Update for December 2012


January 2013

Due to a change in the Arizona statute, A.R.S. 33-1322, on January 1, 2013 the Residential Lease Agreement will be updated on the Tenant Advisory page and line 272 to reflect the new location/website of the Arizona Residential Landlord and Tenant Act on the Arizona Department of Housing’s website at http://www.azhousing.gov/.

February 2013

The forms slated for a February 2013 release include:

  • The new Buyer Pre-Closing Walkthrough, which was drafted to assist in the final walkthrough process.  A Frequently Asked Questions article on the form will be forthcoming.
  • The Application for Occupancy, whichwasrevised due to members’ requests to add space at the bottom of page three for notes. The non-resident application fee was moved to the top of the Deposit to Hold Agreement section to add space for notes.
  • We are also making every effort to complete the Vacant Land/Lot Purchase Contract and related forms for a February release.


Effective January 1, 2013 the parties in an arbitrable dispute will be required to attempt settlement of the dispute through mediation prior to proceeding to a hearing. In 2007, AAR recommended and in 2011, NAR approved, an amendment to Article 17 of the NATIONAL ASSOCIATION OF REALTORS® Code of Ethics, giving associations discretionary authority to require their members mediate otherwise arbitrable disputes (“mandatory mediation”).  In October, the AAR Board of Directors adopted changes to the AAR Professional Standards Bylaws, Policy and Procedure to adopt mandatory mediation of arbitrable disputes.

Benefits for members include a faster process, more options, and a decreased likelihood of damaging relationships.  The mediation will be free and if the dispute is not resolved, the arbitration deposit will remain unchanged at $500.  AAR will also continue to offer its successful voluntary mediation program.  To learn more about the mediation process at AAR, view the video located at: https://www.aaronline.com/disputes/


The Consumer Financial Protection Bureau (“CFPB”) is responsible for implementation and regulation of the new rules for Owner Carry Financing. As an addition to the 2008 SAFE ACT, the Dodd-Frank Wall Street Reform and Consumer Protection Act (“DFA”) was signed into law in 2010. Under Title XIV and the definition of Qualified Mortgage (“QM”), the DFA states that no creditor may make a mortgage loan without making a reasonable or good faith determination that the customer has the ability to repay the loan. NAR’s President, Moe Veissi, submitted comments to the CFPB in October, 2012, that the CFPB align rules pertaining to seller financers, including standardization of the QM rule. Additionally, requests from NAR have included exemption for individuals providing seller financing who are exempt from licensing under the SAFE ACT, (which allows states to decide who should be required to obtain a mortgage originator license).

If regulations go into effect without changes, AAR will withdraw the AAR Assumption/Carry Back form from zipForm until it can be revised to conform with the law. The CFPB has until January 21, 2013 to issue final regulations which would be scheduled to take effect no later than 12-months after their issuance. If the deadline is not met by CFPB, Title XIV will take effect on that date.  For more information: http://www.realtor.org/articles/mortgage-finance-reform-pending-federal-financial-regulations


The AAR “AS IS” Addendum is intended for use when the seller is selling a home in its existing condition (“AS IS”). The Addendum was first developed in 2005 and underwent minor revisions for clarity in 2009. Recently, some questions have been raised about the buyer’s rights pursuant to Section 6j of the AAR Residential Resale Purchase Contract (02/11) (“Buyer Disapproval’) when the “AS IS” Addendum is incorporated into the contract.

Question: Does the buyer retain the right to request repairs? Answer: Yes, the Addendum was always intended to allow the buyer the opportunity to request repairs.When first developed in 2005, line 16 of the Addendum read “Buyer retains the right to cancel the Contract pursuant to Section 6j.” This line was revised in 2009 to “Buyer retains the rights pursuant to Section 6j” to clarify that the buyer retains both options in Section 6j of the residential contract: (i) cancel immediately or (ii) allow the seller the opportunity to correct any of the items disapproved. Section 6j of the residential contract provides:

If Buyer, in Buyer’s sole discretion, disapproves of items as allowed herein, Buyer shall deliver to Seller notice of the items disapproved and state in the notice that Buyer elects to either:

(1) Immediately cancel this Contract and all Earnest Money shall be released to Buyer, or

(2) Provide the Seller an opportunity to correct the items disapproved, in which case:

(a) Seller shall respond in writing within five (5) days or ____ days after delivery to Seller of Buyer’s notice of items disapproved. Seller’s failure to respond to Buyer in writing within the specified time period shall conclusively be deemed Seller’s refusal to correct any of the items disapproved.

(b) If Seller agrees in writing to correct items disapproved, Seller shall correct the items, complete any repairs in a workmanlike manner and deliver any paid receipts evidencing the corrections and repairs to Buyer three (3) days or ____ days prior to COE Date.

(c) If Seller is unwilling or unable to correct any of the items disapproved, Buyer may cancel this Contract within five (5) days after delivery of Seller’s response or after expiration of the time for Seller’s response, whichever occurs first, and all Earnest Money shall be released to Buyer. If Buyer does not cancel this Contract within the five (5) days as provided, Buyer shall close escrow without correction of those items that Seller has not agreed in writing to correct.

To read the full article on the “AS IS” Addendum, go to: https://www.aaronline.com/azr/2012/december/the-great-as-is-debate.aspx


In this case, a buyer’s agent was working with the buyers to find a home in the $4 million price range. During that time, the parties entered into several Buyer-Broker Employment Agreements. In January 2009, the buyer’s agent emailed the buyers a new Buyer-Broker Employment Agreement. The buyers printed the Agreement, signed it, and emailed it back. The buyer’s agent responded “thank you” via email with a signature block containing the firm logo, agent’s name, photo and contact information, but did not sign the actual Agreement. During the term of the Agreement, the buyers purchased a home using another real estate agent. Thereafter, the buyer’s agent sued the buyers for breach of contract seeking to recover the commission set forth in the Agreement. The Buyers asserted that the buyer’s agent’s complaint should be dismissed contending that there was no enforceable contract because neither the buyer’s agent nor the broker had signed the Agreement as required by A.R.S. §32-2151.02(A)(4). The trial court agreed with the buyers and dismissed the complaint.  The buyer’s agent appealed.

The Arizona Court of Appeals ruled that the Agreement was unenforceable without the buyer’s agent’s signature. The Court held that a real estate agent/broker may sue to recover compensation due under a real estate employment agreement only if there is a written agreement that complies with both the Statute of Frauds, A.R.S. §44-101(7), which requires a writing with the signature of the party to be charged,and the real estate employment agreement statute, A.R.S. §32-2151.02(A), which requires thatall real estate employment agreements be signed by all parties.

In a footnote, the Court also raised an issue regarding the broker’s failure to sign, review, or initial it as required by A.R.S. § 32-2151.01(G) (requiring a broker to review transactional documents within ten days of execution, and initial and date the “instrument on the same page as the signatures of the parties”).  A Petition for Review to the Arizona Supreme Court has been filed and AAR will be filing an amicus brief addressing the issue.

To read an article on the case, go to: https://www.aaronline.com/azr/2012/november/details-matter.aspx


In the recent case of Lerner v. DMB (1 CA-CV 11-0039), the Arizona Court of Appeals upheld the dismissal of a claim against a broker acting as a dual agent based on the AAR Consent to Limited Representation and held the stigmatized property act was constitutional. In regard to the stigmatized property act, the Court stated: “. . . we hold A.R.S. § 32-2156(A)(3) bars their claim against the sellers for failing to disclose the presence of the sex offender and reject the Lerners’ contention that the statute unconstitutionally abrogates their right to sue for damages.

In regard to the Consent to Limited Representation, the court stated: “We also hold the representation agreement the Lerners signed bars their claim for breach of fiduciary duty against the broker . . .” “With the client’s informed consent and in the absence of fraud, the duties a broker owes its client may be limited by contract. The dual representation that the Lerners signed in this case is just such an agreement.“

The court did allow a common law fraud claim against the seller to go forward (although there was a dissenting opinion) based on the allegation that the sellers lied about their reason for moving.  To read the Court’s Opinion, go to: http://azcourts.gov/Portals/0/OpinionFiles/Div1/2012/1%20CA-CV%2011-0339.pdf OR go to http://azcourts.gov/coa1/SearchDecisions.aspx (1. For date range enter: 11/01/2012 to 12/11/2012; 2. For case title type “Lerner”; 3. Click on “submit”).

MAKING HOME AFFORDABLE UPDATE – Jan Steward, AAR Risk Management Specialist

In April of 2012, a short sale blog was created at the direction of RMC. One of the periodic postings from staff is the Making Home Affordable Outreach & Updates Bulletins. This month, a Program Performance Report (Making Home Affordable: Summary Results) was received with interesting data stating that 65% of Home Affordable Foreclosure Alternatives (HAFA) activity originated in three states, including Arizona.

Highlights (Making Home Affordable Program Performance Report through September 2012) from the report state approximately 1.3 million homeowner assistance actions occurred:

  • Nearly 1.1 million homeowners received a permanent modification through HAMP; of the nearly 1.1 million recipients, homeowners have reduced first lien mortgage payments by a median of approximately $541 each month; savings      total an estimated $15.6 billion in monthly mortgage payments
  • Nearly 97,000 second lien modifications have been started through the Second Lien Modification Program (2MP); over 75,000 homeowners have exited their homes  through a short sale or deed-in-lieu of foreclosure with assistance from HAFA
  • 86% of eligible homeowners entering a HAMP trial modification since June 1, 2010 have received a permanent modification with an average trial period of 3.5 months
  • Homeowners currently in HAMP permanent modifications with some form of principal reduction have been granted an estimated $7.6 billion in principal reduction, 75% of eligible non-GSE borrowers entering HAMP in September received some form of principal reduction w/their modifications

For more information go to: http://www.treasury.gov/initiatives/financial-stability/reports/Documents/September%202012%20MHA%20Report%20Final.pdf

A NEW YEAR, A NEW AARONLINE.COM – Bethany Helvie, AAR cmmunications manager

As 2012 comes to a close, most REALTORS® take time to reflect on the past year; celebrating their successes and putting together a winning strategy for the year to come. At AAR, your success is our first priority and will continue to be in the New Year. That’s why, on January 1, 2013, we’re excited to share with you a completely re-designed AARonline.com. The new site will feature the same great resources for brokers, like the Legal Hotline and risk management tools, in a more user-friendly layout.

What to expect? In the first part of 2013, AAROnline.com will showcase the multitude of member benefits in an easy-to-navigate site. Use the following six categories to access all the resources and tools AAR offers to help you:

  • Have a Voice at the   apitol. Resources in this section of AARonline.com include your online connection to legislative bulletins and summaries, Capitol Insider updates during the legislative session, as well as RAPAC and issues mobilization resources and tools.
  • Manage Risk.  This section of AAR’s website features: forms, advisories, legal hotline Q&A’s, broker/manager newsletters and numerous legal-related articles and resources focusing on today’s issues.
  • Increase Knowledge. Here you’ll discover all the exceptional educational programs AAR offers such as: designation and certification courses, Master of Real Estate Society, online education opportunities, and more.
  • Efficient Business Tools. Access zipForm (electronic contracts) and AAR’s Transaction Management platform. You can also access training  webinars/videos, FAQs and user-guides. Additionally, this section houses information about tools available to you such as MongoFAX, RoboForm and eSign.
  • Stay Informed. Read AAR’s digital publications, connect with fellow members on AAR’s Facebook and Twitter feeds, watch videos and read the AAR Blog. Best of all, you’ll have a front row seat to industry news as it is happening.
  • Resolve Disputes. When things go wrong, as they sometimes can, AAR is here through tools offered in this section. Here you will find valuable resources covering the Code of Ethics and ethics enforcement, arbitration,      Ombudsman and mediation programs, as well as detailed information guiding you through the complaint filing  process.

Watch for more details soon!

TWO-DAY WORKSHOP FOR BROKERS/MANAGERS (January 16-17, 2013):  Multi-agent and mega-teams have become commonplace in many real estate companies, but do team members view the owner/broker as their primary resource for leadership? If they don’t, chances are they are being coached by others outside of the organization. You need to be front and center as the mentor, consultant and business manager of these teams.  This two day workshop focuses on understanding the team concept, and how and when to recruit, retain, and provide valued feedback to them though every stage of their development. This is also great training for your future team leaders and managers.

Topics in the course include:

  • Developing  a blueprint for successful teams, including job descriptions
  • Creating employment contracts that align with company policies
  • Managing conflicts within the brokerage relating to teams
  • Creating  team compensation plans
  • Understanding and coaching team growth plateaus

Course:  Understanding and Leveraging Teams

Cost:  $179
Date:  January 16-17, 8:30 – 4:30 each day)
Instructors:  Holly Eslinger and Laura Kovacs
Register:  www.regonline.com/crbjan
NOTE: This course counts toward your CRB designation.


Learn how to use Arizona Real Estate: A Professional’s Guide to Law & Practice by watching this two minute video: http://www.youtube.com/watch?feature=player_embedded&v=6VBZ855KCfg. The ebook searchable format is available at https://www.aaronline.com/azre-book (also on Amazon, iBookstore, and Barnes & Noble). Traditional print books are available for order from the same webpage ($21.99 + shipping) and at most local associations and real estate schools.

The AAR Legal Hotline is a valuable member benefit for brokers needing legal information. The Hotline accepts emails from members who have access to the Hotline. When you send an email to the Hotline attorneys please include your telephone number, a Hotline attorney will call you with a response to your email. For the email address to the Hotline please contact Christina Smalls at christinasmalls@aaronline.com.

To sign up for the Hotline, go to: https://www.aaronline.com/law-ethics/legal-hotline/.


If you would like your office manager(s) to receive this newsletter please contact Christina Smalls at christinasmalls@aaronline.com with the names and email addresses of your manager(s).