SB1715 - 572R

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

Section 1. Section 32-2101, Arizona Revised Statutes, is amended to read:

START_STATUTE32-2101. Definitions

In this chapter, unless the context otherwise requires:

1. "Acting in concert" means evidence of collaborating to pursue a concerted plan.

2. "Address of record" means any of the following:

(a) The address where a licensee practices or is otherwise employed.

(b) A licensee's residential address.

(c) The address of a licensee's statutory agency who is registered as the licensee's statutory agent with the corporation commission. This subdivision applies only if notice of the statutory agent is given to the department pursuant to section 32-2126.

3. "Advertising" means attempting by publication, dissemination, exhibition, solicitation or circulation, oral or written, or for broadcast on radio or television to induce directly or indirectly any person to enter into any obligation or acquire any title or interest in lands subject to this chapter, including the land sales contract to be used and any photographs, drawings or artist's presentations of physical conditions or facilities existing or to exist on the property. Advertising does not include:

(a) Press releases or other communications delivered to newspapers, periodicals or other news media for general information or public relations purposes if no charge is made by the newspapers, periodicals or other news media to publish or use any part of these communications.

(b) Communications to stockholders as follows:

(i) Annual reports and interim financial reports.

(ii) Proxy materials.

(iii) Registration statements.

(iv) Securities prospectuses.

(v) Applications for listing of securities on stock exchanges.

(vi) Prospectuses.

(vii) Property reports.

(viii) Offering statements.

4. "Affiliate" means a person who, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with the person specified.

5. "Associate broker" means a licensed broker who is employed by another broker. Unless otherwise specifically provided, an associate broker has the same license privileges as a salesperson.

6. "Barrier" means a natural or man-made geographic feature that prevents parcels of land from being practicably, reasonably and economically united or reunited and that was not caused or created by the owner of the parcels.

7. "Blanket encumbrance":

(a) Means either:

(i) Any mortgage, any deed of trust or any other encumbrance or lien that secures or evidences the payment of monies and that affects more than one lot or parcel of subdivided land.

(ii) An agreement that affects more than one lot or parcel by which the subdivider holds the subdivision under an option, contract to sell or trust agreement.

(b) Does not include taxes and assessments that are levied by public authority.

8. "Board" means the real estate advisory board.

9. "Broker", when used without modification, means a person who is licensed as a broker under this chapter or who is required to be licensed as a broker under this chapter.

10. "Business broker" means a real estate broker who acts as an intermediary or agent between sellers or buyers, or both, in the sale or purchase, or both, of businesses or business opportunities where a lease or sale of real property is either a direct or incidental part of the transaction.

11. "Camping site" means a space that is designed and promoted for the purpose of locating any trailer, tent, tent trailer, pickup camper or other similar device used for camping.

12. "Cemetery" or "cemetery property" means any one, or a combination of more than one, of the following in a place that is used, or intended to be used, and dedicated for cemetery purposes:

(a) A burial park, for earth interments.

(b) A mausoleum, for crypt or vault entombments.

(d) A cemetery plot, including interment rights, mausoleum crypts, niches and burial spaces.

13. "Cemetery broker" means a person other than a real estate broker or real estate salesperson who, for another, for compensation:

(a) Sells, leases or exchanges cemetery property or interment services of or for another, or on the person's own account.

(b) Offers for another or for the person's own account to buy, sell, lease or exchange cemetery property or interment services.

(d) Negotiates the purchase or sale, lease or exchange, or lists or solicits, or negotiates a loan on or leasing of cemetery property or interment services.

14. "Cemetery salesperson" means a natural person who acts on the person's own behalf or through and on behalf of a professional limited liability company or a professional corporation engaged by or on behalf of a licensed cemetery or real estate broker, or through and on behalf of a corporation, partnership or limited liability company that is licensed as a cemetery or real estate broker, to perform any act or transaction included in the definition of cemetery broker.

15. "Commissioner" means the state real estate commissioner.

16. "Common promotional plan" means a plan, undertaken by a person or a group of persons acting in concert, to offer lots for sale or lease. If the land is offered for sale by a person or group of persons acting in concert, and the land is contiguous or is known, designated or advertised as a common unit or by a common name, the land is presumed, without regard to the number of lots covered by each individual offering, as being offered for sale or lease as part of a common promotional plan. Separate subdividers selling lots or parcels in separately platted subdivisions within a master planned community shall not be deemed to be offering their combined lots for sale or lease as part of a common promotional plan.

17. "Compensation" means any fee, commission, salary, monies or other valuable consideration for services rendered or to be rendered as well as the promise of consideration whether contingent or not.

18. "Contiguous":

(a) Means lots, parcels or fractional interests that share a common boundary or point.

(b) Does not include lots, parcels or fractional interests that are separated by either of the following:

(i) A barrier.

(ii) A road, street or highway that has been established by this state or by any agency or political subdivision of this state, that has been designated by the federal government as an interstate highway or that has been regularly maintained by this state or by any agency or political subdivision of this state and has been used continuously by the public for at least the last five years.

19. "Control" or "controlled" means a person who, through ownership, voting rights, power of attorney, proxy, management rights, operational rights or other rights, has the right to make decisions binding on an entity, whether a corporation, a partnership or any other entity.

20. "Corporation licensee" means a lawfully organized corporation that is registered with the corporation commission and that has an officer licensed as the designated broker pursuant to section 32-2125.

21. "Department" means the state real estate department.

22. "Designated broker" means a natural person who is licensed as a broker under this chapter and who is either:

(a) Designated to act on behalf of an employing real estate, cemetery or membership camping entity.

(b) Doing business as a sole proprietor.

23. "Developer":

(a) Means a person who offers real property in a development for sale, lease or use, either immediately or in the future, on the person's own behalf or on behalf of another person, under this chapter.

(b) Does not include a person whose involvement with a development is limited to listing property within the development for sale, lease or use.

24. "Development" means any division, proposed division or use of real property that the department has authority to regulate, including subdivided and unsubdivided lands, cemeteries, condominiums, timeshares, membership campgrounds and stock cooperatives.

25. "Distance learning" means continuing education or prelicensure education that is an online, planned learning experience with a geographic separation that may be synchronous or asynchronous, that does not require real-time interaction between a student and an instructor and that uses a platform with self-paced or prerecorded lessons and materials that a student can access via the internet to proceed at the student's own pace.

26. "Employing broker" means a person who is licensed or is required to be licensed as a:

(a) Broker entity pursuant to section 32-2125, subsection A.

(b) Sole proprietorship if the sole proprietor is a broker licensed pursuant to this chapter.

27. "Fractional interest" means an undivided interest in improved or unimproved land, lots or parcels of any size created for the purpose of sale or lease and evidenced by any receipt, certificate, deed or other document conveying the interest. Undivided interests in land, lots or parcels created in the names of a husband and wife as community property, joint tenants or tenants in common, or in the names of other persons who, acting together as part of a single transaction, acquire the interests without a purpose to divide the interests for present or future sale or lease shall be deemed to constitute only one fractional interest.

28. "Improved lot or parcel" means a lot or parcel of a subdivision on which there is a residential, commercial or industrial building or concerning which a contract has been entered into between a subdivider and a purchaser that obligates the subdivider directly, or indirectly through a building contractor, to completely construct a residential, commercial or industrial building on the lot or parcel within two years after the date on which the contract of sale for the lot is entered into, or for a condominium as defined in section 33-1202, within four years after the date on which the contract for sale is entered into.

29. "Inactive license" means a license that is issued pursuant to article 2 of this chapter to a licensee who is on inactive status during the current license period and who is not engaged by or on behalf of a broker.

30. "Lease" or "leasing" includes any lease, whether it is the sole, the principal or any incidental part of a transaction.

31. "License" means the whole or part of any agency permit, certificate, approval, registration, public report, charter or similar form of permission required by this chapter.

32. "Licensee" means a person to whom a license for the current license period has been granted under any provision of this chapter, and, for the purposes of section 32-2153, subsection A, includes original license applicants.

33. "License period" means the two-year period beginning with the date of original issue or renewal of a particular license and ending on the expiration date, if any.

34. "Limited liability company licensee" means a lawfully organized limited liability company that has a member or manager who is a natural person and who is licensed as the designated broker pursuant to section 32-2125.

35. "Live classroom course" means a course or instructional segment delivered in either an in-person classroom instructional format or a synchronous remote instructional format that allows students to observe and participate remotely in an instructional segment via livestreaming.

36. "Lot reservation" means an expression of interest by a prospective purchaser in buying at some time in the future a subdivided or unsubdivided lot, unit or parcel in this state. In all cases, a subsequent affirmative action by the prospective purchaser must be taken to create a contractual obligation to purchase.

37. "Master planned community" means a development that consists of two or more separately platted subdivisions and that is either subject to a master declaration of covenants, conditions or restrictions, is subject to restrictive covenants sufficiently uniform in character to clearly indicate a general scheme for improving or developing real property or is governed or administered by a master owner's association.

38. "Member" means a member of the real estate advisory board.

39. "Membership camping broker" means a person, other than a salesperson, who, for compensation:

(a) Sells, purchases, lists, exchanges or leases membership camping contracts.

(b) Offers to sell, purchase, exchange or lease membership camping contracts.

(c) Negotiates or offers, attempts or agrees to negotiate the sale, purchase, exchange or lease of membership camping contracts.

(d) Advertises or holds himself out as being engaged in the business of selling, buying, exchanging or leasing membership camping contracts or counseling or advising regarding membership camping contracts.

(e) Assists or directs in procuring prospects calculated or intended to result in the sale, purchase, listing, exchange or lease of membership camping contracts.

(f) Performs any of the foregoing acts as an employee or on behalf of a membership camping operator or membership contract owner.

40. "Membership camping contract" means an agreement that is offered or sold in this state evidencing a purchaser's right or license to use the camping or outdoor recreation facilities of a membership camping operator and includes a membership that provides for this use.

41. "Membership camping operator":

(a) Means an enterprise, other than one that is tax exempt under section 501(c)(3) of the internal revenue code of 1986, as amended, that solicits membership paid for by a fee or periodic payments and has as one of its purposes camping or outdoor recreation, including the use of camping sites primarily by members.

(b) Does not include camping or recreational trailer parks that are open to the general public and that contain camping sites rented for a per use fee or a mobile home park.

42. "Membership camping salesperson" means a natural person who acts on the person's own behalf or through and on behalf of a professional limited liability company or a professional corporation engaged by or on behalf of a licensed membership camping or real estate broker, or by or on behalf of a corporation, partnership or limited liability company that is licensed as a membership camping or real estate broker, to perform any act or participate in any transaction in a manner included in the definition of membership camping broker.

43. "Partnership licensee" means a partnership with a managing general partner who is licensed as the designated broker pursuant to section 32-2125.

44. "Permanent access", as required under article 4 of this chapter, means permanent access from the subdivision to any federal, state or county highway.

45. "Perpetual care" or "endowed care":

(a) Means maintaining and caring, in all places where interments have been made, for the trees, shrubs, roads, streets and other improvements and embellishments contained within or forming a part of the cemetery.

(b) Does not include maintaining or repairing monuments, tombs, copings or other man-made ornaments as associated with individual burial spaces.

46. "Perpetual or endowed-care cemetery" means a cemetery in which lots or other burial spaces are sold or transferred under the representation that the cemetery will receive perpetual care or endowed care free of further cost to the purchaser after payment of the original purchase price for the lot, burial space or interment right.

47. "Person" means any individual, corporation, partnership or company and any other form of multiple organization for carrying on business, foreign or domestic.

48. "Private cemetery" means a cemetery or place that is not licensed under article 6 of this chapter, where burials or interments of human remains are made, in which sales or transfers of interment rights or burial plots are not made to the public and in which not more than ten interments or burials occur annually.

49. "Promotion" or "promotional practice" means advertising and any other act, practice, device or scheme to induce directly or indirectly any person to enter into any obligation or acquire any title or interest in or use of real property subject to this chapter, including meetings with prospective purchasers, arrangements for prospective purchasers to visit real property, travel allowances and discount, exchange, refund and cancellation privileges.

50. "Real estate" includes leasehold-interests and any estates in land as defined in title 33, chapter 2, articles 1 and 2, regardless of whether located in this state.

51. "Real estate broker" means a person, other than a salesperson, who, for another and for compensation or expectation of profit:

(a) Sells, exchanges, purchases, rents or leases real estate, businesses and business opportunities or timeshare interests.

(b) Offers to sell, exchange, purchase, rent or lease real estate, businesses and business opportunities or timeshare interests.

(c) Negotiates or offers, attempts or agrees to negotiate the sale, exchange, purchase, rental or leasing of real estate, businesses and business opportunities or timeshare interests.

(d) Lists or offers, attempts or agrees to list real estate, businesses and business opportunities or timeshare interests for sale, lease or exchange.

(e) Auctions or offers, attempts or agrees to auction real estate, businesses and business opportunities or timeshare interests.

(f) Buys, sells, offers to buy or sell or otherwise deals in options on real estate, businesses and business opportunities or timeshare interests or improvements to real estate, businesses and business opportunities or timeshare interests.

(g) Collects or offers, attempts or agrees to collect rent for the use of real estate, businesses and business opportunities or timeshare interests. This subdivision does not apply to a person who is not a licensee, who works for a real estate broker or a real estate salesperson, who collects in-person rent and related fees on behalf of the real estate broker or real estate salesperson for the use of real estate as part of the person's clerical duties and who provides a receipt when rent is paid.

(h) Advertises or holds himself out as being engaged in the business of buying, selling, exchanging, renting or leasing real estate, businesses and business opportunities or timeshare interests or counseling or advising regarding real estate, businesses and business opportunities or timeshare interests.

(i) Assists or directs in procuring prospects that are calculated to result in the sale, exchange, leasing or rental of real estate, businesses and business opportunities or timeshare interests.

(j) Assists or directs in negotiating any transaction calculated or intended to result in the sale, exchange, leasing or rental of real estate, businesses and business opportunities or timeshare interests.

(k) Incident to the sale of real estate, businesses and business opportunities negotiates or offers, attempts or agrees to negotiate a loan secured or to be secured by any mortgage or other encumbrance on or transfer of real estate, businesses and business opportunities or timeshare interests subject to section 32-2155, subsection D. This subdivision does not apply to mortgage brokers as defined in and subject to title 6, chapter 9, article 1.

(l) Engages in the business of assisting or offering to assist another in filing an application for the purchase or lease of, or in locating or entering on, lands owned by the state or federal government.

(m) Claims, demands, charges, receives, collects or contracts to collect an advance fee in connection with any employment enumerated in this section, including employment undertaken to promote the sale or lease of real property by advance fee listing, by furnishing rental information to a prospective tenant for a fee paid by the prospective tenant, by advertising or by any other offering to sell, lease, exchange or rent real property or selling kits connected therewith. This does not include the activities of any communications media of general circulation or coverage not primarily engaged in advertising real estate or any communications media activities that are specifically exempt from applicability of this article under section 32-2121.

(n) Engages in any of the acts listed in subdivisions (a) through (m) of this paragraph for the sale or lease of other than real property if a real property sale or lease is a part of, contingent on or ancillary to the transaction.

(o) Performs any of the acts listed in subdivisions (a) through (m) of this paragraph as an employee of, or in behalf of, the owner of real estate, or interest in the real estate, or improvements affixed on the real estate, for compensation.

(p) Acts as a business broker.

(q) Acts as a wholesaler or equity purchaser as defined in section 44-5101.

52. "Real estate sales contract" means an agreement in which one party agrees to convey title to real estate to another party on the satisfaction of specified conditions set forth in the contract.

53. "Real estate salesperson" means a natural person who acts on the person's own behalf or through and on behalf of a professional limited liability company or a professional corporation engaged by or on behalf of a licensed real estate broker, or by or on behalf of a limited liability company, partnership or corporation that is licensed as a real estate broker, to perform any act or participate in any transaction in a manner included in the definition of real estate broker subject to section 32-2155.

54. "Sale" or "lease" includes every disposition, transfer, option or offer or attempt to dispose of or transfer real property, or an interest, use or estate in the real property, including offering the property as a prize or gift if a monetary charge or consideration for whatever purpose is required.

55. "Salesperson", when used without modification, means a natural person who acts on the person's own behalf or through and on behalf of a professional limited liability company or a professional corporation licensed under this chapter or any person required to be licensed as a salesperson under this chapter.

56. "School" means a person or entity that offers a course of study toward completion of the education requirements leading to licensure or renewal of licensure under this chapter.

57. "Stock cooperative" means a corporation to which all of the following apply:

(a) The corporation is formed or used to hold title to improved real property in fee simple or for a term of years.

(b) All or substantially all of the shareholders of the corporation each receive a right of exclusive occupancy in a portion of the real property to which the corporation holds title.

(c) The right of occupancy may only be transferred with the concurrent transfer of the shares of stock in the corporation held by the person having the right of occupancy.

58. "Subdivider":

(a) Means any person who offers for sale or lease six or more lots, parcels or fractional interests in a subdivision or who causes land to be subdivided into a subdivision for the subdivider or for others, or who undertakes to develop a subdivision.

(b) Does not include a public agency or officer authorized by law to create subdivisions.

59. "Subdivision" or "subdivided lands":

(a) 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.

(b) Includes a stock cooperative, lands divided or proposed to be divided as part of a common promotional plan and residential condominiums as defined in title 33, chapter 9.

(i) Leasehold offerings of one year or less.

(ii) The division or proposed division of land located in this state into lots or parcels each of which is or will be thirty-six acres or more in area including to the centerline of dedicated roads or easements, if any, contiguous to the lot or parcel.

(iii) The leasing of agricultural lands or apartments, offices, stores, hotels, motels, pads or similar space within an apartment building, industrial building, rental recreational vehicle community, rental manufactured home community, rental mobile home park or commercial building.

(iv) The subdivision into or development of parcels, plots or fractional portions within the boundaries of a cemetery that has been formed and approved pursuant to this chapter.

(v) A sale or lease of a lot, parcel or fractional interest that occurs ten or more years after the sale or lease of another lot, parcel or fractional interest if the other lot, parcel or fractional interest is not subject to this article and is treated as an independent parcel unless, on investigation by the commissioner, there is evidence of intent to subdivide.

60. "Timeshare" or "timeshare property" means real property ownership or right of occupancy in real property pursuant to article 9 of this chapter. For the purposes of this chapter, a timeshare is not a security unless it meets the definition of a security under section 44-1801.

61. "Trustee":

(a) Means a person who either:

(i) Is designated under section 32-2194.27 to act as a trustee for an endowment-care cemetery fund.

(ii) Holds bare legal title to real property under a subdivision trust.

(b) Does not include a developer, subdivider, broker or salesperson within this chapter.

62. "Unimproved lot or parcel" means a lot or parcel of a subdivision that is not an improved lot or parcel.

63. "Unsubdivided lands":

(a) Means 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 and the lots or parcels are thirty-six acres or more each but less than one hundred sixty acres each, or that are offered, known or advertised under a common promotional plan for sale or lease, except that agricultural leases shall not be included in this definition.

(b) Includes any land that is sold and that would otherwise constitute the sixth lot, parcel or fractional interest if the sale occurs ten or more years after the earliest of the previous five sales and if all of the sales consist of property that was originally contained within the same parcel that is thirty-six acres or more and less than one hundred sixty acres. END_STATUTE

Sec. 2. Section 32-2121, Arizona Revised Statutes, is amended to read:

START_STATUTE32-2121. Applicability of article; exceptions

A. This article does not apply to:

1. A natural person, a corporation through its officers, a partnership through its partners or a limited liability company through its members or managers that deals in selling, exchanging, purchasing, renting, leasing, managing or pledging the person's or entity's own property, including cemetery property and membership camping contracts, and that does not receive special compensation for a sales transaction or does not receive special compensation, profit or other consideration, including assignment fees, property management fees or consulting fees for any property management services performed, if the majority of an officer's, partner's, member's or manager's activities on behalf of the corporation, partnership or limited liability company do not involve the acts of a real estate broker, cemetery broker or membership camping broker as defined in section 32-2101.

2. A person holding a valid power of attorney that is being used for a specific purpose in an isolated transaction and not as a method of conducting a real estate business.

3. An attorney performing the attorney's duties as an attorney. This paragraph does not allow an attorney to otherwise engage in any acts requiring a license under this article.

4. Any receiver, a trustee in bankruptcy or any other person acting under an order of a court.

5. A trustee selling under a deed of trust.

6. Natural persons who are acting as residential leasing agents or on-site managers of residential rental property, who are performing residential leasing activities on residential income property at not more than one location during the period of the residential leasing agents' or on-site managers' regular workday, who do not receive special compensation for the acts described in subdivisions (a) through (e) of this paragraph and who are employed by the owner or the owner's licensed management agent to perform the duties customarily associated with that employment. A bonus that is paid to a residential leasing agent or on-site manager working under the supervision of a licensed real estate broker and that is based on performance, that is received not more frequently than monthly and that does not exceed one-half of the residential leasing agent's or on-site manager's total compensation for the time period does not constitute special compensation for the acts described in subdivisions (a) through (e) of this paragraph. For the purposes of this paragraph, "residential leasing agents or on-site managers" means natural persons who are employed by the owner or the owner's licensed management agent and whose normal duties and responsibilities include any one or a combination of the following:

(a) Preparing and presenting to any person a residential lease, application or renewal or any amendment of the lease.

(b) Collecting or receiving a security deposit, a rental payment or any related payment for delivery to and made payable to a property, a property manager, an owner or the location.

(d) Executing residential leases or rental agreements adopted under title 33, chapter 10.

(e) Acting on behalf of the owner or the owner's licensed management agent to deliver notice pursuant to title 12, chapter 8 and title 33, chapters 10 and 11.

7. Any officer or employee of a governmental agency who is not a contract or temporary employee of the agency in conducting the officer's or employee's official duties.

8. One natural person who acts as a property manager for one nonresidential income property or for two or more contiguous nonresidential income properties that are under common ownership and who is employed by the owner or the owner's licensed management agent to perform the duties customarily associated with that employment.

9. Natural persons who are employed by an employing broker, a person otherwise licensed under this chapter or a person or entity exempt under this section, who are unlicensed and perform clerical, bookkeeping, accounting and other administrative and support duties, who are not engaged in any other acts requiring a license under this chapter and whose employment is not conditioned on or designed to perform duties otherwise requiring a license under this chapter.

10. Natural persons who are employed by an employing broker and who perform telemarketing services that are limited to soliciting interest in engaging the services of a licensee or broker or gathering demographic information that will be used by a licensee or broker to solicit prospective buyers, sellers, lessees and lessors.

11. Communications media or their representatives that are primarily engaged in advertising real estate and that perform no other acts requiring a real estate license, if:

(a) The communications media or their representatives do not, directly or indirectly, compile or represent that they compile information about specific prospective purchasers or tenants, except that general information about prospective purchasers or tenants, such as demographic and marketing information, may be compiled.

(b) The communications media or their representatives do not make representations to prospective real property sellers or landlords, or their representatives, concerning specific prospective purchasers or tenants or specific sales or leasing leads.

(d) The advertisements provide for direct contact between the seller or landlord and the prospective buyers or tenants, or for contact through a licensed real estate broker or property management firm. The communications media or their representatives shall not act as intermediaries or assist in any intermediary action between prospective parties to a real estate transaction, except that additional information about advertised properties may be provided to prospects on request.

12. Persons who perform residential property management services or marketing and promotional services solely for nursing care institutions as defined in section 36-401 or pursuant to life care contracts as defined in section 20-1801.

13. A person who offers to sell or lease property that constitutes a security as defined in section 44-1801 and that is offered, sold or leased in compliance with title 44, chapter 12 if the person is a registered securities dealer or salesperson pursuant to title 44, chapter 12, article 9.

14. A person who manages a hotel, motel or recreational vehicle park.

15. A person who, on behalf of another, solicits, arranges or accepts reservations or monies, or both, for occupancies of thirty-one or fewer days in a dwelling unit.

16. An escrow agent in performing the escrow agent's duties as an escrow agent, a title insurer in performing the title insurer's duties as a title insurer or a title insurance agent in performing the title insurance agent's duties as a title insurance agent. This paragraph does not allow an escrow agent, a title insurer or a title insurance agent to otherwise engage in acts requiring a license under this article.

17. Notwithstanding paragraph 1 of this subsection, a corporation through its officers and employees that purchases, sells, exchanges, rents, leases, manages or pledges its property if both of the following apply:

(a) The activity is only incidental to the business of the corporation.

(b) The officers and employees engaged in the activity do not receive special compensation or other consideration for the activity.

18. A trust company owned by a bank holding company regulated by the federal reserve board or a bank in exercising its fiduciary duties under the terms of a trust agreement to which real property is subject.

19. A person who receives a finder fee pursuant to section 32-2176 or 32-2197.21.

B. The commissioner may grant an exemption from the licensure requirements of this article to any corporation that applies for an exemption on a finding that both of the following apply:

1. The corporation is a nonprofit corporation that provides project-based housing services and operates solely as a charitable organization as defined in section 44-6551.

2. The corporation's sole activities related to real estate involve ownership or management of residential property owned or controlled by the corporation. END_STATUTE

Sec. 3. Section 32-2122, Arizona Revised Statutes, is amended to read:

START_STATUTE32-2122. License required of brokers and salespersons

A. This article applies to any person acting in the capacity of a:

1. Real estate broker.

2. Real estate salesperson.

3. Cemetery broker.

4. Cemetery salesperson.

5. Membership camping broker.

6. Membership camping salesperson.

B. It is unlawful for any person, corporation, partnership or limited liability company to engage in any business, occupation or activity listed in subsection A of this section without first obtaining a license as prescribed in this chapter and otherwise complying with this chapter. A violation of this subsection constitutes an unfair act or an unlawful practice under section 44-1522.

C. A person, corporation, partnership or limited liability company that is licensed as a salesperson or broker pursuant to this article or that is engaging in any work for which a license is required under this article is subject to the requirements of this chapter in performing any acts included in the definition of a broker unless otherwise provided in this chapter.

D. Except as otherwise provided in this subsection, any act, in consideration or expectation of compensation or profit, that is included in the definition of a real estate broker, cemetery broker or membership camping broker, whether the act is an incidental part of a transaction or the entire transaction, constitutes the person offering or attempting to perform the act of a real estate broker or real estate salesperson, a cemetery broker or cemetery salesperson or a membership camping broker or a membership camping salesperson within the meaning of this chapter. A person who is not a licensee may collect in-person rent and related fees for the use of real estate as part of the person's clerical duties if the person works for a licensee, the rent collection is on behalf of the licensee and the person provides a receipt when rent is paid. END_STATUTE

Sec. 4. Section 32-2160.01, Arizona Revised Statutes, is amended to read:

START_STATUTE32-2160.01. Civil penalties

A. Any licensee who is subject to the jurisdiction of the department and who has violated any provision of this chapter or any rule or order adopted or issued by the commissioner, who has deviated substantially from the provisions of a public report or who has engaged in any unlawful practices defined in practice under section 44-1522 with respect to the purchase, sale or lease of either residential real estate, subdivided lands or unsubdivided lands may be assessed a civil penalty by the commissioner, after a hearing, in an amount not to exceed one thousand dollars $1,000 for each infraction.

B. Actions to recover penalties assessed pursuant to this chapter shall be brought by the attorney general in the name of the state in the superior court in the county in which the violation occurred or in a county in which the commissioner maintains an office. When the commissioner has revoked a license or withdrawn certification or approval of a school, educational course or real estate instructor and assessed civil penalties that remain unpaid, if judicial review has not been sought under title 12, chapter 7, article 6, a certified copy of any such commissioner's order requiring the payment of civil penalties may be filed in the office of the clerk of the superior court. The clerk shall treat the commissioner's order in the same manner as a judgment of the superior court. A commissioner's order so filed has the same effect as a judgment of the superior court and may be recorded, enforced or satisfied in like manner. No filing fee is required under this section.

C. This chapter does not limit:

1. the authority of the ATTORNEY General to bring enforcement actions against licensees pursuant to title 44, chapter 10, article 7.

2. the cumulative remedies AVAILABLE to the attorney general pursuant to section 44-1533. END_STATUTE

Sec. 5. Repeal

Title 44, chapter 15.1, article 1, Arizona Revised Statutes, is repealed.

Sec. 6. Title 44, chapter 15.1, Arizona Revised Statutes, is amended by adding a new article 1, to read:

ARTICLE 1. DISTRESSED HOMES

START_STATUTE44-5101. Definitions

In this article, unless the context otherwise requires:

1. "Distressed home" means a dwelling to which any of the following applies:

(a) The homeowner has defaulted on a MORTGAGE and, under the terms of the MORTGAGE, the MORTGAGEE has the right to accelerate full payment of the MORTGAGE and REPOSSESS the property or sell or cause the property to be sold.

(b) The homeowner is at least thirty days delinquent on any loan that is secured by the property.

(c) A notice of trustee sale or other evidence of delinquency has been recorded in the county where the dwelling is located within the preceding one HUNDRED eighty days.

(d) The dwelling is at risk of loss due to the nonpayment of taxes.

(e) The homeowner has a good faith belief that default on the MORTGAGE is likely within the next one hundred twenty days and has reported that belief to any of the following:

(i) The MORTGAGEE.

(ii) The trustee.

(iii) An escrow agent.

(iv) A credit counseling service.

(v) A distressed home consultant.

(vi) any party to a distressed home conveyance.

2. "Distressed home consultant" means a person that solicits, contracts with or communicates with a distressed HOMEOWNER in writing, in person, through advertising or through any electronic or telecommunications medium and that makes a REPRESENTATION or offer to perform any act that the person represents to the distressed homeowner will:

(a) Prevent or postpone a trustee sale or foreclosure proceeding.

(b) Obtain FORBEARANCE, an extension of time to make payments or other relief from any servicer, beneficiary or mortgagee.

(c) Assist the distressed homeowner to exercise a right of reinstatement provided in the loan documents or to refinance a loan secured by a distressed home.

(d) Obtain a waiver of acceleration clause contained in any promissory note or contract secured by a MORTGAGE on a distressed home or contained in the MORTGAGE.

(e) Provide or assist the distressed homeowner in obtaining a loan or advance of monies.

(f) Save the distressed home from foreclosure or trustee sale or provide any other remedy available to a creditor or CLAIMANT.

(g) Result in the execution of any contract, agreement or ARRANGEMENT to purchase an interest in the distressed home.

(h) Arrange for the distressed HOMEowner to become a lessee or tenant entitled to CONTINUE to reside in or occupy the distressed home, EXCEPT:

(i) The continued residence is for a period of not more than twenty days after the close of escrow.

(ii) The purpose of the continued residence is to arrange for and relocate to a new residence.

(iii) All MORTGAGES, LIENS, judgments and other claims relating to the distressed home are fully satisfied at or before the close of escrow.

(i) Grant the distressed HOMEOWNER an option to repurchase or otherwise redeem the distressed home.

(j) Assist with the creation and filing of any petition or pleading relating to probate or bankruptcy.

3. "Distressed home conveyance" means any agreement, contract, arrangement or transaction in which a distressed HOMEOWNER conveys any right, claim, title or interest in the distressed home to a distressed home consultant, a wholesaler or an equity purchaser.

4. "Distressed homeowner" includes any of the following:

(a) The owner of record of a distressed home.

(b) The SPOUSE of the owner of record of a distressed home.

(d) If the owner of record of a distressed home is deceased, any person asserting a claim or interest in the distressed home by inheritance or otherwise.

5. "Dwelling" means a residence that is DESIGNED principally for at least one and not more than four families and includes a CONDOMINIUM unit, a residential cooperative unit, a residential unit in any other type of planned unit DEVELOPMENT or a manufactured home.

6. "Escrow" has the same meaning prescribed in section 6-801.

7. "Escrow agent" has the same meaning prescribed in section 6-801.

8. "Equity purchaser" means any person, CORPORATION, trust, partnership, LIMITED liability COMPANY or other entity that:

(a) Acquires any interest in any dwelling.

(b) Does not intend to use the dwelling as the entity's primary residence for the twelve-month PERIOD following the close of escrow.

(i) Conveying the interest in the dwelling to a third party.

(ii) Retaining the interest in the dwelling with the intent to use the property for short-term rentals, RESIDENTIAL LEASES or any other income-generating activity.

9. "MORTGAGE" means a MORTGAGE contract, MORTGAGE deed, deed of trust, security agreement or other instrument securing a MORTGAGE loan and constituting a lien on or security interest in a property.

10. "Wholesaler" means an equity purchaser that is engaged in one or more wholesale transactions.

11. "Wholesale transaction" means a transaction in which an equity purchaser acquires equitable title to a dwelling and reconveys that INTEREST to a third party WITHOUT ACQUIRING legal title, whether characterized as an assignment of CONTRACTUAL rights, a finder's fee, a commission, a joint venture or any other similar assignment.END_STATUTE

START_STATUTE44-5102. Distressed home consultants; prohibited activities; unfair practices

A. When INITIATING contact with a distressed HOMEOWNER who has not previously requested to be contacted, it is unlawful for a distressed home CONSULTANT to:

1. Claim to represent a charitable ORGANIZATION.

2. Claim to represent an entity with a name likely to CAUSE the least SOPHISTICATED consumer to believe the distressed home CONSULTANT is a charitable organization.

3. Use any pretext or artifice to CONCEAL the true PURPOSE of any in-person contact, including any statement, DOCUMENT or prop that is likely to cause the LEAST sophisticated consumer to believe the PURPOSE of the VISIT is PARCEL delivery or utility repair or any other PURPOSE UNRELATED to a distressed home conveyance.

4. Offer the distressed HOMEOWNER cash, food, a mobile phone or any other thing of value to induce the distressed homeowner to continue the contact.

5. Make any claim either orally or in writing that would LEAD the distressed HOMEOWNER to believe the distressed homeowner will be able to remain in the distressed home for more than twenty days after the close of escrow on a distressed home conveyance.

6. Make any claim to represent or have any RELATIONSHIP with the distressed HOMEOWNER'S MORTGAGE lender or service.

7. Discourage the distressed HOMEOWNER from speaking to OTHER distressed home consultants.

8. Induce the distressed HOMEOWNER to agree to meet with an equity purchaser or wholesaler with any claim that is likely to mislead the least sophisticated consumer about the purpose of the meeting.

9. Refuse to depart the property or return to the PROPERTY after any request to depart is made by the distressed HOMEOWNER or any other RESIDENT of the distressed home.

b. It is unlawful for a distressed home consultant to contact a distressed HOMEOWNER by telephone, email or electronic text messaging service unless the distressed HOMEOWNER previously and UNAMBIGUOUSLY granted permission for the contact and did not SUBSEQUENTLY revoke permission.

c. A person that violates this section is guilty of an unfair act or an unlawful practice under section 44-1522.END_STATUTE

START_STATUTE44-5103. Equity purchasers; prohibited activities; contracts; unfair practices

A. It is unlawful for an equity purchaser to:

1. Make any claim to a distressed homeowner that is likely to mislead the least sophisticated consumer about the purpose of a proposed transaction.

2. Claim to represent the distressed homeowner, refer to the distressed homeowner as a client or make any other claim that is likely to mislead the least sophisticated consumer into believing the relationship of the distressed homeowner with the equity purchaser is anything other than arm's-length and adverse.

3. Take possession of any deed or other instrument purporting to convey title before the close of escrow.

4. Instruct any escrow agent to limit communication with the distressed homeowner or require any communications between the escrow agent and the distressed homeowner to be conveyed by the equity purchaser.

5. Initiate or cause to be initiated any summary eviction proceedings of any distressed homeowner if a genuine dispute exists regarding the validity of the equity purchase transaction or legal title.

6. Enter into a transaction on behalf of a corporation, partnership or limited liability company with a name that is likely to cause the least sophisticated consumer to believe the corporation, partnership or limited liability company is a family trust or living trust of which the distressed homeowner is the beneficiary.

7. Advise a distressed homeowner with regard to the decision of the distressed homeowner to file a probate or bankruptcy petition or assist in any way with the preparation or filing of documents in court.

8. Cause or induce any other person to engage in any activity prohibited by this subsection.

9. Record or cause to be recorded any affidavit, memorandum, purchase contract or other document purporting to claim an equitable interest in a dwelling before the close of escrow. Any such recorded document is void and cannot be treated as a claim to title.

B. Any contract for a distressed home conveyance in which an equity purchaser is the buyer is void and without effect if:

1. An earnest money deposit of at least 0.5 percent of the full purchase price or $1,000, whichever is greater, is not deposited with the escrow agent within one business day after the contract is signed.

2. The contract allows the equity purchaser to cancel the transaction and receive a refund of the earnest money deposit less than seventy-two hours before the close of escrow.

3. The contract does not give the distressed homeowner at least seventy-two hours to cancel the contract or does not provide a mailing address, telephone number and email address for receipt of a cancellation notice.

4. The contract is written in a language other than the language used by the distressed homeowner in connection with the transaction.

5. The equity purchaser does not provide the distressed homeowner with a complete and final copy of all written agreements on the same business day that the distressed homeowner executes the documents.

6. The purchase price is less than eighty-two percent of the fair market value of the dwelling in "as is" condition on the date the distressed homeowner executes the purchase contract.

7. The contract purports to allow the distressed homeowner to remain in possession of the dwelling for more than twenty days after the close of escrow.

8. The contract does not require payment in full of all liens and encumbrances at the close of escrow or purports to convey title subject to any lien or encumbrance.

9. The contract requires the distressed homeowner to extend credit to the equity purchaser.

10. The contract does not require all proceeds due to the distressed homeowner to be fully distributed within twenty days after the close of escrow.

C. In any transaction for the conveyance of a dwelling between a distressed homeowner and an equity purchaser, any ambiguities in the written agreement shall be construed in favor of the distressed homeowner.

D. It is unlawful for an equity purchaser to contact a distressed homeowner by telephone, email or electronic text messaging service unless the distressed homeowner previously and unambiguously granted express permission for the contact and did not subsequently revoke permission.

E. A person that violates this section is guilty of an unfair act or an unlawful practice under section 44-1522.END_STATUTE

START_STATUTE44-5104. Wholesalers; notice requirement; unfair practices

A. Before entering into a wholesale transaction, a wholesaler must obtain the distressed homeowner's signature on a written disclosure containing the following language in at least fourteen-point type:

Notice

You are selling your home to a wholesaler. The buyer executing the purchase agreement might not be the buyer at close of escrow. You are entitled to a purchase price equal to at least eighty-two percent of the fair market value of your home on the date you execute the purchase agreement. If you believe you have been misled by the wholesaler, you can report your concerns to the Arizona department of real estate and the Arizona attorney general.

B. It is unlawful for a wholesaler to engage in any practices prohibited by sections 44-5102 and 44-5103.

C. Notwithstanding any other law, it is unlawful for a wholesaler to engage in two or more transactions in a calendar year unless the wholesaler is licensed as a real estate broker or real estate salesperson pursuant to title 32, chapter 20, article 2.

D. A person that violates this section is guilty of an unfair act or an unlawful practice under section 44-1522. END_STATUTE

START_STATUTE44-5105. Escrow agents; resignation; unfair practices

A. In any transaction involving a distressed homeowner, a distressed home consultant, an equity purchaser or a wholesaler, it is unlawful for an escrow agent to close escrow if:

1. During the pendency of the transaction, the escrow agent did not speak directly to the distressed homeowner outside of the presence of the distressed home consultant, equity purchaser or wholesaler.

2. The distressed home consultant, equity purchaser or wholesaler instructed the escrow agent not to provide the distressed homeowner with a full preliminary settlement statement showing all commissions, fees and payments to be disbursed at the close of escrow, or the escrow agent failed to provide a full preliminary settlement statement to the distressed homeowner for any other reason.

3. The escrow instructions require conveyance of title subject to a mortgage containing a due on sale clause or other notice requirement, unless the mortgage lender or servicer provides written authorization for the transaction to proceed without paying the lien in full.

4. The distressed home consultant, equity purchaser or wholesaler fails to provide an independent appraisal demonstrating that the purchase price is at least eighty-two percent of the dwelling's fair market value in "as is" condition on the date of the purchase contract.

5. The escrow agent has reason to believe that the transaction was induced by fraudulent or unfair acts by the distressed home consultant, equity purchaser or wholesaler.

6. The escrow agent has a good faith basis to believe that the distressed homeowner may lack capacity to consent to the transaction.

B. If an escrow agent is unable to close escrow in a distressed home conveyance, the escrow agent may resign and provide notice of resignation as required by applicable law and regulations. This chapter does not impose any additional reporting duties that are not required by any other statute or regulation.

C. A person that violates this section is guilty of an unfair act or an unlawful practice under section 44-1522. END_STATUTE

START_STATUTE44-5106. Remedies; rulemaking authority

A. Except as otherwise provided, any violation of this article is subject to enforcement under chapter 10, article 7 of this title.

B. This article does not limit any rights or remedies available pursuant to any other provision of law.

C. The state real estate department may adopt rules pursuant to title 41, chapter 6 to carry out this article. END_STATUTE