, the order of precedence runs from the statute, to the recorded declaration and other governing documents, to board rules — with stricter governing-document limits controlling wherever they exist. Most Arizona associations are organized as nonprofit corporations, so directors also answer to the Arizona Nonprofit Corporation Act.

A.R.S. § 10-3830 requires a director to act in good faith, with the care an ordinarily prudent person in a like position would use under similar circumstances, and in a way the director reasonably believes serves the best interests of the corporation.⁶ A member who claims the association failed to maintain common areas brings a derivative claim: in a published 2026 decision the Court of Appeals held that such a claim ("the clubhouse or the shared parks") is subject to A.R.S. §§ 10-3631 and 10-3632, which require at least 50 members or 25% of the voting power and a written demand before suit.¹⁰

That standard is the practical anchor for reserve decisions. A board that funds and plans for major component replacement is exercising the duty of care; a board that defers reserves without analysis invites a challenge. The bottom line: Arizona's statutory reserve layer is a disclosure obligation triggered at resale, not a study or funding mandate — and the funding decision lives in the declaration and the boardroom.

Section 3: Compliance obligations

A. Study and inspection obligations

No reserve-study obligation exists under either chapter. Neither the Condominium Act (Ch. 9) nor the Planned Communities Statute (Ch. 16) requires an initial study, an update interval, a physical inspection, or a credentialed preparer; any such requirement is contractual, arising only from the recorded declaration.^1,2 Arizona also does not require community association managers to be licensed, so occupational law imposes no preparer credential either.

B. Funding obligations

No reserve-funding minimum applies under either chapter. For condominiums (Ch. 9), A.R.S. § 33-1242 authorizes budgeting for reserves but sets no level.⁵ For planned communities (Ch. 16), there is no funding mandate; instead, A.R.S. § 33-1803 limits regular assessment increases to twenty percent without member approval, which constrains how fast reserve contributions can climb without a vote.⁹ Beyond that, the funding obligation is fiduciary — the board's duty under A.R.S. § 10-3830 — and contractual, set by the declaration.⁶

C. Disclosure obligations

Annual member disclosure is limited. For condominiums (Ch. 9), A.R.S. § 33-1243 requires a budget summary to owners within thirty days of adoption and an annual audit, review, or compilation; for planned communities (Ch. 16), A.R.S. § 33-1810 requires the annual audit, review, or compilation, with no parallel budget-summary mandate.^7,8 Resale disclosure is the core reserve obligation, and it appears in both chapters under different sections: A.R.S. § 33-1260 for condominiums and A.R.S. § 33-1806 for planned communities, each requiring the total reserves held and the most recent reserve study, if any, within ten days of notice of a pending sale.^1,2

D. Account and governance obligations

No statute in either chapter requires associations to segregate reserve funds, keep a separate reserve account, or follow anti-commingling controls; the declaration and fiduciary duty govern how the money is handled.^1,2 Governance of reserve decisions is corporate: directors of associations organized as nonprofits owe the duties of care, loyalty, and good faith under A.R.S. § 10-3830, and anyone challenging those decisions goes to the Arizona Superior Courts, with appeals to the Arizona Court of Appeals and discretionary review by the Arizona Supreme Court — not to any reserve regulator.⁶ The Arizona Department of Real Estate administers public reports for new subdivisions under A.R.S. § 32-2181 et seq., but it does not regulate ongoing HOA operations or reserves.¹¹

Section 4: Recent legislative and judicial activity

A. Recent bills

Arizona's recent legislative activity on reserves is limited, and notably restrained. No Arizona bill in the past 24 months has proposed a periodic reserve-study requirement or a minimum reserve-funding level for either chapter. The one enacted measure, HB 2397, tightens what associations must disclose at resale.

B. Recent appellate rulings

No Arizona appellate decision in the past 36 months speaks directly to reserve studies or reserve funding. The closest relevant ruling deals with an association's authority over the common-area assets that reserves exist to maintain.

C. Active legislative debates

The active debate centers on assessment and budget controls, not reserve mandates. Lawmakers and stakeholders are weighing proposals to lower the member-ratification threshold for assessment increases and to direct surplus operating funds either back to owners or into reserves. No active proposal would impose a periodic reserve-study requirement.

Section 5: National positioning and related coverage

Arizona belongs to the middle of three national groups. The first group is the reserve-study mandate states, which set specific study and funding rules. California requires a visual inspection of major components at least every three years, with annual review, under Cal. Civ. Code § 5550(a). Florida requires structural integrity reserve studies for condominium and cooperative buildings three or more stories tall, due by December 31, 2025, under Fla. Stat. § 718.112(2)(g) (enacted by SB 4-D in 2022 and refined by SB 154 in 2023). Nevada requires a study at least every five years under NRS 116.31152.

The second group — where Arizona sits — carries reserve-disclosure obligations but no study mandate, requiring disclosure of reserves and any existing study at resale without compelling a study or a funding level. The third group is the no-mandate states, which carry no reserve provisions at all.

What makes Arizona distinctive is its two-statute structure — the Condominium Act (Chapter 9) and the Planned Communities Statute (Chapter 16), running in parallel but never interchangeable — and the fact that Arizona has not adopted UCIOA. For a multi-state operator moving from a mandate state into Arizona, the practical takeaway is this: study and funding decisions shift from statutory compliance to board judgment under fiduciary duty and the declaration, while the resale-disclosure obligation stays a firm compliance point. That judgment call still has to clear a federal floor for financeability: associations seeking Fannie Mae and Freddie Mac project eligibility must fund reserves to at least 10% of annual budgeted income, or rely on a qualifying reserve study alternative, with the minimum rising to 15% for loan applications dated on or after January 4, 2027.¹⁶

HOA Weekly's Arizona Reserve Studies coverage is revised when we verify a change from the legislature and the courts. Federal frameworks — including FHA, ADA, FDCPA, SCRA, and OTARD — also apply to Arizona associations regardless of the state framework.