HB2473 - 492R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 41-2180, Arizona Revised Statutes, is amended to read:

START_STATUTE41-2180. Trust and escrow requirements; rules; exemptions

A. Beginning July 1, 2011, in connection with each new manufactured home transaction each dealer who is licensed pursuant to this article shall establish an independent escrow account with a financial institution or escrow agent authorized to handle such an account in this state.

A. B. Each dealer or broker who is licensed pursuant to this article and who sells manufactured homes, mobile homes or factory‑built buildings designed for use as residential dwellings shall maintain a trust account or an escrow account with a financial institution or escrow agent located in this state and shall deposit all earnest money received for the sale of manufactured homes, mobile homes or factory‑built buildings designed for use as residential dwellings in such account. The department shall conduct an audit of each dealer's or broker's trust or escrow account at least once every two years. Beginning July 1, 2011, this subsection applies to the sale of a previously owned manufactured home, mobile home or factory‑built building designed for use as a residential dwelling. Beginning July 1, 2011, a dealer or broker may comply with this subsection by complying with subsection a of this section.

B. C. All dealers or brokers shall notify the deputy director in writing when the trust or escrow account has been established by indicating the name and number of the account and the name and location of the financial institution used.

C. D. The dealer or broker, in writing, shall authorize the depository to release any and all information relative to trust or escrow accounts to the deputy director or his the deputy director's agent, employee or deputy.

D. E. The dealer's or broker's earnest money receipt book shall reflect all earnest monies received and shall be at the minimum in duplicate and consecutively numbered.

E. All earnest monies shall be deposited in the escrow account or trust fund account no later than the close of the second banking business day after receipt.

F. A dealer or broker may deposit and maintain up to two hundred dollars in the trust account to offset service charges that may be assessed by the financial institutions.

G. Every deposit into a trust account shall be made with a deposit slip which that identifies each transaction as follows:

1. The amount of deposit.

2. The names of all parties involved in the transaction.

All receipts for monies deposited in escrow shall be made accountable by containing the same information.

H. A complete record shall be retained by the dealer's or broker's office of all earnest monies received. The record shall contain provisions for entering:

1. The amount received.

2. From whom the money was received.

3. The date of receipt.

4. The place of deposit.

5. The date of deposit.

6. The daily balance of the trust fund account deposit of each transaction.

7. When the transaction has been completed.

8. Date and payment for all goods and services the dealer has contracted to provide.

I. All earnest money deposited in the trust or escrow account shall be held in such account until one of the following is completed:

1. An application for title transfer has been made.

2. The transaction involved is consummated or terminated and a complete accounting is made.

J. Upon on completion of pursuant to subsection I of this section the earnest money deposit shall be conveyed to the lending institution or the dealer, broker, purchaser, seller, manufacturer or lienholder, whichever is applicable.

K. The dealer or broker shall retain true copies of the purchase agreements, earnest money receipts, depository receipts, evidence of delivery documents and evidence of consummation of sale or termination of sale for a period of three years.

L. The deposits referred to in this section shall not be utilized used for any purpose other than the transaction for which they were provided.

M. Notwithstanding any other provision of this section, before an event listed under subsection I of this section is completed, a licensed dealer may release trust account earnest monies to pay for flooring or inventory for the unit that is the subject of the transaction for which the earnest monies were provided. Either a licensed dealer or broker may release trust account earnest monies to pay other lawfully imposed interim loan amounts and charges imposed by a financial institution or other bona fide lender on the unit that is the subject of the transaction for which the earnest monies were provided. The dealer or broker shall not make any payment out of trust account monies pursuant to this subsection unless done in compliance with all of the following:

1. The payment is made no more than ten business days prior to before the completion date pursuant to subsection I of this section.

2. The payment is made directly to the financial institution or other bona fide lender.

3. The payment is recorded in the dealer's or broker's records under this section and documented by a receipt, a payment record or any other evidence from the financial institution or lender.

4. If the transaction is terminated, the dealer or broker replaces the amount of the payment in the trust account within three business days after receiving written notification of the termination.

This subsection does not affect any other rights or obligations between the purchaser and the licensed dealer or broker.

N. The board shall adopt separate rules for dealer trust and escrow accounts and broker trust and escrow accounts. At a minimum, these rules shall contain trust and escrow account requirements for the following:

1. Record keeping.

2. Administration.

3. Service fees or charges.

4. Deposits.

5. Advances or payments out of trust and escrow accounts.

6. Closing or termination of sales transactions.

7. Auditing or investigation of trust or escrow account complaints.

O. The board shall adopt rules for compliance by dealers with subsection A of this section, including rules for escrow scope and instructions, purchaser notification and information and recordkeeping requirements.

O. P. This section shall not apply to a real estate broker or salesperson licensed pursuant to section 32‑2122 and pursuant to this article when the unit is sold in conjunction with real estate.END_STATUTE

Sec. 2. Section 41-2186, Arizona Revised Statutes, is amended to read:

START_STATUTE41-2186. Grounds for disciplinary action

The deputy director may, upon on the deputy director's own motion, and shall, upon on the complaint in writing of any person, cause to be investigated by the office the acts of any manufacturer, dealer, broker, salesperson or installer licensed with the office and may temporarily suspend or permanently revoke any license issued under this article, impose an administrative penalty or place on probation any licensee, if the holder of the license, while a licensee, is guilty of or commits any of the following acts or omissions:

1. Failure in any material respect to comply with this article or article 2 of this chapter.

2. Violation of any rule that is adopted by the board and that pertains to the construction of any unit or of any rule that is adopted by the board and that is necessary to effectively carry out the intent of this article, article 2 of this chapter or the laws of the United States or of this state.

3. Misrepresentation of a material fact by the applicant in obtaining a license.

4. Aiding or abetting an unlicensed person or knowingly combining or conspiring with an unlicensed person to evade this article or article 2 of this chapter, or allowing one's license to be used by an unlicensed person or acting as an agent, partner or associate of an unlicensed person with intent to evade this article or article 2 of this chapter.

5. Conviction of a felony.

6. The doing of a wrongful or fraudulent act by a licensee which that relates to this article or article 2 of this chapter, including, beginning July 1, 2011, failure to comply with section 41‑2180, subsection A.

7. Departure from or disregard of any code or any rule adopted by the board.

8. Failure to disclose or subsequent discovery by the office of facts which that, if known at the time of issuance of a license or the renewal of a license, would have been grounds to deny the issuance or renewal of a license.

9. Knowingly entering into a contract with a person not duly licensed in the required classification for work to be performed for which a license is required.

10. Acting in the capacity of a licensee under any license issued under this article in a name other than as set forth upon on the license.

11. Acting as a licensee while the license is under suspension.

12. Failure to respond relative to a verified complaint after notice of such complaint.

13. Violation of title 28, chapter 10 or rules adopted pursuant to title 28, chapter 10, except for the licensing requirements of sections 28‑4334, 28‑4335, 28‑4361, 28‑4362, 28‑4364, 28‑4401 and 28‑4402.

14. False, misleading or deceptive sales practices by a licensee in the sale or offer of sale of any unit regulated by this article or article 2 of this chapter.

15. Failure to remit the consumer recovery fund fee pursuant to section 41‑2189.

16. Acting as a salesperson while not employed by a dealer or broker.

17. As a salesperson, representing or attempting to represent a dealer or broker other than by whom the salesperson is employed.

18. Failure by a salesperson to promptly place all cash, checks and other items of value and any related documents received in connection with a sales transaction in the care of the employing dealer or broker.

19. Failure to provide all agreed on goods and services.

20. Failure to manufacture or install in a workmanlike manner all subassemblies, units and accessory structures which that are suitable for their intended purpose.

21. Failure of the licensee to work only within the scope of the license held.

22. An action by a licensee, who is also a mobile home park owner, manager, agent or representative, that restricts a resident's or prospective resident's access to buyers, sellers or licensed dealers or brokers in connection with the sale of a home or the rental of a space, that the department finds constitutes a violation of section 33‑1434, subsection B or section 33‑1452, subsection E or that violates any law or regulation relating to fair housing or credit practices. END_STATUTE

Sec. 3. Section 41-2193, Arizona Revised Statutes, is amended to read:

START_STATUTE41-2193. Enforcement powers of deputy director and office personnel; civil and administrative penalties

A. The deputy director, personnel of the office and personnel under contract to the office, upon on presentation of credentials, shall be permitted to enter and inspect premises where units regulated by this chapter are manufactured, sold or installed as the deputy director may deem appropriate to determine if any person has violated this chapter. No person licensed by the office may refuse to admit the deputy director or the personnel of the office or personnel under contract if the proper credentials are presented and the inspection is made at a reasonable time.

B. If the deputy director has reasonable cause to believe a unit is being offered for sale by a party required to be licensed but not licensed as a dealer or broker by the office or is in violation of this chapter, or the rules, regulations or standards promulgated adopted pursuant to this chapter, the office shall serve upon on the manufacturer, dealer, broker or installer a notice of violation, which may be affixed to the unit in violation and, if affixed to the unit, shall not be removed by anyone without the authorization of the office.

C. If there is reasonable cause to believe, from information furnished to the deputy director or from an investigation instituted by the deputy director, that any person is engaged in a business regulated by this article without being licensed as required by law, the deputy director shall issue and serve upon on the person, by certified mail, a cease and desist order requiring the person immediately, upon on receipt of the notice, to cease and desist from engaging in such business. Upon On failure of such person to comply with the order, the deputy director shall file an action in the superior court in Maricopa county restraining and enjoining the person from engaging in such business. The court in the action shall proceed as in other actions for injunctions.

D. If in the judgment of the deputy director any person has engaged, or is about to engage, in any acts or practices which that constitute, or will constitute, a violation of this chapter, the rules, regulations or standards promulgated adopted pursuant to this chapter or an order issued pursuant to this chapter, the deputy director may make application to the appropriate court for an order enjoining such acts or practices. Upon On a showing by the deputy director that such person has engaged in, or is about to engage in, any such acts or practices, an injunction, restraining order or such other order as may be appropriate shall be granted by such court without bond. On a showing by the deputy director that a licensee has wrongfully withdrawn, or is about to wrongfully withdraw, funds required to be held in the licensee's trust account, an injunction, restraining order or such other order as may be appropriate to prevent a licensee from wrongfully withdrawing trust account funds monies shall be granted by the court. Upon on granting a permanent injunction, the court may impose a civil penalty not exceeding one thousand dollars for each violation.

E. In any investigation, proceeding or hearing which that the deputy director may institute, conduct or hold under this article, the deputy director, or a representative designated by the deputy director, may administer oaths, certify to official acts, issue subpoenas for attendance of witnesses and production of books, papers and records and exercise the same powers in this regard as conferred upon on public officers by the provisions of section 12‑2212.

F. After any hearing which that the deputy director may institute, conduct or hold under this article, the deputy director or a representative designated by the deputy director may impose an administrative penalty in an amount of not to exceed one thousand dollars for each violation. All monies collected pursuant to this subsection shall be deposited in the state general fund.

G. Beginning July 1, 2011, the director or deputy director may refer to the attorney general or a county attorney for criminal or civil investigation the results of any investigation that reflect the possibility of fraud, including investigative information regarding any person or entity that, although not a licensee under this article, has a business or other relationship to a licensee or to a manufactured home transaction under this article.

G. h. If an inspection reveals that a mobile home entering this state for sale or installation is in violation of this chapter, the office may order its use discontinued and the mobile home or any portion of the mobile home vacated. The order to vacate shall be served on the person occupying the mobile home and copies of the order shall be posted at or on each exit of the mobile home. The order to vacate shall include a reasonable period of time in which the violation can be corrected. A person shall not occupy or use a mobile home in violation of an order to vacate.

H. i. If construction, rebuilding or any other work is performed in violation of this chapter or any rule adopted pursuant to this chapter, the office may order the work stopped. The order to stop work shall be served on the person doing the work or on the person causing the work to be done. The person served with the order shall immediately cease the work until authorized by the office to continue. END_STATUTE

Sec. 4. Delayed repeal

Sections 41‑2188, 41‑2189, 41‑2190, 41‑2191 and 41‑2192, Arizona Revised Statutes, are repealed from and after June 30, 2011.