Construction Law

Arizona’s Adaptive Reuse Law Explained Converting Commercial Buildings into Housing - Gottlieb Law
  • Gottlieb Law
  • No Comments

Arizona’s Adaptive Reuse Law Explained: Converting Commercial Buildings into Housing
Arizona’s Adaptive Reuse Law Explained: Converting Commercial Buildings into Housing 1536 1024 Gottlieb Law

Gottlieb Law, PLC provides this article for informational purposes only. Nothing herein creates an attorney-client relationship. Do not take action based on this article without consulting qualified legal counsel. Laws change, and only a licensed attorney can provide advice tailored to your specific situation.


Arizona’s Bold Move to Boost Housing Supply

The Grand Canyon State has taken a significant step to address its housing shortage. If you own or manage an underperforming office, retail, or mixed-use property, Arizona’s new adaptive reuse law (formerly House Bill 2297) may directly affect you.

Effective April 7, 2025, A.R.S. § 9-462.10 establishes a streamlined process for converting qualifying commercial buildings into residential units — without requiring rezoning or public hearings.

This landmark change could reshape development opportunities across Arizona. Whether you’re a developer planning adaptive reuse projects or a municipality preparing your “objective standards” under the new law, Gottlieb Law can help you navigate these evolving requirements.

A.R.S. § 9-462.10 at a Glance

Originally enacted through House Bill 2297, A.R.S. § 9-462.10 creates a simplified approval pathway for adaptive reuse and multifamily development. The statute allows certain commercial properties to be repurposed for residential use so long as they comply with objective health, safety, and building standards adopted by the local jurisdiction.

What Buildings Qualify and What Standards Apply Now

Arizona’s adaptive reuse law (A.R.S. § 9-462.10) does not grant blanket approval for all commercial properties to become housing. To qualify, a property must meet specific statutory criteria, and municipalities may apply only a narrow set of objective standards — nothing subjective or discretionary.

Here’s how the requirements break down.

Eligible Properties:

To qualify for adaptive reuse or multifamily conversion under the statute, a property must:

  • Be an existing commercial, office, or mixed-use parcel.
  • Consist of at least one acre but not more than twenty acres.
  • Contain buildings that are economically or functionally obsolete, meaning the property is in disrepair or has at least 50% vacancy in total leasable square footage.
  • Be located in a municipality with a population of 150,000 or more, since those cities are specifically required to adopt the objective standards within 90 days after April 7 2025.

Note: The term “obsolete” is defined by statute, but municipalities may still attempt to interpret its application narrowly. For example, cities like Scottsdale have indicated they may adopt more restrictive criteria — positions that could invite future legal challenges. Gottlieb Law is closely monitoring these local interpretations and can advise property owners as municipal standards are finalized.

The statute expressly excludes parcels within historic districts, near military or commercial airports, and on tribal land (A.R.S. § 9-462.10 (G))

Required Objective Standards 

Under A.R.S. § 9-462.10(C), the objective standards established by municipalities shall require only the following elements for qualifying adaptive reuse or multifamily projects:

  • Site plan review and approval, including review by affected utility providers.
  • Verification of adequate public sewer and water service.
  • Compliance with applicable building and fire codes.
  • Confirmation that existing buildings are economically or functionally obsolete.
  • A parcel size between 1 and 20 acres.
  • A minimum 10% affordable-housing set-aside for moderate- or low-income households, maintained for at least 20 years after occupancy.
  • Parking standards that may not exceed whichever is lesser — the existing multifamily or commercial requirements.

Municipalities must include these standards — and may not add any additional or discretionary requirements beyond them.  Any attempt to impose subjective design criteria, public hearings, or compatibility reviews would likely violate the statute’s express limitation.  Developers may, at their sole discretion, dedicate a greater share of units as affordable housing.

Eligibility Minimums, Exclusion Zones, and Demolition Rights

To ensure a balanced rollout, A.R.S. § 9-462.10(A)(1) requires municipalities to make at least 10% of existing commercial, office, or mixed-use parcels eligible for multifamily or adaptive reuse.  In practice, that means cities must make at least 10% of those parcels eligible, but they can review and adjust that percentage once every ten years.  Municipalities may not exclude parcels from eligibility if the average sound level is below 65 decibels.  Existing buildings that exceed current setback or height limits may retain their original dimensions and are considered legally nonconforming under the statute.

Why the Adaptive Reuse Law Was Passed — and Why It Matters Now

Arizona faces a dual real-estate challenge:

  • A severe housing shortage driven by population growth and constrained supply; and
  • Rising commercial vacancy, especially in post-pandemic office markets.

The Legislature designed A.R.S. § 9-462.10 to address both problems by making it faster and more predictable to repurpose aging or underused commercial space for housing.

Arizona now joins a growing list of states experimenting with adaptive-reuse incentives—but unlike most, it has preempted local discretionary zoning barriers in a significant way.

Cities such as Tucson are already advancing draft code amendments to align with the statute, while others, including Scottsdale, are facing legislative and developer pressure to ensure local rules remain consistent with the state’s intent.

Whether you’re a private developer, real-estate fund, or nonprofit housing organization, it’s important to consult experienced Arizona real-estate counsel to determine whether your property qualifies and how to position projects as local standards come into force beginning April 7 2025.

Who Benefits and What to Watch 

Commercial Property Owners & Developers

If you own outdated office, retail, or mixed-use space that has been difficult to lease or sell, Arizona’s adaptive reuse law (A.R.S. § 9-462.10, formerly HB 2297) may finally make conversion financially feasible.

However, qualification is not automatic. There are several technical and legal criteria that still apply:

  • Confirm eligibility: Your property must meet the statute’s definitions, including being economically or functionally obsolete (typically 50% vacant or in disrepair).
  • Assess infrastructure: Adequate water, sewer, and utility capacity remain mandatory prerequisites.
  • Review parking and density: Cities must apply the lesser of their commercial or multifamily parking requirements, and height/density caps are governed by the statute.
  • Affordable-housing set-aside: The required 10% set-aside for low- or moderate-income housing is mandatory and must be maintained for at least 20 years.

This is where Gottlieb Law’s real estate attorneys provide value by evaluating project eligibility, preparing compliance plans, and guiding developer negotiations with city staff during implementation.

Municipalities and Planning Departments

Under A.R.S. § 9-462.10(A), municipalities with populations of 150,000 or more must adopt objective standards within 90 days after the law’s effective date.

Cities that fail to act, or that attempt to impose discretionary criteria beyond the statute’s limits, could face legal challenges or state preemption.

Several cities are already drafting zoning-text and general-plan amendments. Others appear to be moving more slowly, which could expose them to claims of statutory non-compliance.

Gottlieb Law also advises municipalities on how to balance compliance with community interests while avoiding prohibited forms of subjective or arbitrary review.

Challenges & Strategic Considerations

Even with its benefits, the new law introduces practical and legal complexities. Key considerations include:

  • Municipal resistance: Some cities may test the limits of the statute by imposing extra conditions (for instance, Scottsdale has been criticized for requiring a six-month vacancy period not found in the law).
  • Infrastructure strain: Older water and sewer systems may constrain redevelopment even if entitlements are available.
  • Structural and retrofit costs: Adaptive reuse can be capital-intensive, often revealing hidden costs such as asbestos removal or major mechanical upgrades.
  • Market feasibility: Not every location suits residential use despite statutory eligibility; access, amenities, and neighborhood fit still matter.
  • Legal gray areas: It remains to be seen how courts will treat cities that fail to adopt standards on time or that enact conflicting regulations.

Early legal consultation can help minimize these risks and ensure timely compliance.

Real Use Cases Emerging

Interest is already building across Arizona:

  • According to the ADOH FY 2025 Low-Income Housing Tax Credit Projects Report, Arizona is actively supporting large-scale affordable housing development — underscoring how the new adaptive-reuse statute (A.R.S. § 9-462.10) enters into a policy environment where affordable units are increasingly embedded in redevelopment deals. Low Income Housing Credits (LIHTC) projects.
  • Phoenix commercial property conversions are growing and the city is one of the leading markets for office space conversions.

Each case is different, but the one constant is that the legal and regulatory pathway is now clearer for qualifying commercial properties.

How Gottlieb Law Can Help Navigate the Adaptive Reuse Law

With decades of experience in Arizona real-estate and land-use law, Gottlieb Law, PLC is uniquely positioned to guide clients through this evolving legal framework:

  • Developers: Entitlement, zoning, and risk-management counsel
  • Property owners: Feasibility analysis and asset-value recovery strategies
  • Municipal clients: Statutory-compliance and ordinance-drafting support
  • Investors and lenders: Due-diligence and regulatory certainty

Whether you’re pursuing a conversion opportunity or implementing municipal standards, our attorneys can help you proceed with confidence and full legal compliance under A.R.S. § 9-462.10, effective April 7, 2025.

Ready to Convert? Talk to a Real Estate Attorney Who Gets It

Let’s Make Arizona’s Adaptive Reuse Law Work for You

The window for early action is here and it’s important to act now if you could be impacted by this new law. Whether you’re trying to convert, invest, or prepare for implementation, Gottlieb Law can help you do it the right way.

With this new law, many Arizona commercial property owners will be able to turn a vacant space into a new residential housing opportunity. Contact our experienced real estate law firm to see how we can help with your adaptive reuse project in Arizona.

Call Gottlieb Law today at 602-899-8188 or use our Contact Us page here to schedule your initial consultation.

Gottlieb Law, PLC provides this article for informational purposes only. Nothing herein creates an attorney-client relationship. Do not take action based on this article without consulting qualified legal counsel. Laws change, and only a licensed attorney can provide advice tailored to your specific situation.

Construction Defect Claims in Arizona
  • Gottlieb Law
  • No Comments

Construction Defect Claims in Arizona
Construction Defect Claims in Arizona 922 922 Gottlieb Law


This article is provided for general informational purposes only and does not constitute legal advice.  Reading it does not create an attorney–client relationship.  Because laws and interpretations change over time, you should consult qualified legal counsel about your specific situation before taking any action.


Understanding Arizona’s Construction Defect Framework

Arizona’s rapid construction growth has created both opportunity and new challenges.  As developments rise throughout Phoenix, Tucson, and other fast-growing areas, more property owners are encountering structural issues, water intrusion, and workmanship defects.

Filing a construction defect claim can be complex, and timing is critical.  Under A.R.S. § 12-552, most construction-related claims must be brought within eight years after substantial completion of the improvement.  In limited circumstances, a claim involving a latent defect discovered in the eighth year may be filed within one additional year, for a maximum of nine years total.

In addition, Arizona’s Notice and Opportunity to Repair statutes (A.R.S. § 12-1361 et seq.) require homeowners to give builders written notice and a chance to inspect or repair before filing suit.  Understanding these rules, and how they apply to your property, is essential for homeowners, buyers, and associations seeking to protect their investments.

 

Current Legal Framework in Arizona

Under A.R.S. § 12-552, Arizona law establishes an eight-year statute of repose for most contract-based claims arising from design, engineering, or construction contracts. The period is measured from the date of “substantial completion”—generally when a structure can be safely occupied or used for its intended purpose, often tied to a certificate of occupancy.

If a latent defect or related property damage is discovered during the eighth year, the law allows an additional one-year period to bring a claim. However, no claim may be filed more than nine years after substantial completion.

Separate statutes of limitations apply to specific legal theories such as negligence, breach of contract, or warranty, so determining which deadlines apply can be highly fact-dependent.

For residential properties, Arizona’s Notice and Opportunity to Repair process (A.R.S. § 12-1363) requires homeowners to formally notify the builder of alleged defects and allow inspection before filing suit. This step can temporarily pause certain deadlines, but failure to follow the procedure can jeopardize the claim.

Arizona law also recognizes implied warranties of workmanship and habitability, providing additional protection to homeowners even when the construction contract does not include an express warranty. Understanding how these warranties interact with contract terms and statutory time limits is a nuanced legal question that typically requires guidance from experienced counsel.

How Construction Defect Claims Are Typically Handled

Because these cases involve technical construction standards, strict statutory deadlines, and multiple potentially liable parties, property owners rarely benefit from handling them alone. A construction defect attorney can evaluate the facts, preserve evidence, and navigate pre-litigation procedures to avoid costly missteps.

Below is a general overview of how claims are commonly addressed, not a step-by-step guide for self-filing:

  1. Investigation and Documentation: An attorney coordinates inspections, engages qualified engineers or construction experts, and gathers photos, repair invoices, and communications to establish the defect’s cause and scope. 
  2. Pre-Litigation Notice: Legal counsel prepares and serves the required written notice to the builder under Arizona’s right-to-repair statutes, ensuring all statutory deadlines are tolled appropriately. 
  3. Contract and Warranty Analysis: Your lawyer reviews purchase agreements, builder warranties, and insurance policies to determine the responsible parties and available coverage. 
  4. Timing and Filing Strategy: Counsel ensures the claim is filed within the applicable repose and limitation periods. Waiting too long, even when a defect appears late, can forfeit recovery rights. 
  5. Association and Condominium Considerations: Condominium and HOA claims often require board authorization or member approval before pursuing legal action. Your attorney can ensure compliance with governing documents and statutory notice requirements. 
  6. Resolution and Recovery: Many cases resolve through negotiation, mediation, or arbitration before trial. Skilled construction defect counsel can leverage expert findings to reach a fair settlement or, if necessary, litigate to verdict.


Why Legal Representation Is Essential

Construction defect law combines technical construction issues with complex statutory requirements.  Missing a notice deadline or filing in the wrong forum can completely bar recovery.  Working with experienced Arizona construction defect attorneys ensures that your rights are preserved, deadlines are met, and the full scope of damages is pursued, whether through repair, settlement, or litigation.


2025 Legislative and Trend Developments to Watch

Early 2025 saw several legislative proposals that could significantly affect Arizona construction defect claims. Some measures proposed reducing the statute of repose for certain types of construction and adding procedural steps for condominium and homeowners’ association cases.

While none of these proposals have become law, they reflect a growing legislative interest in tightening timelines and increasing procedural requirements for defect claims. Many Arizona construction attorneys anticipate renewed debate on these issues in upcoming sessions.

The takeaway for property owners and associations is clear: act promptly and avoid assuming that current filing periods or extensions will remain unchanged. Waiting to “see what happens” with potential legislative changes can lead to missed deadlines and forfeited rights.

Outside the legislature, Arizona continues to see a rise in alternative dispute resolution (ADR) in defect matters. Mediation and arbitration are increasingly favored to control costs and expedite resolutions. At the same time, increasing construction costs, limited materials, and ongoing labor shortages are making it harder to maintain quality on job sites. These pressures are expected to keep defect-related lawsuits in play well into 2026 and possibly longer.

Key Mistakes to Avoid in Construction Defect Claims

Even valid construction defect claims can be undermined by procedural errors or lack of early legal guidance. Below are common mistakes and recommended best practices to help protect your investment.

Frequent Mistakes

  • Waiting too long to consult an attorney. 
  • Skipping the right-to-repair process or sending incomplete notice. 
  • Making repairs before properly documenting evidence of the defect. 
  • For associations: failing to follow voting and notice requirements before pursuing a claim.

Best Practices

  • Maintain detailed maintenance, inspection, and repair records from day one. 
  • Engage a qualified engineer or construction expert early to assess cause and damages. 
  • Review contracts and governing documents for dispute resolution clauses and notice provisions. 
  • Consult legal counsel well before deadlines to preserve all rights under the statute of repose. 
  • Document evidence thoroughly before making any repairs or alterations. 
  • Coordinate with insurance carriers regarding coverage and defense obligations.

Working with experienced Arizona construction defect attorneys helps ensure compliance with statutory procedures, preserves critical evidence, and maximizes recovery opportunities through negotiation or litigation.

Next Steps for Construction Issues

If you suspect a construction defect in your home, condominium, or association property, time is a critical factor. Our attorneys at Gottlieb Law represent homeowners, HOAs, and commercial property owners throughout Arizona in defect, warranty, and construction disputes.

Why Work with an Experienced Construction Defect Attorney

Construction defect matters are inherently complex. They often involve multiple parties, technical building issues, and strict statutory deadlines that vary based on contract terms, claim type, and the timing of discovery.

An experienced Arizona construction defect attorney can help:

  • Evaluate potential claims and identify responsible parties. 
  • Navigate the Notice and Opportunity to Repair process under A.R.S. § 12-1363. 
  • Analyze timing issues under both statutes of limitation and repose. 
  • Develop and execute a tailored resolution strategy—whether through repair negotiations, mediation, arbitration, or litigation.

For HOAs and condominium boards, legal counsel ensures compliance with voting and notice obligations before any action is filed. For builders and developers, defense counsel coordinates expert evaluations, manages insurance coverage issues, and pursues efficient resolution through alternative dispute processes.

Having knowledgeable counsel involved early helps avoid costly procedural errors, preserve evidence, and maintain compliance with Arizona’s evolving construction defect framework.

Arizona’s current law continues to center on an eight-year statute of repose under A.R.S. § 12-552, with a limited nine-year extension for certain latent defects discovered near the end of that period. Although proposed legislation has not yet changed these rules, it suggests a possible future shift toward shorter filing windows and tighter procedural requirements.

Until any changes are enacted, homeowners, buyers, and associations should treat existing deadlines as firm limits and act promptly if defects appear.

 

Ready to Speak with an Arizona Construction Defect Attorney?

If you’ve spotted issues with your home, building, or community, it’s important to act quickly. The legal deadline to file a construction defect claim may already be counting down, even if the damage seems minor at first.

Contact the team at Gottlieb Law, PLC to review your situation, confirm applicable deadlines, and discuss the most effective strategy to protect your property and your rights.

Call Gottlieb Law today at 602-899-8188 or use our Contact Us page here to schedule your initial consultation.


This article is provided for general informational purposes only and does not constitute legal advice.  Reading it does not create an attorney–client relationship.  Because laws and interpretations change over time, you should consult qualified legal counsel about your specific situation before taking any action.

 

Enter your
text here