Common Provisions in Independent Contractor Agreements

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HOA May Restrict Signs In Common Areas

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Both Spouses Must Sign A Lease For More Than One Year

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Disclosure Requirements Of A Group Home Depend On Specific Circumstances

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The Five Ws of RAPAC

“RAPAC” may be a term you’re already familiar with and understand its value to our industry. It may be a term you’ve heard mentioned at various REALTOR®-related events, but aren’t too familiar with. Or, it may be that the word RAPAC incites complete and utter bewilderment for you. If you fall into the latter category, read on. This is the: who, what, where, when and why of RAPAC.

Let’s first begin with a brief introduction. RAPAC stands for the REALTORS® of Arizona Political Action Committee. Today, virtually every special interest group in America has a PAC, and the REALTORS® of Arizona are no different. RAPAC is a nonprofit, unincorporated group that allows REALTOR® members to collectively and effectively participate in political affairs. RAPAC is not affiliated with a political party and is non-partisan in its support of candidates. Simply put, RAPAC is the best way to protect your business. Now let’s dive in.

Who supports RAPAC?

RAPAC is made up of voluntary investments from REALTOR® members all across the state.

What does investing in RAPAC do for me?

Your investment in RAPAC safeguards your business and our industry as a whole. Arizona real estate faces many issues that need support from pro-business/pro-real estate lawmakers. These issues range from HOA reform, water rights, property taxes and preserving the rights of property owners to name a few. Here are some recent legislative wins that could not have happened without AAR members’ investment in RAPAC.

Where does my investment in RAPAC go?

Your investment in RAPAC goes towards educating Arizona lawmakers on the issues that keep you up at night. Through your RAPAC dollars, AAR can support pro-real estate lawmakers and guarantee that no decision is made that will affect our industry, good or bad, until our voice is heard.

Investments can be made to your local association, directly to the Arizona Association of REALTORS®, and to the National Association of REALTORS®. The only acceptable way to contribute to RAPAC is by money drawn from personal funds.

When should I invest?

RAPAC investments are accepted at any time throughout the year. We do understand that for some contributing money to any sort of cause may not always be in your budget. One time to consider contributing is right after you’ve had a successful close. Or have one less Starbucks a week and at the end of the month you’ll have enough money set aside to contribute. Even a minimum donation of $30 per member, per year can do so much. When all things are considered, $30 is a small investment for such a large return – protecting your business!

Most importantly, why should you invest in RAPAC?

The Arizona Association of REALTORS® and RAPAC want to help you make more money, keep more of what you make, reduce your liability and protect you from any undue burdens that will affect your business. Investing in RAPAC means protecting your professional rights.

In order to affect legislation, we must be proactive and support the best. With your minimum contribution of $30, we can raise thousands of dollars to be stronger than ever!

Contributions to RAPAC are voluntary and are used for political purposes. You may refuse to contribute without reprisal or otherwise affecting your membership rights. Seventy percent of each contribution will be sent to Arizona PAC for state and local activities. Contributions to National RPAC are charged against your limits under 2 U.S.C 441a. Contributions are not deductible for Federal income tax purposes.

Should I Accept the Referral?

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Readying for Retirement

When it comes to retirement, real estate professionals have it easy in some regards and harder in others. On the one hand, agents and brokers have the luxury of scaling back their business a little bit at a time. That’s what Tom Fannin did. Fannin started his Arizona real estate career in 1958 “before air conditioning,” and retired in 2010 from Coldwell Banker. Fannin said he “saved enough money, used a financial advisor and bought real estate” as he readied for retirement. On the other hand, real estate agents also are largely in charge of looking out for themselves when it comes to retirement planning. AAR spoke with two financial advisors to offer some sound advice for any real estate professional planning for retirement.

“As you evaluate your retirement readiness,” said Patrick A. Funke, CLU, ChFC, AIF of Patrick Funke and Associates, “consider utilizing any one of the many retirement calculators available on the Internet to estimate your financial needs at retirement based on your desired retirement lifestyle.” Funke goes on to say, “research has shown that you are more likely to meet your retirement goals if you set, and periodically monitor, those goals.” In addition to utilizing a retirement calculator to estimate your financial goals, Funke suggests conducting an insurance review to determine what risks could stop you from meeting those goals and evaluate any ways to mitigate those risks.

Kenneth T. Holman, president of Overland Group, RE/MAX Overland, and the National Association of Real Estate Investment Advisors suggests opening an  Individual 401(k) account with a third-party administrator/custodian who permits self-direction. Holman said, “a self-directed Individual 401(k) is similar to any large company 401(k) account, except it is tailored to businesses that only employ the owner and his/her spouse.” This account is well-suited for licensed real estate professionals who are 1099 independent contractors with no full-time employees.

Advantages of a Self-Directed Account

According to Kenneth Holman, the advantages of having a Self-Directed Individual 401(k) plan are significant:

  1. The contribution limits are significantly higher for an Individual 401(k) than for an IRA account. Compared to $5,500, the limit for 2014 is $17,500 for the employee and another $34,500 for the employer if you’re under 50 years of age. You can add $5,500 in a catch-up contribution if you are 50 or older. Your spouse can also have an account and contribute the same amount.
  2. A Self-Directed account allows you to not only invest in the mutual fund accounts of your choice, but also to invest directly in real estate, mortgages, tax liens and deeds, and other related real estate products.
  3. The Individual 401(k) account allows you to borrow up to $50,000 or 50 percent of the account balance, whichever is less. It’s a great savings account that lets you borrow the money for an emergency. You can’t do that with an IRA. The only restriction is that you have to pay the money back to your account over five years at the rate of 4.25 percent.
  4. If set up properly, the Individual 401(k) permits you to have a Roth component on the employe eportion of the contribution. A Roth account allows you to invest after-tax dollars that earn interest tax-free. When you retire, you are required to take minimum distributions at age 70 ½, but you pay no taxes on the distributions.

With your Individual 401(k) you can invest directly in leveraged real estate with no detrimental tax consequences. If you invest IRA money in a real estate deal that has debt, the IRA account is subject to Unrelated Debt Financed Income taxes on the leveraged portion of the investment. These taxes can be as high as 35 percent. However, 401(k) accounts are not subject to UDFI taxes

Conduct an Investment Review

Once you have set your retirement goals, Patrick Funke recommends an investment review. According to Funke, “Investment downturns are inevitable; having a plan of how you react during a market downturn is a key factor toward your ability to maximize your return over your investment horizon.”

In addition to evaluating the appropriateness of the investments you hold with respect to time horizon or how long until you need the money, minimizing debt, accumulation of a cash reserve and the accumulation of a retirement nest egg, are all significant factors to retirement readiness.  Funke states, ”studies have shown that a sustainable withdrawal rate, the amount of money you take out of your retirement assets on an annual basis, is approximately 4-5 percent annually. If you take out more than 4-5 percent of your assets annually, you run a substantial risk of depleting your assets at an earlier age in retirement.”

By planning ahead and allocating a little time each year to review and update your plan for retirement readiness, you can substantially increase the odds of your success.

About the contributors:

Kenneth T. Holman is president of Overland Group, RE/MAX Overland, and the National Association of Real Estate Investment Advisors. Mr. Holman has more than 30 years of experience in the real estate industry. Mr. Holman offers training for real estate agents on investing for retirement.  Sign up for his classes at He can be reached at or 801.931.5571.

Patrick A. Funke is the founder of Patrick Funke & Associates, Inc. He is a financial consultant and retirement plan specialist with more than 25 years of professional wealth management experience. For more information, visit:

Independent Contractor Agreements

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What’s the Buzz with Airport Noise?

Airport noise can be a nuisance. More importantly, if a property is located within a high noise contour or accident potential zone, it may affect the owner’s ability to utilize the property as intended.

Disclosure of airport noise

Arizona law mandates that sellers disclose if a property is located in territory in the vicinity of a military airport or ancillary military facility. To assist with this legally required disclosure, the Residential Seller’s Property Disclosure Statement and Vacant Land/Lot Seller’s Property Disclosure Statement ask whether the seller is aware if the property is located in the vicinity of an airport.

What is territory in the vicinity of an airport?

Territory in the vicinity is defined by Arizona law at A.R.S. §28-8481(20). The definition provides that territory in the vicinity means any property located within certain zones. Those zones are described by way of dimensions that surround specific military airports in Arizona such as Luke Air Force Base.

For visual learners, the Arizona Department of Real Estate compiles airport boundary maps and makes them available to the public. These maps illustrate the boundaries of areas in the immediate vicinity of military and public airports that are susceptible to a certain level of noise from aircraft. The boundaries are typically referred to as noise contours.

The maps are a useful guide to determine if a property falls within a noise contour. Maps for military airports can be accessed at and maps for many of the public airports are found at Additionally, images for the boundaries to military and public airports located in Maricopa County can be viewed at Notably, the maps are intended to show the areas subject to airport-related noise from a given airport. Periodic over-flights that may contribute to noise cannot usually be determined from these maps.

Zoning and development regulations

Not only can airport noise affect an owner’s enjoyment of their property, but it may affect their use of the property. More specifically, Arizona laws regulate the zoning and development of property located within areas of high noise contours or accident potential zones. The definition for noise or accident potential zones, along with the zoning and development regulations for those areas, can be found at A.R.S. §28-8481; and A.R.S. §28-8461;

It is important to note that while a property may be zoned for a particular use, if that property is located in a high noise contour or accident potential zone, a buyer may not be able to develop and utilize the property as intended. In other words, a vacant land or lot may be zoned as residential but because that property is located within a high noise or accident potential zone, the buyer may not be authorized to construct a residential home on the lot. Therefore, because zoning and development may conflict with one another, a buyer should verify whether the buyer will be able to utilize the property as the buyer intends before purchasing a property near an airport.

About The Author

Nikki J. Salgat, Esq.

Nikki J. Salgat, Esq.

Nikki J. Salgat, Esq. is Associate Counsel at the Arizona Association of REALTORS®. Please note that this post is of a general nature and may not be updated or revised for accuracy as statutes and case law change following the date of first publication. Further, this post reflects only the opinion of the author, is not intended as definitive legal advice, and you should not act upon it without seeking independent legal counsel.

Residential SPDS Release

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