32-2199 / 32-2199.01. Administrative Hearings; Hearing Rights and Procedures +18Arizona · Real Estate · English

An administrative law judge adjudicates complaints regarding condominium (Title 33, Ch. 9) and planned community (Title 33, Ch. 16) documents. Owners or associations may petition the department for hearings on violations, paying a filing fee. The department lacks jurisdiction over owner-vs-owner disputes and design/construction/sale disputes.

• ✓The department has no jurisdiction over disputes among owners where the association is not a party
• ✓The department has no jurisdiction over design, construction, condition, or sale disputes with developers/sellers
• ✓Petitioners must file a written petition and pay a filing fee deposited in the hearing office fund

After receiving a petition and fee, the department mails a copy to the respondent who must respond within 20 days. Failure to answer is deemed admission and results in a default decision. A corporation may be represented by an officer, employee, or contractor if the representation is incidental to their duties.

• ✓Respondent must respond within 20 days after mailing of the petition
• ✓Failure of respondent to answer is deemed an admission, and a default decision issues
• ✓A corporation may be represented by a non-attorney officer/employee/contractor if authorized and incidental to duties

Any person with a recorded ownership interest may apply for a public report, certificate of authority, or special order of exemption. The application must include the development name, list of lots offered, applicant contact information, and applicable Part A/B information. Entity applicants must provide specific formation and ownership documents.

• ✓Applicant must have a recorded ownership interest in the land
• ✓Corporate applicants must provide a current Certificate of Good Standing and identify 10%+ shareholders
• ✓LLC applicants must provide Articles of Organization and operating agreement
• ✓Partnership, trust, and subsidiary applicants have specific disclosure requirements

Applicants must disclose known material facts including flooding/drainage problems (with engineer's letter), subsidence/expansive soils, adjacent nuisance land uses, agricultural activity, geological/environmental hazards, and location within a Superfund or WQARF site.

• ✓Must disclose flooding/drainage with a professional engineer's letter addressing flood plain and 100-year storm
• ✓Must disclose subsidence or expansive soils with an engineer's letter
• ✓Must disclose location within a federal Superfund or state WQARF site
• ✓Must disclose adverse agricultural activity and nuisance land uses

Applicants must disclose utility availability, providers, costs, and completion responsibilities. Water supply disclosures include provider type, compliance status, completion costs, and required water adequacy/availability reports from the Arizona Department of Water Resources.

• ✓Must disclose utility providers, locations, and estimated costs to reach lot lines
• ✓Water adequacy report from ADWR required for subdivisions outside a groundwater active management area
• ✓Water availability report from ADWR required for unsubdivided land, displayed in promotional materials
• ✓Outside an Active Management Area with no water source, an ADRE addendum advising water investigation is required

Each employing broker must maintain a definite place of business or an active valid statutory agent on file with the Corporation Commission, and notify the department. Written notice of change is required; change or abandonment without notice automatically cancels the employing broker's license and severs employed salespersons/associate brokers.

• ✓Each employing broker must maintain a definite place of business or valid statutory agent and notify the department
• ✓Notice of a change of location or statutory agent must be given to the commissioner in writing
• ✓Change/abandonment without notice automatically cancels the employing broker's license and severs employees' licenses

Each designated broker (and employing broker if applicable) must affix a clearly visible sign at the entrance showing the broker's name, business name if different, and wording establishing they are a real estate, cemetery, or membership camping broker. On removal from a location the sign must be removed, and only the licensed name may be displayed.

• ✓Sign must be clearly visible at entrance with broker name and wording establishing broker type
• ✓On removal from a location the broker must remove the sign
• ✓Broker may not display any name other than the name under which the broker is licensed

Subdividers with certain violation histories may be required to post a surety bond (or certificate of deposit) before selling unimproved lots.

• ✓A bond may be required if the subdivider was found in violation of state/other-state subdivision laws or the Interstate Land Sales Full Disclosure Act
• ✓A bond may be required upon a final court or administrative finding of fraud or misrepresentation in the sale of subdivided lands
• ✓In lieu of a bond, a subdivider may post a certificate of deposit with the commissioner

A subdivider may be required to post a surety bond if found in violation of subdivision laws, the interstate land sales full disclosure act, or found guilty of fraud/misrepresentation by a court or administrative agency. The bond is in favor of the state, subject to claims by injured persons; one bond per subdivision. It continues until two years after all sales complete.

• ✓Surety bond may be required after violation or fraud finding
• ✓Bond is in favor of the state, subject to claims by injured persons
• ✓One bond required per subdivision or common plan
• ✓Bond continues until 2 years after all sales completed; a certificate of deposit may substitute

The bond runs in favor of the state to protect purchasers, continues after sales, and cancellation triggers suspension unless replaced.

• ✓Bond is in favor of the state, subject to claims by persons injured by subdivider fraud/misrepresentation; one bond per subdivision or common plan
• ✓Bond continues until two years after all sales are completed; no suit may be maintained after two years following sale/lease to the plaintiff
• ✓On cancellation notice, subdivider must furnish a like bond within 30 days or the right to sell/lease is suspended by operation of law

The commissioner may require a real estate or cemetery licensee/applicant to post a surety bond if they were found in violation of the chapter, convicted of a felony or misdemeanor involving real estate or fraud, or had an administrative order entered against them by a real estate or securities regulatory agency.

• ✓Bond may be required for a prior violation of the chapter or rules
• ✓Bond may be required for conviction of fraud or real estate related crimes
• ✓Bond may be required if an administrative order was entered by a regulatory agency

The bond must be in a form acceptable to the commissioner, in favor of the state, and subject to claims for actual damages including reasonable attorney fees. The principal amount cannot exceed $100,000 and duration cannot exceed five years. On cancellation notice, the licensee must furnish a like bond within 30 days or the license is suspended.

• ✓Bond principal amount cannot exceed $100,000
• ✓Bond duration cannot exceed five years
• ✓A replacement bond must be furnished within 30 days of cancellation notice or license is suspended
• ✓A certificate of deposit may be posted in lieu of a bond

After securing commissioner approval, it is unlawful to materially change the plan without first notifying the commissioner in writing. The commissioner may suspend approval pending amendment for purchaser protection.

• ✓Material changes to an approved plan require prior written notice to the commissioner
• ✓The commissioner may suspend approval pending amendment of the public report if necessary for purchaser protection

An owner/agent violating unsubdivided land provisions may be assessed civil penalties after a hearing. Penalty proceedings have specific limitation periods based on discovery.

• ✓Civil penalty is not more than $1,000 per infraction; an infraction concerning multiple lots is a single infraction
• ✓Penalty/suspension/revocation proceedings must commence within five years of actual discovery or when reasonably diligent discovery should have occurred

The commissioner retains jurisdiction over persons even when other agencies have similar jurisdiction. Each purchaser must receive a recordable copy of every contract at closing.

• ✓The commissioner is not denied jurisdiction because another agency has similar jurisdiction
• ✓Each purchaser must be provided a recordable-form copy of each contract at closing

Cease and desist orders, injunctions, prohibition orders, or suspensions must be recorded in the county deed records with legal descriptions, and affected parties must be notified. Revocations require recording an order of release.

• ✓Enforcement actions must be recorded in the county recorder's book of deeds and include the legal description of affected land
• ✓Affected parties with ownership interest must be notified within ten business days of the order or suspension
• ✓An order of release must be recorded within ten business days of revocation

On the commissioner's own motion or upon complaint with satisfactory evidence of a violation, unlawful practice, or deviation from the public report, the commissioner may investigate and examine the books and records of the owner, agent, or developer.

• ✓The owner, agent, or developer must keep and maintain records of all sales transactions and monies received
• ✓Records must be made accessible upon reasonable notice and demand
• ✓Grounds include violations, unlawful practices under 44-1522, deviation from the public report, or bankruptcy/fraud/felony history of controlling persons

After a hearing, the commissioner may issue orders to protect the public interest or bring court action to enjoin violations. Courts may appoint a receiver and issue orders to restore money or property acquired through unlawful practices.

• ✓Commissioner may issue orders or bring an injunction action in a court of competent jurisdiction
• ✓Courts may appoint a receiver and order restoration of money/property acquired unlawfully
• ✓For out-of-state timeshare investigations (or in-state with protective orders), the developer must reimburse the department for travel and subsistence expenses

Any person with a recorded ownership interest may apply for a public report, certificate of authority, or special order of exemption. The application must include the development/cemetery name and marketing name, the list of lots and sales offering, and applicant contact information.

• ✓Applicant must have a recorded ownership interest (deed, option, beneficial trust interest, or other approved recorded interest)
• ✓Application must include the recorded development name, any marketing name, the list of lots offered, and applicant contact information

Applications must include entity documentation: corporations need a Certificate of Good Standing, formation documents, and owners holding over 10%; partnerships need agreements and partner info; LLCs need Articles/operating agreements and members over 10%; trusts need trustee/beneficiary info; subsidiaries need parent corporation contact.

• ✓Corporations must provide a current Certificate of Good Standing and identify owners of more than 10% interest
• ✓LLCs must provide current Articles of Organization, operating agreement, and members/managers plus anyone holding more than 10%
• ✓Trusts must disclose each trustee, beneficiary, and anyone in control of the trust

The applicant must submit a legible paper (no larger than 11x17) or digital copy of the recorded development map showing recording information, approvals, dedications, monuments/bearings, and surveyor certification, plus the location and most direct route to the development.

• ✓Map must show county recorder's recording info, county/city approval, dedications, monuments/distances/bearings, and surveyor certification
• ✓Applicant must identify location (street, city, county, state), distance/direction from nearest town, and the most direct route

Information and documents in open audits and investigations remain confidential and cannot be disclosed except to authorized parties unless the Commissioner authorizes disclosure in the public interest. Closed files may be disclosed under certain conditions.

• ✓Officers and employees shall not disclose confidential info/documents except to the Attorney General, AG's representative, or authorized Department employees unless the Commissioner authorizes disclosure as in the public interest
• ✓Upon request, the Department shall disclose the existence of and make available audit/investigative files closed within five years of the request, subject to redaction and the Department's retention schedule

'Health, safety or welfare' means protecting the public against harm, fraud or loss, but does NOT include protecting existing businesses from competition. 'Occupational regulation' means rules allowing/preventing use of an occupational title or work, but excludes business licenses, federally required licenses, and council-approved rules, among others.

• ✓Health/safety/welfare does not include protecting businesses from competition
• ✓Occupational regulation excludes business/facility licenses, building permits and zoning
• ✓Occupational regulation excludes federally required licenses and securities dealer licensing
• ✓'Individual' means a natural person

Any party has the right to attendance of witnesses in person or by deposition by requesting the commissioner subpoena them. Witnesses receive the same fees and mileage as in civil cases, paid by the requesting party; fees for witnesses subpoenaed by the commissioner independently are paid as department expenses.

• ✓Parties may request subpoenas for witnesses in person or by deposition
• ✓Witness fees paid by the requesting party unless subpoenaed by commissioner independently

The provisions of this article are in addition to all other causes of action, remedies, and penalties available to the state or the purchaser.

• ✓Article remedies are in addition to other available remedies
• ✓Applies to both the state and the purchaser

All timeshare plans must maintain a one-to-one purchaser-to-accommodation ratio so eligible purchasers never exceed available accommodations during any calendar year. Delinquent purchasers still count as eligible.

• ✓Total purchasers eligible to use accommodations in a calendar year must never exceed total accommodations available
• ✓A purchaser delinquent in assessments continues to be considered eligible for ratio calculations
• ✓Plans may be created in any accommodation unless prohibited by law or zoning

Any person selling, offering, or soliciting purchasers, or creating a plan with an in-state accommodation, must register a notice of intent and application. The application requires extensive documents including plan statements, legal descriptions, title reports, and management provisions.

• ✓Must register a notice of intent to sell and application for a public report with the department
• ✓Application must disclose principals with 10%+ financial or beneficial interest
• ✓Application must include preliminary title report, recorded declaration, management agreement, and exchange program materials

The commissioner may authorize pre-sales before public report issuance if the application is administratively complete. Developers must escrow all monies, provide the proposed report, and give purchasers cancellation rights.

• ✓Pre-sales require an administratively complete application with fees and exhibits
• ✓All monies received must be placed in an independent escrow account until the public report is granted
• ✓Each purchaser must receive the proposed public report and cancellation rights per section 32-2197.03

An agency must limit all occupational regulations to those demonstrated to be necessary to specifically fulfill a public health, safety, or welfare concern.

• ✓Agencies must limit all occupational regulations to those demonstrated to be necessary to specifically fulfill a public health, safety, or welfare concern
• ✓This standard forms the basis for petitions and court challenges to occupational regulations

A person with a criminal record may petition an agency at any time for a determination of whether their criminal record disqualifies them from a license, permit, certificate, or other recognition.

• ✓A person may petition before obtaining required education/experience, taking an exam, or paying any fee, including their criminal history record and current circumstances
• ✓An agency may disqualify only if it concludes the state has an important public-safety interest superior to the person's right AND either a recent (within 3 years) disqualifying conviction exists or an at-any-time serious/dangerous offense conviction exists
• ✓The agency must issue a written determination within 90 days, including findings of fact and conclusions of law; it may not consider nonconviction information, sealed/expunged/pardoned convictions, juvenile adjudications, or nonviolent misdemeanors

Article 11 defines health/safety/welfare, individual, and occupational regulation, establishing the framework for limiting occupational licensing.

• ✓'Health, safety or welfare' means protecting the public against harm, fraud, or loss — it does NOT include protecting existing businesses or agencies against competition
• ✓'Occupational regulation' means a rule/practice/policy allowing use of an occupational title or work in a lawful occupation, or a cease-and-desist demand preventing it; it excludes business/facility licenses, building permits, zoning, federally required licenses, and council-approved rules

An individual harmed by an occupational regulation may petition an agency to repeal or modify it, and may also file a court action to challenge it.

• ✓Within 90 days after a petition is filed, the agency must repeal, modify, recommend legislative action, or state why the regulation complies with section 41-1093.01
• ✓In a court challenge, the plaintiff must show by a preponderance that the regulation burdens entry/participation, and the state must prove by a preponderance the regulation is necessary for public health/safety/welfare
• ✓If the court finds for the plaintiff, it must enjoin enforcement and award reasonable attorney fees and costs to the plaintiff

Agencies must post and print a required notice informing applicants of their rights to petition or challenge occupational regulations.

• ✓The prescribed notice must be posted on the agency's website and printed on license applications, denial communications, and cease-and-desist orders
• ✓The notice must inform persons of their right under sections 41-1093.02 and 41-1093.03 to petition the agency or bring a court action to challenge the occupational regulation

An agency may not deny an otherwise qualified applicant a regular or provisional occupational license solely for a drug offense conviction under title 13, chapter 34 or 34.1.

• ✓An agency may not deny an otherwise qualified applicant either the regular occupational license applied for or a provisional occupational license based on a title 13 chapter 34/34.1 drug offense
• ✓This section does not apply to the state board of education (certification), health profession regulatory boards, the department of health services for title 36 chapter 28.1, or law enforcement agencies and POST

Occupational/professional and health profession regulatory boards may not deny, suspend, or revoke a license for a prior criminal offense unless the offense is substantially related to the occupation or would pose a reasonable threat to public health and safety.

• ✓A board may deny/suspend/revoke for a prior offense only if the offense is substantially related to the occupation OR approval would pose a reasonable threat to public health and safety
• ✓An applicant/licensee may petition the office of administrative hearings for review; the petition may not exceed five double-spaced pages, review hearings are confidential and informal, and Article 10 does not apply
• ✓'Substantially related' means having a direct bearing on the ability to perform occupation duties; 'reasonable threat' means criminal conduct involving harm to another with direct bearing on ability to safely serve the public

Article 11 does not require private employers to grant or deny employment or impair their right to set eligibility criteria, ethics codes, or disciplinary policies.

• ✓The article does not require a private employer to grant or deny employment to any individual
• ✓The article does not impair the right of private employers to establish and enforce eligibility criteria, ethics codes, or disciplinary policies

A party must specifically admit, deny, or state inability to admit or deny each allegation. Failure to respond or appear can result in a default, which the Commissioner may vacate for good cause. Responses must be signed and verified.

• ✓A statement of lack of information has the effect of a denial; any allegation not denied is deemed a violation of A.R.S. § 32-2153(B)(10)
• ✓If a party fails to respond or appear, the Department may file an Affidavit of Default and take action based on the charges, even before the hearing date
• ✓A party may file a motion to vacate default within 15 days after receiving the default; the Commissioner may vacate for good cause and reschedule
• ✓Every response must be signed by the filing party or at least one attorney and must be verified

An agency or political subdivision may not issue a license to an individual unless the individual provides documentation showing lawful presence in the United States.

• ✓Acceptable documents include an Arizona driver license issued after 1996, a driver license from a state verifying lawful presence, a US or foreign passport (with US visa), birth certificate, naturalization/citizenship certificates, and tribal documents
• ✓If a listed document (paragraphs 1-12) lacks a photograph, the individual must also present a government-issued photo document
• ✓Once citizenship or nonexpiring federal work authorization is affirmatively established, no subsequent documentation is required on renewal/reinstatement; but expired limited work authorization requires updated documentation

The documentation requirement does not apply to certain foreign residents or out-of-state licensees meeting specific conditions.

• ✓Does not apply if the individual is a foreign citizen/resident and the license benefits do not require US presence
• ✓Does not apply if the individual is a resident of another state, holds an equivalent same-type license there, and seeks the AZ license to comply with licensing laws, not to establish residency
• ✓'License' means any permit, certificate, approval, registration, charter, or similar authorization required by law for operating a business or providing a service

Agencies must waive initial license fees for certain qualifying applicants applying for that specific license in Arizona for the first time.

• ✓Fee must be waived for applicants whose family income does not exceed 200% of the federal poverty guidelines, active duty military members' spouses, and honorably discharged veterans discharged not more than two years before application
• ✓The waiver excludes individuals applying under title 36, chapter 4, article 10 or chapter 28.1
• ✓The department of administration must report the total number of waived fees by each agency to legislative leadership by March 1 each year

A broker with more than one place of business must procure an additional license for each branch office. Branch office licenses are issued in the same name as the principal office, must be posted, and signs must conform to principal office provisions with the designation 'branch office'. Each branch must be managed by a broker or licensed salesman.

• ✓A separate license is required for each branch office
• ✓Each branch office must be under management of a broker or licensed salesman

If a designated broker is unable to act within 24 hours, they may designate in writing an employed licensee or another designated broker to act on their behalf. The designation may not exceed thirty days, the original must be kept for one year, and a salesperson designee may not hire or sever licensees.

• ✓Temporary absence designation must not exceed 30 days duration
• ✓A salesperson designee may not be authorized to hire or sever licensees

Public reports issued after Dec 31, 2004 (training routes) or Dec 31, 2008 (electronics ranges) for affected property must state the property location, that maps are maintained and available to the public, and that maps are posted on the department's website. For lot reservations/conditional sales before a public report, disclosures must be in the reservation/conditional sales document.

• ✓Public reports must disclose military training route or electronics range location
• ✓Disclosure must state maps are available and posted on department website
• ✓Disclosures required in reservation/conditional sales documents before public report issued
• ✓Compliant subdivider is not liable for military disclosure acts/omissions

Public reports issued after Dec 31, 2006 for property under restricted air space must state the location, that restricted air space maps are maintained and available to the public, and that the map is posted on the department's website. A disclaimer of subdivider control over airspace and flights is permitted.

• ✓Public reports after Dec 31, 2006 must disclose restricted air space location
• ✓Disclosure must state maps are available and posted on department website
• ✓Disclosure required in reservation/conditional sales documents before public report

The administrative law judge may order parties to comply and levy civil penalties per violation, deposited in the hearing office fund. If the petitioner prevails, the respondent must pay the filing fee. Orders are binding unless a rehearing is granted, are enforceable through contempt, and subject to judicial review.

• ✓ALJ may order compliance and levy a civil penalty per violation
• ✓Prevailing petitioner is awarded the filing fee from respondent
• ✓Orders are enforceable through contempt of court and subject to judicial review under 41-1092.08

An aggrieved person may petition the commissioner for a rehearing. Notice is served within 10 days. Filing temporarily suspends the ALJ's action; if granted, the action is suspended pending rehearing decision. The commissioner's order must state grounds for granting/denying.

• ✓Filing a petition for rehearing temporarily suspends the ALJ's action
• ✓The commissioner must serve notice of the rehearing request within 10 days