A.R.S. § 33-1229 — Rights of secured lenders

Rights of secured lenders

Condominiums · Text verified 2026-07-25

In plain English: The declaration may require that certain lenders (mortgage holders, deed-of-trust beneficiaries, or contract sellers) approve specified owner or association actions before those actions take effect. However, this lender-approval requirement cannot be used to take over the day-to-day running of the association or to block the association from starting, joining, or settling litigation or from handling insurance proceeds. It protects the association's ability to govern itself.

33-1229. Rights of secured lenders

The declaration may require that all or a specified number or percentage of the mortgagees, beneficiaries of deeds of trust or sellers under contracts, as defined in section 33-741, for conveyance of real property encumbering the units approve specified actions of the unit owners or the association as a condition to the effectiveness of those actions, but requirement for approval shall not operate to either:

1. Deny or delegate control over the general administrative affairs of the association by the unit owners or the board of directors.

2. Prevent the association or the board of directors from commencing, intervening in or settling any litigation or proceeding, or receiving and distributing any insurance proceeds pursuant to section 33-1253.

Source: A.R.S. § 33-1229 — Arizona State Legislature