ARIZONA STATE SENATE
Phoenix, Arizona
real estate regulation;
enforcement
Purpose
Makes numerous changes
updating the statutes relating to the functions and duties of the Department of
Real Estate (Department), including licensure, disciplinary action, real estate
recovery fund and storage of records.
Background
The primary function of the
Department is to protect the public health, safety and welfare by regulating
the sale of real estate and to administer its duties under the direction of the
Real Estate Commissioner (Commissioner) and to protect the public interest
through licensure and regulation of the real estate profession in Arizona. Currently, the Department licenses and
regulates the activities of approximately 45,000 real estate, cemetery,
membership campground salespersons and brokers.
Current real estate law
requires a real estate license application to be submitted in writing and
signed by the applicant. A licensed
designated broker is required to attend a broker management clinic within
ninety days after licensure. In
addition, a licensee may not be employed by more than one employing broker and
pertinent records must be stored on- site.
H.B. 2024 makes changes to current statute by allowing for electronic
submittal of license applications, allowing a licensee to be employed by more
than one broker provided that the categories of employment differ, requiring a
broker to attend a clinic prior to initial licensure and allowing for storage
of records off-site.
The real estate recovery
fund, established in 1963, serves as a “source of last resort” for victims
unable to otherwise recover actual and direct losses resulting from a real
estate or cemetery licensee’s violations of statutory duties when that licensee
is a principal or agent in a covered transaction. Legislative amendments over the years have clarified the scope of
covered losses and have increased the maximum payments a victim can recover
from the fund. According to the
Department, current limits on recovery from the fund have not kept pace over
recent years with several factors in the real estate market, such as the nature
of claims filed, the difficulty of projecting claims and pay-outs, an increase
in the cost of living and property values and an increase in legal fees. H.B. 2024 amends notice and procedures to
specify time periods, method of notice and documentation required and describes
certain categories of uncovered losses.
The legislation also increases the amount per transaction that may be
paid from the fund to $30,000 and $90,000 total on behalf of a licensee.
There may be an
indiscernible fiscal impact to the real estate recovery fund; however, there is
no anticipated fiscal impact to the state general fund associated with this
measure.
Licensure
1. Allows a license application to be submitted electronically. Requires the submittal to contain an electronic or digital identified deemed appropriate by the Commissioner.
2. Allows a real estate licensee to be employed by more than one employing broker as long as the categories of employment (i.e. cemetery, membership camping and real estate) are different.
3. Requires attendance at a broker management clinic before an applicant for a real estate broker’s license is issued an active-status license, or before a broker becomes licensed as a designated broker.
Disciplinary Action
4. Requires a respondent to file an answer or response to a Department complaint within 20 days of receiving a notice of an appeals hearing.
5. Allows the Department to issue a summary suspension against a licensed salesperson or broker who has been convicted of a felony offense and is currently incarcerated for the conviction, paroled or under supervision, or is on probation due to the conviction. Specifies that the Department’s summary suspension does not limit subsequent Department disciplinary action or revocation of a license.
6. Prohibits a licensed salesperson or broker from conducting real estate related activity while incarcerated and establishes a class 6 felony for a violation.
7. Allows for property management firms the option of maintaining in their records the canceled check or a bank generated image of the canceled check.
8. Clarifies that the real estate recovery fund only covers actual and direct out-of-pocket losses to an aggrieved person.
9. Increases the amount covered by the fund from $20,000 to $30,000 per transaction and from $40,000 to $90,000 per licensee.
10. Expands the circumstances under which the fund is not liable for damages or losses to include a tenant’s conduct or neglect, vandalism, natural causes, punitive damages, post judgment interests and undocumented transactions or losses.
11. Outlines and clarifies the documents and receipts required to be submitted to the Department when an aggrieved person is seeking payment from the fund.
12. Requires an aggrieved person to notify the commissioner within 45 days of commencing an action that may result in a collection from the fund. Requires the notice to be addressed to the fund administrator.
13. Requires an application for an order directing payment from the fund of the amount unpaid on a judgment to be filed in superior court in the county in which the judgment to perfect lien against the real property of the judgment debtor was entered or in which a judgment or transcript of judgment from a lower court has been filed.
14. Requires the application served on the Commissioner to be by certified mail, return receipt requested and addressed to the fund administrator.
15. Requires the aggrieved person to show the court that a copy of the judgment has been recorded in the appropriate county recorder’s office and a copy of the recorded judgment has been provided to the commissioner.
16. Clarifies the equitable distribution of monies from the fund in proration cases and which statutory limits apply in such cases.
17. Requires a licensee to submit evidence to the Commissioner that a judgment paid from the fund has been fully satisfied.
18. Authorizes off-site, in-state storage of specified records upon prior written notification of the address of that location to the Department.
19. Changes the requirement that records of a cemetery broker are kept for five years after payment in full of the transaction instead of for five years after the date of termination of the transaction.
20. Makes numerous clarifying, technical and conforming changes.
21. Provides for a general effective date.
House Action
CED 1/15/01 DPA 9-0-0-1
3rd Read 1/29/01 57-0-3-0
Prepared by Senate Staff
March 12, 2001