distressed residential property

HB2486 - 572R - I Ver

REFERENCE TITLE:
distressed residential property

State of Arizona

House of Representatives

Fifty-seventh Legislature

Second Regular Session

2026

HB 2486

Introduced by

Representative
De Los Santos

AN
ACT

Amending sections 32-2101, 32-2121,
32-2122 and 32-2160.01, arizona revised statutes; Repealing title 44, chapter
15.1, article 1, Arizona Revised Statutes; amending title 44, chapter 15.1,
Arizona Revised Statutes, by adding a new article 1; relating to RESIDENTIAL
property.

(TEXT OF BILL BEGINS ON NEXT PAGE)

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

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

START_STATUTE
32-2101.

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.

(c) A crematory, or a crematory and columbarium, for
cinerary interments.

(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.

(c) Negotiates the purchase and sale, lease or
exchange of 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.

(c) Does not include:

(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_STATUTE
32-2121.

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.

(c) Showing a residential rental unit to any
prospective tenant.

(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.

(c) The fee charged for advertising is based solely
on the advertising services provided.

(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_STATUTE
32-2122.

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 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_STATUTE
32-2160.01.

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_STATUTE
44-5101.

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, unless:

(
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
or beneficial owner of record of a distressed home.

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

(
c
) Any person
acting as AGENt or attorney-in-fact for the OWNER or beneficial 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 a primary residence for the twelve-month PERIOD
following the close of escrow.

(
c
) Attempts to
make a profit by either:

(
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 arrangement.
END_STATUTE

START_STATUTE
44-5102.

Distressed home consultants; prohibited activities; unlawful
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 entity
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
servicer.

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 violation of this section
constitutes an unlawful practice pursuant to section 44-1522.
END_STATUTE

START_STATUTE
44-5103.

Equity purchasers; prohibited activities; contracts; unlawful
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 executed.

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 violation of this section
constitutes an unlawful practice pursuant to section 44-1522.
END_STATUTE

START_STATUTE
44-5104.

Wholesalers; notice requirement; unlawful practices

A. Before entering into a wholesale
transaction, a wholesaler must obtain the 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 violation of this section
constitutes an unlawful practice pursuant to section 44-1522.
END_STATUTE

START_STATUTE
44-5105.

Escrow agents; resignation; unlawful 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 violation of this section
constitutes an unlawful practice pursuant to section 44-1522.
END_STATUTE

START_STATUTE
44-5106.

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