A.R.S. § 10-3833

Planned Communities & Condominiums

Liability for unlawful distributions

Planned Communities & Condominiums · Text verified 2026-07-25

In plain English: A director who votes for or agrees to a distribution that violates the referenced distribution laws or the articles is personally liable to the association for the excess amount, if it is shown the director did not meet the standard of conduct in section 10-3830. A director present when such a distribution is approved is presumed to have agreed unless their dissent is recorded in the minutes or delivered in writing as described, and a director who voted in favor cannot dissent. A director held liable may seek contribution from other liable directors and from those who received the unlawful distribution, and any such proceeding must be started within two years after the distribution.

10-3833. Liability for unlawful distributions

A. A director who votes for or assents to a distribution made in violation of sections 10-11301 and 10-11302 or the articles of incorporation is personally liable to the corporation for the amount of the distribution that exceeds what could have been distributed without violating sections 10-11301 and 10-11302 or the articles of incorporation if it is established that the director's duties were not performed in compliance with section 10-3830.

B. A director of a corporation who is present at a meeting of its board of directors at which action on any distribution in violation of section 10-11301 is taken is presumed to have assented to the action taken unless his dissent is entered in the minutes of the meeting or unless he files his written dissent to the action with the secretary of the meeting before the adjournment of the meeting or forwards the dissent by registered or certified mail to the secretary of the corporation before 5:00 p.m. of the next business day after the adjournment of the meeting. The right to dissent does not apply to a director who voted in favor of the action.

C. A director who is held liable under subsection A of this section for an unlawful distribution is entitled to contribution from:

1. Every other director who could be held liable under subsection A of this section for the unlawful distribution.

2. Each person who received an unlawful distribution for the amount of the distribution whether or not the person receiving the distribution knew it was made in violation of sections 10-11301 and 10-11302 or the articles of incorporation.

D. A proceeding under this section is barred unless it is commenced within two years after the date on which the distribution is made.

Source: A.R.S. § 10-3833 — Arizona State Legislature