32-2195.04 Sale of Lots or Parcels; Conditions Precedent; Rescission +14Arizona · Real Estate · English

Purchasers may rescind unsubdivided land contracts without cause within seven calendar days. Buyers who did not inspect the parcel before signing have a six-month inspection period with unilateral rescission rights.

• ✓A contract may be rescinded without cause by written notice by midnight of the seventh calendar day after execution
• ✓The right to rescind must be clearly and conspicuously disclosed per commissioner regulations
• ✓A buyer who did not inspect before signing has a six-month period to inspect and unilaterally rescind, signing an affidavit at inspection

It is unlawful to sell unsubdivided land lots unless the sale complies with one of three methods: recorded deed with marketable title, escrow with real estate sales contract, or deed to trustee with trust agreement. Recording deadlines apply.

• ✓Deed and mortgage/deed of trust must be recorded within sixty days of execution by the purchaser
• ✓Real estate sales contract must be deposited in escrow not later than sixty days after execution by the purchaser
• ✓Trustee must execute, record, and deliver the deed within sixty days of the purchaser fulfilling contract terms

All required documents must be recorded in the county and state where the unsubdivided land is located. Any sale or assignment of a mortgage, deed of trust, or contract must be recorded and noticed to the commissioner within 60 days.

• ✓All documents must be recorded in the county and state where the unsubdivided land is located
• ✓Sale or assignment of a mortgage/deed of trust/contract must be recorded and noticed to commissioner within sixty days of execution

Only banks, savings and loan associations, title insurance companies (or qualified subsidiaries/agents), or authorized escrow persons/firms may act as trustee under the deed-to-trustee sale method.

• ✓Only qualified banks, S&Ls, title insurance companies, or authorized escrow firms may act as trustee
• ✓This subsection does not extend trustee authority unless otherwise provided by law

Unlawful license activity is: (1) performing acts requiring a license under A.R.S. § 32-2122 by a person who fails to hold a license or holds an inactive license; (2) performing licensed acts on behalf of a broker other than the person's employing broker; or (3) a broker employing a person as salesperson/broker who does not hold an active license issued under that employing broker.

• ✓Acting without an active license, or under an inactive license, is unlawful license activity
• ✓Acting on behalf of a broker other than one's employing broker is unlawful
• ✓A broker employing an improperly-licensed person commits unlawful license activity

A person with no prior unlawful license activity, who conducted such activity for not more than 30 days and against whom there are no pending complaints, may apply to renew or change to active status without processing delay, and the Department issues an Advisory Letter of Concern. The Commissioner MAY take disciplinary action under A.R.S. § 32-2153 against a person who engages in unlawful activity for longer than 30 days, has prior unlawful activity, or is subject to a pending complaint.

• ✓Unlawful activity of 30 days or less (no prior history, no pending complaint) results in an Advisory Letter of Concern
• ✓Unlawful activity exceeding 30 days, with prior history, or pending complaint may lead to disciplinary action under A.R.S. § 32-2153

A person who conducts unlawful license activity must submit to the Department, as soon as they become aware, a written explanation of why it occurred, a signed statement they will not conduct licensed activities unless holding an active license, and a signed statement from the employing broker's designated broker identifying all unlawful activity. Upon request, they must provide copies of all listing/employment agreements and contracts, documentation of all compensation received or to be received (by the person and by the broker), and a signed statement that the information is true and complete.

• ✓Must report unlawful activity as soon as the person becomes aware it occurred
• ✓Designated broker must provide a signed statement identifying all unlawful activity
• ✓Upon request, all related contracts and compensation documentation must be provided

An agency inspector, auditor, or regulator entering a regulated person's premises must follow specific procedures to ensure fairness, unless otherwise provided by law.

• ✓Must present photo identification on entry and state the purpose and legal authority of the inspection/audit
• ✓Must disclose applicable fees; the regulated person is responsible only for direct and reasonable costs and is entitled to a detailed billing statement
• ✓Must allow an authorized on-site representative to accompany the inspector except during confidential interviews

Inspectors must provide notice of rights to copies of documents, sample splits, analyses, and recording/interview protections.

• ✓Must provide notice of the right to copies of original documents taken, splits of samples, copies of analyses, and documents relied on for compliance determinations
• ✓Must inform each person their recorded conversation is being tape recorded
• ✓Must inform interviewees that participation is voluntary (unless legally compelled), statements may be in the report, they have at least 24 hours to review/revise witness statements, and they may have an attorney or expert present

Inspectors must obtain the regulated person's signature acknowledging receipt of the written rights, and the agency must deliver an inspection report within set timeframes.

• ✓The inspector must obtain the signature of the regulated person/on-site representative acknowledging receipt; if absent or refusing to sign, that fact must be noted on the writing
• ✓The agency must give a copy of the inspection report either at the time of inspection, within thirty working days after, or as required by federal law
• ✓The inspection report must contain alleged deficiencies identified during the inspection

Agencies generally must give regulated persons an opportunity to correct alleged deficiencies unless specified exceptions apply, with a defined correction verification process.

• ✓The agency must allow correction unless deficiencies are intentional, not correctable in reasonable time, evidence of a pattern of noncompliance, or a significant risk to health/safety/welfare/environment
• ✓If unsure whether an exemption applies, the agency must provide the opportunity to correct
• ✓Within thirty days after the person notifies the agency of correction, the agency must determine and notify whether the person is in substantial compliance; a decision under subsection E or G is not an appealable agency action

At initiation, inspectors must provide in writing the regulated person's rights, contact information, due process/appeal rights, and applicable time limits.

• ✓Must provide in writing the subsection A rights and the 41-1001.01(C) rights, a contact person's name and phone number, and due process/appeal rights
• ✓Must state that no adverse action or inference may be taken from the person's decision to use an attorney or expert
• ✓Must provide notice that the person may redact trade secrets and confidential information if documents become public record, and state the statute of limitations for compliance actions

Violations of inspection rules carry consequences for employees and can affect evidence and penalties. The section applies broadly to state agencies with specific exceptions.

• ✓Evidence gathered in violation of the section may be excluded in a civil or administrative proceeding (but never in a criminal proceeding)
• ✓Employee noncompliance may lead to discipline/dismissal and must be considered as grounds for reducing any fine or civil penalty
• ✓The section applies to all state agencies that conduct inspections/audits and governs over conflicting statutory rights; it does not apply to criminal/undercover investigations, cases of reasonable suspicion of criminal activity, or the AZ POST board

Agencies must provide monthly status updates during inspections and, for Title 49 agencies, provide detailed written allegation notices.

• ✓At least once every month after an inspection commences, an agency must provide a status update on any resulting agency action until completion or notice that no action will result
• ✓For Title 49 agencies, an allegation of noncompliance requires written notice citing the specific statute/regulation/permit provision, documents relied on, factual basis, and instructions to discuss the deficiency
• ✓This section does not authorize any inspection or act not otherwise authorized by law

Certain agreements must be in writing and signed by the party to be charged (or an authorized agent) to be enforceable in court. This includes real estate sales/leases over one year, agreements not performable within one year, and agreements employing an agent/broker to buy or sell real property or mines for a commission.

• ✓Agreements for sale of real property or leases longer than one year must be in writing and signed
• ✓An agreement employing an agent/broker to buy or sell real property for commission must be in writing

An agreement for leasing longer than one year or for the sale of real property or an interest therein, if made by an agent of the party to be charged, is invalid unless the agent's authority is itself in writing and subscribed by the party to be charged.

• ✓An agent's authority for real property sale/lease agreements must be in writing subscribed by the principal
• ✓Without written agent authority, the real property agreement is invalid

Other agreements requiring a signed writing include: answering for another's debt (suretyship), agreements upon consideration of marriage, sale of goods valued $500 or more (with acceptance/earnest exceptions), agreements not performed within the promisor's lifetime or devises/bequests, and loan/credit commitments over $250,000 not for personal/family/household purposes.

• ✓Sale of goods of $500 or more must be in writing absent acceptance, receipt, or earnest payment
• ✓Loan or credit commitments over $250,000 not for personal/family/household purposes must be in writing

The licensing article does not apply to persons/entities dealing in their own property without special compensation (if majority of activities are not broker acts), persons holding a valid power of attorney for a specific isolated transaction, attorneys performing attorney duties, receivers/trustees under court order, and trustees selling under a deed of trust.

• ✓Owners dealing in their own property without special compensation are exempt
• ✓Power of attorney exemption applies only to specific isolated transactions, not as a method of business
• ✓Attorneys performing attorney duties are exempt but cannot otherwise engage in licensed acts
• ✓Trustees selling under a deed of trust are exempt

Natural persons acting as residential leasing agents or on-site managers at not more than one location during their workday are exempt if they do not receive special compensation and are employed by the owner or licensed management agent. A performance bonus not exceeding one-half of compensation, paid no more than monthly, is not special compensation.

• ✓Leasing agent/on-site manager exemption limited to one location during regular workday
• ✓A performance bonus not exceeding one-half of total compensation, paid monthly or less, is not special compensation
• ✓Duties may include presenting leases, collecting deposits/rent, showing units, executing leases, and delivering notices

Exemptions also include government officers/employees in official duties, nonresidential property managers of contiguous common-ownership properties, unlicensed clerical/administrative employees, telemarketers soliciting interest, qualifying communications media, nursing care/life care service providers, registered securities dealers, hotel/motel/RV park managers, short-term reservation agents, escrow/title agents, and finder fee recipients.

• ✓Unlicensed clerical/administrative employees are exempt if not engaged in licensed acts
• ✓Short-term reservation exemption applies to occupancies of 31 or fewer days
• ✓Escrow agents, title insurers, and title insurance agents are exempt in their own duties
• ✓Finder fee recipients under 32-2176 or 32-2197.21 are exempt

The commissioner may grant an exemption to a nonprofit corporation that provides project-based housing services and operates solely as a charitable organization (per 44-6551), if its sole real estate activities involve ownership/management of property owned or controlled by the corporation.

• ✓Corporation must be nonprofit providing project-based housing services and be a charitable organization
• ✓Corporation's sole real estate activities must involve ownership/management of its own property

When application, examination, and fee requirements are satisfied, the commissioner issues the license. A person who passes the broker or salesperson exam must become licensed within one year from the examination date or must retake and pass another examination.

• ✓Must become licensed within 1 year from the examination date
• ✓Failure to comply requires retaking and passing another examination

Not more than one license may be issued to a licensee at one time, except a real estate broker or salesperson may engage in cemetery or membership camping sales without separate licensure. A real estate licensee may have only one employing broker in each category: cemetery, membership camping, and real estate.

• ✓Only one license may be outstanding to a licensee at one time (with stated exceptions)
• ✓A licensee may have only one employing broker per category (cemetery, membership camping, real estate)

Once application, exam, and fee requirements are satisfied, the commissioner issues the license. A person who passed the broker or salesperson exam must become licensed within one year of the exam date or must retake and pass another examination.

• ✓Must become licensed within one year from the date of the examination
• ✓Failure to comply requires passing another examination

Only one license may be outstanding to a licensee at a time, but a real estate licensee may engage in cemetery/membership camping sales without separate licensing. A real estate licensee may have only one employing broker in each category: cemetery, membership camping, and real estate.

• ✓Not more than one license may be outstanding to a licensee at any one time
• ✓Real estate broker/salesperson may engage in cemetery or membership camping sales without separate license
• ✓Only one employing broker per category (cemetery, membership camping, real estate)

Subdividers must file advertising upon request, and all advertising and sales literature (including oral statements) must avoid untrue or misleading content.

• ✓Subdivider must file advertising material with the commissioner within ten days after request
• ✓No advertising/communication/sales literature (including oral statements) may contain untrue statements of material fact or misleading omissions
• ✓No representation that lots are offered without risk or that loss is impossible
• ✓Proposed improvements or nonexistent scenes must be clearly indicated as proposed/nonexistent

Advertising cannot claim lots are suitable homesites without water/sewer availability or a clear disclaimer, and must be consistent with filed documents.

• ✓Cannot represent lots as suitable homesites/building lots unless potable water and sewage disposal are available, or contrary facts are clearly and conspicuously disclosed in each ad
• ✓All advertising/sales literature must be consistent with the notice of intention and the public report
• ✓Subdivider must retain advertising materials for three years after last use

A subdivider may hold a drawing or contest to induce visits only if strict conditions are met.

• ✓Requirements include: a current public report in effect, not under ongoing investigation (unless permitted), and department review/approval of contest details beforehand
• ✓No fee may be charged to participate and participation cannot require attending a sales presentation or taking a tour
• ✓Material terms must be disclosed in writing; the subdivider is responsible for lawful conduct of the contest

The developer must supervise, manage, and control all aspects of the timeshare offering including promotion, advertising, contracting, and closing. The developer is responsible for each registered plan and for the actions of any sales agent or managing entity.

• ✓Developer supervises all aspects: promotion, advertising, contracting, and closing
• ✓A violation during offering activities is deemed a violation by the developer AND by the sales agent/managing entity that committed it
• ✓Developer is responsible for the association/managing entity only while they are subject to the developer's control

The Department may require earnest money and down payments to be placed in a neutral depository based on prior report revocation or knowledge of developer failures, and mandates such deposits in specific circumstances.

• ✓Department may require deposit of earnest money/down payment in a neutral depository based on revocation of a prior public report or knowledge of the developer's failure to meet prior obligations
• ✓Developer shall deposit earnest money and down payments in a neutral depository if the seller is in bankruptcy
• ✓Developer shall deposit funds in a neutral depository if the sale is conditional pursuant to R4-28-B1202

Administrative actions/proceedings involving an active-duty military service member as a necessary party may be stayed during service or within 60 days after, at the discretion of the administrative entity or on application.

• ✓A proceeding may be stayed on the entity's own motion during service or within 60 days thereafter, but not if the service member makes a written objection
• ✓A proceeding shall be stayed on application by the service member unless the entity's written decision finds the member's ability to pursue the claim/defense is not prejudiced by military service

A person may not refuse to testify or produce evidence sought by an agency on self-incrimination grounds unless it constitutes compelled testimony or private papers privileged under the U.S. or Arizona constitution and the privilege is claimed before production. Compelled evidence cannot be used in criminal prosecution except for perjury and related offenses.

• ✓Person cannot refuse testimony on self-incrimination grounds unless constitutionally privileged
• ✓Privilege must be claimed before production of testimony or papers
• ✓Compelling testimony requires prior written approval of the attorney general
• ✓Compelled evidence is inadmissible in criminal prosecution except for perjury and related offenses

The article applies to real estate brokers/salespersons, cemetery brokers/salespersons, and membership camping brokers/salespersons. It is unlawful for any person or entity to engage in these activities without first obtaining a license and complying with the chapter.

• ✓A license is required before engaging in any listed broker/salesperson activity
• ✓The requirement applies to real estate, cemetery, and membership camping brokers and salespersons
• ✓Salespersons/brokers are subject to broker requirements when performing broker acts

Any act in consideration or expectation of compensation included in the broker definition, whether incidental or the entire transaction, constitutes performing the act of a broker/salesperson within the meaning of the chapter, requiring a license. Non-licensees may collect in-person rent as clerical duty if providing receipts.

• ✓Even a single act for compensation within the broker definition requires a license
• ✓The act may be incidental to or the entire transaction
• ✓Non-licensees may collect in-person rent as part of clerical duties if they provide receipts

Advertising, communications, and sales literature (including oral statements) cannot contain untrue statements, misleading omissions, claims of no risk, or misrepresentations of proposed improvements or nonexistent scenes as if they exist.

• ✓No untrue statement of material fact or misleading omission is permitted
• ✓No representation that land is offered without risk or that loss is impossible
• ✓Proposed improvements and nonexistent scenes must be clearly indicated as proposed or nonexistent

Owners/agents must file original promotional and advertising material with the commissioner, plus copies of material changes and subsequent advertising within 21 days of use. Repetitive filings of substantially identical material are not required.

• ✓Original promotional and advertising material must be filed with the commissioner
• ✓Subsequent advertising must be filed within twenty-one days of use
• ✓Repetitive filings of material that is the same or varies only in minor details are not required

Advertising cannot claim lots are suitable as homesites or building lots unless potable water and sewage/sewer are available, or facts to the contrary are clearly disclosed in each advertisement.

• ✓Homesite/building lot claims require potable water from a certificated utility/municipal corporation and a functioning sewage disposal or sewer system
• ✓If those facilities are not available, facts to the contrary must be clearly and conspicuously included in each advertisement
• ✓All advertising must be consistent with the notice of intention and public report

Newspaper/magazine publishers and radio/television station operators are not liable for advertisements they disseminate when they have no knowledge of the advertiser's intent, design, or purpose.

• ✓Publishers and broadcasters are exempt when they have no knowledge of the advertiser's intent or purpose
• ✓It is unlawful for any owner, agent, or employee to authorize, use, direct, or aid in violating advertising
• ✓The commissioner may adopt rules to ensure advertising is not false or misleading

A membership camping contract entered in substantial reliance on false or misleading information is voidable at the purchaser's option. Prevailing parties get attorney fees. Injured purchasers may recover damages, attorney fees, and $5,000 per violation in punitive damages if the violation is willful.

• ✓Contract entered in reliance on false/misleading information is voidable at the purchaser's option
• ✓Any waiver of the article's provisions by the purchaser is void
• ✓Willful violations allow punitive damages of $5,000 per violation plus reasonable attorney fees

A membership camping contract entered in substantial reliance on false, fraudulent, or misleading information is voidable at the purchaser's option. Attorney fees go to the prevailing party. Any waiver of the article by the purchaser is void. Injured purchasers may recover damages, attorney fees, and, if wilful, $5,000 punitive damages per violation.

• ✓Contract based on false/misleading info is voidable at purchaser's option
• ✓Reasonable attorney fees awarded to prevailing party
• ✓Any waiver of the article by the purchaser is void
• ✓Wilful violations allow punitive damages of $5,000 per violation

Licensing time frames consist of an administrative completeness review time frame and a substantive review time frame, which together make up the overall time frame.

• ✓Administrative completeness review time frame = days from receipt of application until the agency determines it contains all required components; excludes public notice and substantive review periods
• ✓Substantive review time frame = days after completion of administrative completeness review during which the agency determines whether the application meets all substantive criteria; public notice and hearings fall within it
• ✓Overall time frame = total days consisting of both the administrative completeness and substantive review time frames

An agency must issue a written notice of administrative completeness or deficiencies within the administrative completeness review time frame. Failure to do so deems the application complete.

• ✓A deficiency notice must include a comprehensive list of specific deficiencies; issuing it suspends both the administrative completeness and overall time frames until missing information is received
• ✓If the agency does not issue a notice of completeness or deficiencies within the time frame, the application is deemed administratively complete
• ✓A determination that an application is not administratively complete is an appealable agency action (except for Dept. of Water Resources applications under title 45)

An agency must issue a written notice granting or denying a license within the overall time frame. Denial notices must include justification and appeal information.

• ✓A license denial notice must justify the denial with references to statutes/rules and explain the applicant's right to appeal, including the number of days to file a protest and an agency contact person
• ✓Unless extended by mutual agreement, the agency must grant or deny within the overall time frame

If an agency fails to grant or deny within the overall time frame, it must refund all application fees and pay monthly penalties to the state general fund.

• ✓The agency must refund all fees charged for reviewing/acting on the application within 30 days, without requiring the applicant to apply for a refund (applies only to applications subject to substantive review)
• ✓The agency must pay a monthly penalty of 2.5% of total fees received to the state general fund for each month after expiration until the license is granted or denied (except for applications not subject to substantive review)

Agencies issuing licenses must have final rules establishing overall time frames, stating separately the administrative completeness and substantive review time frames.

• ✓Each license type's rule must state separately the administrative completeness review time frame and the substantive review time frame
• ✓Where a statutory overall time frame exists without separate components, the agency must by rule establish separate time frames that together do not exceed the statutory overall time frame
• ✓In establishing time frames, agencies must consider complexity, agency resources, economic impact of delay, public health/safety impact, and other listed factors

During substantive review, an agency may make one comprehensive written request for additional information (or supplemental requests by mutual agreement). Time frames may be extended by mutual agreement.

• ✓The agency may make one comprehensive written request for additional information; the request suspends the substantive and overall time frames until the information is received
• ✓By mutual written agreement, an agency and applicant may extend the substantive and overall time frames, but the extension may not exceed 25% of the overall time frame

Agencies issuing licenses must provide applicants specific information at the time they obtain an application.

• ✓At the time an applicant obtains an application, the agency must provide a list of all steps required, the applicable licensing time frames, and an agency contact person
• ✓This section does not apply to the Arizona peace officer standards and training board