Arizona REALTOR® VOICE
September 8, 2020
Leadership Interview Series
2020 Arizona REALTORS® President Mary Roberts
As we celebrate our 75th Anniversary, we’re also honoring the 75 Presidents of your state association.
It goes without saying that 2020 has thrown some unique challenges at the industry and this year’s President Mary Roberts has successfully led Arizona REALTORS® through some of the most dramatic changes the industry has experienced in quite a while.
In this third segment of our Leadership Interview Series, President, Mary talks about how she got involved with the state and national associations of REALTORS® and how it impacts her day-to-day business.
Using Markups in Authentisign
Authentisign has a great feature that allows you to add text to a document that needs to be signed by your clients.
Our experts walk you through the simple process in this week’s tech update.
Enter to win a $100 Gift Card
It’s REALTOR® Safety Month and we want to share the precautions you take to protect yourself and clients with Arizona’s real estate community.
Your response could win you a $100 gift card!
Later this month we’ll share your responses on our website and announce which random participant won the gift card!
A Seller May Require That A Particular Title Company Be Used Only If The Seller Pays All Associated Fees
ISSUE:
Can the seller choose the title company provided that the seller pays for the buyer’s owner’s title policy and not require that the buyer purchase their lender’s title policy from the same title company?
ANSWER:
See Discussion.
DISCUSSION:
Section 9 of RESPA provides: “No seller of property that will be purchased with the assistance of a federally related mortgage loan shall require directly or indirectly, as a condition to selling the property, which title insurance covering the property be purchased by the buyer from any particular title company.” See 12 U.S.C. § 2608.
The Department of Housing and Urban Development (HUD) has indicated that it will not enforce Section 9 of RESPA against a seller who selects the title insurance company if the seller is paying for the owner’s title insurance policy and does not require the buyer to use the title insurance company for the simultaneously issued lender’s policy. HUD would take action under Section 9, however, in situations where a seller required a buyer to pay the seller an amount towards closing costs and the seller used a portion of the buyer’s paid closing costs for the owner’s title insurance without providing the buyer with a choice of that title company.
Buyer Who Acquires Property After A Lis Pendens Is Recorded Takes Title Subject To The Outcome Of The Underlying Litigation
FACTS:
The seller refuses to close escrow, at which point the buyer hires an attorney to file a specific performance lawsuit and record a lis pendens against the property.
ISSUE:
What is the effect of the lis pendens?
DISCUSSION:
The lis pendens constitutes a legal notice recorded to evidence existing litigation involving title to real property. The document therefore provides notice that anyone acquiring an interest in the property subsequent to the date of the recordation may be bound by the outcome of the litigation.
Arizona REALTOR® Magazine – January 2013
- Leadership Interview Series
- Using Markups in Authentisign
- Enter to win a $100 Gift Card
- September 1, 2020
- Leadership Interview Series
- Scott’s Legal Scoops
- August 25, 2020
- Leadership Interview Series
- Flood Insurance
- August 18, 2020
- August 11, 2020
- August 4, 2020
- July 28, 2020
- July 21, 2020
- July 14, 2020
- July 7, 2020
- June 30, 2020
- June 23, 2020
- June 16, 2020
- June 9, 2020
- June 2, 2020
- May 26, 2020
- May 19, 2020
- May 12, 2020
- May 5, 2020
- April 28, 2020
- April 21, 2020
- April 7, 2020
- March 31, 2020
- March 3, 2020
- February 25, 2020
- February 18, 2020
- February 11, 2020
- February 4, 2020
- January 28, 2020
- January 21, 2020
- January 14, 2020
- January 7, 2020
- Arizona REALTOR Voice® Archive
September 1, 2020
Leadership Interview Series
2020 Arizona REALTORS® President Mary Roberts
The segment features Mary’s early years and what led her to settle in Lake Havasu City.
Scott’s Legal Scoops
What happens to earnest money if a buyer fails to provide a reason when they give the seller notice of cancelation within the inspection period?
Our General Counsel and Assistant CEO, Scott Drucker, has the answer in this month’s Legal Scoops.
Anyone who works in the real estate industry knows Cash is King. However, for many buyers navigating FHA or VA financing, it can be a complex process.
While disclosure forms are meant to protect buyers who are accessing government financing, the Amendatory/Escape Clause can easily confuse our clients and introduce more anxiety into an already stressful transaction.
In this piece by Assistant General Counsel Nikki Salgat, you’ll learn more about the clause and how to prepare your buyers best if they ask for help.
August 25, 2020
Leadership Interview Series
2020 Arizona REALTORS® President Mary Roberts
In this first segment of our four-part Leadership Interview Series, find out how President Mary got involved with real estate after moving to Lake Havasu City (the second time) …
Flood Insurance
Did you know that our state has a greater amount of area in flood plains than any other non-coastal state?
While most of Arizona hasn’t seen much in the way of rain this monsoon season, we all know the skies can open at any moment bringing a deluge of water to our desert.
Are you and your clients prepared when the rain turns into pain?
Get up to speed on the latest info on flood insurance from NAR as well as state and federal resources.
August 18, 2020
Supreme Court Protects REALTORS®
When do seven votes carry nearly the same weight as 1.4 million?
When those seven votes come from Arizona’s Supreme Court Justices and their unanimous confirmation of a key aspect of the Protect Arizona Taxpayers Act!
In the state’s first real test of Prop. 126 passed by voters in 2018, Arizona’s top court was faced with a decision that could have undermined the will of voters and opened the door to state and local government’s desire to increase taxes on services.
Add a time stamp using Authentisign
Want to add a time stamp on TransactionDesk using AuthentiSign? The right click menu option allows you to do so quite easily.
- The Seller is Obligated to Allow Inspections Even if the Buyer Purchases As Is
- The Buyer’s Agent is Obligated to Disclose that the Buyer Does Not Have the Required Down Payment
August 11, 2020
Realty Website Accessibility
Imagine ignoring one out of every four potential leads in your business. If your website and online platforms are not ADA compliant, that’s exactly what could happen.
With 25.8% of Arizona adults living with a disability, working to ensure our websites are accessible to everyone can be the difference between missing an opportunity or landing a new client.
This week’s featured selections will provide you with knowledge and the steps you can take to improve accessibility and better communicate with this important group of people.
Rental Property Owner Preservation Fund
Last week, the Rental Property Owner Preservation Fund (RPOPF) was established by the Governor’s Office.
This fund is intended to provide financial assistance to eligible landlords and property owners, who have faced hardships, directly or indirectly, due to the impact of the coronavirus; and are struggling with lost rental income due to nonpayment by their tenants.
2020 REALTOR® Caucus
On Thursday, September 3rd, Arizona’s REALTORS® will meet virtually for the annual REALTOR® Caucus. During the caucus REALTORS® are encouraged to share their input on current issues that affect the real estate industry. Caucus serves as an opportunity to discuss recommendations for possible legislative or regulatory actions for the 2021 legislative session.
The Buyer’s Agent is Obligated to Disclose that the Buyer Does Not Have the Required Down Payment
The Buyer’s Agent is Obligated to Disclose that the Buyer Does Not Have the Required Down Payment
August 4, 2020
Baffling BINSRs
If a clear and concise Buyer’s Inspection Notice and Seller’s Response make REALTORS® lives easier, why is it that we find confusing references within the BINSR so often?
In this month’s edition of Scott’s Legal Scoops, Assistant CEO and General Counsel Scott Drucker serves up a video on why Arizona REALTORS® should strive for clarity when documenting the list of things that don’t meet the approval of our buyers.
¿Pueden Tus Clientes Leer Esto?
Can your clients read the title of this article? If so, they may be interested to know that Arizona REALTORS® has translated its most often used forms and advisories into Spanish.
July 28, 2020
Economic Pulse Survey – Verbatim Responses
Nearly every aspect of the real estate transaction has been impacted by the coronavirus global pandemic. However, the extent of the changes varies wildly among Arizona REALTORS®.
Want to find out what your colleagues are experiencing?
- How are they dealing with changing client attitudes?
- How has their business changed?
- Are they running into delays?
As promised a few weeks back, we’ve posted a glimpse of the verbal responses to the questions we asked during our COVID-19 Economic Pulse Survey.
We hope the results will shed some light on what members are dealing with around the state. Some of the responses may surprise you! ARIZONA INDUSTRY INSIGHTS
Avoid Using “On or Before” in Contracts
Imagine getting a save-the-date card for a wedding that said the event was to be held “On or Before” a certain date?
That kind of ambiguity might make you late for the champagne toast!
The same kind of uncertainty in a real estate contract can lead to confusion, or much worse…
Refresh your memory on why having “On or Before” written in an offer is a BAD IDEA by reading this column by Assistant General Counsel Nikki Salgat.
Customizing your Agent Dashboard in Transaction Desk
Looking for a quick way to save time? Customize your Dashboard in TransactionDesk. (Now Lone Wolf Transactions)
Customizing the program lets users make their own selections about what they want to see, or set preferences for how information is organized or displayed.
While our Tech Team might not sing Stairway to Heaven to you, their tips will bring about a sense of nirvana in no time.
If All Repairs Agreed to, Buyer Cannot Cancel via BINSR
FACTS:
A buyer and seller entered into a residential purchase contract. During the Inspection Period, the Buyer completed page one of the Buyer’s Inspection Notice and Seller’s Response (“BINSR”) requesting repairs from the seller. The seller responded on page two of the BINSR indicating the seller would repair all of the items the buyer had requested. The seller returned the BINSR to the buyer.
Several days prior to closing, the buyer delivered the BINSR to the seller, indicating at the bottom of page two that the buyer was electing to cancel.
ISSUE:
Can the Buyer use the BINSR to cancel the contract after the seller agreed to all repairs on the BINSR?
ANSWER:
No.
DISCUSSION:
Because the Seller agreed to make all repairs requested in the BINSR, the Buyer has no basis to cancel. The BINSR should only be used for cancellation pursuant to section 6j of the contract. That is not the circumstance here.
Late BINSR Does not Necessitate a Cure Notice
Facts:
Buyer submits a Residential Buyer’s Inspection Notice and Seller’s Response (BINSR) requesting a credit in lieu of repairs. Seller’s agent explains to buyer’s agent that the BINSR is improper and should not serve as a tool to negotiate price. Seller’s agent then encourages buyer to submit a revised BINSR identifying items disapproved and, if desired, submit an addendum asking to lower the purchase price. Buyer agrees, but does not submit the corrected BINSR until 12 days after contract acceptance, which is two days after the end of the inspection period.
Issue:
Is buyer’s late BINSR valid and if not, must seller submit a Cure Period Notice in order to recover the earnest money deposit?
Answer:
See Discussion
Discussion:
Since buyer’s corrected BINSR was submitted late, it was not valid. In fact, the situation is akin to buyer having entirely failed to submit a BINSR. Under such circumstances, the buyer is obligated to proceed with the transaction and the cure notice discussed on lines 268-272 of AAR’s Residential Resale Real Estate Purchase Contract does not come into play.
July 21, 2020
Conviction Disclosure Process
Filing a form with the Department of Real Estate might be the last thing on someone’s mind if they’ve been convicted of a crime. Nonetheless, Arizona’s real estate licensees are required to file ADRE’s Disclosure Document Checklist within a short period of time after a conviction for any misdemeanor or felony.
While no one wants to think about such a situation, this column by Assistant CEO and General Counsel Scott Drucker provides an important roadmap for those who find themselves facing such a requirement.
Implicit Association Tests
Understanding how we perceive others helps us avoid attitudes or stereotypes that negatively affect our actions & decisions unconsciously.
To further raise awareness about hidden biases, a non-profit organization has developed a series of Implicit Association Tests (IAT) in which you will be asked to sort pictures and words into groups as fast as you can.
Each session takes about 10 minutes to complete. At the end, you will receive your IAT results along with information about what it means.
Handwritten Language Trumps Boilerplate Language
FACTS:
Buyer and Seller executed a Residential Resale Real Estate Purchase Contract (Contract). In the Additional Terms and Conditions section of the Contract, the parties agreed to terms different than the boilerplate language contained in Section 2 of the Contract.
After execution of the Contract, Seller indicates that he will not comply with the provisions hand-written into the Additional Terms and Conditions section of the Contract. The basis for Seller’s position is that the contract contains conflicting terms. Specifically, the provisions contained in the Additional Terms and Conditions section of the Contract are different than the provisions contained in Section 2 of the Contract.
ISSUE:
Is the seller required to perform as set forth in the Additional Terms and Conditions section of the Contract?
ANSWER:
Yes.
DISCUSSION:
The Arizona REALTORS® provides forms with what is known as “boilerplate” language. This means that the documents are pre-printed forms with standard language.
Under contract law, handwritten terms usually prevail over boilerplate language. As such, Seller is obligated to comply with the provisions hand-written into the Additional Terms and Conditions section of the Contract.
Why ‘On or Before’ is a Bad Idea
FACTS:
Buyer and seller entered into a contract with a close of escrow date of April 27. Language written in the Additional Terms and Conditions section states, “Close of escrow to be on or before April 27.”
On April 24, the buyer notified the seller that his loan was ready so he wanted to close escrow on April 25.
The seller states he cannot close on April 25 because his moving company isn’t taking his items until April 26.
ISSUE:
Can the buyer demand the seller close escrow on April 25?
ANSWER:
No.
DISCUSSION:
The only agreed upon closing date is April 27. Unless there is a meeting of the minds to move the closing date to April 25, the agreed upon closing date remains April 27.
PRACTICE TIP: The better practice is to identify a specific date for closing. The language “on or before” can be perceived as ambiguous and often creates confusion and differing expectations.
July 14, 2020
Are Standard Commissions a Myth?
Ønce upon a time in a land far, far away, a fair-minded King issued a decree that protects REALTORS® from being thrown in a dungeon for price-fixing. Our very own Royal Counsel and Assistant CEO Scott Drucker’s column reveals the history of real estate commissions and whether or not they exist alongside unicorns and magic wands.
Opposition to Eviction Order
With tenants and property owners facing increasing economic pressure related to the worldwide COVID -19 healthcare crisis, Arizona must do more to improve access to the existing tools to help stave off eviction proceedings.
In advance of Governor Ducey’s executive order related to evictions set to expire on July 22, Arizona REALTORS®, alongside other industry leaders, recently expressed their opposition to recent calls to extend the order.
While property owners continue to work with tenants who find themselves suffering through the pandemic, the state must do more to help them out of this economic crisis.
If All Repairs Agreed to, Buyer Cannot Cancel via BINSR
FACTS:
A buyer and seller entered into a residential purchase contract. During the Inspection Period, the Buyer completed page one of the Buyer’s Inspection Notice and Seller’s Response (“BINSR”) requesting repairs from the seller. The seller responded on page two of the BINSR indicating the seller would repair all of the items the buyer had requested. The seller returned the BINSR to the buyer.
Several days prior to closing, the buyer delivered the BINSR to the seller, indicating at the bottom of page two that the buyer was electing to cancel.
ISSUE:
Can the Buyer use the BINSR to cancel the contract after the seller agreed to all repairs on the BINSR?
ANSWER:
No.
DISCUSSION:
Because the Seller agreed to make all repairs requested in the BINSR, the Buyer has no basis to cancel. The BINSR should only be used for cancellation pursuant to section 6j of the contract. That is not the circumstance here.
Late BINSR Does not Necessitate a Cure Notice
Facts:
Buyer submits a Residential Buyer’s Inspection Notice and Seller’s Response (BINSR) requesting a credit in lieu of repairs. Seller’s agent explains to buyer’s agent that the BINSR is improper and should not serve as a tool to negotiate price. Seller’s agent then encourages buyer to submit a revised BINSR identifying items disapproved and, if desired, submit an addendum asking to lower the purchase price. Buyer agrees, but does not submit the corrected BINSR until 12 days after contract acceptance, which is two days after the end of the inspection period.
Issue:
Is buyer’s late BINSR valid and if not, must seller submit a Cure Period Notice in order to recover the earnest money deposit?
Answer:
See Discussion
Discussion:
Since buyer’s corrected BINSR was submitted late, it was not valid. In fact, the situation is akin to buyer having entirely failed to submit a BINSR. Under such circumstances, the buyer is obligated to proceed with the transaction and the cure notice discussed on lines 268-272 of AAR’s Residential Resale Real Estate Purchase Contract does not come into play.
July 7, 2020
COVID-19 Economic Pulse Survey
Arizona REALTORS® conducted a survey to find out how the COVID-19 pandemic has affected the real estate business. From questions about how the situation has impacted the market to each step of the transaction, we hope the results will shed some light on what your colleagues in the industry are experiencing around the state.
10,000 Pennies For Your Thoughts!
Last month, we asked you what you thought was the most important tip you give to first-time homebuyers and have posted a sample of them on our website.
Lone Wolf Transactions
It’s official—Lone Wolf has rebranded their flagship products, including zipForm Plus/zipTMS to Lone Wolf Transactions (zipForm Edition).
Learn more about why and when the changes are happening here: ow.ly/TyR250ApF8i
Legal Hotline
If All Repairs Agreed to, Buyer Cannot Cancel via BINSR
FACTS:
A buyer and seller entered into a residential purchase contract. During the Inspection Period, the Buyer completed page one of the Buyer’s Inspection Notice and Seller’s Response (“BINSR”) requesting repairs from the seller. The seller responded on page two of the BINSR indicating the seller would repair all of the items the buyer had requested. The seller returned the BINSR to the buyer.
Several days prior to closing, the buyer delivered the BINSR to the seller, indicating at the bottom of page two that the buyer was electing to cancel.
ISSUE:
Can the Buyer use the BINSR to cancel the contract after the seller agreed to all repairs on the BINSR?
ANSWER:
No.
DISCUSSION:
Because the Seller agreed to make all repairs requested in the BINSR, the Buyer has no basis to cancel. The BINSR should only be used for cancellation pursuant to section 6j of the contract. That is not the circumstance here
Late BINSR Does not Necessitate a Cure Notice
Facts:
Buyer submits a Residential Buyer’s Inspection Notice and Seller’s Response (BINSR) requesting a credit in lieu of repairs. Seller’s agent explains to buyer’s agent that the BINSR is improper and should not serve as a tool to negotiate price. Seller’s agent then encourages buyer to submit a revised BINSR identifying items disapproved and, if desired, submit an addendum asking to lower the purchase price. Buyer agrees, but does not submit the corrected BINSR until 12 days after contract acceptance, which is two days after the end of the inspection period.
Issue:
Is buyer’s late BINSR valid and if not, must seller submit a Cure Period Notice in order to recover the earnest money deposit?
Answer:
See Discussion
Discussion:
Since buyer’s corrected BINSR was submitted late, it was not valid. In fact, the situation is akin to buyer having entirely failed to submit a BINSR. Under such circumstances, the buyer is obligated to proceed with the transaction and the cure notice discussed on lines 268-272 of AAR’s Residential Resale Real Estate Purchase Contract does not come into play.
June 30, 2020
Overcoming Barriers to Fair Housing
The Fair Housing Act and NAR’s Code of Ethics provide REALTORS® a strict set of guidelines that protect housing rights.
While Arizona REALTORS® knows that the consequences of an ethical or legal lapse in judgement can be costly, understanding how implicit bias can be equally if not more damaging is vital in protecting your business.
Test your knowledge with this Implicit Bias Test and then watch this video from the mind science experts at the
Perception Institute to help ensure you avoid implicit bias in your daily business interactions.
Will Mortgage Forbearance Ruin My Credit?
Earlier this week mortgage professionals reported a slight decrease in the number of Americans who have paused their mortgage payments.
While the numbers seemingly indicate that the real estate sector is rebounding to some degree, the truth is 4.2 million people in the U.S. are still working through forbearance.
One question that keeps coming up is, ‘Should people be worried about their credit as they emerge from forbearance?’
This article from Assistant CEO & General Counsel Scott Drucker details the impact of this financial situation on an individual’s credit score.
June 23, 2020
Are You Adding Confusion to an Addendum?
Drafting accurate and unambiguous contractual addenda ensure the parties involved have a clear understanding of the details and expectations of a real estate transaction.
Are you exposing yourself to potential liability by inadvertently drafting an addendum that is confusing or not as precise as it should be?
10 Quick Tips to Improve Email Engagement
Whether you’ve been an Arizona REALTOR® for weeks, months, years or decades, you’ve likely sent a newsletter or email update to your list of contacts.
If you’re among the lucky ones who get 100% open rates stop reading. For the rest of us, a few tips and reminders may help to incorporate into your next email missive. HERE
2020 Home Ownership Month: A New Era
Helping clients successfully find a place they’ll call home is one of the most rewarding aspects of being a real estate agent.
Have a story you would like to SHARE? Submit your client’s story & we’ll select one to feature on the Home Ownership Matters website.
Legal Hotline
Advocating for the Removal of an Apparent Prescriptive Easement is Beyond an Agent’s Licensure
FACTS:
The agent is listing a property on a hillside which a driveway runs through to access the house above the subject property. There is no written or recorded easement noted in the title commitment. Because there is no recorded easement, the buyer insists that the driveway is “illegal” and has urged the agent to eliminate it.
ISSUE:
Is the agent licensed to address the prescriptive easement and seek its removal?
ANSWER:
No.
DISCUSSION:
Article 26 of the Arizona Constitution allows licensees to represent a party in a real estate transaction. A real estate licensee may not, without further licensure, practice law. Based on the facts presented, the driveway may constitute a prescriptive easement through the subject property. Attempting to eliminate the easement would constitute the practice of law. The agent is therefore not properly licensed to address the situation. Rather, the agent should refer the buyer to independent legal counsel.
Listing Agent Must Disclose Letter from Neighbor’s Counsel as to Potential Infringement to the Buyer
FACTS:
Ten days before escrow was scheduled to close, the seller received a letter from a lawyer representing the neighbor. The lawyer’s letter claims that several trees that straddle the property line are a nuisance and that the neighbor is going to remove them at his expense.
ISSUE:
Should the listing agent disclose to the potential buyer the letter from the neighbor’s attorney?
ANSWER:
Yes.
DISCUSSION:
Real estate licensees are obligated to disclose all known material facts affecting the property. Here, the attorney’s letter and the alleged nuisance would constitute material facts which should be disclosed.
June 16, 2020
TransactionDesk: Tips, Tricks & Training
Let’s face it. Old school life jackets were less than ideal. Maybe they worked just fine, but we think advancements in technology have resulted in more people enjoying themselves around water.
The same can be said about form providers. Sure, the old form platforms are OK, but the technological advancements within TransactionDesk make it a great choice. Plus, you’ve already paid for it as a part of your Arizona REALTORS® membership.
If you’ve been waiting for the right time to try TransactionDesk, remind yourself of the old adage, ‘There’s no time like the present!’
To help you quickly get up-to-speed on real estate’s leading forms solution, look no further than our dedicated page of TransactionDesk resources.
From live streaming online classes with tested instructors to on-demand pre-recorded webinars, FAQs, and insightful tips and tricks, you’ll be ready in less time than you can say “Iceberg right ahead!”
Understanding Pool Barrier Laws
Because of the number of drownings and near-drownings in Arizona, most of which involve small children, most places around the state have enacted swimming pool barrier laws.
Generally, these laws require that all affected swimming pools (or certain other contained bodies of water) be protected by an enclosure surrounding the pool area, or by another barrier, that meets specific requirements.
“Know Before You Owe”TRID Rule Updates
The Consumer Financial Protection Bureau has just released a number of important updates related to TRID Title Insurance and Total of Payments Disclosures.
The useful updates come on the heals of an April 2020 TRID interpretive rule providing COVID-19 pandemic guidance.
Legal Hotline
Neighbor Brandishing a Firearm During Inspection is a Sufficient Basis for a Buyer to Cancel a Contract
FACTS:
The buyer and seller entered into an Arizona REALTOR® Residential Resale Purchase Contract (Contract) for a property with a zero lot line. The access to the HVAC and the electrical panel is through the neighboring property. A recorded easement allows the access. During a property inspection, the owner of the neighboring property over which the easement is located confronted the home inspector with a firearm and advised him to vacate his property immediately. The home inspector complied. The buyer now wants to cancel the transaction. The seller, however, claims that because the “problem” is beyond the property boundaries, the buyer is unable to cancel because he has not identified a defect with the property itself.
ISSUE:
Is the buyer entitled to cancel the transaction?
ANSWER:
Yes.
DISCUSSION:
The Contract gives the buyer the ability to inspect the property itself and the “surrounding area” during the inspection. Here, the reason for the cancellation involves the surrounding area. Therefore, the buyer is entitled to cancel the contract and receive the return of his earnest money.
Seller Should Cure An Ineffective Cancellation on the BINSR
FACTS:
The buyer and seller entered into the Contract. On the BINSR, the buyer elected to cancel the transaction. However, the buyer indicated that the reason for the cancellation was that he decided not to move to Tucson, Arizona.
ISSUE:
Did the buyer validly cancel the contract?
ANSWER:
See discussion.
DISCUSSION:
Generally speaking, the buyer must provide a reason related to the property condition, surrounding area or value in order to validly cancel the Contract during the inspection period. Here, the cancellation does not address either. However, the Contract addresses this issue. Specifically, Section 6j provides that if the buyer provides a cancellation that is not consistent with the contract provisions, then the contract is still canceled but the seller may issue a cure giving the buyer three (3) additional days to provide a valid reason for the cancellation. If the buyer provides a valid reason for the cancellation within the three-day timeframe, then the buyer is entitled to the return of the earnest money.
June 9, 2020
Who Enforces Forcible Detainer Actions?
Arizona REALTORS® closely monitor court proceedings for litigation that could result in any change in the way the business of real estate is conducted.
Recently, a Court of Appeals interpretation of state statute related to evictions has changed who enforces forcible detainer actions.
In this article by Assistant General Counsel Nikki Salgat, you’ll learn the details of the case and what property owners now need to know about which judicial jurisdiction they must file eviction documents with.
10,000 Pennies For Your Thoughts?
Sharing your professional experience with clients is one of the most valuable services REALTORS® provide.
Managing expectations and helping people understand a complex financial transaction can help reduce anxiety especially when faced with the twists and turns they’ll face during a stressful time.
This month, we want to HEAR FROM YOU with what you think is the most important tip you give to first-time homeowners.
Your response could win you a $100 gift card to Bed Bath and Beyond (Triple B for those in the know) that you can pass along to a client or even spend it yourself!
Later this month we’ll share the responses and reward a random entry with a shiny $100 BB&B gift card to enjoy!
The Power of the R®
If you’ve been an Arizona REALTOR® for any amount of time, you know that your membership benefits from the National Association of REALTORS® and your state association evolve and adapt frequently. Now more than ever, it’s important that REALTORS® are taking advantage of the package of valuable benefits available to them.
This presentation from award-winning Arizona REALTOR® and resident ROCKSTAR Lisa Paffrath uncovers the tools and resources that are FREE and will help you and your business save money.
Legal Hotline
With Precautions, Agents May Conduct Open Houses During the Coronavirus Pandemic
FACTS:
The seller is insisting that the listing agent host regular open houses for the property. The listing agent is hesitant to do so in light of the COVID-19 pandemic and the potential health and liability considerations. The listing agent has expressed these concerns to the seller and the seller insists that open houses be held nonetheless.
ISSUE:
May a listing agent host an open house in light of the COVID-19 pandemic?
ANSWER:
See discussion.
DISCUSSION:
The listing agent has valid concerns with the health and liability consequences that may flow from hosting an open house during this pandemic. However, there is no prohibition against the listing agent conducting an open house. The National Association of REALTORS® and the Arizona REALTORS® have published guidelines to assist licensees when hosting an open house. See here. Provided that the listing agent is comfortable with the open house under the precautions identified, and after consultation with its broker, the listing agent can hold an open house during the COVID-19 pandemic. Note: The open house should follow the Centers for Disease Control & Prevention guidelines regarding limiting gatherings and social distancing.
The Coronavirus Pandemic Generally Does Not Excuse Performance Under a Contract
FACTS:
The buyer and seller entered into an Arizona REALTOR® Residential Resale Purchase Contract (Contract). After the inspection period, the buyer elected to cancel the Contract because of the COVID-19 pandemic.
ISSUE:
Is the COVID-19 pandemic, in and of itself, a legal justification for canceling the contract?
ANSWER:
See discussion.
DISCUSSION:
Many buyers and sellers are uneasy with the economic and financial consequences flowing from the COVID-19 pandemic. However, in Arizona, the county recorder’s offices remained open at all times. Additionally, those in the real estate industry were deemed “essential” so that they could continue to operate. Accordingly, real estate agents, title companies, lenders, appraisers and home inspectors continued to function, at least on a modified basis. Therefore, the COVID‑19 pandemic did not make it impossible for parties to perform their contractual obligations. As such, the COVID-19 pandemic does not legally justify the buyer (or seller) canceling an otherwise valid purchase contract. Note, if as a result of the pandemic, the buyer lost her job or experienced a substantial decrease in income, thereby resulting in a good faith denial of their loan, the buyer would be entitled to cancel pursuant to the financing contingency in the Contract.
June 2, 2020
Finding Peace in Turbulent Times
Arizona REALTORS® are known nationwide for being among the Best Prepared Real Estate Practitioners with the Highest Standards. That’s why so many of our members are asked to share their secrets to success at meetings around the country.
The latest example was former 2017 President Paula Monthofer and her featured presentation during the 2020 National Association of REALTORS® Legislative Meetings. Watch this compelling discussion, where Paula will guide you through techniques and resources to help you stay calm and focused in today’s uncertain environment.
Anticipatory Breach
Assistant CEO & General Counsel Scott Drucker serves up an ice-cold helping of legal analysis in this month’s Legal Scoops.
Can you identify the difference between an expression of doubt and “positive and unequivocal” statement that may result in anticipatory breach?
Relief Hotline Assists AZ REALTORS®
In response to the unique financial challenges to members, Arizona REALTORS® launched the Relief Hotline.
Having proved very successful, and with REALTORS® returning to work stronger than ever, the hotline has been suspended, having accomplished its mission.
Legal Hotline
Independent Contractor May Qualify for Federal Unemployment Benefits
FACTS:
N/A
ISSUE:
Are independent contractor licensees who receive only 1099 income entitled to federal unemployment benefits in light of the coronavirus pandemic.
ANSWER:
See discussion.
DISCUSSION:
Generally, independent contractors are not entitled to state unemployment benefits. However, the federal Pandemic Unemployment Assistance (PUA) program is available to 1099 independent contractors. The benefit is $600 per week and the amount received is taxed as normal income. Licensees who are independent contractors that qualify can apply for PUA benefits through the Arizona Department of Economic Security.
Generally, Licensed Independent Contractors are Not Employees for State Unemployment Benefits
FACTS:
The brokerage firm received a notice from the Arizona Department of Economic Security (“DES”) seeking confirmation that one of its licensees was employed by the brokerage. The licensee is an independent contractor only, not a W-2 employee.
ISSUE:
Can the brokerage firm contest the “employee” status of its independent contract?
ANSWER:
Yes.
DISCUSSION:
Licensees who do not receive W-2 compensation from their brokerage firm are generally not entitled to state unemployment benefits. The brokerage firm should therefore return the documents to DES, specifying that the licensee is not an employee of the brokerage firm for unemployment compensation purposes.
May 26, 2020
REALTOR® Value Flyer
Arizona REALTORS® are constantly working to help provide the tools you need to grow your business.
The Professional & Business Development and Business Services & Technology Committees collaborated to create an online tool that can be used by members to articulate the REALTOR® value to the consumer.
The new value proposition flyer, “A REALTORS® Value To You,”
Members can use the Arizona REALTORS® branded version or follow the directions on the page to upload their brokerage logo.
Sine Die 2020
The 54th Arizona House has completed its work for 2020 and due to the efforts of your Legislative & Political Affairs team, Arizona REALTORS® emerged with more clout than ever before.
Government Affairs Director Matt Contorelli gives you the skinny on a turbulent session where the impacts of COVID-19 overwhelmed the end of session.
June 1st Forms Revision Release
What do the H.O.A. Condominium / Planned Community Addendum, BINSR and Counter Offer forms have in common?
Yep, they’ve been revised.
Check out the changes and be among the Best Prepared Real Estate Practitioners with the Highest Standards.
Legal Hotline
Time Period Does Not Include The Day of Act or Event
Facts:
Contract acceptance occurred on Monday.
Issue:
When does five days after contract acceptance expire?
Answer:
See discussion.
Discussion:
The day of the act or event from which the time period begins to run is not included, so day one is Tuesday. The last day to perform any acts required to be accomplished within five days after acceptance should be completed by Saturday at 11:59 p.m.
Note: All references to days are calendar days. A day begins at 12:00 a.m. and ends at 11:59 p.m.
FACTS:
A buyer sent a seller a counter-offer to the Residential Resale Real Estate Purchase Contract (Contract). The seller signed the counter-offer and provided it to his listing agent with instructions to deliver the acceptance to the buyer.
Before the listing agent could deliver the accepted Contract to the buyer, the seller called the listing agent and directed him not to deliver the acceptance.
ISSUE:
Was Contract acceptance already delivered?
ANSWER:
No.
DISCUSSION:
Section 8o of the Contract states “This offer will become a binding Contract when acceptance is signed by Seller and a signed copy delivered in person, by mail, facsimile or electronically, and received by Broker named in Section 8q.”
In this case, the accepted offer never left the seller’s possession. Therefore, acceptance was neither delivered nor received.
Note: If the listing agent was a dual agent, then the accepted offer would have been delivered to the buyer once it was in the dual agent’s possession and the seller could not have withdrawn the acceptance.
May 19, 2020
President’s Update
In this update from President Roberts, you will find an overview of the resources available to members. From special access to relevant videos and financial assistance to revised forms, flyers, and addendums, this important information will help you and your business emerge stronger than ever.
Purchase Contract MLS Code
Our IT gurus have heard that some members have had an issue with the correct Firm MLS Code populating on the Residential Purchase Contract or a few other forms.
FHFA Delivers Certainty to American Homeowners
With so many families struggling with the financial impact of COVID-19, the Federal Housing Finance Agency has some good news for people currently in forbearance.
Legal Hotline
Unlicensed Assistant Must be Identified as Unlicensed in All Advertising
FACTS:
A real estate team held an open house. An unlicensed assistant attending the open house posted video to a social media site. The video featured the unlicensed assistant who stated, “Come down to our open house and join us!”
ISSUE:
Must the unlicensed assistant disclose that she is not licensed in the video?
ANSWER:
Yes.
DISCUSSION:
Arizona Department of Real Estate Substantive Policy Statement 2017.01 states: All inclusions of the unlicensed assistant in advertising or marketing must indicate the individual as being “unlicensed” (A.R.S. § 32-2165(A)).
Therefore, the unlicensed assistant should identify herself as unlicensed in any advertisement or marketing.
FACTS:
An agent wants to send unsolicited text messages to consumers as part of a marketing campaign.
ISSUE:
Can an agent send text messages as part of an unsolicited marketing campaign?
ANSWER:
No.
DISCUSSION:
The Federal Trade Commission (FTC) provides information regarding unsolicited text message marketing:
Text Message Spam is Illegal
It’s illegal to send unsolicited commercial email messages to wireless devices, including cell phones and pagers, unless the sender gets your permission first…If you receive unwanted commercial text messages, file a complaint with the FTC.
Therefore, agents should not participate in text-message marketing.
Note, the FTC lists an exception:
Transactional or relationship types of messages.
If a company has a relationship with (a consumer), it can send (the consumer) things like statements or warranty information.
May 12, 2020
Legislative Update
Your legislative and government affairs team has been hard at work to minimize the impact of coronavirus on your business and reduce bureaucratic red tape wherever possible.
In this column, Government Affairs Director Matt Contorelli recaps a turbulent session where Arizona REALTORS® and their business interests were successfully represented at the state capitol.
Love Your Neighbor T-Shirt Sale
Russ Lyon Charitable Foundation Partners with Arizona Association of REALTORS® to Sell T-Shirts and Raise Funds to Benefit Arizona Housing Fund.
The sales started Monday, May 4th and runs through Monday, May 18th, 2020. Love Your Neighbor apparel will be produced and shipped after the ordering period ends.
Coronavirus & Fair Housing Pop Quiz
Are individuals who have COVID-19 covered under the disability protections of the federal Fair Housing Act?
Are you obligated to assist, or show or provide housing to someone who has or may have COVID-19?
If you aren’t quite sure about the answers to these questions, or just need a refresher, take a few minutes to review the guidance provided by NAR.
Legal Hotline
Seller May Not Unilaterally Cancel a Listing Agreement
FACTS:
The seller and agent execute a one-year listing agreement. After three months, the seller wants to unilaterally cancel the listing agreement because she says she is unhappy with the agent and thinks that more should be done to market the property.
ISSUE:
Can the seller unilaterally cancel the listing agreement?
ANSWER:
No. A listing agreement is a binding bilateral contract between the listing brokerage and the seller. Any cancellation of the listing agreement requires the consent of both the seller and the listing broker, unless the listing agent has materially breached the agreement.
Trustee Generally Has The Authority To Sign On Behalf Of A Trust
FACTS:
A husband and wife deeded the property into a revocable living trust when they purchased it. The husband died and the death certificate was recorded.
ISSUE:
Who is the rightful owner of the property entitled to sign the listing agreement?
ANSWER:
The listing agreement is a contract between the broker and the seller and must be signed by the actual owner of the property. Here, the trust is the owner of the property. Generally, the trustee of a trust is the person with signing authority for a trust. Accordingly the trustee should sign the listing agreement.
May 5, 2020
Scott’s Legal Scoops
Earlier this year Arizona REALTORS® revised the Residential Resale Purchase Contract to allow seller concessions on any expenditures that are accepted by a buyers lender.
In this edition of Scott’s Legal Scoops, hear from our Assistant CEO and General Counsel Scott Drucker as he recaps why the decision was made and what members can expect moving forward.
Tech Helpline
As COVID-19 continues to cause us to acclimate to working remotely, Arizona REALTORS® have a tremendous benefit at their fingertips with free access to Tech Helpline.
While most members call for immediate assistance with software repair or help desk support, Tech Helpline recently provided tips and best practices on how to participate and hold virtual meetings.
Relief Hotline FAQ’s w/Rick Mack
Arizona REALTORS® created a new FREE member benefit titled the COVID-19 Arizona REALTORS® Relief Hotline.
To help members access information about small business loans or unemployment benefits, we held a ZOOM meeting where Rick Mack shared common questions and discussed issues the hotline has received to date.
Legal Hotline
A Residential Tenant Must Allow The Home To Be Shown On A Reasonable Basis
With At Least 48 Hours Notice
FACTS:
The single family residence, which is rented to a tenant, is listed for sale. The listing agent wants to show the residence to a prospective buyer and gave the tenant 24 hours advanced notice of the showing.
ISSUE:
Is 24 hours advance notice sufficient?
ANSWER:
No.
DISCUSSION:
A residential landlord has the right to enter the premises for, among other things, showing the premises to a prospective purchaser. See A.R.S. § 33-1343(A). However, except in an emergency, the landlord must give the tenant at least two days notice with the intent to enter. Further, the entry into the dwelling must be done only at reasonable times. See A.R.S. § 33-1343(D).
Accounting Of Security Deposit May Not Be Required
FACTS:
A property manager placed a tenant in the landlord’s property. After the tenant failed to pay rent for several months, the landlord filed an action for eviction with the assistance of an attorney. The landlord obtained a judgment against the tenant and the tenant was evicted. The landlord wants to claim all of the security deposit toward the amount owing from the judgment. Additionally, the tenant has left no forwarding address.
ISSUE:
Should the property manager provide an accounting of the security deposit to the tenant?
ANSWER:
See Discussion.
DISCUSSION:
Within 14 business days after termination of the tenancy and delivery of possession and demand by the tenant, the tenant is entitled to receive an itemized list of any/all security deposit deductions together with the amount due and payable to the tenant. A.R.S §33-1321(D) . According to a strict reading of the statute, unless the tenant has made a demand for an accounting of the security deposit, the property manager does not necessarily need to provide an accounting. However, the best practice is for the property manager to send a final accounting to the last known address of the tenant regardless of whether the tenant demanded an accounting.
April 28, 2020
Compliance with Arizona Blue Sky Laws is Critical
Arizonans enjoy sunny skies nearly 300 days of the year, but are they up to speed on the state’s Blue Sky Laws? These regulations set forth in the Securities Act of Arizona ensure people register with the AZ Corporation Commission and make it unlawful to omit or misrepresent material facts during the course of a transaction involving securities.
This week’s featured article recounts a scheme where someone violated the law by failing to disclose important details of a real estate investment project.
WEBINAR: Condos in Arizona
Need a refresher on the difference between condominiums and other property types? Want to be able to better navigate around incorrect property classifications commonly made by the County Assessor?
Watch this webinar featuring Patrick Ritchie, a Senior GRI instructor as he gives a comprehensive overview and in-depth details involved with condominium transactions sure to benefit you and your clients.
Unemployment for Independent Contractors
The process of accessing unemployment benefits under the recently passed CARES Act has frustrated many Arizona REALTORS®.
While new government programs oftentimes face a bumpy start, many people are understandably confused and discouraged with the process during a time when they face such extreme economic uncertainty.
Building on the recently created COVID-19 Relief Hotline, Assistant General Counsel Nikki Salgat has put together a step-by-step guide to help members apply and receive Pandemic Unemployment Assistance.
Legal Hotline
Arizona REALTORS® Forms Are For Member Use Only
Law Allows One Party To A Conversation To Record w/o The Other Party’s Consent
April 21, 2020
Preparing Your Clients for Remote Online Notarization Today and Beyond
The onset of coronavirus has fundamentally changed the way Arizona REALTORS® are working through complex real estate transactions. While Remote Online Notarization was signed into law last year, Governor Ducey and Secretary of State Katie Hobbs have fast-tracked its implementation to further protect people from the spread of COVID-19 during this uncertain time.
In this comprehensive and detailed article by Certified Senior Escrow Officer Leslie Banes, you’ll learn everything you need to know about online notarization and how to best prepare your clients.
Scott’s Legal Scoops
Should an agent ever buy the house of a seller they are representing? Arizona REALTORS® Assistant CEO and General Counsel Scott Drucker serves up some tasty advice in the inaugural edition of our new feature, Scott’s Legal Scoops.
COVID-19 Certification for Property Access
Taking advantage of virtual showings during the coronavirus pandemic is a great way to make sure you are keeping yourself and others safe.
With that in mind, Arizona REALTORS® have updated the Model Certification for Property Access to include a reminder about alternative ways to view a home.
Legal Hotline
Landlord Must Allow an Assistance Dog as a Reasonable Accommodation for a Handicapped Tenant
FACTS:
A landlord wishes to rent his unit to a handicapped tenant who uses an assistance dog.
ISSUE:
May the landlord charge a pet deposit for the assistance dog?
ANSWER:
No.
DISCUSSION:
Charging a pet deposit would likely be an act of discrimination under the Fair Housing Act. Discrimination under the act includes “a refusal to make reasonable accommodations in rules, policies, practices, or services, when such accommodations may be necessary to afford [a person with a disability] equal opportunity to use and enjoy a dwelling.” 42 U.S.C. § 3604(f)(3)(B). So long as the requested accommodation does not constitute an undue financial or administrative burden for the landlord, or fundamentally alter the nature of the housing, the landlord must provide the accommodation.
Arizona REALTOR® Magazine – February 2012
HOA Cannot Impose Additional Fee On Tenant For Service Animal
FACTS:
A tenant signed a lease and is going to move into a townhouse. The tenant has a service dog.
The HOA wants to charge the tenant $75, which is charged to all pet owners to pay for DNA testing. The HOA has DNA testing performed, so they can identify individual pet owners to enforce the HOA policy that residents must clean up after their pets.
ISSUE:
Can the HOA charge $75 to the tenant for the DNA testing of the dog?
ANSWER:
No.
DISCUSSION:
Reasonable Accommodations for Assistance Animals under the FHA and Section 504 states:
“An assistance animal is not a pet. It is an animal that works, provides assistance, or performs tasks for the benefit of a person with a disability, or provides emotional support that alleviates one or more identified symptoms or effects of a person’s disability.” Therefore, the tenant’s service animal is not considered a pet, and the HOA cannot impose the $75.00 fee. To do so would be an act of discrimination under the Fair Housing Act.
April 7, 2020
Info & Resources from REALTORS® for REALTORS®
To help you navigate the (COVID-19) health crisis and its impact on the real estate industry, we’ve developed a webpage that consolidates the latest news and information on the constantly evolving situation.
Model COVID-19 Certification For Property Access
Arizona REALTORS® has developed a document that may help ease their concerns by requiring individuals to agree to certain criteria before entering the property.
Sharing is Caring on TransactionDesk
Sharing documents with your team on TransactionDesk is a simple and efficient way to get things done without the hassle of emailing back and forth. Our tech team outlines the steps you can take to set up the connection.
Legal Hotline
Licensees Should Not Represent Parties Who Refuse to Obtain Title Insurance
FACTS:
After the Purchase Contract (Contract) was entered into by the buyer and seller, intending to save some money, the parties decided they would not use a title company nor a traditional lender. The agents have been asked to draft an Addendum to the Contract providing for seller financing and eliminating the provisions addressing title insurance and the handling of escrow.
ISSUE:
Can the agents represent the parties in the transaction consistent with the standard of care?
ANSWER:
See discussion.
DISCUSSION:
Both the buyer’s agent and the seller’s agent owe their respective clients a fiduciary duty to promote and protect their interests. A.A.C R4-28-1101(A). Seller finance transactions are complex even under normal circumstances because of the Dodd-Frank legislation and should at least be reviewed by counsel. Closing a transaction without a title commitment and without title insurance is a very high-risk proposition for the parties and the brokerage firms involved.
The agents should notify their respective clients to obtain independent legal counsel. If the parties refuse to hire counsel, it is recommended that the agents resign their agency roles in the transaction.
An Agent Sitting an Open House for the Listing Agent Cannot be Compensated Directly by the Listing Agent
FACTS:
A listing agent has hired an agent licensed with another brokerage firm to sit open houses. The listing agent pays the other agent hourly and pays by way of check issued directly to the other agent.
ISSUE:
May the other agent accept direct payment from the listing for sitting the open houses?
ANSWER:
No.
DISCUSSION:
Sitting an open house is activity that requires a license. See ADRE Substantive Policy Statement No. 2017.01. As such, the other agent my accept compensation only from the broker with whom they are licensed. A.R.S. §32-2155(A). The agent therefore may not accept compensation directly from the listing agent.
March 31, 2020
What Does Governor Ducey’s Shelter Order Mean for REALTORS®?
With nearly 100,000 people working in real estate and related industries, it’s essential Arizona REALTORS® understand how governmental decisions are impacting their business.
Governor Ducey has issued numerous Executive Orders to deal with this evolving crisis, most recently the “Stay home, Stay healthy, Stay connected,” policy to limit the spread of COVID-19.
What does this really mean for REALTORS®? Assistant CEO and General Counsel Scott Drucker has an analysis that will help you better understand this latest development.
AZ REALTORS® Ready To Assist Buyers and Sellers, Taking Extra Precautions
From technology, safety precautions and issues related to potential delays, your state association stands ready to help you navigate the heath and economic crisis.
The demand for real estate remains strong and Arizona REALTORS® has compiled information and resources to help you serve your clients and our community.
COVID-19 Causes Suspension of Some Evictions
Arizona Governor Doug Ducey recently issued two Executive Orders dealing with the prohibition of “Essential Services” and the postponement of certain evictions.
In this article, Arizona REALTORS® Assistant General Counsel Nikki Salgat identifies commonly asked questions and answers for tenants, landlords and property managers based on what we know to date.
TransactionDesk Virtual Training
While attending TransactionDesk classes in person is off the table during this period of social distancing, you can still enjoy virtual classes from the comforts of home.
Take a few minutes and watch recorded webinars on Authentisign and TransactionDesk without ever changing out of your favorite sweats and 80s concert tee shirt you’ve got on.
Legal Hotline
Providing Guidance to a For Sale By Owner (FSBO) Could Create an Agency Relationship
FACTS:
The buyer’s agent presented an offer on a property that was for sale by owner (“FSBO”). In connection with the Purchase Contract, the seller executed the Arizona REALTOR® Unrepresented Seller Consent. During the course of the escrow, the seller has asked the agent multiple questions regarding price, a response to the Buyer’s Inspection Notice and Seller Response, repairs to be made and title issues. The buyer’s agent has answered some but not all of the questions posed by the seller.
ISSUE:
Has the buyer’s agent created an implied dual agency by assisting the unrepresented seller even though the parties signed the Unrepresented Seller Compensation Consent Agreement addressing the various duties owed?
ANSWER:
See discussion.
DISCUSSION:
Agency can be either expressed or implied. Warren v. Mangels Realty, 23 Ariz. App. 318, 533 P.2d 78 (App 1978). Providing advice to and otherwise assisting an unrepresented seller could give rise to an implied agency relationship with that seller. Haldiman vs. Gosnell, 155 Ariz. 585, 748 P.2d 1209 (1988.). The buyer’s agent should therefore provide no further assistance to the seller and should also remind the seller, in writing, that the buyer’s agent is not representing the seller in the transaction.
Buyer Must Provide Seller a Copy of a Termite Report Obtained During the Inspection Period
FACTS:
The buyer and seller entered into an Arizona REALTOR® Residential Resale Real Estate Purchase Contract (Contract). During the inspection period, the buyer elected to cancel the Contract based on the results of a termite inspection obtained by the buyer. The seller did not contest the cancellation and further agreed to refund the buyer his earnest money. However, the seller did ask for a copy of the termite report. The buyer refuses to provide a copy.
ISSUE:
Is the buyer required to provide a copy of the termite report?
ANSWER:
Yes.
DISCUSSION:
The Contract provides at lines 222-223: “Buyer shall provide Seller and Broker(s) upon receipt, at no cost, copies of all inspection reports concerning the Premises obtained by Buyer.” The buyer is therefore contractually obligated to provide the termite report to the seller.
March 3, 2020
Wells 101
With more than 120K Arizonans getting their water from a private well, are you prepared to talk with your clients about the procedures, rules, regulations, and forms that will be a part of their transaction?
WATCH WEBINAR
BONUS INFO: GUIDE FOR OPERATING SHARED WATER WELLS IN AZ
Preformed Pixels
For Arizona REALTORS®, creating Templates in TransactionDesk can reduce the time it takes to complete required documents as well as ensure accurate information is on their forms.
Our TDESK TEAM has a quick step-by-step primer on how to create these templates so you can start adding minutes to your day.
¿Pueden Tus Clientes Leer Esto?
Can your clients read the title of this article? If so, they may be interested to know that Arizona REALTORS® has translated its most often used forms and advisories into Spanish.
Legal Hotline
An Affidavit of Disclosure is Mandated by Statute and May Not be Waived by the Parties
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FACTS:
The buyer submitted an offer on a home in an unincorporated and unsubdivided area. As part of the offer, the buyer requested an affidavit of disclosure. In the counter offer, the seller refused to provide an affidavit of disclosure.
ISSUE:
May the parties waive an affidavit of disclosure when otherwise required?
ANSWER:
No.
DISCUSSION:
When property being sold is in an unincorporated and unsubdivided area, an affidavit of disclosure must be provided by the seller at least seven days before the close of escrow. A.R.S. § 33-422. Accordingly, the affidavit of disclosure may not be waived by the parties.
Inoperable Car Does Not Give the Buyer the Ability to Cancel the Real Estate Contract
FACTS:
The buyer and seller entered into an Arizona REALTOR® residential purchase contract. Subsequently, in an addendum, the seller agreed to convey several cars on the Property to buyer as part of the transaction.
ISSUE:
Can the buyer cancel the purchase contract upon finding out one of the cars does not run?
ANSWER:
See discussion.
DISCUSSION:
Probably not, Section 6j of the Contract provides that the buyer can cancel within the Inspection Period if the buyer “disapproves of items as allowed herein.” This language references Section 6a of the Contract, which specifies the items which the buyer can investigate during the Inspection Period. All of these items relate to the real property, and not personal property. Therefore, the buyer cannot cancel because one of the cars is inoperable.
February 25, 2020
Mary Lee Greason Award
During last week’s Professional Standards Workshop, Arizona REALTORS® took the time to recognize a member with the Mary Lee Greason Excellence in Professional Standards Award. The honor is bestowed upon someone who has exhibited a passion for professional standards through exceptional service, commitment, preparation, and leadership.
Arizona’s Youngest REALTOR®
All of us remember the ??? ?? ???? that got us into the industry. While some people came into real estate later in life, some figured it out much earlier. While we were more interested in the latest Journey record or Star Wars movie, we recently became aware of a young man who became a REALTOR® while still in High School late last year and we had to meet him.
Counting Arizona
We all know that the number of people living here grows each day. Whether it’s one of Arizona’s 5 C’s, (Climate, Citrus, Cattle, Cotton or Copper) or something else, we need to have the resources and infrastructure in place when the next million people move to the Grand Canyon State.
That’s why it’s so important we get an accurate count of the people who already live here. In just a few weeks the U.S. Census Bureau will begin the process and Arizona REALTORS® can help make sure our communities get back what they pay in via their annual tax bill. In this short video, Sindy Ready, the 2020 Scottsdale Area Association of REALTORS® President reveals how you can get involved, and make a little $$$ while doing it!
Legal Hotline
An Unlicensed Assistant May Unlock a Home Under Certain Circumstances
FACTS:
The licensee is running late for a property showing and asked her assistant to unlock the door in advance.
ISSUE:
Can an unlicensed assistant unlock a home for a licensee in the event the licensee is late?
ANSWER:
See discussion.
DISCUSSION:
Pursuant to Arizona Department of Real Estate in Substantive Policy Statement number 2017.01, an unlicensed assistant may unlock a home for a licensee so that the licensee can show a client the property or preview the property. However, the unlicensed assistant may not have any discussions pertaining to the property.
A Property Manager May Not Require a Tenant with Children to Pay for a Pool Barrier
FACTS:
A property management company has a swimming pool barrier policy for tenants with children. This policy requires tenants with children to install a fence or otherwise comply with swimming pool barrier laws. Furthermore, at the termination of the tenancy, the tenant is required to remove the fence or other improvements at the tenant’s expense.
ISSUE:
Is this policy in compliance with Fair Housing laws?
ANSWER:
No.
DISCUSSION:
Familial status (including tenants with children) is a protected class under Fair Housing laws. If the property management company has a policy which places conditions or restrictions upon the rental because of familial status, e.g., compliance with swimming pool barrier laws, the property management company has probably committed a discriminatory act under the Fair Housing laws. See A.R.S. §41-1491.01.
February 18, 2020
Presidential Preference Election
Today is the deadline for people to register to vote in Arizona’s March 17th Presidential Preference Election.
This year, the Democratic Party is the only political party holding a Presidential Preference Election. To participate, a voter must be registered as a Democrat by 11:59 p.m. tonight. You can register HERE, or visit our webpage for more information on upcoming elections, candidates and how to participate in the rest of Arizona’s elections in 2020.
Digital Document Depot
One of the many features available in TransactionDesk is unlimited storage. This week, our TDESK experts walk you through the steps to save your documents in DocBox.
Silver Tsunami Causing Homelessness?
According to a recent study released by the Maricopa Association of Governments, the number of unsheltered homeless has jumped a staggering 200% over the last six years.
As the cost of housing continues to increase, it’s becoming more important to find solutions for Arizona’s most vulnerable people. While there may not be an easy solution, Arizona REALTORS® are partnering with the Arizona Community Foundation to build a dedicated funding source for nonprofit agencies that build and operate permanent supportive, low-income and working poor housing units.
Legal Hotline
Dual Agency Applies to the Entire Brokerage Firm
FACTS:
The Parties entered into the Arizona REALTORS® Residential Resale Contract. Agent A represents the buyer and Agent B represents the seller. Both agents are licensed with the same brokerage.
ISSUE:
Which box should be checked in the Agency Confirmation section of the Arizona REALTOR® Residential Resale Contract (lines 449-450 and lines 463-464)?
ANSWER:
See discussion.
DISCUSSION:
The “both Buyer and Seller” box at lines 450 and 464, respectively, should be checked because the same brokerage represents the buyer and the seller, even though two different licensees represent the individual parties.
The Buyer is Obligated to Investigate Insurance Premiums During the Inspection Period
FACTS:
The parties closed escrow based on a fully executed Arizona REALTORS® Residential Resale Contract. After closing, the buyers discovered that homeowners’ insurance premiums will be approximately 5 times more than they anticipated based on a prior fire in the home. The fire and resultant repairs were disclosed by the seller in the transaction. The buyers are demanding that the buyers’ agent reimburse them for the cost of the additional insurance premiums for the time they own the house, which the buyers estimate at 10 years.
ISSUE:
Is the buyers’ agent legally obligated to pay the unexpected insurance premiums?
ANSWER:
Probably not.
DISCUSSION:
There is a trend with the Arizona appellate courts to enforce risk shifting provisions in contracts. For, instance the language warning the buyers to investigate square footage if it was material to them was enforced by the Court in Elm Retirement vs. Callaway, 226 Ariz. 287, 246 P 3.d 938 (App. 2010). The language regarding insurance is akin to the square footage language enforced by the Court of Appeals. The insurance language (lines 237 through 239) provides:
IF HOMEOWNER’S INSURANCE IS A MATERIAL MATTER TO THE BUYER, BUYER SHALL APPLY FOR AND OBTAIN WRITTEN CONFIRMATION OF THE AVAILABILITY AND COST OF HOMEOWNER’S INSURANCE FROM THE BUYER’S INSURANCE COMPANY DURING THE INSPECTION PERIOD.
(emphasis in original)
Based on the quoted language, the buyer’s agent should not be obligated to pay the increased insurance premiums. Independent legal counsel should be consulted.
February 11, 2020
Are you READE for this video?
Logging into TransactinDesk?
Well, well, well, A webinar on water wells.
Legal Hotline
Licensees Must Advise Clients to Obtain Counsel Regarding Pre/Post Possession Agreements
FACTS:
The buyer and seller have agreed in an addendum that the seller will deliver possession of the home three (3) days after the close of escrow.
ISSUE:
Other than documenting the possession date in an addendum, are the agents required to take further action on behalf of their respective clients?
ANSWER:
Yes.
DISCUSSION:
Because of the inherent risk in pre- and post possession agreements, the Commissioner’s Rules require licensees to advise their clients in writing to seek “appropriate counsel from insurance, legal, tax and accounting professionals regarding the risks of pre-possession and post possession of the property.” A.A.C. R4 28-1101 (K).
The Broker Has Immunity for Failure to Supervise if Immediately Reported to ADRE
FACTS:
The broker has received several complaints from buyers’ agents that a licensee has not submitted offers to the seller. Upon investigation, the designated broker discovered that the complaints were accurate. On several transactions, the listing agent received yet did not convey offers to the property owners. The owners were not aware, nor did they agree, that certain offers would not be presented to them.
ISSUE:
Is the broker obligated to inform the ADRE of this activity?
ANSWER:
See discussion.
DISCUSSION:
The broker may, but is not obligated to, advise the ADRE of the licensee’s activity. However, if the broker does report the activity immediately, the broker is not subject to disciplinary action from the ADRE for failing to supervise the licensee. See A. A. C. R4-28-1103 (F).
February 4, 2020
Problem: Homelessness /// Solution: AZ Housing Fund
With more than 10K individuals looking for housing, the growing number of homeless living in Arizona is nearing crisis levels.
While there isn’t an easy solution to completely solve the problem, one organization has developed a mechanism where people can help reduce homelessness. Combined with the Arizona REALTORS® supported ESCROW DONATION PROGRAM, better days lie ahead for low income and the working poor.
New Guidance for Assistance Animals
Housing providers are often faced with tenant requests for assistance animals. While accommodating some requirements can be fairly straight forward, others can be more difficult.
To help people understand the complex regulations of the Fair Housing Act, specifically the rules related to assistance animals, the Department of Housing and Urban Development recently issued formal guidance to help clarify many of the issues that have come up during these conversations with tenants with disabilities.
In this article, Arizona REALTORS® Assistant General Counsel Nikki Salgat provides an in-depth analysis of the significant clarifications and discusses the best practices outlined in the official notification.
Accessing Accessibility
Some of our clients face unique challenges when looking for a home that meets their accessibility requirements.
In this special column, the founder of AbleUSA reveals how Arizona REALTORS® can best help seniors or others with special needs through the process and find a place they are comfortable calling home.
Legal Hotline
Access to Smart Home Devices Must Convey
FACTS:
The seller’s home contained one particular smart device that was operated by a tablet.
ISSUE: Upon the sale of the home, must the tablet be conveyed to the buyer, or can the seller take it with them?
ANSWER:
See Discussion.
DISCUSSION:
The answer depends on whether the smart device is operated via an app that can be installed on any phone, iPad, tablet, etc., or whether the tablet is dedicated to that piece of equipment, meaning its sole purpose is to operate the device.
The February 2020 Residential Resale Real Estate Purchase Contract, Section 1g, states that affixed smart home devices constitute fixtures that convey with the home, “access to which shall be transferred.” Section 1g also states that means to operate fixtures, such as remote controls, shall convey.
The majority of smart home devices are operated via an app. In such cases, the buyer can download the app on any phone, iPad, tablet, etc., meaning that the tablet used by the seller need not convey. However, if the tablet itself is needed to operate the smart home device, it must convey to the buyer.
Use of the Multiple/Counter Offer Form is Recommended when the Seller Wishes to Convey Multiple Counters
FACTS:
The seller received multiple offers on the listed property. After consulting with the owner, the listing agent submitted counter offers to two of the potential buyers. One of the buyers accepted immediately and delivered the signed counteroffer to the listing agent. The listing agent has not heard from the other buyer yet.
ISSUE:
How does the listing agent ensure that the other buyer does not accept the counter offer?
ANSWER:
See discussion.
DISCUSSION:
A counter offer can be revoked at any time prior to acceptance. The seller should therefore immediately revoke the counter offer to the other buyer.
Note: The Arizona REALTORS® Multiple Offer/Counter Offer form should be used to avoid potentially contracting to sell the property to two different buyers if the seller wishes to present multiple counter offers.
January 28, 2020
Blight to Beauty
REALTORS® know better than most how important a vibrant, welcoming community can be. Not only is it important to our clients, but it’s also a point of pride for those who already live there.
However, we all come across so-called “eyesores” that we would like to see transformed into something that makes the neighborhood an even better place to live.
Did you know that NAR has grants to do just that?
REAL ESTATE & REAL ID
In just over 250 days, the Driver License most of us have will no longer be accepted to fly or enter federal buildings. However, does the REAL ID ACT have any impact on REALTORS? What about our mortgage partners who have to verify identity?
Just recently, an Escrow Officer in Arizona ran into an out-of-state ID that had “Not for REAL ID Purposes” written on it. Is this ID acceptable? What should she do?
TransactionDesk® Tips & Fab Features
The reviews are in! As more and more Arizona REALTORS® begin to use TransactionDesk®, most are finding it to be a better forms platform.
Since its implementation, nearly 10,000 users have completed 50K transactions.
Legal Hotline
BINSR May Continue on Additional Pages
FACTS:
After entering into a Residential Resale Real Estate Purchase Contract (the “Contract) with a seller, the buyer hired a home inspector to perform a home inspection. After reviewing the inspection, the buyer had a list of requested repairs, all of which would not fit on page 1 of the Buyer’s Inspection Notice and Seller’s Response (“BINSR”). The buyer’s agent continued the list on an addendum, incorporating the addendum into the BINSR. The seller now refuses to sign the addendum because he does not agree to make all of the requested repairs.
ISSUE:
Does the seller have to sign the addendum?
ANSWER:
Probably not.
DISCUSSION:
An addendum is a mutual agreement to amend the Contract. Here, the seller does not agree to all of the repairs and, by signing the addendum, it may represent that the seller agrees to all of the repairs on the addendum.
Practice tip: To avoid confusion, the buyer’s agent can add a blank page titled BINSR ATTACHMENT by clicking the “Add Page” button found in TransactionDesk forms or zipForms. Alternatively, the buyer’s agent should have used a blank word document incorporated into the BINSR to continue the list of requested repairs to submit to the seller.
No Requirement That Home Comply With Current Building Code
ISSUE:
The home was built in 1963. After the inspection period the buyer discovered minor violations of the current building code. The buyer does not want to close escrow until these minor code violations are corrected. Is the buyer required to close escrow?
ANSWER:
Yes. The contract does not require that the home comply with current building code provisions. For example, if the plumbing is in working condition as warranted in the Contract, the fact that the plumbing does not comply with the current building code is no basis for the buyer to refuse to close escrow.
January 21, 2020
REALTOR® Day at the Capitol
Less than 24 hours into the 54th legislative session, Arizona REALTORS® met with state leaders to express their concerns and advocate for the industry.
New CPOA Addendum
As the number of commercial properties governed by an association similar to an HOA has grown, it became clear that Arizona needed a form that formally discloses fees that become payable upon close of escrow.
Recently, a dedicated group of individuals set out to create the Commercial Property Owner’s Association Addendum.
Professional Standards Workshop
When can a seller compel arbitration? Who can file an ethics complaint? Who actually has the right to due process? If you need a refresher on Professional Standards, we’ve got an important workshop coming up!
Legal Hotline
Agent May Not Procure Employment Agreement from Party Subject to Existing Exclusive EA
FACTS:
Agent worked for Brokerage ABC. Brokerage ABC has a large property management business.
Agent wants to sever from brokerage ABC and open her own brokerage offering property management services. Agent wants to take a copy of brokerage ABC’s property management book of business and contact brokerage ABC’s clients to procure business for her new brokerage.
ISSUE:
Can an Agent take brokerage ABC’s list of clientele and contact them offering property management services?
ANSWER:
No.
DISCUSSION:
Brokerage ABC’s Policy and Procedures Manual prohibits removal of client lists from the brokerage upon severance. The Policy and Procedures Manual also clarifies data lists are the property of the brokerage. Therefore, Agent may not take the list from the brokerage.
Furthermore, pursuant to A.R.S. § 32-2151.02(C):
A licensee shall not procure, or attempt to procure, a real estate employment agreement from a party who is already subject to an existing exclusive real estate employment agreement unless the licensee has received written acknowledgment from the party that the execution of additional real estate employment agreements could expose the party to liability for substantial additional commissions.
Thus, the best business practice for Agent would be to procure clients through other avenues and not utilize brokerage ABC’s clientele list.
Agent Must Recommend Professional Advice Prior to Pre-Possession Agreement
FACTS:
The buyer wants to take possession of the property before the close of escrow. The seller, who does not occupy the premises, has no objection to this pre-possession.
ISSUE:
May the listing agent draft a pre-possession agreement to facilitate the parties’ desires?
ANSWER:
See Discussion.
DISCUSSION:
The listing agent may assist the parties in preparing a pre-possession agreement. However, the Commissioner’s Rules require that the listing agent recommend that the clients seek “appropriate counsel from insurance, legal, tax and accounting professionals regarding the risks of a pre-possession” agreement beforehand. See A.A.C. R4-28-1101(K). If the seller refuses to seek the advice of these professionals, the listing agent may want to decline the representation because of the inherent risky nature of a pre-possession agreement.
January 14, 2020
Residential Purchase Contract to be Revised
Arizona REALTORS® will soon an updated Residential Purchase Contract with three important revisions.
- Solar Lease / Solar Loan Assumption Addendum
- Smart Home Devices
- Seller Concessions
New App Lets You Personalize and Share Social Media Content
Did you know that a new app provides you with a powerful tool to easily access, personalize and leverage “That’s Who We R” campaign assets across social marketing channels? It’s true and takes only a few minutes to set up. Don’t believe us? Listen to Shane Cook from South East Valley Living talk about the technology.
Adding Forms to Transactions
This week’s hot tip is all about adding standalone forms in TransactionDesk. Our experts lay it out in five easy steps.
Legal Hotline
Buyer Cannot Waive Requirement of Affidavit of Disclosure
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ISSUE:
The seller has an addendum to the purchase contract requiring the buyer to waive any disclosures, which would include the waiver of the Affidavit of Disclosure under A.R.S. §33-422. Can a buyer agree to waive the requirement of the Affidavit of Disclosure under A.R.S. §33-422?
ANSWER:
Probably not. Under A.R.S. §33-422 a seller shall provide to the buyer an Affidavit of Disclosure if the seller is selling five or fewer parcels of land in an unincorporated area of a county which is not subdivided land. This Affidavit of Disclosure applies to vacant, commercial, industrial and residential land.
In light of this mandatory language of A.R.S. §33-422, the buyer, for public policy reasons, probably cannot waive the right to receive from the seller an Affidavit of Disclosure. Otherwise, every seller subject to A.R.S. §33-422 would require a waiver of the Affidavit of Disclosure.
The Seller Must Provide An Affidavit Of Disclosure When The Property Is Not Subdivided In An Unincorporated Area
FACTS:
The seller owns a 36-acre parcel of land located in an un-incorporated area of Maricopa County, Arizona.
ISSUE:
Is the seller required to provide an Affidavit of Disclosure?
ANSWER:
Yes. A.R.S. § 33-422(A) provides that a seller of five or fewer parcels of land, other than subdivided land, in an unincorporated area of a county must furnish a written affidavit of disclosure to the buyer, at least seven days before the transfer of the property, and the buyer shall acknowledge receipt. Simply put, a seller is required to provide an affidavit of disclosure in accordance with § 33-422 if: (i) the seller is selling five or fewer parcels, (ii) the parcels are not subdivided land, and (iii) the parcels are located in an unincorporated area of the county.
In this instance, the seller is selling a single a 36-acre parcel located in an unincorporated area of Maricopa County, Arizona. That being said, the only issue left to resolve is whether the parcel is subdivided. Pursuant to A.R.S. § 32-2101(56)(a) subdivided land means “improved or unimproved land or lands divided or proposed to be divided for the purpose of sale or lease, whether immediate or future, into six or more lots, parcels or fractional interests.” In this case, the seller owns one 36-acre parcel that has not been divided into six or more lots or parcels. As such, the parcel is considered un-subdivided and therefore an Affidavit of Disclosure is required.
NOTE: Effective August 27, 2019, the Affidavit of Disclosure includes disclosure of additional items (water adjudication and solar panels) pursuant to HB 2443 and HB 2485.
January 7, 2020
Buyer Contingency Addendum
Arizona REALTORS® have dozens of forms that make complex financial transactions manageable. While each form itself is valuable, special attention should be paid to the Buyer Contingency Addendum.
In this Contract Conversation, our Assistant CEO and General Counsel Scott Drucker and Stephen Gomez of Real Living Properties For You discuss the form and reveal several areas where REALTORS® need to be extra careful.
zipForm Benefit Transition
With access to MLS Connect and zipForm Mobile set to expire during the second week of January, Arizona REALTORS® are making their final decisions whether to purchase these zipForm add-ons or utilize the TransactionDesk platform which offers comparable services at no cost.
Legal Hotline
Listing Broker Cannot Disclose Halfway House for Recovering Alcoholics
Question: The listing broker has a listing on a home. The listing broker learns that there is a halfway house for recovering alcoholics next door. Can the listing broker disclose the existence of this halfway house to prospective buyers?
Answer: No. The recovering alcoholics in the halfway house are “disabled,” and therefore are members of a protected class under the fair housing laws. See A.R.S. § 41-1491(5). Therefore, the seller and the real estate brokers are prohibited from disclosing the existence of this halfway house, similar to the prohibition against disclosing individuals in the neighborhood of a certain race, religion, sex or any other protected class.
Note: Only recovering alcoholics are a protected class under fair housing laws. Although alcoholics that are not recovering may have a “disability,” the protection of the fair housing laws specifically applies only to recovering alcoholics.
Arizona REALTOR® November 2010
Team Leader and Member May Agree Upon Dispute Resolution Methods
Facts:
Team leader continues to increase the size of her real estate team. As the team grows in size, so too does the number of disputes between the team leader and various team members. As such, the team leader wants to execute an agreement with all team members governing how such disputes will be addressed.
Issue:
Can the team leader and team members execute an agreement governing how disputes will be resolved and, if so, what options are available?
Answer:
See discussion.
Discussion:
Team leaders are encouraged to enter into agreements with each team member documenting the nature of their relationship. These agreements can and should include a dispute resolution provision.
To assist team leaders and team members in crafting such an agreement, Arizona REALTORS® has developed a Team Toolkit that includes a comprehensive list of provisions that the parties can use to draft a Team Leader / Member Agreement. Among the provisions provided is a dispute resolution provision that outlines various options.