32-2197.06 through 32-2197.08 Declaration, Examination & Public Report +17Arizona · Real Estate · English

The public report must be furnished to each prospective customer (electronic or hard copy) with a receipt taken. It must include owner info, interest type, accommodations, budgets, title defects, the ten-day cancellation statement, and exchange program details.

• ✓Report must be furnished to each prospective customer with a receipt for each copy
• ✓Report must include the ten-calendar-day cancellation statement and cancellation mailing address
• ✓Report must disclose liens, defects, encumbrances, bankruptcies, pending suits, and financial arrangements for improvements

The commissioner examines and may physically inspect timeshare plans. The filing fee is $20 per interest with a maximum of $1,000. Developers bear travel and subsistence examination costs.

• ✓Initial filing fee is $20 per interest with a maximum of $1,000
• ✓The commissioner may physically inspect any timeshare plan offered or located in the state
• ✓Developers bear total travel and subsistence examination costs based on actual cost

In active management areas, the commissioner must deny a report unless the developer has a certificate of assured water supply. Outside active management areas, adequate water supply requirements apply if the county/city has adopted them.

• ✓In active management areas, denial is required unless a certificate of assured water supply or written commitment of water service is obtained
• ✓Outside active management areas, adequate water supply must be reported, committed, or exempted where local ordinances require it
• ✓Denial may also occur if the timeshare property is incompatible with the neighborhood and detrimental to property values

The declaration must include applicable general provisions such as association organization, assessment procedures, membership termination for nonpayment, use scheduling, liability insurance, and amendment procedures.

• ✓Must include procedures for calculating and collecting regular and special assessments
• ✓Must include procedures for terminating membership and selling the interest for failure to pay assessments
• ✓Must include comprehensive general liability insurance provisions for death, bodily injury, and property damage

The commissioner may authorize a developer of a plan with all accommodations outside Arizona to use a current public report or equivalent registration document issued by another jurisdiction, without exempting other requirements.

• ✓Authorization applies only where all accommodations are located outside this state
• ✓A current public report or equivalent from another jurisdiction may be authorized
• ✓This authorization does not exempt the developer from other applicable article requirements

Applicants (and any officer, director, member, 10%+ owner, or controlling person of an entity) must submit a signed questionnaire disclosing convictions, adverse judgments involving fraud/dishonesty, license restrictions/suspensions/revocations, and injunctions. Affirmative disclosures require detailed written statements and certified records.

• ✓Applicants must disclose convictions, deferred judgments, adverse fraud/dishonesty judgments, license discipline, and injunctions
• ✓Disclosures require a signed written statement and certified court/agency records
• ✓Entity applicants must have 10%+ owners and controlling persons make the same disclosures

Licensees must notify the commissioner in writing within 10 days of changes to disclosure information (convictions, judgments, discipline, injunctions). Licensees must respond within 14 calendar days to commissioner requests for documents in complaint investigations, whether or not named in the complaint.

• ✓Notify the commissioner within 10 days of changes to disclosure information
• ✓Respond within 14 calendar days to complaint investigation document requests, even if not named

Applicants must submit a valid fingerprint clearance card, the license application and fee, and (for individuals) a social security number. Salesperson/broker applicants must show experience/education qualifications, and disclosure of prior discipline requires a certified license history from each state for the prior five years.

• ✓A valid fingerprint clearance card is required under A.R.S. 32-2108.01
• ✓Discipline disclosures require certified license history from each state within the prior five years

The department will not issue a broker's license to someone holding an active salesperson's license. Licenses bear the legal name plus approved nickname/dba/corporate name. Professional corporations/PLLCs cannot adopt dba names. Licensees must file both business and residence addresses.

• ✓The department will not issue a broker's license to a person holding an active salesperson's license
• ✓Every salesperson and broker must file both a business/statutory agent address and a current residence address
• ✓Professional corporations and PLLCs shall not adopt a dba name

Purchase/lease contracts must conspicuously disclose key rights, and residential contracts cannot waive liability for prior material representations.

• ✓Contracts must clearly disclose the nature of the document, the buyer's right to a copy of the public report, and (for unimproved lots) the right to rescind
• ✓A contract/lease failing to make required disclosures is unenforceable against the purchaser
• ✓For residential lots, any provision attempting to waive or disclaim liability for prior material representations relied upon is void

Subdivided land generally cannot be sold without permanent access, and lack of access makes the sale rescindable.

• ✓No subdivided land may be sold without provision for permanent access traversable by conventional motor vehicle unless waived by the commissioner
• ✓A sale without permanent access is rescindable; the action must be brought within three years of execution of the sales contract

The commissioner retains jurisdiction regardless of other agencies, fees deposit to the general fund, and buyers must receive recordable contract copies.

• ✓The commissioner's jurisdiction is not denied because another agency has similar jurisdiction over the person
• ✓All fees and earned expense collected are deposited in the state general fund unless otherwise prescribed
• ✓Each purchaser under a contract (as defined in 33-741) must be provided a recordable copy of the contract upon execution

A developer must deposit 100% of monies received during the rescission period in a federally insured escrow or trust account. For incomplete construction, monies remain escrowed until evidence of completion, with specified release conditions.

• ✓100% of monies received during the rescission period must be deposited in a federally insured escrow or trust account
• ✓Monies may only be disbursed to the developer after the rescission period expires and per the purchase agreement
• ✓For incomplete construction, monies remain escrowed until acceptable evidence of completion such as a certificate of occupancy

A developer must immediately report material changes in the timeshare plan or marketing program. The commissioner may suspend approval or require a supplement to the public report pending amendment.

• ✓A developer must immediately report any material change in the plan or marketing program
• ✓The commissioner may require a supplement disclosing the change be delivered with the previous report until a new report issues
• ✓Amended reports need not be delivered to prior purchasers unless disclosure was found inadequate

In lieu of escrow, the commissioner may accept a surety bond, letter of credit, or other assurance in an amount at least equal to escrowed monies or completion cost. Disputed monies must remain in escrow until resolved.

• ✓Acceptable financial assurance must equal or exceed the monies that would be escrowed or the cost to complete
• ✓Disputed monies must remain in escrow until a signed written direction by all parties or deposit with the court after a civil action is filed

A real estate broker must disclose to all parties in a transaction, in writing at least three calendar days before closing, the name of each employing broker who represents a party to the transaction and who will receive compensation from the transaction.

• ✓Compensation sharing disclosure must be in writing at least three calendar days before closing
• ✓Disclosure must name each employing broker who represents a party and will receive compensation

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

• ✓Boards cannot deny/suspend/revoke for a prior offense unless it is substantially related to the occupation
• ✓Alternatively, action allowed if approving would pose a reasonable threat to public health and safety
• ✓'Substantially related' means having a direct bearing on the ability to perform occupational duties
• ✓'Reasonable threat' involves an act or threat of harm bearing on ability to safely serve the public

An applicant, licensee, registrant or certificate holder may petition the office of administrative hearings to review a denial, suspension or revocation for a prior offense. The petition is limited to five double-spaced pages, hearings are confidential and informal, and article 10 does not apply.

• ✓Petition to OAH may not exceed five double-spaced pages
• ✓Review hearings are confidential and conducted informally
• ✓OAH questions are limited to matters specified in the petition
• ✓Boards must post notice of the right to petition OAH on their website and on denials

A developer must notify the Department of all material changes and must amend the public report if a material change adversely impacts a potential purchaser or lessee. Amendments require payment of the amendment fee, development identification, a list of changes, and a purchase contract addendum acknowledging the sale is conditioned on issuance of the amended report.

• ✓Developer must notify the Department of all material changes
• ✓Must amend the public report if a material change adversely impacts a purchaser/lessee
• ✓Amendment requires the applicable fee and a list of changes
• ✓Purchase contract addendum must acknowledge the sale is conditioned on the amended report

A developer may apply to extend an improvement completion date with an affidavit showing purchasers, owners, and officials were notified. The Department may deny extensions beyond the first if a purchaser or official opposes, and may suspend sales or accept a written agreement to suspend sales pending amendment.

• ✓Extension application requires an affidavit of written notice to purchasers, owners, and officials
• ✓Department may deny a second extension if a purchaser, owner, or official opposes
• ✓Department may suspend approval to sell pending amendment if needed to protect purchasers
• ✓Sales may continue if purchaser gets a copy of the current report and disclosure of all changes

A person who knowingly authorizes/directs false statements or publishes false advertising about land, a subdivision, or membership camping contract, or knowingly violates a commissioner order, is guilty of a class 6 felony and, if licensed, tried for suspension/revocation. 'Knowingly' includes knowing or should have known of the falsity.

• ✓Knowingly publishing false land/subdivision statements is a class 6 felony
• ✓'Knowingly' includes situations where the person knew or should have known of falsity

Advertising and sales literature (including oral statements) must not contain untrue material statements, material omissions, or misleading presentations of proposed improvements or nonexistent scenes. Material must be filed with the commissioner within 10 days of request and be consistent with the notice of intention.

• ✓No untrue statements or material omissions in advertising
• ✓Proposed improvements and nonexistent scenes must be clearly labeled
• ✓Advertising material must be filed within 10 days of a commissioner request
• ✓Newspaper/radio/TV publishers without knowledge of intent are exempt

Cemeteries must keep records of all documents in plot transactions, including sales contracts, payment ledgers, certificates of burial rights, receipt/disbursement books, and plat records. Records must be open for inspection and kept for five years after full payment at the main office or a noticed off-site location.

• ✓Records must include sales contracts, ledgers, and certificates of burial rights
• ✓Records must be open at all reasonable times for commissioner inspection
• ✓Records must be kept for five years after full payment of the transaction
• ✓Off-site storage requires prior written notice of the street address

A developer may obtain a special order of exemption to offer subdivision or unsubdivided lots for sale before public report issuance by submitting a petition, completed application, purchase contract with disclosures and Conditional Sales Addendum, title report, maps, water documentation, and other requested items. The exemption expires upon issuance/denial of the public report or a suspension/cease-and-desist order.

• ✓Requires a completed Petition for Conditional Sales Exemption, the completed application, and a purchase contract with a Conditional Sales Addendum
• ✓Requires water documentation (Certificate of Assured Water Supply in an AMA, or water adequacy report outside an AMA)
• ✓The exemption expires upon issuance or denial of the public report or issuance of a suspension/cease-and-desist order

A developer must notify the Department of all material changes and must amend the public report if a material change adversely impacts a purchaser/lessee. Completion date extensions require an affidavit and purchaser/official notice; the Department may deny extensions beyond the first if opposed. Amendments require fees, listed changes, sales status, and a purchase contract addendum.

• ✓Developer must notify the Department of all material changes and must amend the public report if a change adversely impacts a purchaser/lessee
• ✓Completion date extensions require a developer affidavit that purchasers, owners, and officials received written notice; the Department may deny extensions beyond the first if opposed
• ✓Amendment submissions must include the amendment fee, development name/number, developer signature, list of changes, sales status, and a signed purchase contract addendum

To protect purchasers, the Department may suspend approval to sell/lease pending amendment or accept the developer's written agreement to suspend sales. If suspension is unnecessary, sales may continue if purchasers receive the current report and disclosure of changes, conditioned on delivery of the amended report. Denials trigger written notice of the statutory basis and the right to a fair hearing.

• ✓The Department may suspend approval to sell/lease pending amendment or accept a written agreement to suspend sales in lieu of a formal order
• ✓If suspension is unnecessary, sales may continue only if purchasers receive the current report and disclosure of all changes before signing
• ✓A denied amendment application entitles the developer to written notice of the statutory basis and a fair hearing

Except as provided in A.R.S. § 32-2181.02, a developer who is a successor in interest to six or more lots within a subdivision that previously had a Department-issued public report must file with the Department.

• ✓A successor in interest to six or more lots in a subdivision with a prior public report must file with the Department
• ✓Exceptions apply under A.R.S. § 32-2181.02

Article 10 applies to all contested cases and appealable agency actions except for enumerated agencies and specific tax/board exemptions.

• ✓The article applies to all contested cases (section 41-1001) and appealable agency actions except enumerated agencies (e.g., corrections, industrial commission, corporation commission, board of regents, state personnel board, department of transportation, department of revenue on income/withholding tax)
• ✓Unless waived by all parties, an ALJ must conduct all hearings under the article using the procedural rules in the article and the Director's rules
• ✓The article applies notwithstanding any other administrative or judicial review process established in statute or rule, subject to its own exceptions

Sections 32-2198 through 32-2198.05 prohibit unlawful offer or sale of membership camping contracts, require an application for a membership camping public report, govern issuance of the report, prohibit certain representations, require examination, and provide contract cancellation rights.

• ✓A public report must be issued before selling membership camping contracts
• ✓Purchasers have statutory contract cancellation rights (32-2198.05)
• ✓False representations in offering membership camping contracts are prohibited

Sections 32-2198.10 and 32-2198.11 govern advertising plans, disclosures, lotteries and drawings, and purchaser's remedies for violations.

• ✓Membership camping advertising and lotteries/drawings are regulated
• ✓Purchasers have specific remedies for violations (32-2198.11)
• ✓Denial, suspension, or revocation of a public report is governed by 32-2198.08

If the commissioner issues a cease and desist order, obtains an injunction, issues an order of prohibition, or suspends approval of a timeshare plan, the action must be recorded in the county recorder's book of deeds in any county where the property is located; releases are recorded the same way.

• ✓Cease and desist orders, injunctions, prohibition orders, and suspensions must be recorded in the book of deeds where the property is located
• ✓An order of release upon revocation must be recorded in the same manner

The fund is established in the department, administered by the commissioner, with monies continuously appropriated and invested by the state treasurer. Monies reimburse the office of administrative hearings for conducting hearings and may offset department costs of administering cases.

• ✓Monies in the fund are continuously appropriated
• ✓Fund reimburses actual costs of the office of administrative hearings
• ✓Remaining monies may offset department's costs of administering cases

Clerical mistakes and errors from oversight or omission in opinions, orders, rulings, or the record may be corrected by the ALJ or Commissioner, either on their own initiative or by party motion.

• ✓Clerical mistakes may be corrected by the ALJ before transmission of the hearing file to the Commissioner, or by the Commissioner after transmission
• ✓Correction may occur on the initiative of the ALJ/Commissioner or upon motion of any party

The commissioner maintains a real estate recovery fund for persons aggrieved by a licensed broker/salesperson who violated the chapter. The fund pays only actual and direct out-of-pocket losses (including reasonable attorney fees and costs). Liability cannot exceed $30,000 per transaction and $90,000 per licensee.

• ✓Fund liability limited to $30,000 per transaction regardless of number aggrieved
• ✓Fund liability limited to $90,000 per licensee
• ✓Fund pays only actual and direct out-of-pocket losses, not speculation
• ✓Fund liable only against the license of a natural person, not entities

The fund is not liable for losses from speculation/lost profits, out-of-state property, loans/notes/securities, judgments against non-principal bonding companies, tenant conduct, vandalism, natural causes, punitive damages, postjudgment interest, or undocumented transactions. A licensee acting as principal/agent (including entities where the licensee holds 10%+) has no claim.

• ✓No fund liability for speculation, out-of-state property, or securities
• ✓No fund liability for punitive damages, postjudgment interest, or undocumented losses
• ✓A licensee acting as principal/agent has no claim against the fund
• ✓Entities where licensee holds 10%+ interest cannot claim

The fund compensates persons aggrieved by a licensed broker's or salesperson's violations, paying only actual and direct out-of-pocket losses arising from a real estate/cemetery transaction.

• ✓The fund benefits persons aggrieved by a licensed real estate/cemetery broker or salesperson who violated the chapter or rules
• ✓The fund pays only actual and direct out-of-pocket loss (including reasonable attorney fees and court costs) from the transaction
• ✓The licensee must have performed acts requiring a license OR engaged in fraud/misrepresentation as a principal where the aggrieved relied on their licensed status

The fund has per-transaction and per-licensee caps and terminates liability once maximum payments are ordered.

• ✓Fund liability shall not exceed $30,000 per transaction regardless of number of persons, licensees, or parcels
• ✓Fund liability shall not exceed $90,000 per licensee
• ✓Liability terminates upon issuance of orders authorizing payments reaching the aggregate maximum

Licensees acting as principals/agents have no claim, and the fund excludes numerous loss types and pays only against natural persons.

• ✓A licensee acting as principal or agent (or affiliated entities with 10%+ interest) has no claim against the fund
• ✓The fund pays only against the license of a natural person, not a corporation, partnership, or fictitious entity
• ✓The fund is not liable for speculation/lost profits, out-of-state property, securities losses, tenant conduct, vandalism, natural causes, punitive damages, postjudgment interest, or undocumented losses

The article defines what qualifies as a judgment for recovery fund purposes.

• ✓'Judgment' includes a final judgment in a court of competent jurisdiction
• ✓It also includes a criminal restitution order (section 13-603 or 18 USC 3663) and a confirmed arbitration award reduced to judgment under section 12-133
• ✓'Judgment debtor' means any defendant under the article who is the subject of a judgment

No person may sell/lease/offer timeshare interests without first obtaining a public report or pre-sales authorization. Sales of 12+ interests before issuance render the sale rescindable by the purchaser.

• ✓A public report or pre-sales authorization must be obtained before selling or leasing timeshare interests
• ✓Sale of twelve or more interests before issuance renders the sale rescindable by the purchaser
• ✓A rescission action must be brought within three years of execution of the agreement

Before public report approval, a deposit may be accepted for a timeshare reservation if requirements are met, including notice to the department, deposit not exceeding 20% of price, and delivery to independent third-party escrow within one business day.

• ✓The reservation deposit for a single interest cannot exceed twenty percent of the purchase price
• ✓The deposit must be delivered to an independent third-party escrow/trust account within one business day
• ✓The reservation form must contain a conspicuous statement that the property has not been inspected/approved and no offer may be accepted before a public report or pre-sale authorization

A prospective buyer may cancel a reservation any time before executing a purchase agreement. Refunds of all deposits plus interest (minus agreed fees) must be made within five business days of termination.

• ✓A buyer may cancel a reservation at any time before executing a purchase agreement
• ✓All reservation deposits plus interest (minus agreed fees) must be refunded within five business days of termination
• ✓If the department denies the report, the seller must notify buyers within five business days and return deposits

An 'active license' states the employing broker's name and location. A 'current license' is active or eligible to be active within the two-year license period or the one-year grace period while expired. An 'eligible license' means a licensee not engaged by a broker and prohibited from active-license activities. 'Inactive license' means prohibited from active-license activities.

• ✓Active license states employing broker name and employment location
• ✓Current license is within two-year period or one-year grace period while expired
• ✓Eligible license holder is not engaged by a broker and cannot perform active activities
• ✓Inactive license holder is prohibited from activities requiring an active license

A 'credit hour' is 50 minutes of instruction where content is at least 80% of the approved course category. A 'module' is 0.25 to 1 credit hour (12.5-50 minutes). A 'distance learning course' is computer-based interactive instruction requiring specified credit hours with interactions and student participation.

• ✓Credit hour = 50 minutes; content must be at least 80% of the course category
• ✓Module = no shorter than .25 credit hours (12.5 min), no longer than 1 credit hour (50 min)
• ✓Distance learning must include interactions, instruction, and student participation

A 'non-resident license' is issued to a person domiciled in Arizona less than one year who does not meet residency indicators (AZ driver's license, vehicle registration, employment, voter registration, banking, tax return, etc.). 'Residency' means having a place of habitation and living in Arizona as other than a tourist, or owning/operating an Arizona business.

• ✓Non-resident license: domiciled less than one year and lacking residency indicators
• ✓Residency indicators include AZ driver's license, employment, voter registration, and tax return
• ✓Residency means living in AZ as other than a tourist or operating an AZ business

A 'material change' is any significant change in size/character of development, plan, or interest offered, or affecting rights/duties/obligations or use/enjoyment. A 'property interest' is ownership or control of a lot, parcel, unit, share, or use, including subdivided/unsubdivided land, cemetery plots, condominiums, time-shares, membership camping contracts, or stock cooperatives.

• ✓Material change significantly affects development, rights, duties, or use
• ✓Property interest includes condominiums, time-shares, and membership camping contracts
• ✓Immediate family includes spouse, siblings, parents, grandparents, children, grandchildren