Property Owner Liability Related to Recreational and Educational Users (SB 1229)

As a general matter, a person who has an interest in public or private real property is not liable for harm caused to a recreational or educational user.  A recreational user is generally defined as a person to whom permission has been granted or implied without the payment of an admission fee or any other consideration to travel across or enter the premises in order to engage in statutorily specified activities.  These activities are currently limited to hunting, fishing, trapping, camping, hiking, riding, exercising, swimming or engaging in similar pursuits.  Further, the current law dictates that the purchase of a state hunting, trapping or fishing license does not constitute payment of an admission fee or any other consideration.

Senate Bill 1229 expands the definition of recreational user to include a person who enters the premises to engage in off-highway vehicle, off-road recreational motor vehicle, all-terrain vehicle activity or outdoor recreational pursuits.  Senate Bill 1229 also clarifies that a tenant and manager of a premises are not liable to a recreational or educational user.  Finally, Senate Bill 1229 clarifies that the definition of “premises” also includes water delivery and water drainage areas located on real property.

Taxation of State Trust Lands (HB 2397)

Under current law, when a private entity purchases State Trust Land from the Arizona State Land Department, the Department issues a Certificate of Purchase to the purchaser that details the terms and conditions of the sale.  Once the purchaser satisfies the terms and conditions of the Certificate of Purchase, including full payment of principal and interest, the Department issues a patent to the purchaser.  However, if a purchaser becomes delinquent on real property taxes before a patent is issued, the Department is required to repossess the State Trust Land.

House Bill 2397 exempts a purchaser from paying real property taxes on State Trust Land for 7 years commencing on the date on which the Department issues a Certificate of Purchase or patent for the State Trust Land, whichever occurs first.  Under House Bill 2397, the Department is prohibited from issuing a patent for State Trust Land until all real property taxes that are due have been paid.

Defaults Under State Trust Land Leases (SB 1228)

The Arizona State Land Department frequently enters into long and short term commercial leases with third parties in order to generate income from the State Trust Land owned by the Department.  The recent recession caused many tenants of State Trust Land to default on the payment under their leases.  In an effort to respond to the numerous lease defaults, Senate Bill 1228 grants new powers to the Department and the State Land Commissioner in order to address future lease defaults in a commercially reasonable manner.

Senate Bill 1228 provides that a long-term lease for State Trust Land (i.e., greater than 10 years) is subject to forfeiture and termination upon a lease default, provided that the Department must notify the tenant of the default within 60 days after the default.  Senate Bill 1228 also allows the Commissioner to authorize an extension for the payment of delinquent rent amount for up to 5 years.  A tenant’s payment extension request is considered denied if the Department does not act upon a request for an extension within 30 days following the Department’s receipt of a tenant’s request.  If a tenant fails to make the payments in compliance with the extension approval, the lease is subject to cancellation by the Department.

Further, Senate Bill 1228 clarifies that a short-term lease for State Trust Land (i.e., 10 years or less) wherein rent payments are delinquent is subject to cancellation or forfeiture by the Department.  The Department is authorized to grant an extension for the payment of the delinquent rent amount on a short-term lease for up to 90 days at a time; provided, however, not more than three 90-day extensions can be granted to a tenant in one lease year and a short-term lease cannot be extended for more than a total of 270 days.  A short-term lease automatically terminates upon rent being delinquent for more than one calendar year.

Senate Bill 1228 also requires the Department to add a penalty and delinquent interest on past due lease payments if a payment extension is granted under either a long-term or short-term lease.  The delinquent rent, penalty and interest constitutes a lien on the improvements, crops and other property located on the leased premises.  Under a long-term lease, a tenant and its mortgagees and lienholders are permitted to cure any default (that is able to be cured) within 60 days after the tenant’s receipt of the Commissioner’s default notice letter.  Under a short-term lease, a tenant and its mortgagees and lienholders are permitted to cure any default (that is able to be cured and that involves failure to pay rent, taxes or other assessments) within 30 days of the tenant’s receipt of the Commissioner’s default notice letter, and 45 days in the event of any other non-monetary curable default.