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ARIZONA REAL ESTATE

LAW BOOK

2007 Edition

ARIZONA REAL ESTATE LAW BOOK 2007 Edition STATE OF ARIZONA Department of Real Estate Janet Napolitano

STATE OF ARIZONA Department of Real Estate

Janet Napolitano GOVERNOR

Sam Wercinski COMMISSIONER OF REAL ESTATE

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Product Number 2172511

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ARIZONA REAL ESTATE LAW BOOK

2007 Edition

The Arizona Department of Real Estate retains the Exclusive right to control the publication, sale, reproduction Or other use of the Arizona Real Estate Law Book

The text of this publication can be found on the Department’s Web site at www.AZRE.gov

Arizona Department of Real Estate 2910 N. 44 th Street Phoenix, AZ 85018 (602) 468-1414

Web site at www.AZRE.gov Arizona Department of Real Estate 2910 N. 44 t h Street Phoenix,

This Real Estate Law Book is intended for use solely as a desk reference tool and should not be used as a substitute for the Arizona Revised Statutes

TABLE OF CONTENTS

 

Page

Sections Affected by 2007 Legislation

vii

 

Constitution of the State of Arizona

Article 26. Right of Licensed Real Estate Brokers and Salesmen to Prepare Instruments Incident to Property Transactions, § 1

1

 

Arizona Revised Statutes

Title 32

Professions and Occupations

Chapter 20.

Real Estate Real Estate Department, §§ 32-2101 to 32-2118 Licensing, §§ 32-2121 to 32-2136 Regulation, §§ 32-2151 to 32-2166

 

Article 1.

5

Article 2.

13

Article 3.

23

Article 3.1. Property Management, §§ 32-2171 to 32-2176

30

Article 4.

Sale of Subdivided Lands, §§ 32-2181 to 32-2185.09 Real Estate Recovery Fund, §§ 32-2186 to 32-2193.02

32

Article 5.

46

Article 5.1. Condominium Recovery Fund, §§ 32-3193.31 to 32-2193.43

51

Article 6.

Organization and Regulation of Cemeteries, §§ 32-2194 to 32-2194.33 Sale of Unsubdivided Lands, §§ 32-2195 to 32-2195.11 Real Estate Timeshares, §§ 32-2197 to 32-2197.24 Membership Camping, §§ 32-2198 to 32-2198.14

55

Article 7.

63

Article 9.

68

Article 10.

83

Arizona Administrative Code

Title 4

Professions and Occupations

Chapter 28. State Real Estate Department

 

Article 1.

General Provisions, §§ R4-28-101 to R4-28-104 Repealed Licensure, §§ R4-28-301 to R4-28-306 Education, §§ R4-28-401 to R4-28-405 Advertising, §§ R4-28-501 to R4-28-504 Repealed Compensation, § R4-28-701 Documents, §§ R4-28-801 to R4-28-805 Repealed

91

Article 2.

Article 3.

94

Article 4.

103

Article 5.

109

Article 6.

Article 7.

111

Article 8.

111

Article 9.

v

TABLE OF CONTENTS

vi

 

Page

Article 10.

Repealed Professional Conduct, §§ R4-28-1101 to R4-28-1103 Developments, §§ R4-28-1201 to R4-28-1204

Article 11.

113

Article 12.

115

PART A. Application for Public Report, Certificate of Authority, or Special Order of Exemption, §§ R4-28-A1201 to R4-28-A1223

116

PART B. General Information, §§ R4-28-B1201 to R4-28-B1211

125

Article 13.

Administrative Procedures, §§ R4-28-1301 to R4-28-1313 Repealed

128

Article 14.

Appendix

Arizona Department of Real Estate 2007 Directory of Substantive Policy Statements, Nos. 2005.01 to 2007.18

133

Index

145

Sections Affected by 2007 Legislation

NOTE: In addition to the sections listed below, users of this edition should be aware
NOTE: In addition to the sections listed below, users of this edition should be aware that additional section and case note
annotations have also been appropriately incorporated throughout this publication. The sections with new and/or revised
annotations do not appear in this listing.
ARS
Effective
Chapter
Act
Bill
Section
Action
Date
Number
Section
Number

32-2101

Amended

June 30, 2007

165

1

SB1349

32-2107

Amended

(retro.) Sept. 19, 2007

9

1

HB2110

32-2118

Added

Sept. 19, 2007

9

2

HB2110

32-2124

Amended

June 30, 2007

165

2

SB1349

32-2125

Amended

(retro.) June 30, 2007

165

3

SB1349

32-2129

Amended

(retro.) June 30, 2007

165

4

SB1349

32-2130

Amended

(retro.) June 30, 2007

165

5

SB1349

32-2131

Amended

(retro.) June 30, 2007

165

6

SB1349

32-2132

Amended

(retro.) Sept. 19, 2007

9

3

HB2110

32-2132

Amended

June 30, 2007

165

7

SB1349

32-2135

Amended

(retro.) Sept. 19, 2007

9

4

HB2110

32-2136

Amended

Sept. 19, 2007

9

5

HB2110

32-2136

Amended

June 30, 2007

165

8

SB1349

32-2153

Amended

(retro.) June 30, 2007

165

9

SB1349

32-2160.01

Amended

(retro.) June 30, 2007

165

10

SB1349

32-2181

Amended

(retro.) Sept. 19, 2007

240

3

SB1575

32-2181.02

Amended

Sept. 19, 2007

240

4

SB1575

32-2183

Amended

Sept. 19, 2007

240

5

SB1575

t. 32, ch. 20, art. 5.1

Added

Sept. 19, 2007

221

1

SB1546

32-2193.31

Added

Sept. 19, 2007

221

1

SB1546

32-2193.32

Added

Sept. 19, 2007

221

1

SB1546

32-2193.33

Added

Sept. 19, 2007

221

1

SB1546

32-2193.34

Added

Sept. 19, 2007

221

1

SB1546

32-2193.35

Added

Sept. 19, 2007

221

1

SB1546

32-2193.36

Added

Sept. 19, 2007

221

1

SB1546

32-2193.37

Added

Sept. 19, 2007

221

1

SB1546

32-2193.38

Added

Sept. 19, 2007

221

1

SB1546

32-2193.39

Added

Sept. 19, 2007

221

1

SB1546

32-2193.40

Added

Sept. 19, 2007

221

1

SB1546

32-2193.41

Added

Sept. 19, 2007

221

1

SB1546

32-2193.42

Added

Sept. 19, 2007

221

1

SB1546

32-2193.43

Added

Sept. 19, 2007

221

1

SB1546

32-2197.08

Amended

Sept. 19, 2007

240

6

SB1575

vii

Arizona Real Estate Laws

CONSTITUTION OF THE STATE OF ARIZONA

ARTICLE 26. RIGHT OF LICENSED REAL ESTATE BROKERS AND SALESMEN TO PREPARE INSTRUMENTS INCIDENT TO PROPERTY TRANSACTIONS

Section

1. Powers of real estate broker or salesman.

§ 1. Powers of real estate broker or salesman

Section 1. Any person holding a valid license as a real estate broker or a real estate salesman regularly

issued by the Arizona State Real Estate Department when acting in such capacity as broker or salesman for the parties, or agent for one of the parties to a sale, exchange, or trade, or the renting and leasing of property, shall have the right to draft or fill out and complete, without charge, any and all instruments incident thereto including, but not limited to, prelim- inary purchase agreements and earnest money re- ceipts, deeds, mortgages, leases, assignments, re- leases, contracts for sale of realty, and bills of sale. 1962

1

TITLE 32

PROFESSIONS AND OCCUPATIONS

Ch.

Art.

Section

20.

REAL ESTATE

1.

Real Estate Department

32-2101

2.

Licensing

32-2121

3.

Regulation

32-2151

3.1.

Property Management

32-2171

4.

Sale of Subdivided Lands

32-2181

5.

Real Estate Recovery Fund

32-2186

5.1.

Condominium Recovery Fund

32-2193.31

6.

Organization and Regulation of Cemeteries

32-2194

7.

Sale of Unsubdivided Lands

32-2195

9.

Real Estate Timeshares

32-2197

10.

Membership Camping

32-2198

CHAPTER 20

REAL ESTATE

This chapter is repealed effective January 1, 2013 ARTICLE 1. REAL ESTATE DEPARTMENT

Section

32-2101.

Definitions.

32-2102.

Administration of chapter by real estate department;

32-2103.

purpose. Placement of monies collected; revision of fees.

32-2104.

Real estate advisory board; members; terms; qualifica-

32-2105.

tions; compensation; chairman; duties. Meetings of the state real estate advisory board.

32-2106.

Real estate commissioner; appointment; qualifications.

32-2107.

Powers and duties of commissioner; compensation; ad-

ministration of department; seal; revolving fund. 32-2107.01. Recorded disclaimer of unlawful restrictions. 32-2108. Powers and duties of commissioner to make investiga-

tions and require information.

32-2108.01. Fingerprinting license applicants; requirements; fees; definition.

32-2109.

Employment; compensation.

32-2110.

Interest of department officer or employee in real estate

32-2111.

company prohibited. Attorney general as legal adviser and representative of

32-2112.

commissioner. Admissibility of certified copies of department records in

32-2113.

evidence. Recorded disclosure for territory in the vicinity of a

32-2114.

military airport or ancillary military facility. Recorded disclosure for land under a military training

32-2115.

route or restricted air space. Department’s web site; military training route map;

32-2116.

restricted air space map. Military training routes; contacts.

32-2117.

Earth fissure maps; posting; immunity.

32-2118.

Competition with private enterprise; prohibition.

ARTICLE 2. LICENSING

32-2121.

Applicability of article; exemption.

32-2122.

License required of brokers and salespersons.

32-2123.

Application for license as broker or salesperson.

32-2124.

Qualifications of licensees.

32-2125.

Licenses for corporations, limited liability companies or

partnerships. 32-2125.01. Issuance of license; multiple licenses; use. 32-2125.02. Nonresident licensees; service of process; employment. 32-2125.03. Confidentiality of licensee’s home address, home tele- phone number and social security number.

3

Section

Place of business required; notice of change in location; failure to give notice as cancellation of license; signs. Licenses for additional places of business; branch office manager; broker’s temporary absence. Display and possession of license certificate. Advance payment of license fees. Renewal of licenses. Reinstatement of license. Fees. Temporary broker’s license. Temporary cemetery salesperson’s license.

32-2134.01. Membership camping salesperson certificate of conve- nience.

32-2134.

32-2133.

32-2132.

32-2126.

32-2127.

32-2128.

32-2129.

32-2130.

32-2131.

32-2135.

32-2136.

Real estate schools; courses of study; instructors; certi- fication. Broker management clinics.

ARTICLE 3. REGULATION

32-2151. Disposition of funds; trust money deposit requirements. 32-2151.01. Broker requirements; record keeping requirements. 32-2151.02. Real estate employment agreements; definition.

32-2152.

Action by broker or salesperson to collect compensation.

32-2153.

Grounds for denial, suspension or revocation of licenses; letters of concern; provisional license; retention of jurisdiction by commissioner; definitions.

32-2153.01. Consent order; terms.

32-2154.

32-2155.

Cease and desist orders; hearing. Restriction on employment or compensation of person as broker or salesperson. Real estate sales and leases; disclosure.

Written notice of charges; summary suspension; hear- ing. Hearing; witnesses; deposition; service of process. Judicial review; costs; transcript. Filing of complaint by commissioner; prosecution.

32-2156.

32-2157.

32-2158.

32-2159.

32-2160.

32-2160.01. Civil penalties.

32-2161.

False statements or publications concerning land, sub- division or membership camping contract for sale or lease; classification; definition. Sale of cemetery property for speculation unlawful. Unlawful acts; out-of-state broker; cooperation agree- ment. Unlawful subdivision lot sales. Unlicensed activities; violation; classification. Activities while incarcerated; violation; classification.

32-2162.

32-2163.

32-2164.

32-2165.

32-2166.

ARTICLE 3.1. PROPERTY MANAGEMENT

32-2171.

32-2172.

32-2173.

32-2174.

32-2175.

32-2176.

Definitions. Scope of article. Property management agreements; contents, termina- tion. Property management accounts. Property management records; requirements; audits. Payment of finder fees to apartment tenants; limits; prohibited activities; definitions.

ARTICLE 4. SALE OF SUBDIVIDED LANDS

32-2181. Notice to commissioner of intention to subdivide lands; unlawful acting in concert; exceptions; deed restric- tions; definition.

32-2181.01. Power of commissioner to exempt certain subdivisions or fractional interests by special order. 32-2181.02. Exempt sales and leases. 32-2181.03. Lot reservations; expiration.

32-2182.

32-2183.

sales; voidable sale or lease; order prohibiting sale or lease; investigations; hearings; summary orders. 32-2183.01. Advertising material; contents; order prohibiting use; costs of investigation; drawings or contests.

32-2183.02. Recording of actions. 32-2183.03. Civil liabilities.

Examination of subdivision by commissioner; fee. Subdivision public reports; denial of issuance; unlawful

PROFESSIONS AND OCCUPATIONS

4

Section 32-2183.04. Surety bond requirement; form; cancellation; effective date; certificate of deposit.

Section 32-2194.16. Sale of undeveloped cemetery property. 32-2194.17. Transaction of cemetery business.

32-2183.05. Military training route disclosure; residential property. 32-2183.06. Restricted air space disclosure; residential property.

32-2194.18. Application for authority to open and operate cemeter- ies.

32-2184.

Change of subdivision plan after approval by commis-

Sale of unimproved lots or parcels; conditions precedent;

32-2194.19. Investigation of applicant before granting of certificate

32-2185.

sioner; notice. Delivery of clear title by vendor on performance of

of authority where needed. 32-2194.20. Right of cemetery to make rules and regulations.

32-2185.01.

contract by vendee.

methods.

32-2194.21. Survey of property; maps and plats. 32-2194.22. Filing maps and declaration of dedication. 32-2194.23. Nonapplication of law against perpetuities.

32-2185.02.

Permanent access to subdivided land; rescindable sales.

32-2194.24.

Trust fund to be established before certificate of author-

32-2185.03. Deposit of fees. 32-2185.06. Contract disclosures; contract disclaimers. 32-2185.07. Jurisdiction. 32-2185.08. Recordable forms of contracts. 32-2185.09. Civil penalties; limitation.

ARTICLE 5. REAL ESTATE RECOVERY FUND

32-2186.

Real estate recovery fund; liability limits; definitions.

32-2187.

Payments to real estate recovery fund.

32-2188.

Statute of limitations; service of summons; application

for payment; insufficient monies; definition. 32-2188.01. Notice of claim to judgment debtor; response.

32-2188.02. Correction of deficiencies in the application. 32-2188.03. Investigation and discovery. 32-2188.04. Final decision and order on claim; notice.

32-2188.05. Claimant’s right to appeal denial of claim; service of notice of appeal; response; failure to file response.

32-2189.

Management of fund.

32-2191.

Commissioner’s standing in court.

32-2192.

Subrogation of rights; collection.

32-2193.

Waiver of rights.

32-2193.01. Effect of article on disciplinary action. 32-2193.02. Surety bond requirement; form; cancellation; effective date; certificate of deposit.

ARTICLE 5.1. CONDOMINIUM RECOVERY FUND

32-2193.31. Definitions. 32-2193.32. Condominium recovery fund; award limits. 32-2193.33. Payments to the condominium recovery fund. 32-2193.34. Statute of limitations; service of summons; application for payment; insufficient monies; definition. 32-2193.35. Notice of claim to judgment debtor; written response. 32-2193.36. Correction of deficiencies in the application. 32-2193.37. Investigation and discovery. 32-2193.38. Final decision and order on claim; notice. 32-2193.39. Claimant’s right to appeal denial of claim; service of notice of appeal; response; failure to file response. 32-2193.40. Management of fund. 32-2193.41. Commissioner’s standing in court. 32-2193.42. Subrogation of rights. 32-2193.43. Waiver of rights.

ARTICLE 6. ORGANIZATION AND REGULATION OF CEMETERIES

32-2194. Exceptions. 32-2194.01. Notice to commissioner of intention to sell cemetery property; exceptions; restrictions. 32-2194.02. Examination by commissioner; fee. 32-2194.03. Issuance or denial of certificate of authority; voidable sale; order prohibiting sale; investigations by commis- sioner; public hearings; summary orders. 32-2194.04. Contract disclosures; contract disclaimers. 32-2194.05. Advertising material; contents; order prohibiting use. 32-2194.06. Records of transactions. 32-2194.07. Recording of actions. 32-2194.08. Administrative penalties. 32-2194.09. Civil liabilities. 32-2194.10. Change of cemetery plan after approval by commis- sioner; notice; fee. 32-2194.11. Delivery of clear title by cemetery of cemetery plots. 32-2194.12. Permanent access to cemetery land. 32-2194.13. Deposit of fees. 32-2194.14. Cemetery brokers; disclosures. 32-2194.15. Jurisdiction.

ity granted. 32-2194.25. Trust fund to be established before existing cemetery can advertise as endowed-care cemetery. 32-2194.26. Initial deposit required in endowment-care fund. 32-2194.27. Restrictive use of income from endowed-care fund; obli- gation. 32-2194.28. Deposit in endowed-care fund from sales. 32-2194.29. Posting of signs by cemeteries. 32-2194.30. Restriction on use of care funds. 32-2194.31. Crematories. 32-2194.32. Opening and closing of burial places. 32-2194.33. Cemetery property owners; address notification recla- mation; abandoned cemetery plot.

ARTICLE 7. SALE OF UNSUBDIVIDED LANDS

32-2195. Notice to commissioner of intention before offering for sale or lease of unsubdivided land; definition. 32-2195.01. Power of commissioner to exempt certain unsubdivided land by special order. 32-2195.02. Examination of unsubdivided land by commissioner; fee. 32-2195.03. Unsubdivided land reports; denial of issuance; order prohibiting sale or lease; investigations; hearings; summary orders. 32-2195.04. Sale of lots or parcels of unsubdivided lands; conditions precedent; methods. 32-2195.05. Advertising material; contents; order prohibiting use; costs of investigation. 32-2195.06. Civil liabilities. 32-2195.07. Jurisdiction. 32-2195.09. Recordable forms of contracts. 32-2195.10. Change of plan after approval by commissioner; notice. 32-2195.11. Civil penalties; limitation.

ARTICLE 9. REAL ESTATE TIMESHARES

32-2197. Definitions. 32-2197.01. Creation of timeshare plans; ratio. 32-2197.02. Notice of intent to sell; application for timeshare plan public report; authorization for pre-sales. 32-2197.03. Rescission of contract or agreement. 32-2197.04. Notification of material change.

32-2197.05.

tion; financial assurance. 32-2197.06. Declaration of dedication. 32-2197.07. Examination of plan by commissioner; fees. 32-2197.08. Issuance of public report by commissioner on timeshare plan; denial of issuance; additional information; use of another state’s public report. 32-2197.09. Rescindable sale or lease. 32-2197.10. Timeshare interest reservations. 32-2197.11. Developer supervisory duties. 32-2197.12. Blanket encumbrance; lien; alternative assurance. 32-2197.13. Hearing on denial of public report. 32-2197.14. Investigations; orders; hearings. 32-2197.15. Order; appointment of receiver; writ of ne exeat. 32-2197.17. Advertising and promotional requirements; telemarketing and promotional employees; presenta- tions and tours, drawings and contests; commission- er’s authority; disclosures.

32-2197.18. Recording of actions. 32-2197.19. Civil liabilities; prohibitions; limitations. 32-2197.20. Civil penalty. 32-2197.21. Payment of finder fees; limits; prohibited activities; records; definition. 32-2197.22. Exemptions; disclosures; exempt communications.

Escrow or trust account; agreement; evidence of comple-

5

REAL ESTATE

32-2101

Section 32-2197.23. Power of commissioner to exempt timeshare plans. 32-2197.24. Applicability of article.

ARTICLE 10. MEMBERSHIP CAMPING

32-2198. Unlawful offer or sale of membership camping contract. 32-2198.01. Application for membership camping public report; sig- nature; amendment. 32-2198.02. Issuance of public report; representations prohibited. 32-2198.03. Exemptions. 32-2198.04. Examination of project by commissioner. 32-2198.05. Contracts; cancellation. 32-2198.06. Execution of notes; assignment; purchaser’s defenses retained. 32-2198.08. Denial, suspension or revocation of a public report. 32-2198.09. Fees. 32-2198.10. Advertising plans; disclosures; lotteries and drawings. 32-2198.11. Purchaser’s remedies. 32-2198.13. Construction of this article. 32-2198.14. Advertising availability of campgrounds to campground members; blanket encumbrances.

ARTICLE 1. REAL ESTATE DEPARTMENT

32-2101. Definitions

In this chapter, unless the context otherwise re- quires:

1. ‘‘Acting in concert’’ means evidence of collaborat-

ing to pursue a concerted plan.

2. ‘‘Advertising’’ means the attempt by publication,

dissemination, exhibition, solicitation or circulation, oral or written, or for broadcast on radio or television to induce directly or indirectly any person to enter into any obligation or acquire any title or interest in lands subject to this chapter including the land sales

contract to be used and any photographs, drawings or artist’s presentations of physical conditions or facili- ties existing or to exist on the property. Advertising does not include:

(a) Press releases or other communications deliv-

ered to newspapers, periodicals or other news media for general information or public relations purposes if

no charge is made by the newspapers, periodicals or other news media for the publication or use of any part of these communications.

(b) Communications to stockholders as follows:

(i) Annual reports and interim financial reports.

or reunited and that was not caused or created by the owner of the parcels.

6. ‘‘Blanket encumbrance’’ means any mortgage,

any deed of trust or any other encumbrance or lien securing or evidencing the payment of money and affecting more than one lot or parcel of subdivided land, or an agreement affecting more than one lot or parcel by which the subdivider holds the subdivision under an option, contract to sell or trust agreement. Blanket encumbrance does not include taxes and assessments levied by public authority.

7. ‘‘Board’’ means the state real estate advisory

board.

8. ‘‘Broker’’, when used without modification,

means a person who is licensed as a broker under this chapter or who is required to be licensed as a broker

under this chapter.

9. ‘‘Camping site’’ means a space designed and

promoted for the purpose of locating any trailer, tent, tent trailer, pickup camper or other similar device used for camping.

10. ‘‘Cemetery’’ or ‘‘cemetery property’’ means any

one, or a combination of more than one, of the follow-

ing in a place used, or intended to be used, and dedicated for cemetery purposes:

(a)

A burial park, for earth interments.

(b)

A mausoleum, for crypt or vault entombments.

(c)

A crematory, or a crematory and columbarium,

for cinerary interments.

(d) A cemetery plot, including interment rights,

mausoleum crypts, niches and burial spaces.

11. ‘‘Cemetery broker’’ means a person other than a

real estate broker or real estate salesperson who, for another, for compensation:

(a) Sells, leases or exchanges cemetery property or

interment services of or for another, or on the person’s own account.

(b) Offers for another or for the person’s own ac-

count to buy, sell, lease or exchange cemetery prop- erty or interment services.

(c) Negotiates the purchase and sale, lease or ex-

change of cemetery property or interment services.

(d) Negotiates the purchase or sale, lease or ex-

(ii)

Proxy materials.

change, or lists or solicits, or negotiates a loan on or

(iii)

Registration statements.

leasing of cemetery property or interment services.

(iv)

Securities prospectuses.

12.

‘‘Cemetery salesperson’’ means a natural per-

(v)

Applications for listing of securities on stock

exchanges.

son who acts on the person’s own behalf or through and on behalf of a professional limited liability com-

(vi)

Prospectuses.

pany or a professional corporation engaged by or on

(vii)

Property reports.

behalf of a licensed cemetery or real estate broker, or

(viii) Offering statements.

‘‘Affiliate’’ means a person who, directly or indi-

rectly through one or more intermediaries, controls, is

controlled by or is under common control with the

3.

through and on behalf of a corporation, partnership or limited liability company that is licensed as a ceme-

tery or real estate broker, to perform any act or

person specified.

transaction included in the definition of cemetery broker.

4. ‘‘Associate broker’’ means a licensed broker em-

ployed by another broker. Unless otherwise specifi- cally provided, an associate broker has the same license privileges as a salesperson.

5. ‘‘Barrier’’ means a natural or man-made geo-

graphical feature that prevents parcels of land from being practicably, reasonably and economically united

13. ‘‘Commissioner’’ means the state real estate

commissioner.

14. ‘‘Common promotional plan’’ means a plan, un-

dertaken by a person or a group of persons acting in concert, to offer lots for sale or lease. If the land is offered for sale by a person or group of persons acting in concert, and the land is contiguous or is known,

32-2101

PROFESSIONS AND OCCUPATIONS

6

designated or advertised as a common unit or by a common name, the land is presumed, without regard to the number of lots covered by each individual offering, as being offered for sale or lease as part of a common promotional plan. Separate subdividers sell- ing lots or parcels in separately platted subdivisions within a master planned community shall not be deemed to be offering their combined lots for sale or lease as part of a common promotional plan.

15. ‘‘Compensation’’ means any fee, commission,

salary, money or other valuable consideration for services rendered or to be rendered as well as the

promise of consideration whether contingent or not.

16. ‘‘Contiguous’’ means lots, parcels or fractional

interests that share a common boundary or point.

Lots, parcels or fractional interests are not contiguous if they are separated by either of the following:

(a)

A barrier.

(b)

A road, street or highway that has been estab-

lished by this state or by any agency or political subdivision of this state, that has been designated by

the federal government as an interstate highway or that has been regularly maintained by this state or by any agency or political subdivision of this state and has been used continuously by the public for at least the last five years.

17. ‘‘Control’’ or ‘‘controlled’’ means a person who,

through ownership, voting rights, power of attorney,

proxy, management rights, operational rights or other rights, has the right to make decisions binding on an entity, whether a corporation, a partnership or any other entity.

18. ‘‘Corporation licensee’’ means a lawfully orga-

nized corporation that is registered with the Arizona

corporation commission and that has an officer li- censed as the designated broker pursuant to section

32-2125.

19. ‘‘Department’’ means the state real estate de-

partment.

20. ‘‘Designated broker’’ means the natural person

who is licensed as a broker under this chapter and

(b) Sole proprietorship if the sole proprietor is a broker licensed pursuant to this chapter.

24. ‘‘Fractional interest’’ means an undivided inter-

est in improved or unimproved land, lots or parcels of any size created for the purpose of sale or lease and evidenced by any receipt, certificate, deed or other document conveying the interest. Undivided interests in land, lots or parcels created in the names of a husband and wife as community property, joint ten-

ants or tenants in common, or in the names of other persons who, acting together as part of a single

transaction, acquire the interests without a purpose

to divide the interests for present or future sale or

lease shall be deemed to constitute only one fractional interest.

25. ‘‘Improved lot or parcel’’ means a lot or parcel of

a subdivision upon which lot or parcel there is a

residential, commercial or industrial building or con- cerning which a contract has been entered into be-

tween a subdivider and a purchaser that obligates the

subdivider directly, or indirectly through a building contractor, to complete construction of a residential, commercial or industrial building on the lot or parcel within two years from the date on which the contract

of sale for the lot is entered into.

26. ‘‘Inactive license’’ means a license issued pur-

suant to article 2 of this chapter to a licensee who is on inactive status during the current license period and who is not engaged by or on behalf of a broker.

27. ‘‘Lease’’ or ‘‘leasing’’ includes any lease, whether

it is the sole, the principal or any incidental part of a

transaction.

28. ‘‘License’’ means the whole or part of any

agency permit, certificate, approval, registration, public report, charter or similar form of permission required by this chapter.

29. ‘‘License period’’ means the period beginning

with the date of original issue or renewal of a partic-

ular license and ending on the expiration date, if any.

30. ‘‘Licensee’’ means a person to whom a license

who is either:

for the current license period has been granted under

(a)

Designated to act on behalf of an employing real

any provision of this chapter, and, for purposes of

estate, cemetery or membership camping entity.

section 32-2153, subsection A, shall include original

(b)

Doing business as a sole proprietor.

license applicants.

21.

‘‘Developer’’ means a person who offers real

31.

‘‘Limited liability company licensee’’ means a

property in a development for sale, lease or use, either immediately or in the future, on the person’s own behalf or on behalf of another person, under this chapter. Developer does not include a person whose involvement with a development is limited to the listing of property within the development for sale, lease or use.

22. ‘‘Development’’ means any division, proposed

division or use of real property that the department

has authority to regulate, including subdivided and unsubdivided lands, cemeteries, condominiums, timeshares, membership campgrounds and stock co- operatives.

23. ‘‘Employing broker’’ means a person who is

licensed or is required to be licensed as a:

(a) Broker entity pursuant to section 32-2125, sub-

section A.

lawfully organized limited liability company that has

a member or manager who is a natural person and

who is licensed as the designated broker pursuant to section 32-2125.

32. ‘‘Lot reservation’’ means an expression of inter-

est by a prospective purchaser in buying at some time

in the future a subdivided or unsubdivided lot, unit or

parcel in this state. In all cases, a subsequent affir- mative action by the prospective purchaser must be taken to create a contractual obligation to purchase.

33. ‘‘Master planned community’’ means a develop-

ment that consists of two or more separately platted subdivisions and that is either subject to a master declaration of covenants, conditions or restrictions, is subject to restrictive covenants sufficiently uniform in character to clearly indicate a general scheme for improvement or development of real property or is

7

REAL ESTATE

32-2101

governed or administered by a master owner’s asso- ciation.

34. ‘‘Member’’ means a member of the real estate

advisory board.

35. ‘‘Membership camping broker’’ means a person,

other than a salesperson, who, for compensation:

(a) Sells, purchases, lists, exchanges or leases

membership camping contracts.

(b) Offers to sell, purchase, exchange or lease mem-

bership camping contracts.

(c) Negotiates or offers, attempts or agrees to ne-

gotiate the sale, purchase, exchange or lease of mem- bership camping contracts.

(d) Advertises or holds himself out as being en-

gaged in the business of selling, buying, exchanging or leasing membership camping contracts or counsel-

ing or advising regarding membership camping con- tracts.

(e) Assists or directs in the procuring of prospects

calculated or intended to result in the sale, purchase, listing, exchange or lease of membership camping contracts. (f) Performs any of the foregoing acts as an em- ployee or on behalf of a membership camping operator or membership contract owner.

36. ‘‘Membership camping contract’’ means an

agreement offered or sold in this state evidencing a purchaser’s right or license to use the camping or

outdoor recreation facilities of a membership camping operator and includes a membership that provides for this use.

37. ‘‘Membership camping operator’’ means an en-

terprise, other than one that is tax exempt under section 501(c) (3) of the internal revenue code of 1986, as amended, that solicits membership paid for by a fee or periodic payments and has as one of its purposes camping or outdoor recreation including the use of camping sites primarily by members. Membership camping operator does not include camping or recre- ational trailer parks that are open to the general public and that contain camping sites rented for a per use fee or a mobile home park.

38. ‘‘Membership camping salesperson’’ means a

natural person who acts on the person’s own behalf or

through and on behalf of a professional limited liabil- ity company or a professional corporation engaged by or on behalf of a licensed membership camping or real estate broker, or by or on behalf of a corporation, partnership or limited liability company that is li- censed as a membership camping or real estate bro- ker, to perform any act or participate in any transac- tion in a manner included in the definition of membership camping broker.

39. ‘‘Partnership licensee’’ means a partnership

with a managing general partner who is licensed as

the designated broker pursuant to section 32-2125.

40. ‘‘Permanent access’’, as required under article 4

of this chapter, means permanent access from the

subdivision to any federal, state or county highway.

41. ‘‘Perpetual or endowed-care cemetery’’ means a

cemetery wherein lots or other burial spaces are sold or transferred under the representation that the

cemetery will receive ‘‘perpetual’’ or ‘‘endowed’’ care as defined in this section free of further cost to the purchaser after payment of the original purchase price for the lot, burial space or interment right.

42. ‘‘Perpetual-care’’ or ‘‘endowed-care’’ means the

maintenance and care of all places where interments have been made of the trees, shrubs, roads, streets

and other improvements and embellishments con- tained within or forming a part of the cemetery. This shall not include the maintenance or repair of monu- ments, tombs, copings or other man-made ornaments as associated with individual burial spaces.

43. ‘‘Person’’ means any individual, corporation,

partnership or company and any other form of multi-

ple organization for carrying on business, foreign or domestic.

44. ‘‘Private cemetery’’ means a cemetery or place

that is not licensed under article 6 of this chapter, where burials or interments of human remains are

made, in which sales or transfers of interment rights or burial plots are not made to the public and in which not more than ten interments or burials occur annu- ally.

45. ‘‘Promotion’’ or ‘‘promotional practice’’ means

advertising and any other act, practice, device or scheme to induce directly or indirectly any person to enter into any obligation or acquire any title or interest in or use of real property subject to this chapter, including meetings with prospective pur- chasers, arrangements for prospective purchasers to visit real property, travel allowances and discount, exchange, refund and cancellation privileges.

46. ‘‘Real estate’’ includes leasehold-interests and

any estates in land as defined in title 33, chapter 2,

articles 1 and 2, regardless of whether located in this state.

47. ‘‘Real estate broker’’ means a person, other

than a salesperson, who, for another and for compen-

sation:

(a) Sells, exchanges, purchases, rents or leases real

estate or timeshare interests.

(b) Offers to sell, exchange, purchase, rent or lease

real estate or timeshare interests.

(c) Negotiates or offers, attempts or agrees to ne-

gotiate the sale, exchange, purchase, rental or leasing of real estate or timeshare interests.

(d) Lists or offers, attempts or agrees to list real

estate or timeshare interests for sale, lease or ex- change.

(e) Auctions or offers, attempts or agrees to auction

real estate or timeshare interests.

(f) Buys, sells, offers to buy or sell or otherwise

deals in options on real estate or timeshare interests or improvements to real estate or timeshare interests.

(g) Collects or offers, attempts or agrees to collect

rent for the use of real estate or timeshare interests.

(h) Advertises or holds himself out as being en-

gaged in the business of buying, selling, exchanging, renting or leasing real estate or timeshare interests or counseling or advising regarding real estate or time- share interests.

(i) Assists or directs in the procuring of prospects,

calculated to result in the sale, exchange, leasing or rental of real estate or timeshare interests.

32-2101

PROFESSIONS AND OCCUPATIONS

8

(j) Assists or directs in the negotiation of any

transaction calculated or intended to result in the sale, exchange, leasing or rental of real estate or timeshare interests.

(k) Incident to the sale of real estate negotiates or

offers, attempts or agrees to negotiate a loan secured or to be secured by any mortgage or other encum- brance upon or transfer of real estate or timeshare interests subject to section 32-2155, subsection C. This subdivision does not apply to mortgage brokers as defined in and subject to title 6, chapter 9, article 1. (l) Engages in the business of assisting or offering to assist another in filing an application for the purchase or lease of, or in locating or entering upon, lands owned by the state or federal government. (m) Claims, demands, charges, receives, collects or contracts for the collection of an advance fee in connection with any employment enumerated in this section, including employment undertaken to pro- mote the sale or lease of real property by advance fee listing, by furnishing rental information to a prospec-

tive tenant for a fee paid by the prospective tenant, by advertisement or by any other offering to sell, lease, exchange or rent real property or selling kits con- nected therewith. This shall not include the activities of any communications media of general circulation or coverage not primarily engaged in the advertisement of real estate or any communications media activities that are specifically exempt from applicability of this article under section 32-2121.

(n) Engages in any of the acts listed in subdivisions

(a) through (m) of this paragraph for the sale or lease

of other than real property if a real property sale or

lease is a part of, contingent on or ancillary to the transaction.

(o) Performs any of the acts listed in subdivisions

(a) through (m) of this paragraph as an employee of,

or in behalf of, the owner of real estate, or interest in

the real estate, or improvements affixed on the real estate, for compensation.

48. ‘‘Real estate sales contract’’ means an agree-

ment in which one party agrees to convey title to real estate to another party upon the satisfaction of spec- ified conditions set forth in the contract.

49. ‘‘Real estate salesperson’’ means a natural per-

son who acts on the person’s own behalf or through and on behalf of a professional limited liability com- pany or a professional corporation engaged by or on behalf of a licensed real estate broker, or by or on

behalf of a limited liability company, partnership or corporation that is licensed as a real estate broker, to perform any act or participate in any transaction in a manner included in the definition of real estate broker subject to section 32-2155.

50. ‘‘Sale’’ or ‘‘lease’’ includes every disposition,

transfer, option or offer or attempt to dispose of or transfer real property, or an interest, use or estate in the real property, including the offering of the prop- erty as a prize or gift if a monetary charge or consid- eration for whatever purpose is required.

51. ‘‘Salesperson’’, when used without modification,

means a natural person who acts on the person’s own

behalf or through and on behalf of a professional limited liability company or a professional corpora- tion licensed under this chapter or any person re- quired to be licensed as a salesperson under this chapter.

52. ‘‘School’’ means a person or entity that offers a

course of study towards completion of the education requirements leading to licensure or renewal of licensure under this chapter.

53. ‘‘Stock cooperative’’ means a corporation to

which all of the following apply:

(a) The corporation is formed or used to hold title to

improved real property in fee simple or for a term of years.

(b) All or substantially all of the shareholders of

the corporation each receive a right of exclusive occupancy in a portion of the real property to which

the corporation holds title.

(c) The right of occupancy may only be transferred

with the concurrent transfer of the shares of stock in the corporation held by the person having the right of occupancy.

54. ‘‘Subdivider’’ means any person who offers for

sale or lease six or more lots, parcels or fractional interests in a subdivision or who causes land to be

subdivided into a subdivision for the subdivider or for others, or who undertakes to develop a subdivision, but does not include a public agency or officer autho- rized by law to create subdivisions.

55. ‘‘Subdivision’’ or ‘‘subdivided lands’’:

(a) Means improved or unimproved land or lands

divided or proposed to be divided for the purpose of sale or lease, whether immediate or future, into six or more lots, parcels or fractional interests.

(b) Includes a stock cooperative, lands divided or

proposed to be divided as part of a common promo-

tional plan and residential condominiums as defined in title 33, chapter 9.

(c) Does not include:

(i) Leasehold offerings of one year or less.

(ii) The division or proposed division of land located

in this state into lots or parcels each of which is or will be thirty-six acres or more in area including to the centerline of dedicated roads or easements, if any, contiguous to the lot or parcel. (iii) The leasing of agricultural lands or apart- ments, offices, stores, hotels, motels, pads or similar space within an apartment building, industrial build- ing, rental recreational vehicle community, rental manufactured home community, rental mobile home park or commercial building. (iv) The subdivision into or development of parcels, plots or fractional portions within the boundaries of a cemetery that has been formed and approved pursu- ant to this chapter.

56. ‘‘Timeshare’’ or ‘‘timeshare property’’ means

real property ownership or right of occupancy in real property pursuant to article 9 of this chapter. For the purposes of this chapter, a timeshare is not a security unless it meets the definition of a security under section 44-1801.

9

REAL ESTATE

32-2106

57. ‘‘Trustee’’ means:

(a) A person designated under section 32-2194.27

to act as a trustee for an endowment-care cemetery

fund.

(b)

A person holding bare legal title to real property

under a subdivision trust. A trustee shall not be

deemed to be a developer, subdivider, broker or sales- person within this chapter.

58. ‘‘Unimproved lot or parcel’’ means a lot or

parcel of a subdivision that is not an improved lot or parcel.

59. ‘‘Unsubdivided lands’’ means land or lands di-

vided or proposed to be divided for the purpose of sale or lease, whether immediate or future, into six or more lots, parcels or fractional interests and the lots or parcels are thirty-six acres or more each but less than one hundred sixty acres each, or that are offered, known or advertised under a common promotional plan for sale or lease, except that agricultural leases

shall not be included in this definition. 2007

Recent legislative year: Laws 2001, Ch. 170, § 2; Laws 2004,

Ch. 100, §

1; Laws 2005, Ch. 70, § 1; Laws 2007, Ch. 165, § 1.

32-2102. Administration of chapter by real es- tate department; purpose This chapter shall be administered by the state real estate department under the direction of the real estate commissioner. The purpose of the department in administering this chapter is to protect the public interest through licensure and regulation of the real estate profession in this state. 1997

32-2103. Placement of monies collected; revi-

sion of fees

A. The department shall deposit, pursuant to sec-

tions 35-146 and 35-147, all monies collected under

the provisions of this chapter in the state general fund unless otherwise prescribed by law.

B. Each year the commissioner shall revise all fees

collected under this chapter within the limits pre- scribed by this chapter in such a manner that the revenue derived from such fees equals at least ninety- five per cent but not more than one hundred ten per cent of the anticipated appropriated budget for the department for the succeeding fiscal year. If the revenue derived from the fees exceeds one hundred ten per cent of the anticipated appropriated budget for the department for the succeeding fiscal year, the commissioner shall lower the fees in the succeeding year in proportion to the excess. 2000

Recent legislative year: Laws 2000, Ch. 193, § 304.

32-2104. Real estate advisory board; members;

terms; qualifications; compensation; chairman; duties

A. A real estate advisory board is established com-

posed of nine members appointed by the governor. The term of office of each member is six years, and the terms of three members expire on January 31 of each odd numbered year. Appointment to fill a vacancy occurring other than by expiration of term shall be filled by appointment for the unexpired portion of the term only.

B. The membership of the board shall consist of:

1. Two members, each of whom is a real estate

broker with at least five years of brokerage experience in this state. Not more than one member shall be appointed from any one county.

2. Two members, each of whom has been engaged

in residential real estate brokerage for the five years immediately preceding appointment.

3. Two members who are primarily engaged in

subdividing real property.

4. Three public members who are not related

within the third degree of consanguinity or affinity to any person holding a broker’s or salesperson’s license

from this state.

C. Members of the board shall receive no compen-

sation but shall be reimbursed for subsistence ex-

penses pursuant to section 38-624 and travel ex- penses pursuant to section 38-623.

D. The board annually shall select from its mem-

bership a chairperson for the board.

E. The board shall provide the commissioner with

such recommendations as it deems necessary and beneficial to the best interests of the public. The board shall also provide recommendations on specific ques- tions or proposals as the board deems necessary or as requested by the commissioner.

F. The board annually shall present to the governor

an evaluation of the performance of the real estate

commissioner and the real estate department.

G. Not more than five members of the board from

any one county may serve concurrently. 2000

Recent legislative year: Laws 2000, Ch. 174, § 1.

32-2105. Meetings of the state real estate advi- sory board

A. The board shall meet for the transaction of

business not less than once each quarter-year at a place within the state it designates. The board may hold other meetings it deems advisable upon five days’ written notice of the time and place of the

meeting, signed by the commissioner or a majority of the members of the board.

B. A majority of the board shall constitute a quo-

rum. A vacancy on the board shall not impair the

rights or powers of the remaining members. 1975

32-2106. Real estate commissioner; appoint-

ment; qualifications

A. The real estate commissioner shall be appointed

by the governor, pursuant to section 38-211. The real

estate commissioner shall serve at the pleasure of the governor.

B. To be a candidate for the position of real estate

commissioner a person shall have at least five years’ experience in the real estate industry, title insurance industry, banking or mortgage broker industry and three years’ administrative experience and shall not at the date of acceptance of appointment be finan- cially interested in any real estate or brokerage firm, nor act as a broker, and salesman or agent therefor except through a trust over which the applicant has no control.

1975

32-2107

PROFESSIONS AND OCCUPATIONS

10

32-2107. Powers and duties of commissioner;

compensation; administration of de- partment; seal; revolving fund

A. The commissioner shall have charge of the de-

partment with power to administer it in accordance with the provisions of and to carry out the purposes of this chapter. The commissioner shall adopt a seal which shall bear the words ‘‘real estate commissioner, state of Arizona’’, which shall be used for the authen- tication of proceedings of the department and the

official documents thereof. The commissioner’s prin-

cipal office shall be at the state capitol. The commis- sioner may have branch offices the commissioner deems necessary in other cities.

B. The commissioner shall receive compensation as

determined pursuant to section 38-611.

C. The commissioner shall prepare and cause to be

produced and circulated among the licensees and the general public educational matter the commissioner deems helpful and proper for the guidance and assis- tance of both licensees and the public. The commis-

sioner may assess a fee for each of these educational products that does not exceed a level reasonably estimated to be sufficient to recover production and distribution costs.

D. In cooperation with industry educators, content

experts and other professionals, the commissioner may develop, sponsor or hold educational seminars and workshops for the benefit of licensees.

E. A real estate department education revolving

fund is established consisting of monies received from

the sale of educational matter under subsection C of this section and grants of monies to be used in the production of educational products. Monies in the

fund shall be used for the printing of a compilation of real estate laws and rules and other educational publications and for other educational efforts the commissioner deems helpful and proper for the guid- ance and assistance of licensees and the public, in- cluding sponsoring and holding educational seminars or workshops for educators and other licensees. The department shall establish the revolving fund as a separate account. The department shall make a full accounting of its use to the department of administra- tion annually or as required by the department of administration. Expenditures from the fund and re- imbursement to the fund shall be as prescribed by rules of the department of administration. Monies received in the real estate department education revolving fund are not subject to reversion, except that all monies in the fund in excess of twenty-five thousand dollars at the end of the fiscal year revert to the state general fund.

F. The commissioner shall adopt rules, in accord

with this chapter, as the commissioner deems neces- sary to carry out this chapter.

G. The commissioner may approve standardized

legal forms for use in the sale or lease of real estate for

the purpose of recognizing compliance of the forms with this chapter and the rules adopted pursuant to this chapter.

2007

Recent legislative year: Laws 2007, Ch. 9, § 1.

32-2107.01. Recorded disclaimer of unlawful

restrictions

A. The commissioner shall execute and record in

the office of the county recorder in each county in this state a document that disclaims the validity and enforceability of certain restrictions and covenants. The document shall contain a disclaimer in substan- tially the following form:

It is the law of this state that any cove- nants or restrictions that are based on race, religion, color, handicap status or national origin are invalid and unenforceable. If the invalid covenant or restriction is contained in a document that is recorded in this county, it is hereby declared void.

B. The document that is executed and recorded by

the commissioner shall include the legal description specified by Title 11, Chapter 1, Article 1 for the appropriate county.

C. This section does not affect any other covenant,

condition or restriction.

2000

Recent legislative year: Laws 2000, Ch. 16, § 1.

32-2108. Powers and duties of commissioner to make investigations and require in- formation

A. The commissioner on the commissioner’s own

motion may, and upon a verified complaint in writing shall, investigate the actions of any natural person or entity engaged in the business or acting in the capac- ity of a broker, salesperson or developer and may at any time examine the books and records used in connection with the business insofar as the commis- sioner reasonably believes the books or records per- tain to the transfer, sale, rental, lease, use or man- agement of real property. In connection with an investigation, the commissioner or the commission- er’s representative may take testimony and may

examine and copy documents and other physical evidence that relate to the investigation. If necessary, the commissioner or the commissioner’s representa- tive may issue subpoenas to compel the testimony of witnesses and the production of documents and other evidence. If a person refuses to comply with a sub- poena, the commissioner or the commissioner’s repre- sentative may apply to the superior court for an order to compel compliance.

B. The commissioner shall establish a certification

and enforcement unit that is charged with investiga- tive duties relevant to the rules of the commissioner

and the laws of this state, including applications for certification, investigations and enforcement and other duties as the commissioner prescribes.

C. The commissioner may require any additional

information and documents that are reasonably nec- essary to determine the good moral character of an applicant for or holder of a license or public report or renewal or amendment of a license or public report. For the purposes of this subsection, ‘‘applicant’’ or ‘‘holder’’ means a person and, if an entity, any officer, director, member, manager, partner, owner, trust ben- eficiary holding ten per cent or more beneficial inter-

11

REAL ESTATE

32-2111

est, stockholder owning ten per cent or more stock and person exercising control of the entity. The informa- tion may include:

1. Prior criminal records.

2. Fingerprints and background information pur-

suant to section 32-2108.01.

3. An affidavit setting out whether the applicant or

D. The department may issue a license to an orig-

inal license applicant before receiving the results of a

criminal history records check pursuant to this sec- tion if there is no evidence or reasonable suspicion

that the applicant has a criminal history background. However, the department shall suspend the license if

a fingerprint card is returned as unreadable and an

holder has:

applicant who was issued a license fails to submit a

(a)

Been convicted of a felony or a misdemeanor.

new fingerprint card within ten days after being

(b)

Had any business or professional license de-

notified by the department.

nied, suspended or revoked or had any other disciplin- ary action taken or administrative order entered against the applicant or holder by any regulatory agency.

E. This section does not affect the department’s

authority to otherwise issue, deny, cancel, terminate, suspend or revoke a license.

F. For purposes of this section, ‘‘license applicant’’

(c)

Had a public report denied or suspended.

means:

(d)

Been permanently or temporarily enjoined by

1.

Each original real estate, cemetery and member-

order, judgment or decree from engaging in or con- tinuing any conduct or practice in connection with the sale or purchase of real estate, cemetery property, time-share intervals, membership camping camp- grounds or contracts or securities or involving con- sumer fraud or the racketeering laws of this state.

(e) Had any adverse decision or judgment entered

against the applicant or holder arising out of the

conduct of any business in or involving a transaction in real estate, cemetery property, time-share intervals or membership camping campgrounds or contracts involving fraud, dishonesty or moral turpitude. (f) Filed, or is subject to, a petition under any chapter of the federal bankruptcy act.

ship camping salesperson and broker applicant pur- suant to article 2 of this chapter.

2. Each natural person, or for an entity applicant,

any person exercising control of the entity, who ap-

plies for an original certificate of approval to operate

a real estate school, or for a renewal certificate, any natural person or person exercising control who has not previously submitted a fingerprint card to the department.

3. Any natural person, or for an entity applicant,

any person exercising control of the entity, on whom the department has evidence of a criminal record that has not been previously reviewed or evaluated by the department, who applies for a:

(g)

Participated in, operated or held an interest or

(a)

License renewal pursuant to section 32-2130.

exercised control in any entity to which subdivision

(b)

Public report to:

1997

(b), (c), (d), (e) or (f) applies.

32-2108.01. Fingerprinting license applicants; requirements; fees; definition

A. Before receiving and holding a license issued

pursuant to this chapter, each license applicant shall submit a full set of fingerprints and the fees required

in section 41-1750 to enable the state real estate department to conduct a criminal background inves- tigation to determine the suitability for licensure of the applicant. The state real estate department shall

submit completed applicant fingerprint cards and the fees to the department of public safety. The depart- ment of public safety shall conduct applicant criminal history records checks pursuant to section 41-1750, Public Law 92-544 and any other applicable federal laws. The department of public safety, on behalf of the state real estate department, may exchange license applicant fingerprint card information with the fed- eral bureau of investigation for national criminal history records checks.

B. The fees the department collects under subsec-

tion A of this section shall be credited pursuant to section 35-148.

C. The license applicant is responsible for provid-

ing the department with a readable fingerprint card. The license applicant shall pay any costs attributable to refingerprinting the license applicant due to un- readable prints and any fees required for the resubmission of fingerprints.

(i) Sell or lease subdivided lands pursuant to arti-

cle 4 of this chapter.

(ii) Sell or lease unsubdivided lands pursuant to

article 7 of this chapter.

(iii) Sell or lease time-share estates pursuant to

article 9 of this chapter.

(iv) Sell membership camping contracts pursuant

to article 10 of this chapter.

(c) Certificate of authority to sell cemetery lots

pursuant to article 6 of this chapter. 1995

32-2109. Employment; compensation The commissioner shall appoint a secretary and such deputies, assistants, and clerks as are necessary. The compensation of all such employees shall be as determined pursuant to section 38-611. 1970

32-2110. Interest of department officer or em- ployee in real estate company pro- hibited No officer or employee of the department shall be connected with or directly or indirectly interested in any real estate company or real estate brokerage firm.

1955

32-2111. Attorney general as legal adviser and representative of commissioner The attorney general shall act for the commissioner in all legal actions or proceedings and shall advise him upon all questions of law arising out of the administration of this chapter. 1993

32-2112

PROFESSIONS AND OCCUPATIONS

12

32-2112. Admissibility of certified copies of de- partment records in evidence Properly certified copies of records of the depart- ment or documents filed therein shall be received in evidence in all courts of the state equally and with like effect as the originals.

1955

32-2113. Recorded disclosure for territory in the vicinity of a military airport or ancillary military facility

A. The commissioner shall execute and record in

the office of the county recorder in each county in this state that includes territory in the vicinity of a mili- tary airport or ancillary military facility as defined in section 28-8461 a document, applicable to property located within territory in the vicinity of a military airport or ancillary military facility, with the follow-

ing disclosure: ‘‘This property is located within terri- tory in the vicinity of a military airport or ancillary military facility and may be subject to increased noise and accident potential.’’

B. The attorney general shall prepare in recordable

form the document that is executed and recorded by

the commissioner pursuant to this section.

C. The document that is executed and recorded by

the commissioner shall include a legal description of the territory in the vicinity of a military airport or

ancillary military facility. The military airport shall cause the legal description of territory in the vicinity of the military airport or ancillary military facility defined in section 28-8461 to be prepared and shall provide the legal description to the commissioner and the state land department in recordable form in twelve point font on eight and one-half inch by eleven inch paper.

D. The state land department shall prepare maps

with the legal descriptions pursuant to section 37-

102.

2004

Recent legislative year: Laws 2001, Ch. 23, § 13; Laws 2004, Ch. 111, § 13; Laws 2004, Ch. 235, § 8.

32-2114. Recorded disclosure for land under a military training route or restricted air space

A. The commissioner shall execute and record in

the office of the county recorder in each county in this state that includes land under a military training route as defined in section 28-8461 and as delineated in the military training route map prepared by the state land department pursuant to section 37-102 a document, applicable to land under a military train- ing route as delineated in the military training route map, disclosing that the land is under a military training route.

B. The commissioner shall execute and record in

the office of the county recorder in each county in this state that includes land under restricted air space as delineated in the restricted air space map prepared by the state land department pursuant to section 37-102 a document, applicable to land under restricted air space as delineated in the restricted air space map, disclosing that the land is under restricted air space.

C. If a military training route changes and people

who were notified pursuant to subsection A of this section no longer have property under a military training route as delineated in the military training route map, the commissioner shall execute and record in the office of the county recorder in the county in which the property is located a document disclosing

that the land is not under a military training route.

D. If restricted air space changes and people who

were notified pursuant to subsection B of this section no longer have property under restricted air space as delineated in the restricted air space map, the com-

missioner shall execute and record in the office of the county recorder in the county in which the property is located a document disclosing that the land is not under restricted air space.

E. The attorney general shall prepare in recordable

form the documents that are executed and recorded by the commissioner pursuant to this section.

F. The documents that are executed and recorded

by the commissioner pursuant to this section shall include a legal description of the military training route as delineated in the military training route map and a legal description of the restricted air space as delineated in the restricted air space map. 2006

Recent legislative year: Laws 2004, Ch. 168, § 2; Laws 2006,

Ch. 113, §

1.

32-2115. Department’s web site; military train- ing route map; restricted air space map The department shall post on its web site the military training route map and the restricted air space map prepared by the state land department pursuant to section 37-102. 2006

Recent legislative year: Laws 2004, Ch. 168, § 2; Laws 2006,

Ch. 113, §

2.

32-2116. Military training routes; contacts

A. Each year the department shall contact the

chairperson of the Arizona military airspace working group and request the name, address and telephone number of the chairperson.

B. The department shall post the information it

receives pursuant to subsection A on the department’s web site.

2004

Recent legislative year: Laws 2004, Ch. 168, § 2.

32-2117. Earth fissure maps; posting; immunity

A. On receipt of maps from the state land depart-

ment, the department of real estate shall provide any

earth fissure map to any member of the public in printed or electronic format on request and provide access on its web site to the earth fissure maps prepared by the state land department pursuant to section 37-173, paragraph 11. The following notice shall be displayed below each map:

Notice

The state of Arizona has made a reasonable effort to ensure the accuracy of this map when it was produced, but errors may be

13

REAL ESTATE

32-2121

present and the state of Arizona does not guarantee its accuracy. The map supple- ments, and is not a substitute for, a profes- sional inspection of property for defects and conditions.

B. Nothing in this section shall be construed as

denying a person rights guaranteed by the Arizona Constitution, and notwithstanding any other law, a subdivider, owner or licensee is not liable to any

person or governmental entity for any act or failure to act in connection with:

1. The disclosure of real estate subject to earth

fissures if the subdivider, owner or licensee provides a written disclosure or includes notice in a public re- port, issued pursuant to section 32-2183 or 32- 2195.03, with respect to real estate subject to earth

fissures, of the map and web site described in subsec- tion A of this section. The written disclosure or notice in a public report, issued pursuant to section 32-2183 or 32-2195.03, of the map and web site does not create an independent cause of action.

2. Any disclosure that occurred before the date the

map described in subsection A of this section is posted on the web site if the subdivider, owner or licensee had no actual knowledge that the land was subject to earth fissures before the map was posted. 2006

Recent legislative year: Laws 2006, Ch. 339, § 2.

32-2118. Competition with private enterprise; prohibition The department shall not create, endorse or spon- sor any activity that may be legally performed by a licensee in any way that constitutes competition with the private sector, unless there is no licensee that is capable and willing to create, endorse or sponsor the activity. This section does not apply to license ap- proval processes or procedures under this chapter or to educational activities under section 32-2107. 2007

Recent legislative year: Laws 2007, Ch. 9, § 2.

ARTICLE 2. LICENSING

32-2121. Applicability of article; exemption

A. The provisions of this article do not apply to:

1. A natural person, a corporation through its offic-

ers, a partnership through its partners or a limited liability company through its members or managers

that deals in selling, exchanging, purchasing, renting, leasing, managing or pledging the person’s or entity’s own property, including cemetery property and mem- bership camping contracts, and that does not receive special compensation for a sales transaction or does not receive special compensation or other consider- ation including property management fees or consult- ing fees for any property management services per- formed, if the majority of an officer’s, partner’s, member’s or manager’s activities do not involve the acts of a real estate broker, cemetery broker or mem- bership camping broker as defined in section 32-2101.

2. A person holding a valid power of attorney that

is being used for a specific purpose in an isolated

transaction and not as a method of conducting a real estate business.

3. An attorney in the performance of the attorney’s

duties as an attorney. Nothing in this paragraph shall be construed to allow an attorney to otherwise engage in any acts requiring a license under this article.

4. Any receiver, a trustee in bankruptcy or any

other person acting under an order of a court.

5. A trustee selling under a deed of trust.

6. Natural persons who are acting as residential

leasing agents or on-site managers of residential rental property, who are performing residential leas- ing activities on residential income property at no more than one location during the period of the agents’ or on-site managers’ regular workday, who do not receive special compensation for the acts de- scribed in subdivisions (a) through (e) of this para- graph and who are employed by the owner or the owner’s licensed management agent to perform the duties customarily associated with that employment. A bonus that is paid to a residential leasing agent or on-site manager working under the supervision of a licensed real estate broker and that is based on performance, that is received no more frequently than monthly and that does not exceed one-half of the agent’s or on-site manager’s total compensation for the time period does not constitute special compensa-

tion for the acts described in subdivisions (a) through (e) of this paragraph. For purposes of this paragraph ‘‘residential leasing agents or on-site managers’’ means natural persons employed by the owner or the owner’s licensed management agent whose normal duties and responsibilities include any one or a com- bination of the following:

(a) Preparing and presenting to any person a resi-

dential lease, application or renewal or any amend- ment of the lease.

(b) Collecting or receiving a security deposit, a

rental payment or any related payment for delivery to and made payable to a property, a property manager, an owner or the location.

(c) Showing a residential rental unit to any pro-

spective tenant.

(d) Executing residential leases or rental agree-

ments adopted under title 33, chapter 10.

(e) Acting on behalf of the owner or the owner’s

licensed management agent to deliver notice pursu-

ant to title 12, chapter 8 and title 33, chapters 10 and

11.

7. Any officer or employee of a governmental

agency who is not a contract or temporary employee of the agency in the conduct of the officer’s or employee’s official duties.

8. One natural person who acts as a property

manager for one nonresidential income property or for two or more contiguous nonresidential income prop- erties that are under common ownership and who is employed by the owner or the owner’s licensed man- agement agent to perform the duties customarily associated with that employment.

9. Natural persons who are in the employ of an

employing broker or of a person or entity exempt

32-2122

PROFESSIONS AND OCCUPATIONS

14

under this section, who perform clerical, bookkeeping, accounting and other administrative and support duties, who are not engaged in any other acts requir- ing a license under this chapter and whose employ- ment is not conditioned on or designed to perform duties otherwise requiring a license under this chap- ter.

10. Natural persons who are in the employ of an

employing broker and who perform telemarketing services that are limited to soliciting interest in engaging the services of a licensee or broker or gath- ering demographic information that will be used by a

licensee or broker to solicit prospective buyers, sell- ers, lessees and lessors.

11. Communications media or their representa-

tives that are primarily engaged in advertising real

estate and that perform no other acts requiring a real estate license, if:

(a) The communications media or their representa-

tives do not, directly or indirectly, compile or repre- sent that they compile information about specific prospective purchasers or tenants, except that gen- eral information about prospective purchasers or ten- ants, such as demographic and marketing informa- tion, may be compiled.

(b) The communications media or their representa-

tives do not make representations to prospective real property sellers or landlords, or their representatives, concerning specific prospective purchasers or tenants or specific sales or leasing leads.

(c) The fee charged for advertising is based solely

on the advertising services provided.

(d) The advertisements provide for direct contact

between the seller or landlord and the prospective buyers or tenants, or for contact through a licensed real estate broker or property management firm. The communications media or their representatives shall

as a title insurer or a title insurance agent in the performance of the title insurance agent’s duties as a title insurance agent. Nothing in this paragraph shall be construed to allow an escrow agent, a title insurer or a title insurance agent to otherwise engage in acts requiring a license under this article.

17. Notwithstanding paragraph 1 of this subsec-

tion, a corporation through its officers and employees that purchases, sells, exchanges, rents, leases, man- ages or pledges its property if both of the following apply:

(a) The activity is only incidental to the business of

the corporation.

(b) The officers and employees engaged in the ac-

tivity do not receive special compensation or other consideration for the activity.

18. A trust company owned by a bank holding

company regulated by the federal reserve board or a bank in exercising its fiduciary duties under the

terms of a trust agreement to which real property is subject.

19. A person who receives a finder fee pursuant to

section 32-2176 or 32-2197.21.

B. The commissioner may grant an exemption from

the licensure requirements of this article to any

corporation that applies for an exemption on a finding that both of the following apply:

1. The corporation is a nonprofit corporation that

provides project-based housing services and operates

solely as a charitable organization as defined in section 44-6551.

2. The corporation’s sole activities related to real

estate involve ownership or management of residen- tial property owned or controlled by the corporation.

2004

Recent legislative year: Laws 1999, Ch. 42, § 1; Laws 1999, Ch. 109, § 1; Laws 2001, Ch. 170, § 3; Laws 2004, Ch. 100, § 2.

not act as intermediaries or assist in any intermedi- ary action between prospective parties to a real estate

32-2122. License required of brokers and sales- persons

transaction, except that additional information about

A.

This article applies to any person acting in the

advertised properties may be provided to prospects

capacity of a:

upon request.

1.

Real estate broker.

12.

Persons who perform residential property man-

2.

Real estate salesperson.

agement services or marketing and promotional ser-

3.

Cemetery broker.

vices solely for nursing care institutions as defined in

4.

Cemetery salesperson.

section 36-401 or pursuant to life care contracts as

5.

Membership camping broker.

defined in section 20-1801.

6.

Membership camping salesperson.

13.

A person who offers to sell or lease property

B.

It shall be unlawful for any person, corporation,

that constitutes a security as defined in section 44- 1801 and that is offered, sold or leased in compliance

with title 44, chapter 12 if the person is a registered securities dealer or salesperson pursuant to title 44, chapter 12, article 9.

14. A person who manages a hotel, motel or recre-

ational vehicle park.

15. A person who, on behalf of another, solicits,

arranges or accepts reservations or money, or both, for occupancies of thirty-one or fewer days in a dwelling unit in a common interest development.

16. An escrow agent in the performance of the

escrow agent’s duties as an escrow agent, a title insurer in the performance of the title insurer’s duties

partnership or limited liability company to engage in any business, occupation or activity listed in subsec- tion A without first obtaining a license as prescribed in this chapter and otherwise complying with the provisions of this chapter.

C. A person, corporation, partnership or limited

liability company that is licensed as a salesperson or

broker pursuant to this article or that is engaging in any work for which a license is required under this article is subject to the requirements of this chapter in the performance of any acts included in the definition of a broker unless otherwise provided in this chapter.

D. Any act, in consideration or expectation of com-

pensation, which is included in the definition of a real

15

REAL ESTATE

32-2124

estate, cemetery or membership camping broker, whether the act is an incidental part of a transaction or the entire transaction, constitutes the person offer- ing or attempting to perform the act of a real estate broker or real estate salesperson, a cemetery broker or cemetery salesperson or a membership camping broker or a membership camping salesperson within the meaning of this chapter. 1997

32-2123. Application for license as broker or

salesperson

A. Every application for an original license shall be

either submitted in writing and signed by the appli-

cant or submitted electronically and contain an elec- tronic or digital identifier that the commissioner deems appropriate. The application shall be accompa- nied by all applicable fees.

B. An application for an original license as a broker

or salesperson shall set forth:

1. The legal name and residence address of the

applicant.

2. The applicant’s employers and employment his-

tory for the immediately preceding ten years and any experience in real estate sales, appraisals, transfers or similar business in which the applicant previously

engaged, if the commissioner determines that this

information is needed to reasonably evaluate the good moral character of the applicant.

3. The name and place of business of the appli-

cant’s present employer, if any.

4. Whether the applicant has ever been convicted

of a felony and, if so, the nature of the felony, where

and when committed and the disposition of the con-

viction, or whether the applicant has been disbarred or suspended from the practice of law.

5. Whether the applicant has ever been refused a

broker’s or salesperson’s license or any other occupa- tional license in this or any other state, whether the applicant’s license as a broker or salesperson has been revoked or suspended in this or any other state or whether the applicant has had any other occupational

or professional license, certificate or registration re- voked or suspended in this or any other state.

6. The name of any corporation, company or part-

nership that is or ever has been licensed by the

department in which the applicant exercised any control.

7. If the applicant is a natural person, the appli-

cant’s social security number. If the applicant, due to bona fide religious convictions or other bona fide reasons that the applicant documents on the applica- tion to the satisfaction of the commissioner, does not have a social security number, the applicant may provide the applicant’s federal tax identification num- ber with the application. The state real estate depart- ment shall use the applicant’s social security number or federal tax identification number to aid the depart- ment of economic security in locating noncustodial parents or the assets of noncustodial parents, and for no other purpose.

C. An application for a license as a broker addition-

ally shall set forth:

1. The name under which the business is to be

conducted.

2. The situs and mailing address of the applicant’s

place of business, or if more than one, the situs and

mailing addresses of each.

D. An applicant for a broker’s or salesperson’s

license shall provide information that the commis- sioner determines is reasonably necessary to estab- lish the character of the applicant. The information

may include but shall not be limited to:

1. Prior criminal records.

2. Fingerprints and background information, pur-

suant to section 32-2108.01.

3. An affidavit setting out whether the applicant

has participated in, operated or held an interest in any land development company which has filed, or is

subject to, a petition under any chapter of the federal bankruptcy act.

E. Each person licensed pursuant to this article,

whether the license is active or inactive, shall have available for the licensee’s use a current copy of the department’s statutes, rules and annotations pertain- ing to real estate laws. Failure to comply with this requirement shall not be deemed grounds for a civil penalty or for denial, suspension or revocation of a license.

2001

Recent legislative year: Laws 2001, Ch. 67, § 1.

32-2124. Qualifications of licensees

A. Except as otherwise provided in this chapter,

the commissioner shall require proof, through the application or otherwise, as the commissioner deems advisable with due regard to the interests of the

public, as to the honesty, truthfulness, good character and competency of the applicant and shall require that the applicant has:

1. If for an original real estate broker’s license, at

least three years’ actual experience as a licensed real estate salesperson or real estate broker during the five years immediately preceding the time of applica- tion.

2. If for an original cemetery broker’s license, ei-

ther a current real estate broker’s license, or if the applicant does not have a current real estate broker’s license, at least three years’ actual experience as a cemetery salesperson or broker or as a licensed real estate salesperson or broker during the five years immediately preceding the time of application.

3. If for an original membership camping broker’s

license, either a current real estate broker’s license, or if the applicant does not have a current real estate

broker’s license, at least three years’ actual experi- ence as a licensed membership camping salesperson or broker or as a licensed real estate salesperson or broker during the five years immediately preceding the time of application.

4. If for any type of broker’s or salesperson’s li-

cense, not had a license denied within one year

immediately preceding application in this state pur- suant to section 32-2153 or a similar statute in any other state.

5. If for any type of broker’s or salesperson’s li-

cense, not had a license revoked within the two years

32-2124

PROFESSIONS AND OCCUPATIONS

16

immediately preceding application in this state pur- suant to section 32-2153 or a similar statute in any other state. 6. If reapplying for a license that expired more than one year before the date of application, met all current education and experience requirements and retakes the examination the same as if the applicant were applying for the license for the first time. 7. If for a real estate, cemetery or membership camping broker’s license, other than a renewal appli- cation, an equivalent amount of active experience within the immediately preceding five years in the field in which the applicant is applying for the bro- ker’s license, as a substitute for the licensed active experience otherwise required in paragraphs 1, 2 and 3 of this subsection. The licensed active experience required may be met if the applicant can demonstrate to the commissioner’s satisfaction that the applicant has an equivalent amount of experience in the past five years that, if the applicant had held a license, would have been sufficient to fulfill the licensed expe- rience requirement. B. All applicants other than renewal applicants under section 32-2130 for a real estate salesperson’s license shall show evidence satisfactory to the com- missioner that they have completed a real estate salesperson’s course, prescribed and approved by the commissioner, of at least ninety classroom hours, or its equivalent, of instruction in a real estate school certified by the commissioner and have satisfactorily passed an examination on the course. In no case shall the real estate salesperson’s course completion or its equivalent be more than ten years before the date of application unless, at the time of application, the commissioner determines in the commissioner’s dis- cretion that the applicant has work experience in a real estate related field and education that together are equivalent to the prelicensure education require- ment. The commissioner may waive all or a portion of the prelicensure course requirement, other than the twenty-seven hour Arizona specific course, for an applicant who holds a current real estate license in another state. C. All applicants other than renewal applicants under section 32-2130 for a real estate broker’s li- cense shall show evidence satisfactory to the commis- sioner that they have completed a real estate broker’s course, prescribed and approved by the commissioner, of at least ninety classroom hours, or the equivalent, of instruction in a real estate school certified by the commissioner and have satisfactorily passed an ex- amination on the course. In no case shall the real estate broker’s course completion or its equivalent be more than ten years before the date of application unless, at the time of application, the commissioner determines in the commissioner’s discretion that the applicant has work experience in a real estate related field and education that together are equivalent to the prelicensure education requirement. The commis- sioner may waive all or a portion of the prelicensure course requirement, other than the twenty-seven hour Arizona specific course, for an applicant who holds a current real estate license in another state.

D. Prior to receiving any license provided for by

this chapter, an applicant shall be at least eighteen

years of age.

E. The commissioner shall ascertain by written,

electronic or any other examination method that an applicant for a real estate license has:

1. An appropriate knowledge of the English lan-

guage, including reading, writing and spelling, and of arithmetical computations common to real estate

practices.

2. At a minimum, an understanding of the general

purpose and legal effect of any real estate practices, principles and related forms, including agency con- tracts, real estate contracts, deposit receipts, deeds, mortgages, deeds of trust, security agreements, bills

of sale, land contracts of sale and property manage- ment, and of any other areas that the commissioner deems necessary and proper.

3. A general understanding of the obligations be-

tween principal and agent, the principles of real

estate and business opportunity practice, the applica- ble canons of business ethics, the provisions of this chapter and rules made under this chapter. F. The commissioner shall ascertain by written, electronic or any other examination method that an applicant for a license as a cemetery broker or a cemetery salesperson has:

1. Appropriate knowledge of the English language,

including reading, writing and spelling, and of ele- mentary arithmetic.

2. A general understanding of:

(a) Cemetery associations, cemetery corporations

and duties of cemetery directors and officers.

(b) Plot ownership, deeds, certificates of ownership,

contracts of sale, liens and leases.

(c) Establishing, dedicating, maintaining, manag-

ing, operating, improving, preserving and conducting

a cemetery.

(d) The provisions of this chapter and rules made

under this chapter relating to the organization and

regulation of cemeteries and the licensing and regu- lation of cemetery brokers and cemetery salespersons.

3. A general understanding of the obligations be-

tween principal and agent, the principles of cemetery practice and the canons of business ethics pertaining

to the operation of cemeteries and the sale of cemetery

property.

G. The commissioner shall ascertain by written,

electronic or any other examination method that an applicant for a license as a membership camping broker or a membership camping salesperson has:

1. An appropriate knowledge of the English lan-

guage, including reading, writing and spelling, and of elementary arithmetic.

2. A general understanding of:

(a) The general purposes and legal effect of con-

tracts and agency contracts.

(b) Establishing, maintaining, managing and oper-

ating a membership campground.

(c) The provisions of this chapter and rules adopted

under this chapter relating to the organization and

regulation of membership campgrounds and the li-

17

REAL ESTATE

32-2125

censing and regulation of membership camping bro- kers and membership camping salespersons. 3. A general understanding of the obligations be-

tween principal and agent and the canons of business ethics pertaining to the operation and promotion of membership campgrounds.

H. No renewal applicant for a real estate, cemetery

or membership camping broker’s or salesperson’s li- cense shall be required to submit to an examination if the application is made within twelve months after

the license expires and the license is not cancelled, terminated or suspended at the time of application.

I. The examination for a broker’s license shall be

more exacting and stringent and of a broader scope than the examination for a salesperson’s license.

J. An applicant for a real estate salesperson’s or

broker’s license who currently holds at least an equiv- alent license in another state may be exempt from taking the national portion of the real estate exami- nation if the applicant can demonstrate having pre- viously passed a national examination within the past five years that is satisfactorily similar to the one administered by the department.

K. Identification of each applicant whose licensing

requirement was allowed to be met by an equivalent alternative pursuant to this section shall be included in the annual performance report presented by the board to the governor pursuant to section 32-2104.

L. An applicant for an original real estate salesper-

son’s license, after completion of the requirements of

subsection B of this section, shall provide certification to the department at the time of application evidenc- ing completion of six hours of instruction in real estate contract law and contract writing. This instruc- tion shall include participation by the applicant in the drafting of contracts to purchase real property, listing agreements and lease agreements.

M. The commissioner shall not issue a license to a

person who has been convicted of a felony offense and

who is currently incarcerated for the conviction, pa- roled or under community supervision and under the supervision of a parole or community supervision officer or who is on probation as a result of the conviction.

N. An applicant or licensee who wants to obtain a

license specializing in sales of businesses after com- pletion of the requirements of subsection B or C of this section and before activation of the person’s license shall provide certification to the department evidenc- ing completion of twenty-four hours of instruction in business brokerage. This instruction shall include satisfactory proof of passing a test that is acceptable to the department.

2007

Recent legislative year: Laws 2002, Ch. 23, § 1; Laws 2004, Ch. 100, § 3; Laws 2007, Ch. 165, § 2.

32-2125. Licenses for corporations, limited lia-

bility companies or partnerships

A. A corporation, limited liability company or part-

nership applying for a broker’s license for the entity

shall designate a natural person who is licensed as a broker and who is an officer of the corporation, man-

ager of the limited liability company if management of the limited liability company is vested in one or more managers, member of the limited liability company if management is vested in the members or partner of the partnership who shall act as designated broker.

The license shall extend no authority to act as desig- nated broker to any other person. This subsection does not apply to a corporation or limited liability company applying for a license under subsection B of this section. An entity’s broker’s license issued pursu- ant to this subsection shall run concurrently with the corporation’s, limited liability company’s or partner- ship’s designated broker’s license.

B. An employing broker may engage the services of

salespersons and associate brokers who act through and on behalf of professional corporations or profes- sional limited liability companies that are licensed by the department. A designated broker who acts on behalf of an employing real estate entity is permitted to become a professional corporation or a professional limited liability corporation. Any person so engaged shall be separately licensed. The department shall issue to or renew a license under this subsection only for a professional corporation or a professional limited liability corporation whose shareholders, members or managers hold active real estate licenses. A corpora- tion licensed under this subsection shall meet the

requirements of title 10, chapter 20. A limited liability company licensed under this subsection shall meet the requirements of title 29, chapter 4, article 11. A professional corporation or professional limited liabil- ity company shall not be licensed as an employing broker.

C. The license of a corporation or limited liability

company licensed under subsection B of this section terminates only upon the death of a shareholder, member or manager or any other change of sharehold- ers, members or managers, except that any remaining shareholder, member or manager who was an autho- rized officer and shareholder prior to the change remains authorized to continue business under the

corporation’s or limited liability company’s license for up to an additional ninety days pending the issuance of a new license.

D. The commissioner may suspend, revoke or deny

renewal or the right of renewal of the license of a

corporation, limited liability company or partnership licensed under this section if the corporation, limited liability company or partnership or any shareholder, officer, agent, partner or member of a corporation, limited liability company or partnership violates any of the provisions of this chapter.

E. Nothing in this section shall be construed to

enlarge the functions of salespersons, to permit sales- persons to assume any of the responsibilities or func- tions of brokers or to relieve the commissioner of any regulatory power or authority over salespersons or brokers.

F. A corporation, limited liability company or part-

nership licensed under subsection A of this section or a professional corporation or professional limited lia- bility company licensed under subsection B of this

32-2125.01

PROFESSIONS AND OCCUPATIONS

18

section is exempt from the education requirements imposed pursuant to this chapter. The commissioner shall not charge a license fee or a renewal fee pursu- ant to section 32-2132 to a corporation, professional corporation, limited liability company, professional limited liability company or partnership licensed or approved under this section.

G. A corporation, limited liability company or part-

nership licensed under this section shall report to the department within ten days:

1. Any change in officers, directors, members, man-

agers or partners or any change of control of the entity.

2. Any amendment to its articles of incorporation

or organization or to its partnership agreement.

3. If a corporation, when a person becomes an

owner of ten per cent or more of the stock in the corporation.

4. The dissolution of the corporation, limited liabil-

ity company or partnership. 2007

Recent legislative year: Laws 2004, Ch. 100, § 4; Laws 2007,

Ch. 165, §

3.

32-2125.01. Issuance of license; multiple li-

censes; use

A. When the requirements for application, exami-

nation and payment of fees are completed to the satisfaction of the commissioner, the commissioner

shall issue the license applied for to the applicant. Any person who has passed the state examination for broker or salesperson must become licensed within one year from the date of the examination. Failure to comply with this section will necessitate the submis- sion to and passing of another examination.

B. Not more than one license shall be issued and

outstanding to or in favor of a licensee at any one time, except that a person licensed as a real estate broker or real estate salesperson may engage in cemetery or membership camping sales activities without being separately licensed to engage in these activities. A real estate licensee may have only one

employing broker in each of the following categories:

1.

Cemetery.

2.

Membership camping.

3.

Real estate.

C.

A designated or employing real estate broker

may engage in cemetery or membership camping sales activities and may employ cemetery and mem- bership camping salespersons and associate brokers without being separately licensed as a cemetery or membership camping broker or salesperson. 2001

Recent legislative year: Laws 2001, Ch. 67, § 2.

32-2125.02. Nonresident licensees; service of

process; employment

A. An application for and acceptance of a license as

a nonresident salesperson or broker shall be deemed to constitute irrevocable appointment of the commis- sioner as the agent or attorney in fact of the licensee for the acceptance of service of process issued in this state in any action or proceeding against the licensee arising out of the licensing, out of transactions under

the license or in any action which may result in payment from the real estate recovery fund.

B. Duplicate copies of any process shall be served

on the commissioner. The plaintiff at the time of service shall pay the commissioner fifteen dollars, taxable as costs in the action. On receiving this service the commissioner shall promptly forward a copy of the service by certified mail to the licensee at the licensee’s last address of record with the commis- sioner. Process served on the commissioner pursuant

to this subsection constitutes service of process on the licensee as though the licensee were personally served with the process in this state.

C. A nonresident licensee shall accept employment

or compensation as a nonresident licensee only under

section 32-2155 and only from a broker who is actively licensed in this state.

D. A nonresident broker shall maintain in this

state the records required by section 32-2151.01 and shall notify the commissioner of the address where the records are kept.

E. Broker or salesperson license applicants who do

not reside in this state are required to complete a

minimum of a twenty-seven hour course that is spe-

cific to this state’s real estate statutes, rules, practices and procedures and that is prescribed and approved by the commissioner and are required to pass the real estate school examination before taking this state’s examination. The subject matter and course outline shall cover areas specific to this state’s real estate practice and law. The requirements of this subsection also apply, to the extent applicable, to broker or salesperson applicants who wish to use college credit in fulfillment of the required ninety prelicensure hours.

F. The commissioner may adopt rules necessary for

the regulation of nonresident licensees. 1997

32-2125.03. Confidentiality of licensee’s home

address, home telephone number and social security number

A. By filing an original signed statement with the

department on a form that is prescribed by the department and that is used for no other purpose, a licensee may request that the department not release the home address and home telephone number of the licensee to any person other than a court, a process server or a governmental agency that will use the information for a legitimate governmental purpose. The signed statement shall indicate why the licensee reasonably believes that there is a risk of personal danger to or harassment of the licensee, the licensee’s family or members of the licensee’s household and

why maintaining the confidentiality of this informa- tion will reduce the risk of personal danger or harass- ment. The department shall honor the licensee’s re- quest if, after review, the commissioner determines that maintaining the confidentiality of this informa- tion will reduce the risk of personal danger to or harassment of the licensee, the licensee’s family or members of the licensee’s household.

B. The department may charge a fee for each

request made pursuant to subsection A.

19

REAL ESTATE

32-2130

C. This section applies only to a natural person

who holds, has held or has applied for a license under this article. This section does not apply if a licensee’s

home address or home telephone number is the same

as the licensee’s business address or business tele- phone number.

D. The department may not release a licensee’s

social security number or make a licensee’s social security number available for inspection by any per- son other than a court or a governmental agency that

will use the information for a legitimate governmen- tal purpose.

32-2126. Place of business required; notice of change in location; failure to give notice as cancellation of license; signs

A. Each employing broker shall have and maintain

1996

a definite place of business. Notice of change of

business location shall be given to the commissioner

in writing and the commissioner shall issue a new

license for the unexpired period. Change or abandon-

ment of a business location without notice shall auto- matically cancel the broker’s license and shall sever the license of any salesperson or associate broker employed by the employing broker. If an employing broker’s license is cancelled pursuant to this subsec- tion and the broker’s license is later reinstated, any salesperson or associate broker employed by the em- ploying broker whose license was severed pursuant to this subsection may be rehired.

B. Each designated broker and, if applicable, each

employing broker shall cause a sign to be affixed at the entrance to the broker’s place of business, in a place and position clearly visible to all entering the place of business, with the name of the broker, the name under which the broker is doing business if other than the broker’s given name, and sufficient wording to establish that the person is a real estate broker, cemetery broker or membership camping bro-

ker. In addition to any other applicable law, the sign shall conform to rules adopted by the commissioner.

C. Upon removal from any location the broker shall

remove the sign from the location. A broker shall not display any name at designated places of business named in the broker’s license other than the name under which the broker is licensed. 1997

32-2127. Licenses for additional places of busi- ness; branch office manager; bro- ker’s temporary absence

A. When a broker maintains more than one place of

business within the state he shall be required to procure an additional license for each branch office maintained.

B. Branch office licenses shall be issued in the

same name as the principal office license is issued, and the license must be posted in the branch office. Branch office signs shall conform to the provisions for the principal office and shall include the designation ‘‘branch office’’.

C. Each branch office shall be under the manage-

ment of a broker or a licensed salesman.

D. If a designated broker is unable to act within

twenty-four hours, he may designate a licensee whom he employs or another designated broker to act in his behalf. The designated broker shall make this desig- nation in writing and shall keep the original designa- tion at his office for one year from its effective date. A copy of this designation must be attached to any hire, sever or renewal form submitted to the department which is signed by the designated broker’s designee. This designation shall not exceed thirty days’ dura- tion and may authorize the designee to perform any and all duties the designated broker may legally perform, except that a salesperson shall not be autho- rized to hire or sever licensees. A written designation is required for each temporary absence. 1994

32-2128. Display and possession of license cer- tificate The designated broker’s and, if applicable, the em- ploying broker’s license certificate shall be promi- nently displayed in the office of the broker, and all other license certificates shall be readily available. A salesperson’s or associate broker’s license shall re- main in the possession of the employer until can- celled, terminated, suspended or revoked by the de- partment, or when the licensee is severed from employment, when it shall be returned to the depart- ment by the designated broker. If a pocket card identification was issued to a licensee whose license is subsequently cancelled, terminated, suspended or re- voked or if the licensee is no longer employed by a broker, the licensee shall immediately return the pocket card to the broker.

32-2129. Advance payment of license fees

A. All license fees shall be paid in advance and

1997

shall be the same regardless of the time of the year the license is issued.

B. If the license fees or other fees that relate to

licensure are paid with a check that is not honored by the financial institution on which it is written, the department may deny or cancel the license.

C. An original license shall be for a period of two

years up to and including the last day of the month in which the license was granted. A renewal license shall

be effective as of the date of issuance, but no earlier than the first day after the expiration of the previous license. Regardless of the date of issuance, the re- newed license is for a four year period beginning on the first day after the expiration of the previous license.

D. License applicants shall pay fees as specified in

this chapter.

2007

Recent legislative year: Laws 2007, Ch. 165, § 4.

32-2130. Renewal of licenses

A. A license may be renewed in a timely manner by

filing an application for renewal in the manner pre- scribed by the commissioner, by paying the renewal fee specified in this chapter and by presenting evi- dence of attendance at a school certified by the com- missioner during the preceding license period of twen- ty-four credit hours in the first renewal and forty-

32-2131

PROFESSIONS AND OCCUPATIONS

20

eight credit hours in subsequent renewals, or a lesser number of credit hours prescribed by the commis- sioner, of real estate oriented continuing education courses prescribed and approved by the commis- sioner. The total number of credit hours shall be accrued at a rate of twenty-four credit hours during each twenty-four month period of licensure. The de- partment shall maintain a current list of approved courses. The commissioner may waive all or a portion of the continuing education requirement for good cause shown.

B. If an applicant is renewing a license within one

year after it expired, the applicant may apply continu- ing education hours completed after the expiration toward the continuing education required for re- newal.

C. Each renewal application shall contain, as ap-

plicable, the same information required in an original application pursuant to section 32-2123.

D. Cemetery brokers and salespersons and mem-

bership camping brokers and salespersons are ex- empt from the educational requirements of this sec- tion.

E. Nothing in this section requires a licensee to

attend department produced or sponsored courses if approved courses are otherwise available.

F. If a renewal applicant is retaining the special-

ization in sales of businesses designation, the appli-

cant is required to complete business brokerage courses for one-half of the credit hours prescribed by the commissioner for license renewal pursuant to this section.

G. Between the expiration date of the license and

family member, the license placed on inactive status, shall have the right to renew the license and shall not be required to pay further fees until the employee or family member is again eligible to use the license. Renewal fees for the license shall not be required for only as long as the employee or family member is prohibited from using the license.

J. The department shall not renew the license of a

person who has been convicted of a felony offense and who is currently incarcerated for the conviction, pa- roled or under community supervision and under the supervision of a parole or community supervision officer or who is on probation as a result of the conviction. This subsection does not limit the commis- sioner’s authority and discretion to deny the renewal for any other reason pursuant to this chapter. 2007

Recent legislative year: Laws 2004, Ch. 100, § 5; Laws 2007,

Ch. 165, §

5.

32-2131. Reinstatement of license

A. The commissioner may reinstate a license that

was issued under this article and that expired or was canceled, terminated, suspended or revoked as fol- lows:

1. For a license that expired pursuant to section

32-2130, subsection G, by renewal application pursu- ant to this article.

2. For a license canceled pursuant to section 32-

2126, subsection A or section 32-2129, subsection B or any other lawful authority:

(a) If within the license period, by reapplication

and payment of applicable fees.

(b) If after expiration of the license, by original or

the date of renewal of the license, the rights of the

licensee under the license expire. While the license is

renewal application, as appropriate, pursuant to this article.

expired it is unlawful for a person to act or attempt or

3.

For a license terminated pursuant to section

offer to act in a manner included in the definition of a

32-2188, subsection I, by:

real estate, cemetery or membership camping broker

(a)

Repayment in full to the real estate recovery

or salesperson. If the license of an employing broker

fund.

expires under this subsection, the licenses of persons

(b)

Original application pursuant to this article.

who are employed by the employing broker shall be

(c)

Providing evidence that the judgment that

severed from the employing broker on the license expiration date of the employing broker. These per-

caused the recovery fund payment has been fully satisfied.

sons may be rehired on renewal of the employing

4.

For a license terminated pursuant to section

broker’s license. The department shall terminate a license that has been expired for more than one year.

32-2130, subsection G, by original application pursu- ant to this article.

H. No more than one year after the license expira-

tion date, the department shall renew a license with- out requiring the applicant to submit to an examina- tion if the applicant held a license that was not canceled or suspended at the time of expiration. The license period for a license renewed pursuant to this subsection commences the day after the expiration date of the expired license. Except as provided in section 32-2131, subsection A, paragraph 4 or 6, an applicant whose license has been terminated or re- voked does not qualify for license renewal. I. Any employee or immediate family member of any employee of this state who, pursuant to section 32-2110 or any other law, rule or requirement, is prohibited from using a license issued under this chapter shall have, on the request of the employee or

5. For a license suspended pursuant to section

32-2153, 32-2154 or 32-2157 or any other lawful

authority:

(a) If suspended for failure on the part of the

licensee to meet procedural or educational require- ments for maintaining the license, and the require- ments have subsequently been fully met, and the suspension has been vacated:

(i) If within the license period, by reapplication and

payment of applicable fees.

(ii) If after expiration of the license, by original or

renewal application, as appropriate, pursuant to this article.

(b) If suspended by order of the commissioner for a

specified length of time, and the suspension period has ended:

21

REAL ESTATE

32-2134

(i) If within the license period, by reapplication and

payment of applicable fees. (ii) If after expiration of the license, by original or

renewal application, as appropriate, pursuant to this article.

6. For a license revoked pursuant to section 32-

2153 or any other lawful authority, by original appli- cation pursuant to this article.

7. For a license suspended or revoked by order of

the commissioner and this order is subsequently vacated as to the licensee, by reapplication only. No

fees may be assessed. The reapplication may be initi- ated by the department on behalf of the licensee.

B. Except for canceled licenses, reinstatement of a

license pursuant to subsection A of this section shall not be made for any licensee who is the subject of a

department investigation into alleged violations of this chapter or of a pending administrative proceed- ing pursuant to article 3 of this chapter.

C. This section shall not be interpreted to lessen or

reduce the qualifications otherwise required of license applicants under this article or the department’s authority to deny a person’s application for license reinstatement who does not otherwise meet all of the requirements.

2007

Recent legislative year: Laws 2002, Ch. 58, § 1; Laws 2007, Ch.

165, §

6.

32-2132. Fees

A. Except as provided in subsection D, the follow-

ing fees shall be charged which shall not be refunded by the commissioner after issuance of a receipt for payment:

1. A broker’s examination application fee of not less

than thirty-five dollars and not more than one hun- dred twenty-five dollars.

2. A broker’s examination fee of not less than

thirty-five dollars and not more than one hundred dollars.

3. A broker’s license fee of not less than seventy-

five dollars and not more than two hundred fifty

dollars.

4. A broker’s renewal fee of not less than one

hundred dollars and not more than four hundred dollars.

5. A salesperson’s examination application fee of

not less than fifteen dollars and not more than seven- ty-five dollars.

6. A salesperson’s examination fee of not less than

fifteen dollars and not more than fifty dollars.

7. A salesperson’s license fee of not less than thirty-

five dollars and not more than one hundred twenty- five dollars.

8. A salesperson’s renewal fee of not less than sixty

dollars and not more than two hundred dollars.

9. A branch office broker’s license fee or renewal fee

of not less than sixty dollars and not more than two hundred dollars.

name and address of

licensee on records of the department of not more

than twenty dollars. 11. A duplicate license fee of five dollars.

10.

A fee

for a change of

12. A fee for reinstatement of license within license

period of five dollars.

13. A fee for each certificate of correctness of copy of

records or documents on file with the department of

one dollar, plus the cost to the department for repro- ducing the records or documents.

14. A temporary broker’s license fee of not less than

fifteen dollars and not more than fifty dollars.

15. A temporary cemetery salesperson’s license fee

of not less than fifteen dollars and not more than fifty dollars.

16. A membership camping salesperson certificate

of convenience fee of not less than fifteen dollars and not more than fifty dollars.

B. No corporation, partnership or limited liability

company shall be assessed a fee for the issuance of a broker’s license.

C. The commissioner may contract for the process-

ing of applications and the examination of applicants for licensure. The contract may provide for specific fees or a reasonable range for fees as determined by the commissioner for examination applications and examinations to be paid directly to the contractor by

the applicant. These fees may not exceed the amounts prescribed in subsection A, paragraphs 1, 2, 5 and 6.

D. For good cause shown the commissioner may

refund fees previously collected. 2007

Recent legislative year: Laws 2007, Ch. 9, § 3; Laws 2007, Ch.

165, §

7.

32-2133. Temporary broker’s license

A. Notwithstanding any other law, the commis-

sioner may issue a temporary license as a broker to a

licensed or unlicensed person for the purpose of wind- ing up the existing or pending business of a licensed broker in the following cases:

1. To the surviving spouse or next of kin or to the

administrator or personal representative or the em-

ployee of the administrator or personal representative of a deceased licensed broker.

2. To the spouse, next of kin, employee, legal guard-

ian or conservator of a licensed broker disabled by sickness, injury or insanity.

B. Each temporary license is for a period of not

over ninety days and shall not be extended for a longer period, except that a license issued to a per- sonal representative or administrator or the employee of the personal representative or administrator pur-

suant to subsection A, paragraph 1 continues until the personal representative or administrator disposes of the deceased broker’s business, but not to exceed a period of fifteen months.

C. No more than one temporary license may be

issued to or with respect to the same individual within any one year period.

D. A temporary licensee has the same license pow-

ers and obligations as under a permanent license. 1997

32-2134. Temporary cemetery salesperson’s li- cense Notwithstanding any other provision of law to the contrary, the commissioner may issue without exam- ination to any person who has applied and otherwise

32-2134.01

PROFESSIONS AND OCCUPATIONS

22

qualifies for a cemetery salesperson’s license, a tem- porary cemetery salesperson’s license good for a pe- riod not to exceed ninety days from the date of issuance. An applicant shall not be entitled to more than one temporary license without examination. An employing cemetery broker shall certify by affidavit to the commissioner that the temporary license appli- cant has been trained in applicable Arizona cemetery and contract law.

32-2134.01. Membership camping salesperson certificate of convenience Notwithstanding any other licensing requirement under this chapter, the commissioner may issue a one time thirty day certificate of convenience without examination to any person who has applied and otherwise qualifies for a membership camping sales- person’s license. An employing membership camping broker shall certify by affidavit to the commissioner that the salesperson applicant will be trained in applicable membership camping and contract laws before participation in any offer or sale. 1993

32-2135. Real estate schools; courses of study; instructors; certification

A. Before offering a course of study towards com-

pletion of the education requirement for real estate licensure or renewal of licensure, a school shall obtain from the commissioner a certificate of approval or

renewal to operate a school for a period of at least four years. A school shall also obtain a certificate of course approval for each course offered for credit that is not currently approved for another school. Each school is responsible for the content of any course it offers and for the professional administration and teaching of the course. Live classroom prelicensure education, live classroom continuing education and distance learning continuing education courses are subject to approval pursuant to this section.

B. Each approved school shall issue a certificate of

real estate course attendance to each person who completes an approved prelicensure or continuing

education course. An applicant for renewal of licensure as provided by section 32-2130 shall file evidence of the certificates issued by the school with the commissioner showing the number of credit hours and course of study required for renewal.

1989

C. The commissioner may withdraw or deny certi-

fication or approval of real estate schools, educational

courses or real estate instructors for any acts incon- sistent with the requirements of this chapter, includ- ing:

1. The commission of or the failure to report a

violation by an approved school or instructor of any provision of this chapter or rules adopted pursuant to this chapter.

2. Improper certification of student attendance or

performance.

3. Any act that is grounds for discipline under

section 32-2153.

4. Teaching information or using course materials

that have not been approved by the commissioner.

5. Failing to attend any continuing education

course required by the commissioner.

6. Filing any false or misleading application, report

or documentation with the department.

D. A real estate school, through any owner, direc-

tor, administrator, instructor or other agent, shall not:

1. Offer a course of study for credit that is not

approved by the department, except that the school may advertise a course as pending approval before its approval.

2. Promote or advertise the school using false or

misleading statistics or testimonials or any other form of deceptive advertisement.

E. The commissioner may determine minimal con-

tent requirements for approving educational courses

and appropriate professional qualifications for ap-

proving instructors to teach individual educational courses.

F. At least thirty days before holding a course of

study for completion of the education requirements leading to licensure of real estate applicants or for license renewal requirements, an application for a certificate of course approval or renewal must be filed

with the department. For a live classroom course, the application shall include a course outline with suffi- cient detail to clearly identify the scope and content of the course. The outline shall state a desired instruc- tional outcome for the course. A prelicensure educa- tion course outline that is submitted for approval shall be divided into estimated fifty minute instruc- tional segments. Course approval shall not be unrea- sonably withheld and shall not be issued later than thirty days after filing with the department for a live classroom course. A continuing education distance learning course approval shall not be issued later than ninety days after filing with the department. If the approvals under this subsection are not granted within the time frames prescribed by this subsection, the course shall be automatically approved on a provisional basis for one hundred eighty days, unless the department has otherwise notified the applicant of specific deficiencies or unfulfilled requirements for the course submission. A provisional approval may be withdrawn by the department upon fifteen days’ ad- vance notice if the department’s review of the course subsequently reveals course deficiencies or unfulfilled course requirements. If not withdrawn, the course approval shall remain approved for the entire course approval period. Course approval shall be for a period of at least four years if the contents of the course remain current and substantially unchanged. The course may not be taught if the content ceases to be current or is substantially changed. The department may establish by rule additional appropriate require- ments for approval of a distance learning course.

G. For a currently approved course:

1. The school shall submit notice to the department

at least fourteen days before holding the course to permit department employees to monitor the course. The notice is not otherwise subject to review and approval by the department.

2. With the permission of the school that received

original approval for the course, another school that desires to offer the course is subject only to the

23

REAL ESTATE

32-2151

fourteen day notice requirement before holding the same course. No additional review and approval by the department is required.

H. The department shall approve for continuing

education credit any course of study proposed by a

real estate school if the course satisfies the commis- sioner’s requirements and is held in this state.

I. The department may approve for continuing ed-

ucation credit any course of study proposed by a real estate school if the course satisfies the commissioner’s

requirements and is held outside this state. Upon the commissioner’s request, the school shall either:

1. Provide the department with a videotape or videotapes of the course. 2. Make arrangements that are approved by the department for monitoring the course.

J. An instructor shall file with the department an

application for instructor approval or renewal. In- structor approval shall be for at least four years from

the date of approval and is subject to amendment

during the license period only if information material to the instructor’s qualifications has changed. A per- son holding instructor approval to teach specific sub- ject matter is not subject to additional or duplicate approval requirements during the original approval period, except that an additional instructor compe- tency area may be added during the license period on submission by the instructor of evidence of compe- tency in such additional competency area.

K. The thirty day and fourteen day course filing

time frames prescribed in this section may be waived by the department for good cause shown.

L. Unless subject to a violation or suspected viola-

tion listed in subsection C of this section, the depart-

ment’s approval of a school, school official, instructor or course shall be processed in a time frame consistent with the time frames set forth in this section.

M. This section does not affect the department’s

ability to withdraw or deny certification or approval of

real estate schools, education courses or real estate instructors for a violation of this chapter. 2007

Recent legislative year: Laws 2002, Ch. 23, § 2; Laws 2007, Ch.

9, §

4.

32-2136. Broker management clinics

A. The department shall determine the instructor

qualifications for teaching broker management clinics

and the course content of broker management clinics

for persons required to attend these clinics pursuant to subsection C of this section.

B. A broker management clinic shall include in-

struction on department audits and on the obligations and responsibilities of designated brokers. A broker management clinic may address record keeping re- quirements, trust fund accounts, advertising and pro- motions, employment agreements, contracts, fidu- ciary duties, material disclosures, department investigations, risk management, employee supervi- sion and broker responsibilities and related topics. A broker management clinic may be designed to address property management activities or sales activities, or both.

C. An applicant for an original real estate broker’s

license shall attend a broker management clinic be- fore activating the license. A broker shall attend a

broker management clinic before becoming a desig- nated broker, unless the broker has attended a broker management clinic during the preceding twenty-three months. All active designated real estate brokers shall attend a broker management clinic once during each twenty-four months of licensure after their ini- tial attendance.

D. Attendance at a broker management clinic con-

stitutes three credit hours of real estate oriented education pursuant to section 32-2130, subsection A.

2007

Recent legislative year: Laws 2000, Ch. 174, § 2; Laws 2001,

Ch. 67, § 3; Laws 2002, Ch. 23, § 2007, Ch. 165, § 8.

3; Laws 2007, Ch. 9, § 5; Laws

ARTICLE 3. REGULATION

32-2151. Disposition of funds; trust money de- posit requirements

A. Unless otherwise provided in writing by all

parties to a transaction, any licensed real estate broker who does not immediately place all funds entrusted to the broker, in the broker’s capacity as a real estate broker, in a neutral escrow depository in

this state shall upon receipt place all such funds in a trust fund account in a federally insured or guaran- teed account in a depository located in this state. The commissioner may adopt such rules as are necessary to provide for records to be maintained and the manner in which such trust fund account deposits may be made.

B. The following minimum requirements apply to

each broker’s trust fund account:

1. The broker shall make deposits to trust fund

accounts by deposit slips. Receipts or other documen-

tation shall identify each transaction, the date and the amount of each deposit and the names of parties involved in the transaction represented by the deposit and monies shall be used only for the purpose for which the monies were deposited.

2. The broker shall retain a complete record of all

monies received in connection with a real estate transaction in the main or branch office of the desig- nated broker in this state or at an off-site storage location in this state if the broker provides prior written notification of the street address of the off-site storage location to the department. A broker’s records shall be kept according to generally accepted account- ing principles and shall include a properly descriptive receipts and disbursement journal and client ledger. The broker shall keep any computerized records in a manner allowing reconstruction in the event of de- struction of electronic data. The broker shall maintain a trust fund account bank reconciliation and client ledger balance on a monthly basis and shall remove any interest earned on a trust fund account at least once every twelve months. A broker shall not permit advance payment of monies belonging to others to be deposited in the broker’s personal account or to be

32-2151.01

PROFESSIONS AND OCCUPATIONS

24

commingled with personal monies. It is not consid- ered commingling if, when establishing a trust fund account, a broker deposits monies not exceeding five

hundred dollars to keep the account open or to avoid charges for an insufficient minimum balance.

C. An agreement to place monies entrusted to the

broker in a depository that is located outside of this