AAR Policy Statement P.30 states, “New or revised forms shall be released on or about February 1, June 1 and October 1 unless law or regulation mandates earlier release.” Pursuant to this Policy, at the beginning of February two of AAR’s standard forms have been revised as follows:

PRE-QUALIFICATION FORM
 

12 CFR 1026.19(e)(2)(ii) states:

Written information provided to consumer.If a creditor or other person provides a consumer with a written estimate of terms or costs specific to that consumer before the consumer receives the disclosures required under Paragraph (e)(1)(i) of this section, the creditor or such person shall clearly and conspicuously state at the top of the front of the first page of the estimate in a font size that is no smaller than 12-point font: “Your actual rate, payment, and costs could be higher. Get an official Loan Estimate before choosing a loan.” The written estimate of terms or costs may not be made with headings, content, and format substantially similar to form H-24 or H-25 of Appendix H to this part.

To ensure compliance with this federal law, a sentence has been added to the top of the form stating “Your actual rate, payment, and costs could be higher. Get an official Loan Estimate before choosing a loan.”

PROPERTY MANAGEMENT AGREEMENT

In cases of an automatic renewal provision, A.R.S. § 32-2173(A)(2)(a) requires a property management firm to send the owner a reminder notice at least 30 days before the renewal date. Based on this language, the Arizona Department of Real Estate (ADRE) has expressed that property management agreements cannot be for a term of less than 30 days. Consequently, the box for “days” that appeared on line 13 has been removed. Additionally, because the renewal notice is sent prior to each renewal date, for clarification line 14 has been revised as follows: “Broker shall send Owner a reminder notice at least thirty (30) days prior to the each renewal date.”


Three additional forms will be revised effective mid-February. They are the Residential Resale Real Estate Purchase Contract, the Vacant Land/Lot Purchase Contract and the Commercial Real Estate Purchase Contract.

The reason behind these changes is that The Protecting Americans from Tax Hikes Act (The PATH Act) was signed into law on December 18, 2015 and includes a provision modifying the Foreign Investment in Real Property Tax Act (FIRPTA). The modification increases the tax withholding from 10% to 15% for homes over $1 million. The withholding tax rate increase is effective 60 days after the enactment of the PATH Act, which is February 16, 2016. Because of this federal law change, the FIRPTA section in AAR’s above-referenced purchase contracts will be revised to now refer to the FIRPTA withholding cap as “up to 15%.”


About the Author

Scott Drucker, Esq.

Scott M. Drucker, Esq., a licensed Arizona attorney, is General Counsel for the Arizona REALTORS® serving as the primary legal advisor to the association. This article is of a general nature and reflects only the opinion of the author at the time it was drafted. It is not intended as definitive legal advice, and you should not act upon it without seeking independent legal counsel.