ARIZONA STATE SENATE
Forty-eighth Legislature, First Regular Session
FINAL AMENDED
FACT SHEET FOR S.B. 1349
department of real estate
Purpose
Makes several changes, retroactive to July 1, 2007, to the Arizona Department of Real Estate (ADRE) statutes concerning licensure and expands the ability of the Commissioner of ADRE (Commissioner) to assess penalties for violations.
Background
Statute establishes a two-year staggered license period for licenses issued by ADRE. The current license period is two years beginning with the date of original issue or renewal of a particular license (A.R.S. § 32-2101).
Every corporation, limited liability company (LLC) or partnership that applies for a real estate broker’s license must designate a natural person who is licensed as a broker and who is an officer, manager, member or partner of the entity to act as a designated broker (A.R.S. § 32-2125). An employing broker may engage the services of salespersons and associate brokers who act through and on behalf of professional corporations or LLCs that are licensed by ADRE. A designated broker is permitted to become a professional corporation or a professional LLC but needs to be licensed separately (A.R.S § 32-2125).
Current statute permits the renewal of an ADRE issued license by: a) filing an application for renewal; b) paying a renewal fee; and c) presenting evidence of attendance at a certified school during the preceding license period for 24 clock-hours, or a lesser number of clock-hours as prescribed by the Commissioner, of real estate oriented continuing education courses (A.R.S. § 32-2130). The current fees for licensure renewal are: a) for a broker’s renewal, no less than $75 and no more than $250; b) for a salesperson’s renewal, no less than $35 and no more than $125; and c) for a branch office broker’s license and renewal, no less than $35 and no more than $125 (A.R.S. § 32-2132). The fee range is determined in statute and the actual fee is set by the ADRE.
The Commissioner, after a hearing, may assess civil penalties in an amount not to exceed $1,000 against any ADRE licensed broker or salesperson who has violated any provision or any rule or order adopted or issued by the Commissioner, who has deviated substantially from a public report or who has engaged in unlawful practices such as deception, fraud, false pretense or concealment with respect to the sale or lease of lands (A.R.S. § 32-2160.01).
The Commissioner may withdraw or deny certification or approval of real estate schools, educational courses or instructors for any acts inconsistent with the laws pertaining to real estate education, including improper certification of student attendance and failure to attend continuing education (A.R.S. § 32-2135).
There is no anticipated fiscal impact to the state General Fund associated with this measure.
Provisions
1. Removes the two-year staggered license period and requires a renewed license to become effective on the date of issuance and to last for a four-year period beginning on the first day after the expiration of the previous license.
2. Requires an applicant for an original real estate salesperson’s license to provide certification of completion of six hours of instruction in real estate contract law and contract writing to ADRE at the time of application, as opposed to before activation of the license.
3. Requires an entity’s broker’s license to run concurrently with the corporation’s, LLC’s or partnership’s designated broker’s license.
4. Prohibits a professional corporation or professional LLC from being licensed as an employing broker.
5. Replaces references to “clock-hours” with “credit hours.”
6. Requires a person applying for a second or subsequent renewal to present evidence of attendance of 48 credit hours, unless the Commissioner requires fewer hours.
7. Requires the total number of credit hours of continuing education to accrue at a rate of 24 credit hours during each 24-month period of licensure.
8. Requires a renewal applicant who is retaining the specialization in sales of businesses designation to complete business brokerage courses for one-half of the continuing education credit hours prescribed by the Commissioner for renewal, as opposed to for 12 additional clock-hours.
9. Requires an applicant or licensee who has completed the requirements for a real estate broker’s license and who wants to obtain a license specializing in sales of businesses to provide certification to ADRE of completion of 24 hours of instruction in business brokerage, including satisfactory proof of passing an acceptable test, before activation of the person’s license.
10. Removes the requirement that a renewal applicant who is retaining the specialization in sales of businesses designation pass a school test for each course for the first renewal.
11. Requires ADRE to renew a license, up to one year after the expiration date, without requiring the applicant to submit to an examination if the applicant held a license that was not cancelled or suspended at the time of expiration, as opposed to at the time of application.
12. Permits a license to be renewed by filing an application for renewal in the manner prescribed by the Commissioner, as opposed to on a form provided by the Commissioner, and by paying the prescribed fee, as opposed to by paying the prescribed fee on or before the license expiration date.
13. Increases the following licensure fee ranges: a) for a broker’s renewal, from not less than $75 and not more than $250, to not less than $100 and not more than $400; b) for a salesperson’s renewal, from not less than $35 and not more than $125, to not less than $60 and not more than $200; and c) for a branch office broker’s license or renewal, from not less than $35 and not more than $125, to not less than $60 and not more than $200.
14. Requires a licensed corporation, LLC or partnership to report its dissolution to ADRE within ten days.
15. Permits the Commissioner to assess a civil penalty, after a hearing, in an amount not to exceed $1,000 for each infraction, against any licensee who commits a violation of any provision, rule or order, as opposed to against only a licensed broker or salesperson.
16. Allows the Commissioner to file a copy of an order requiring payment of civil penalties with the clerk of the superior court, if judicial review has not been sought, when certification or approval of a school, educational course or real estate instructor has been withdrawn and civil penalties remain unpaid.
17. Permits the Commissioner to suspend or revoke a license, deny issuance or renewal of a license, issue a letter of concern or issue a provisional license to a school if within the five previous years the licensed school failed to exercise reasonable supervision over the activities for which a license is required for an owner, director, administrator or instructor in the school’s employ.
18. Redefines “licensure period” and “provisional license.”
19. Makes technical and conforming changes.
20. Becomes effective on the general effective date, retroactive to July 1, 2007.
Amendments Adopted by Committee
1. Removes confidentiality of investigation and audit files.
2. Restores the ability for a branch office to be under the management of a licensed salesman.
Amendments Adopted by Committee of the Whole
1. Removes the requirement that each school provide notice to the Commissioner of the credit hours and course study completed by each student.
2. Permits the Commissioner to assess a penalty against any licensee who violates any provision of rule or regulation.
Amendments Adopted by House of Representatives
1. Permits the Commissioner to suspend or revoke a license, deny issuance or renewal of a license, issue a letter of concern or issue a provisional license if a school failed to reasonably supervise the activities for which a license is required.
2. Changes the licensure period and effective date of a license.
3. Changes the terminology of “clock-hours” to “credit hours” and modifies the continuing education requirements.
4. Modifies the course requirements for a renewal applicant who is retaining the specialization in sales of businesses designation.
5. Requires ADRE to renew a license, up to one year after the expiration date, without requiring the applicant to submit to an examination.
6. Changes the process for filing a renewal application.
7. Increases the fee range for the broker’s, salesperson’s and branch office broker’s license renewal and branch office broker’s original license.
Senate Action House Action
CED 2/7/07 DPA 6-0-2-0 COM 3/14/07 DPA 8-0-0-2
3rd Read 2/19/07 27-2-1-0 3rd Read 4/9/07 53-3-4-0
Final Read 4/25/07 25-3-2-0
Signed by the Governor 5/1/07
Chapter 165
Prepared by Senate Research
May 14, 2007
LB/jas