installation license; insurance; rules

HB2868 - 572R - H Ver

House Engrossed

installation license;
insurance; rules

State of Arizona

House of Representatives

Fifty-seventh Legislature

Second Regular Session

2026

HOUSE BILL 2868

AN
ACT

Amending sections 41-4025, 41-4027, 41-4030,
41-4032 and 41-4036, Arizona Revised Statutes; relating to the Arizona
department of housing.

(TEXT OF BILL BEGINS ON NEXT PAGE)

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

Section 1. Section 41-4025, Arizona Revised
Statutes, is amended to read:

START_STATUTE
41-4025.

Qualifications and requirements for licensure

A. A manufacturer, dealer, broker, salesperson or
installer license shall be issued by the director.

B. The director shall:

1. Qualify applicants for a license.

2. Conduct investigations as the director deems
necessary.

3. Establish and administer written examinations for
the applicable license classifications.

C. The director may establish experience
requirements for installers of manufactured homes, mobile homes, factory-built
buildings and accessory structures.

D. To obtain a license pursuant to this article, the
applicant shall submit to the director a notarized application on forms
prescribed by the department together with the required license
fee. The application shall contain the following information:

1. A designation of the classification of license
sought by the applicant.

2. The name, birth date and address of an individual
applicant.

3. If the applicant is a partnership, the name,
birth date and address of all partners with a designation of any limited
partners.

4. If the applicant is a corporation, association or
other organization, the names, birth dates and addresses of the president, vice
president, secretary and treasurer.

5. For all licenses, except those for salespersons,
the name, birth date and address of the qualifying party. The
qualifying party must reside within the state of the principal place of the
licensee's business and shall not act in the capacity of a qualifying party for
more than one license in the same classification.

6. If the applicant is a corporation, association or
other organization, evidence that the corporation, association or other
organization is in good standing with the Arizona corporation commission.

7. Whether the owner, if the applicant is a sole
proprietorship, all partners, if the applicant is a partnership, all officers,
if the applicant is a corporation or other type of association, the managers or
managing members, if the applicant is a limited liability company, the general
partner, if the applicant is a limited partnership, or the individual, if the
applicant is a salesperson, has ever been charged or convicted of a felony, or
has ever received an adverse final decision in a civil action alleging fraud or
misrepresentation and, if so, the nature of the action and the final
disposition of the case.

8. For corporations, the name and address of a
statutory agent who is

appointed by the licensee on
whom legal notices, summonses or other processes may be served, which service
shall be deemed personal service on the licensee.

9. If it is an application for a salesperson's
license, the applicant shall designate an employing dealer or broker and shall
include the signature of the qualifying party or the qualifying party's
designee.

10. Other information as the director may deem
necessary.

E. Before receiving and holding a license issued
pursuant to this article, the owner, if the applicant is a sole proprietorship,
all partners, if the applicant is a partnership, the general partner, if the
applicant is a limited partnership, the president, vice president, secretary
and treasurer, if the applicant is a corporation or other type of association,
the manager or managing members, if the applicant is a limited liability
company, the individual, if the applicant is a salesperson, and the qualifying
party shall submit a valid fingerprint clearance card issued pursuant to
section 41-1758.03.� The applicant is responsible for providing the
department with a valid fingerprint clearance card.

F. The department shall not issue a license to an
applicant before receiving a valid fingerprint clearance card pursuant to this
section.� The department shall suspend the license if the fingerprint clearance
card is determined to be invalid and an applicant who was issued a license
fails to submit a new fingerprint clearance card within ten days after being
notified by the department.� This section does not affect the department's
ability to otherwise issue, deny, cancel, terminate, suspend or revoke a license.

G. To obtain a license pursuant to this article, a
person shall not have had a license refused or revoked within one year before
the date of the application, shall not have engaged in the business without
first having been licensed and shall not act as a licensee between the filing
of the application and actual issuance of the license. For the
purposes of this subsection, "person" means an applicant, an
individual, a qualifying party, any partner of a partnership, any manager or
managing member of a limited liability company, or any officer, director,
qualifying party or owner of forty percent or more of the stock or beneficial
interest of a corporation.

H. Before issuance of a dealer, broker or installer
license, the qualifying party, in addition to meeting the requirements provided
in subsection D of this section, shall successfully show, by written
examination within three attempts, qualification in the kind of work or
business in which the applicant proposes to engage.� Before the issuance of an
installer license, the qualifying party shall also provide the department with
evidence of successful completion of the online installer course that is
administered by the manufactured housing educational institute and proof of
three years of practical or field experience or training that is deemed
acceptable by the department.

I. A license shall not be issued to a minor or to
any partnership in which one of the partners is a minor.

J. Every salesperson who holds an active license
shall maintain on file with the department a current residence address and
shall notify the department within five working days of any change of address,
of any discontinued employment, and where, if anywhere, the salesperson is
currently working.

K. The license of a salesperson who is no longer
employed by the dealer of record is deemed inactive. The salesperson shall turn
the license into the department until the salesperson is employed by another
dealer and a written notification of the change has been received by the
department. On notification, the department shall return the license
to the salesperson.

L. An applicant for an installation
license for a manufactured home or mobile home in this state shall provide
evidence of and maintain insurance in an amount that will cover the cost of
repairing all damage to the manufactured home or mobile home and its supports
that is caused by the installer during the installation, including replacement
of the manufactured home or mobile home.� The department may require the
licensed installer to provide proof of insurance at any time. The licensed
installer must notify the department of any changes or cancellations regarding
the licensed installer's insurance coverage.

END_STATUTE

Sec. 2. Section 41-4027, Arizona Revised
Statutes, is amended to read:

START_STATUTE
41-4027.

Renewal of licenses; license status

A. Licenses issued under this article
shall

expire one year after the date of issuance. An application for
renewal of any current license with evidence of a valid bond or cash deposit
, a valid fingerprint CLEARANCE card issued pursuant to section
41-1758.03 and proof of insurance required pursuant to section 41-4025,
subsection L, if applicable,
when accompanied by the required fee and
received by the director before the expiration date shall authorize the
licensee to operate until actual issuance of the renewal license for the
ensuing year.

B. A license that expires may be reactivated and
renewed within one year of its expiration by filing the required renewal
application, signed by the licensee or qualifying party for a business
licensee, evidence of a valid bond and payment of a fee of one hundred twenty-five
percent of the amount required for that license class. When a
license has been expired for more than one year for failure to renew, a new
application for license shall be made and a new license issued pursuant to this
article. If the license has been expired for more than one year, the
fee required shall be two hundred percent of the fee required for that license
class.

C. An applicant for renewal of a license issued
pursuant to this article shall not be required to take a written examination.

D. A license is not transferable. Any
change in the legal entity of a licensee that includes any change in the
ownership of a sole proprietorship or a partner of a partnership or in the
creation of a new corporate entity requires a new license.

E. A license may be canceled on the written request
of the owner of a sole proprietorship, a partner of a partnership or, in the
case of a corporation or a limited liability corporation, any person with
written evidence of
his

the person's
authority
to request the cancellation. A salesperson's license may be canceled
on the written request of the salesperson.� The director may refuse to accept
voluntary cancellation of a license if good cause may exist for disciplinary
action.

F. If possible, the licensee shall notify the
director in writing of the disassociation of a qualifying party before the
action, and in any event
no

not
later
than five business days after the action. The licensee shall also
notify the director as to who will be temporarily responsible for the operation
of the business. The absence of a written designated qualifying
party for sixty days is grounds for suspension of the license.� If a person
ceases to be the qualifying party for a licensee, the person shall notify the
department within five days.

G. An application for a new qualifying party shall
include the completion of the prescribed forms, fingerprints and testing, if
applicable, in accordance with sections 41-4025 and 41-4026.

H. A licensee may request the director, on forms
prescribed by the director, to inactivate the licensee's current license for a
period of not more than two years. In the absence of any
disciplinary proceeding or disciplinary suspension and on payment of reasonable
fees determined by the board the director may issue an inactive license
certificate to the licensee if the licensee has turned in
his

the licensee's
license. The inactive license
certificate may consist of an endorsement on the licensee's license stating
that the license is inactive.� The director may not refund any of the license
renewal fee
which

that
a licensee
paid before requesting inactive status. A licensee's license that is
not suspended or revoked and is inactive shall be reactivated as an active
license on payment of the current year's renewal fee and thirty days' written
notice to the director.� An examination may not be required to reactivate an
inactive license. If the license is not reactivated within two years, a new
application for licensing must be made and the new license issued pursuant to
this chapter.� A licensee may not inactivate the license more than
once. The holder of an inactive license shall not work as a licensee
until the licensee's license is reactivated as an active
license. The inactive status of a licensee's license does not bar
any disciplinary action by the director against a licensee for any of the
grounds stated in this chapter.
END_STATUTE

Sec. 3. Section 41-4030, Arizona Revised Statutes, is amended to read:

START_STATUTE
41-4030.

Trust and escrow requirements for dealers that are not also
owners of mobile home parks; rules; exemptions

A. Each dealer licensed pursuant to this article
shall establish an independent escrow account with an independent financial
institution or escrow agent authorized to handle such an account in this state
as prescribed by title 6, chapter 7 or 8 for each transaction involving:

1. A new manufactured home.

2. A new factory-built building designed for
use as a residential dwelling.

3. A manufactured home, mobile home or factory-built
building designed for use as a residential dwelling that is previously owned
and that has a purchase price of $50,000 or more.

B. For the purposes of subsection A of this section,
a financial institution or escrow agent is independent if the individual or
entity is not controlled by the licensee, a family member of the licensee or a
business affiliated with the licensee and the licensee, family member or
business affiliate does not have a majority interest in the financial
institution or escrow agent.

C. Each dealer that sells new manufactured homes or
factory-built buildings designed for use as residential dwellings or a
manufactured home, mobile home or factory-built building designed for use
as a residential dwelling that is previously owned and that has a purchase
price of less than $50,000 shall maintain a licensee's trust account or open an
escrow account with an independent financial institution or escrow agent
located in this state and shall deposit all earnest monies received for the
sale of manufactured homes, mobile homes or factory-built buildings
designed for use as residential dwellings in that account. The
department shall conduct an audit of each dealer's trust or escrow account,
including any transactions with an independent escrow account, at least once
every two years. A purchaser of a mobile home, used manufactured
home or used factory-built building designed for use as a residential
dwelling may request that the dealer establish an independent escrow account
,
and if such a request is made in writing not later than the
time the purchase contract is signed
,
and the seller
consents, the dealer shall comply with this subsection by complying with
subsection A of this section. A licensee that handles a transaction
under this subsection shall disclose to the purchaser, in writing and before or
at the time the purchaser signs the purchase contract, that the purchaser may
request in writing the use of an independent escrow account, and that the
transaction will otherwise be handled through a trust account controlled by the
licensee.

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

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

F. The dealer's earnest monies receipt book shall
reflect all earnest monies received and shall be at the minimum in duplicate
and consecutively numbered.

G. All earnest monies shall be deposited in the
escrow account or trust fund account not later than the close of the second
banking business day after receipt.

H. The terms or instructions for any escrow account
opened under subsection A or C of this section are deemed to be enforceable as
part of the purchase contract.� All parties to the purchase contract and the
licensee shall sign the terms and instructions. If practicable, the
escrow terms or instructions shall be included in the purchase contract or
stated in an addendum to the purchase contract. The licensee shall
provide a copy of the purchase contract to the escrow agent even if the escrow
terms or instructions are contained in a separate document. The
licensee shall promptly provide the escrow account information to all parties
to the purchase contract once the account is opened.

I. At a minimum, the
escrow terms or instructions shall contain:

1. Identification of
the escrow agent with information containing at least the name, address and
telephone number of the escrow agent.

2. All conditions or requirements that affect or
pertain to closing the escrow account and disbursement of the monies in the
escrow account.

3. Any conditions or requirements where monies are
to be disbursed from the escrow account in advance of the escrow account being
closed.

4. Any conditions or requirements where additional
monies or documents must be deposited with an escrow agent after the escrow
account is opened.

J. A dealer or broker may deposit and maintain up to
$200 in the trust account to offset service charges that may be assessed by the
financial institution.

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

1. The amount of deposit.

2. The names of all parties involved in the
transaction. All receipts for monies deposited in escrow shall be
made accountable by containing the same information.

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

1. The amount received.

2. From whom the monies were received.

3. The date of receipt.

4. The place of deposit.

5. The date of deposit.

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

7. When the transaction has been completed.

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

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

1. The consummation of sale.

2. The termination of sale, including a complete
accounting of all monies.

N. On completion pursuant to subsection M of this
section, the earnest monies deposit shall be conveyed to the lending
institution or the dealer, purchaser, seller, manufacturer or lienholder,
whichever is applicable.

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

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

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

1. The payment is made not more than ten business
days before the completion date pursuant to subsection M of this section.

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

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

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

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

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

1. Recordkeeping.

2. Administration.

3. Service fees or charges.

4. Deposits.

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

6. Closing or termination of sales
transactions.

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

S.

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

Sec. 4. Section 41-4032, Arizona Revised
Statutes, is amended to read:

START_STATUTE
41-4032.

Cosmetic complaints; process; walk-through; definition

A. Notwithstanding sections 41-4004 and 41-4031,
a purchaser of a new manufactured home shall file a complaint concerning
cosmetic, superficial or minor matters relating to the manufactured home
no

not
more than one hundred twenty days
after the date of installation or the designated cosmetic complaint date
prescribed in section 41-4033.

B. The director shall not process or verify a
complaint described in subsection A of this section if the complaint is filed
more than one hundred twenty days after the date of installation or the
designated cosmetic complaint date prescribed in section 41-4033, unless
the director finds, after written notice to the interested parties, that the
complaint involves major or structural matters relating to the manufactured
home.

C. The board shall adopt rules
establishing procedures for complaints filed pursuant to this section,
including rules for determining the date of installation of a new manufactured
home.

D.

C.
This
section does not apply if, within thirty days after the date of installation or
the designated cosmetic complaint date prescribed in section 41-4033, the
manufacturer or dealer of the new manufactured home has not conducted a walk-through
of the home with the purchaser or the purchaser's representative and has not
completed a walk-through checklist on a form approved by the
board. The walk-through checklist form shall contain a notice
to the purchaser, located immediately above the signature lines and in bold
print, advising the purchaser that all cosmetic, superficial or minor matters
found during the walk-through should be listed on the form and that the
complaint filing period for cosmetic, superficial or minor matters is one
hundred twenty days from either the date of installation of the home or the
designated cosmetic complaint date prescribed in section 41-4033.

E.

D.
For
the purposes of this section, "cosmetic, superficial or minor
matters"
:

1.
Means any defect or
condition that renders a part of the home not fit for its intended, expected or
ordinary use or appearance, including defects or conditions that involve the
appearance of the home's structural, electrical, plumbing, mechanical or gas systems.
Cosmetic, superficial or minor matters do

2. Does
not include defects or
conditions involving the performance of the home's structural, electrical,
plumbing, mechanical or gas systems.
END_STATUTE

Sec. 5. Section 41-4036, Arizona Revised
Statutes, is amended to read:

START_STATUTE
41-4036.

Repairs; complaints

A. Within ninety days after the end of the cosmetic
complaint period
,
the dealer or manufacturer shall repair
or replace cosmetic, superficial or minor matters discovered on the walk-through
unless an item necessary for the repair or replacement is unavailable and
written notice of that fact is provided to the purchaser.

B. For cosmetic, superficial or minor matters found
after the walk-through and before the one hundred twenty-day
deadline, the purchaser shall notify the dealer in writing before a complaint
may be filed, except if there are extenuating circumstances, such as serious
illness, incapacity or death. The dealer or manufacturer shall
replace or repair these items within ninety days after the end of the cosmetic
complaint period.

C. The board shall adopt rules
establishing procedures for scheduling repair and replacement of complaint
items.

D.

C.
The
purchaser may file a complaint with the department on matters covered by this
section if the complaint is filed within the twelve-month period prescribed
by sections 41-4004 and 41-4031 and the licensee failed to repair
or replace the items within the repair and replacement period or the repair or
replacement does not comply with adopted codes or workmanship standards.
END_STATUTE