Legal Question and Answers Part 5-BMC #3 – Supervision

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ISSUE:

Can a licensed real estate agent sell a mobile home located in a mobile home park on a leased lot?

ANSWER:

At REALTOR® Caucus 2016, the issue of selling manufactured and mobile homes in mobile home parks was addressed and placed on the Arizona REALTORS® 2017 legislative agenda. As a direct result, Arizona House Bill 2072 went into effect on August 9, 2017. This law allows real estate agents to sell mobile and manufactured homes not affixed to land in manufactured housing communities in Arizona.

Homes in mobile home parks are not affixed, but are typically physically attached. The Department of Motor Vehicles (DMV) provides certificates of title which convey these homes as personal property, as ownership does not pass with ownership of the land. The new law applies specifically to homes located in mobile home parks, which is defined at A.R.S. § 33-1409 as “a parcel of land with four or more rental spaces.”

 

Judgment Against Property Manager Requires Notice to ADRE Within Ten Days

ISSUE

The tenant had a $1,500 security deposit.  At the move-out inspection, the property manager discovered damage to the walls caused by the tenant.  The tenant denied causing the damage to the walls.  The property manager got a bid for $500 to repair the walls, and timely sent, i.e. within 14 days after termination of the lease, a letter to the tenant enclosing a check for $1,000 along with an itemization of the $500 in damage to the walls.  The tenant claimed that there was no damage to the walls and sued the property manager in small claims court for the return of the $500.  Although the tenant’s claim should have been against the landlord, not the property manager, the tenant got a judgment against the property manager for $500.  Is the property manager required to inform the Arizona Department of Real Estate of this $500 judgment within ten days?

ANSWER:

Yes.  A judgment against a real estate licensee involving “any business or transaction in real estate” must be reported to the Arizona Department of Real Estate within ten days.  A.A.C. R4-28-301(A)(1)(b); A.A.C. R4-28-301(F).  Arizona REALTOR® Magazine – July 2011

Quick Quiz

Fill in the Blank:
A against a real estate licensee involving “any business or transaction in real estate” must be reported to the Arizona Department of Real Estate within  days.

License for Branch Office Not Required

ISSUE:

The broker has a main office in Phoenix. The broker occasionally rents a conference room in Glendale at an hourly rate, in order to meet with clients and conduct business. Does the broker need to get a branch office license for this conference room?

ANSWER:

Probably not. Under A.R.S. § 32-2127(A) a broker is required to obtain a branch office license if the broker “maintains” more than one place of business. The occasional use of a conference room at an hourly rate is probably not the maintaining of another place of business.  Arizona REALTOR® Digest May 2007

ISSUE:

Can an agent list a mobile home for a long-term rental or sale?

ANSWER:

Agents are now allowed to sell mobile homes that are on leased land. Most parks will want to approve the new prospective owner prior to the agent accepting an offer on the mobile home. They are also allowed to list to rent these with approval possibly from the park prior to executing the lease.

Licensee Must Disclose Felony

ISSUE:

Is a real estate licensee required to disclose to the Arizona Department of Real Estate (ADRE) a felony guilty plea?

ANSWER:

Yes. Pursuant to A.R.S. § 32-2153, the ADRE may sanction a licensee, deny a license renewal or deny an original license application if, among many others, the licensee or applicant has been convicted of a felony or of any crime of forgery, theft, extortion, conspiracy to defraud, a crime of moral turpitude, or any other like offense, been guilty of fraud or dishonest dealings or not shown that the licensee or applicant is a person of honesty, truthfulness and good character.

The disciplinary actions disclosure is required by the ADRE to determine qualifications and suitability of the licensee to hold an Arizona Real Estate License. Under A.A.C. R4-28-301(F), a licensee, including the broker, must report to the ADRE within 10 days any convictions, judgments or adverse actions relating to, among others: (1) misdemeanor or felony conviction, deferral of judgment or sentencing; and (2) order, judgment or adverse decision involving fraud or dishonesty or involving a real estate transaction. A plea of guilty with regard to a felony is a deferral of judgment. Here, the real estate licensee pled guilty to a felony. As such, the real estate licensee (and his or her broker) is required to make a disciplinary action disclosure within 10 days of such guilty plea.  Arizona REALTOR® Magazine – April 2014 | Brokerage

Quick Quiz

Fill in the Blank:
The actions disclosure is required by the ADRE to determine qualifications and suitability of the licensee to hold an Arizona Real Estate .

Licensees Must Be Paid Through Their Brokerage

ISSUE:

A limited liability company (LLC) has been formed to purchase properties. The LLC is comprised of several family members. Two of the family members, a brother and sister, are licensed real estate agents.  From time to time, the licensed brother acts as an assistant to the sister agent. In addition, a non-member certified public accountant (CPA) reviews various documents in the transactions, such as a HUD-1, and wants to be compensated for his services.

Can the sister agent pay her agent brother directly for services he provides to her as an assistant? Can the brother and sister agents pay the CPA for his services directly as part of their expenses for the real estate transaction?

ANSWER:

Because the brother is a licensee, if he is performing duties that require a real estate license, then he can only accept compensation as a licensee from his legally licensed broker to whom he is licensed. See A.R.S. § 32-2155(A). Concerning the CPA, the CPA cannot perform any acts that require a real estate license or be compensated for such acts.  See A.R.S. § 32-2165. However, the LLC can pay the CPA for his services as a CPA as part of the expenses incurred by the LLC in conjunction with its real estate transactions.  Arizona REALTOR® Magazine – July 2013 | Brokerage.

Listing Agent Cannot Charge a Processing Fee for Presenting an Offer

ISSUE:

The listing agent refuses to submit the buyer’s offer to the seller unless the buyer pays a $100 “processing fee.”  May the listing agent require a processing fee as a condition of submitting an offer?

ANSWER:

No.  A listing agent is required by the Commissioner’s Rules to “promptly submit to the . . .  client all offers to purchase or lease the listed property.”  See A.A.C. R4-28-801(B).  The listing agent may not condition submitting of an offer on the buyer or buyer’s agent of paying a “processing fee.”

 Note:  The practice of collecting a processing fee is likely a RESPA violation as well.  See Busby v. JRHBW Realty, Inc. d/b/a RealtySouth, 642 F.Supp.2d 1283 (11th Cir. 2009).

Listing Agent Must Submit All Offers To Seller

ISSUE:

The listing agent placed a residential property into the MLS. The seller had previously met with a different real estate agent and does not want to do business with him. The seller has requested that the listing agent refuse to accept any offers from the agent, or any offers in which the agent may potentially obtain a referral fee.  Can the listing agent refuse to accept offers from a particular agent?

ANSWER:

Generally speaking, a listing agent is bound to present any and all offers to the seller unless precluded by law, government rule or regulation, or agreed otherwise in writing between the seller and the listing subscriber. A.A.C. R4-28-802(B). As a practical matter, there is no requirement that the seller accepts those offers.   Arizona REALTOR® Magazine – May 2013 | Brokerage

Quick Quiz

Fill in the Blank:
Generally , a listing agent is bound to present any and all offers to the seller unless precluded by law, government rule or  .

 

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