AZ R.E. dept ignores HOA laws in its policy of “No Negatives About HOAs”

Today, Arizona has a new crop of laws becoming effective, aside from SB 1070, two of which affect HOAs and property sales.  One would think that the AZ Dept of RE (ADRE) would mention these new laws. Although pertaining to HOAs, which ADRE does not regulate, they affect the sale of real property.  Real estate agents are required to know real estate law, contract law, agency law, and the Commissioner’s Rules, which are part of the licensing test and are included in its biannual continuing education classes.

Playing its part in the unspoken alliance of “No Negatives About HOAs“, ADRE released the following document:  Law Book Addendum 2010 Statute Changes –  Click here.   It makes no mention of the only two HOA bills with changes to ARS 33-442, which pertains to real property sales and transfer “fees” imposed by HOAs.  HOA attorneys have suggested that the HOA get the seller to include payment by the buyer it the sales contract.  But, according to ADRE, no need to be concerned here.

The Addendum also does not mention the changes to ARS 33-1808 and 33-1261 pertaining to “for sale sales” signs.  Not a concern of agents either, it appears. (It’s not like ADRE is not aware of the bills, having supported them.).

Under the Commissioners Rules (AZ Administrative Code, Title 4, Chapter 28 (ADRE), Article 11, Professional Conduct, excerpted here (emphasis added),

R4-28-1101. Duties to Client (legally, the guy who pays; the other party is the “customer”)

A. A licensee owes a fiduciary duty to the client and shall protect and promote the client’s interests. The licensee shall also deal fairly with all other parties to a transaction.

B. A licensee participating in a real estate transaction shall disclose in writing to all other parties any information the licensee possesses that materially or adversely affects the consideration to be paid by any party to the transaction, including:

3. Any material defect existing in the property being transferred;

H. The services that a salesperson or broker provides to a client or a customer shall conform to the standards of practice and competence recognized in the professional community for the specific real estate discipline in which the salesperson or broker engages . . . .

I. A salesperson or broker shall exercise reasonable care in ensuring that the salesperson or broker obtains information material to a client’s interests and relevant to the contemplated transaction and accurately communicates the information to the client. A salesperson or broker is not required to have expertise in subject areas other than those required to obtain the salesperson’s or broker’s license. A salesperson or broker shall take reasonable steps to assist a client in confirming the accuracy of information relevant to the transaction.

A strict reading of the above evokes a “caveat emptor” policy by ADRE, and “material” only pertains to the physical, and not to all of the real property interests affected by the sale of the real property.  Yet, in its PR statement to consumers, “Information for Consumers” page, ADRE assures the consumer in its (emphasis added),

 We want to protect consumers from being harmed in real estate transactions.  You will find a wealth of information on this website that will help you be a smarter real estate consumer.  You will also find information about what to do if something goes wrong in your transaction.  Remember, we are always willing to help.

 If you need to speak with an ADRE staff person, phone the ADRE Consumer Assistance Team at 602.771.7730

PS.  Earlier this year, the last time that I wrote ADRE about this, and to the new Commissioner, I was told that ADRE doesn’t regulate HOAs.  No mention of its failure under the above Rule.  I guess HOA laws affecting sales does not concern ADRE, and has adopted the “see no evil hear no evil, speak no evil” stance.

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Published in: on July 29, 2010 at 8:00 am  Comments (1)  
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  1. […] (AZ R.E. dept ignores HOA laws in its policy of “No Negatives About HOAs” (July 2010)). […]


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